TRADE NEWS BULLETIN Volume 2 Number 92 Tuesday, May 25, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ EC POSITIVE ABOUT NAFTA, CONCERNED ABOUT AGRICULTURE The European Community (EC) released a report two weeks ago detailing the impact of the North America Free Trade Agreement on European trade. The report, which concludes that NAFTA would boost EC trade overall, indicates Europe's desire to avoid trade friction with the United States as they try to complete the Uruguay Round of GATT. The report says the Community can expect to form a closer political relationship with Mexico. "As the NAFTA draws Mexico more closely into the North American orbit, Mexico's relationship with the EC may gain importance as a counterweight," it states. But the report finds that NAFTA would hurt certain EC industries. It identifies financial services and insurance, rules of origin, services and farm products as areas the EC could suffer a loss in market share. The EC is especially concerned about losing its share of Mexico's sugar, dairy and meat markets. NAFTA would raise Mexican agricultural barriers to the same level as the U.S. after a six year period. The report expressed concern that NAFTA dispute settlement rules could conflict with GATT procedures. The 20-page document says the "interests of GATT Contracting Parties could be affected" by NAFTA. Meanwhile, U.S. Agriculture Secretary Mike Espy told a gathering of the International Nut Council in Athens, Greece that the United States remains committed to reaching NAFTA and GATT agreements by the end of the year. "For the United States," Espy said, "agricultural prosperity depends on exports. The crop production from three out of every 10 U.S. acres is sold to customers in other countries." He estimated that NAFTA's gradual lifting of trade barriers would add $2 billion to $2.5 billion a year to U.S. agricultural exports. Sources: "Espy Says U.S. Committed to Reaching GATT, NAFTA," UPI, May 24, 1993; "EC Outlines Potential Problems in NAFTA," AGRA EUROPE, May 14, 1993; Lionel Barber, "EC Positive About NAFTA Agreement," FINANCIAL TIMES, May 13, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ CAIRNS GROUP TO MEET BEFORE G-7 The Cairns Group of agricultural exporting nations will meet in Thailand next month to negotiate a framework for concluding the General Agreement on Tariffs and Trade. The 14-member group intends to draft a deal on world trade barriers, which it will present to July's meeting of the Group of Seven (G-7) leading industrialized nations in Tokyo. Australian trade minister Peter Cook said the meeting was intended to ensure the interests of the Cairns Group are reflected at the G-7 meeting. Cook said there have been "encouraging signs" lately that agricultural differences between the U.S. and EC, which have long stalled the GATT negotiations, are slowly being resolved. "Ways are being found to bridge important differences between the U.S. and the EC on key issues," Cook said. He added that the needs of smaller exporting countries have not been addressed and should be adequately reflected in a GATT deal. Australia helped to establish the Cairns Group in the mid 1980's. The group was formed to lobby the main trading blocs on what it calls "damaging protectionism in agriculture." Paul Shanahan, Agriculture and Commodities Counselor for GATT, said the world trade body continues to "put meat on the bones" of agriculture export and tariff agreements. Shanahan said that protectionism is the biggest threat to the international trading system, and expects the U.S.-EC farm deal to clear the way for trade progress, even though some countries remain firmly opposed to the accord. Sources: "Cairns Group to Press G-7 Over GATT," FINANCIAL TIMES, May 25, 1993; "Uruguay Round Completion on Course-GATT Official," REUTER, May 25, 1993; "Cairns Group Wants GATT Completion, Plans to Meet in Thailand," REUTER, May 24, 1993. ________________________________________________________ GATT WILL ELECT NEW DIRECTOR-GENERAL IN JUNE A closed-door meeting of GATT members is scheduled for June 9 to elect a new director-general of GATT. "The purpose of the session is the appointment of a new director-general," said a statement issued by the world trade body. Peter Sutherland, chairman of Allied Irish Banks, is expected to replace Arthur Dunkel, the current GATT chief. Sutherland, who is backed by the United States and European Community, was the EC's Competition Commissioner from 1985 to 1989. Sutherland is one of three official candidates. Latin American countries have nominated Luis Fernando Jaramillo, Colombia's ambassador to the United Nations and Julio Lacarte-Muro of Uruguay, a senior trade ambassador to GATT. Source: "GATT Session in June to Name Dunkel Successor," REUTER, May 25, 1993. ________________________________________________________ Event: "Joint Agency Conference on International Trade, and its Environmental and Social Implications," October 22-24, Abbotsford, Australia. Contact: Cathy Smith, Community Aid Abroad, 156 George Street, Fitzroy, Australia, 3065; Tel: 03 289 9444 or Karen Alexander, Environment Manager, Australian Conservation Foundation, 340 Gore Street, Fitzroy, Australia, 3056; Tel: 03 416 1166. Topics will include: The Philosophy of Trade: Rationale for Free Trade, Critiques, Rationale for Fair Trade; Global Overview: Winners and Losers; Specific discussions on GATT, NAFTA, Cairns Group; Case Studies from the Third World. ________________________________________________________ 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 ________________________________________________________