TRADE NEWS BULLETIN Volume 2 Number 84 Thursday, May 13, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ MEXICO EXPECTS GROWTH IN AUTO PRODUCTION UNDER NAFTA The Mexican auto industry is expected to become one of the world's leading automobile producers if the North American Free Trade Agreement (NAFTA) is ratified. "The current economic, political and social environment generate the proper conditions for the consolidation of the Mexican automotive industry in a region that will soon become the largest market in the world," said Gustavo Saavedra, director of the Mexican automobile industry. "So I strongly encourage you to support NAFTA," Saavedra said during an automotive conference in Mexico City. Some of the world's largest producers -- General Motors, Ford Motor Corporation, Chrysler Corporation, Volkswagen and Nissan Motor Company Limited -- already operate production plants in Mexico. A number of other automakers have expressed interest in locating there, according to Saavedra, who expects auto exports to rise from 400,000 units in 1993 to 700,000 by the year 2000 if the trade pact is passed. He also projected that domestic sales would rise 10-12% over the next few years due to anticipated improvement in Mexico's economy. Existing auto plants have announced they will spend $4 billion on expansion and remodeling plans over the next few years, as will Mexico's auto parts industry. "We don't know what will happen if (NAFTA) doesn't pass," Saavedra said. Source: "Mexico Poised for Auto Industry Growth Under NAFTA," REUTER, May 12, 1993. ________________________________________________________ EUROPEAN COMMISSION SAYS NAFTA POSITIVE, UNSURE OF GATT COMPATIBILITY The European Commission anticipates positive trade results for the European Community under NAFTA, despite concerns about the compatibility of the North American trade pact with the General Agreement on Tariffs and Trade (GATT). According to a Commission report, Europe expects to become the second largest provider of foreign investment in Mexico after the United States and anticipates increased Mexican demand of European exports as their economy improves. A Commission spokesman said these positive elements would help offset the negative impact of reduced tariffs on U.S.- Mexican trade. But the spokesman said the Commission would have liked more explicit references in the NAFTA text stating that nothing would breech GATT trade rules. The Commission is also concerned about NAFTA's impact on trade in the textile sector and for rules of origin on cars. The spokesman allegedly refused to disclose any more specific details of the report claiming it was confidential. The report is expected to be sent to all 12 EC members after which talks to address concerns are expected. Source: "EC Reserves Judgment on NAFTA's GATT Aspects," REUTER, May 12, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ U.S. RETALIATION OVER COPYRIGHTS SPARKS ANGER FROM OTHER GATT MEMBERS The United States announced recently that it plans to take retaliatory action against Brazil, India and Thailand, which have allegedly failed to enforce U.S. patent and copyright laws. A number of GATT members, including Japan and Australia, defended the three countries, arguing that the United States has undermined the intentions and rules of GATT by taking bilateral retaliatory action under U.S. Trade Law section 301. Brazil's Trade Ambassador Celso Nunes Amorim said in a speech during the closed-door talks, "By threatening to make use of unilateral trade measures, the U.S. government reinforces doubts the international community has as to the sincerity of the U.S. commitment to the multilateral trade rules, as embodied in the GATT." India and Thailand voiced similar complaints. "We wish to impress upon the U.S. government that issues such as these must be resolved through the multilateral system and that any unilateral action on their part is unwarranted," said India's Ambassador B.K. Zutshi. Deputy Head of the U.S. Trade Delegation Andrew Stoler defended the U.S. position in a recent speech saying that GATT does not yet contain any provisions for intellectual property rights, therefore Washington had no choice but to pursue its interests bilaterally. GATT rules on trademarks, patents, and copyrights are currently being negotiated in the Uruguay Round of world trade talks. Source: S. Nebehay, "U.S. Trade Threat on Copyrights Attacked at GATT," REUTER, May 12, 1993. ________________________________________________________ Other Trade News ________________________________________________________ U.S. MAY IMPOSE CONDITIONS ON CHINA MFN Under increasing pressure from Congress, President Bill Clinton is expected to attach human rights reforms to China's renewal of Most Favored Nation (MFN) trade status. Clinton has until June 3 to decide whether to renew MFN for China with or without conditions relating to human rights, weapons proliferation, and China's $18 billion trade surplus with the United States. China has repeatedly warned that it would not accept a conditional MFN, but has not stated how it will retaliate if conditions are imposed. MFN guarantees access to the U.S. market at reduced tariff rates. Singapore's Prime Minister Goh Chok Tong told U.S. leaders yesterday that Beijing would push ahead with economic reforms and the creation of an open economy, but only if the United States stops pressuring for other reforms. "All the Chinese leaders I met, whether in Beijing or the provinces, were united behind Deng (Xiaoping)'s economic reforms and open-door policy," said Tong. "We should understand that Chinese leaders suspect that the West wants to use human rights as a tool to pressure them and change their political system." Singapore has emerged as a strong defender of China since a diplomatic relationship formed in 1990. Sources: Tony Walker, "U.S. and China at Odds Over Move to Link Trade with Human Rights," FINANCIAL TIMES, May 13, 1993; "Singapore PM Says U.S. Should Ease Off on China," REUTER, May 13, 1993; Carol Giacomo, "U.S. May Put Conditions on Trade With China," JOURNAL OF COMMERCE, May 12, 1993. ________________________________________________________ Produced by: 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 ________________________________________________________