TRADE NEWS BULLETIN Volume 2 Number 82 Tuesday, May 11, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ NAFTA OPPONENTS WAIT FOR SIDE DEALS Two leading Congressional opponents of the North American Free Trade Agreement (NAFTA) are encouraging their colleagues to tone down their criticisms of the trade pact. House Majority Leader Richard Gephardt (D-Missouri) and Representative Sander M. Levin (D-Michigan) said they were urging Democrats to avoid taking positions on NAFTA until after the United States, Canada and Mexico conclude negotiations on three side agreements. Gephardt and Levin indicated separately that they would support the free trade deal if they find the side agreements acceptable. Following Budget Director Leon Panetta's remarks three weeks ago that Congress was not ready to pass NAFTA, the White House has increased pressure on lawmakers to support the trade pact. "There is a shift and I trace it back to the Panetta comments, which really shook up the White House," said Representative Jim Kolbe (R-Arizona). President Bill Clinton is also expected to make some public appearances throughout the United States to rally public support for the free trade pact. Many members of Congress still remain firmly opposed to NAFTA. "I don't think this is the time for us to let the debate wallow," said Representative Marcy Kaptur (D-Ohio). "It's time for us to sharpen the debate." Representative Sherrod Brown, a freshman Ohio Democrat, who has organized freshman opposition to the agreement, said, "It seems to me now is the time to scuttle the agreement." Sources: Keith Bradsher, "Trade-Pact Opposition Eases a Bit," NEW YORK TIMES, May 11, 1993; "NAFTA Negotiating Sessions Set for May 19 to 20," REUTER, May 10, 1993; Richard Lawrence, "Clinton to Tour Country to Boost NAFTA Support," JOURNAL OF COMMERCE, May 7, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ GATT PANEL TO DECIDE ON U.S. FUEL LAWS The European Community is expected to initiate formal GATT proceedings this week against two U.S. environmental laws that tax domestic and foreign cars using large amounts of fuel. The EC claims that the Gas Guzzler Tax and the Corporate Average Fleet Economy (CAFE) standards benefit U.S. and Japanese auto manufacturers because they make more fuel-efficient cars. The CAFE standard taxes autos that fail to meet the average standard of 27.5 miles per gallon. The Gas Guzzler imposes a similar tax on passenger cars that average less than 22.5 miles per gallon of gasoline. Friends of the Earth (FOE), an international environmental organization, sent a letter this week to EC Trade Commissioner Sir Leon Brittan challenging the EC's "unnecessary, undemocratic, and unwise" attack on national environmental laws. Alex Hittle, International Coordinator of FOE, calls for a reform of the GATT dispute resolution process to make the panels open to the public and to include input and expertise beyond "simple trade experience." The EC has refused to release to the public its official reason for disputing the tax. Fiona Weir, Air Pollution Campaigner at FOE England, Wales and Northern Ireland, said, "As a citizen of the EC, I find it appalling that our representatives are attacking other countries' environmental laws." A three-member GATT panel is expected to hear, in private, arguments by the two parties to decide whether or not the U.S. fuel taxes violate world trade laws. If the panelists rule in favor of Europe, the U.S. will be obliged to change the laws or face punitive retaliation from the EC. Trade analysts worry that a ruling in favor of the EC could send an anti-environmental message from GATT, making it more difficult to win U.S. congressional approval. The taxes have helped double the fuel efficiency of the U.S. car fleet since 1974, saving the U.S. 2.5 million barrels of oil per day. Sources: Nancy Dunne, "EC Challenge Over U.S. Fuel Economy Tax," FINANCIAL TIMES, May 11, 1993; "European Community Trying to Dismantle U.S. Environmental Laws Through GATT," FRIENDS OF THE EARTH, May 11, 1993. ________________________________________________________ FRANCE MAY CONCEDE ON OILSEEDS France announced yesterday that it will issue a memorandum this week detailing its stance on the General Agreement on Tariffs and Trade (GATT). "With this memo, we will define our main priorities as far as the Uruguay Round is concerned," said Alain Juppe, France's foreign minister. Juppe hinted during a day-long meeting with his 11 EC counterparts that France would be willing to approve the oilseeds deal negotiated last year if its partners agreed to pay more for land set aside to curb farm production. However, he said France remains firmly opposed to the two other sections of the farm deal which call for a 21 percent cut in subsidized EC farm exports and allow nearly unhindered U.S. exports of corn gluten feed. Juppe said an oilseeds agreement could be settled by mid-June. The oilseeds deal has already been postponed once and is the only section that requires ratification now by EC ministers. The other two proposals could be approved as part of an overall GATT accord if accepted by all EC ministers. But France has continued to reject the U.S.-EC farm accord, saying that its farmers will be hurt more than other EC farmers under the trade liberalization deal. "What's at stake is worth ... our taking perhaps the risk of a crisis (in the EC)," said Juppe. "It's a major economic issue for us. We cannot yield." Sources: Yves Clarisse, "France Yields on Oilseeds But Digs in on GATT," REUTER, May 10, 1993; "France to Unveil New GATT Policy by End of Week," REUTER, May 10, 1993. ________________________________________________________ Resources: "NAFTA Resource Book," compiled by Carmen Moreno and Edgar de Jesus for the Institute for Puerto Rican Policy. Includes North East Puerto Rican /Latino statement on NAFTA and a compilation of other articles. Available for $2.50 from the Institute for Puerto Rican Policy, 286 Fifth Avenue, 3rd Floor, New York, NY 10001-4512. ________________________________________________________ Produced by: Kai Mander and Gigi Boivin The Institute for Agriculture and Trade Policy (IATP) 1313 Fifth Street SE, Suite #303, Minneapolis, MN 55414-1546 USA Telephone:(612)379-5980 Fax:(612)379-5982 E-Mail:kmander@igc.apc.org ________________________________________________________