TRADE NEWS BULLETIN Volume 2 Number 101 Tuesday, June 8, 1993 Headlines: REPUBLICANS OPPOSE NAFTA IF SIDE DEALS INCLUDE SANCTIONS LINKING NAFTA WITH SOUTH EAST ASIAN TRADE A POSSIBILITY OECD RELEASES TWO STUDIES: ENVIRONMENT, MARKET ACCESS U.S. NAMES POLICY GOALS FOR JAPAN TRADE ________________________________________________________ NAFTA News Summary ________________________________________________________ REPUBLICANS OPPOSE NAFTA IF SIDE DEALS INCLUDE SANCTIONS A group of House Republicans promised to oppose the North American Free Trade Agreement if enforcement mechanisms for labor and environmental side accords include sanction powers. They told U.S. Trade Representative Mickey Kantor that they strongly object to the creation of tri-national bodies with the power to investigate abuses and recommend sanctions for repeated violators. They said side accords would channel "disproportional resources" into the creation of multilateral environmental and labor bureaucracies "with little accountability and sweeping mandates." Last week several Democrat groups, members of the Alliance for Responsible Trade, listed other objections to the labor accord and proposed the appointment of an independent secretariat to oversee labor complaints. They argue that the proposed labor standard, allowing national enforcement of federal laws, would not prevent a government from lowering its national standards to avoid being challenged for non-enforcement. The independent secretariat, which could include non-NAFTA countries, would hear government and citizen groups' complaints. Source: Nancy Dunne, "U.S. NAFTA Plan Draws Fire," FINANCIAL TIMES, June 8, 1993. ________________________________________________________ LINKING NAFTA WITH SOUTH EAST ASIAN TRADE A POSSIBILITY The Clinton Administration may be in favor of linking NAFTA to the Association of South East Asian Nations' (ASEAN) Free Trade Area (AFTA). During a forum in Singapore last month, Winston Lord, U.S. assistant secretary of state for East Asia and Pacific affairs, "more or less endorsed the idea" of joining the two free trade deals, according to U.S. business delegates. The Bush Administration had said it would only invite Asian countries with a record of open trade to join NAFTA. The ASEAN, which includes Brunei, Indonesia, Malaysia, Singapore, the Philippines and Thailand, agreed last year to gradually cut tariffs for manufactured goods and some agricultural products over a 15-year period. U.S. exports to ASEAN have risen by more than 15 percent since 1991. Imports from ASEAN have grown by 24 percent. Source: "U.S. Wants to Link NAFTA With ASEAN's Free Trade Area," KYODO NEWS SERVICE, May 16, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ OECD RELEASES TWO STUDIES: ENVIRONMENT, MARKET ACCESS The Organization for Economic Cooperation and Development (OECD) is calling on the General Agreement on Tariffs and Trade (GATT) to establish global environmental policies as a means of countering national policies that restrict trade. OECD released a report urging GATT to develop environmental policies aimed at eliminating national laws and creating greater transparency on environmental trade and scientific opinions. The report says an enormous potential exists for disputes over environmental trade barriers. An OECD official cited the U.S. Marine Mammal Protection Act (MMPA), which bans imports of tuna caught with drift nets, as an example of an environmental policy having a direct impact on trade. He said the OECD has begun trying to integrate awareness of this potential problem into the Uruguay Round of GATT talks. A second OECD report warns that international trade and investment will not lead to reduced prices and improved product quality unless measures are taken to ensure market access and competition. It calls for better cooperation between competition authorities and a greater openness in export cartels. Importing countries often lack the information or legal means to challenge export cartels, according to the study. Source: Tara Patel, "OECD Warns Against Rise of 'Green' Barriers in Trade," JOURNAL OF COMMERCE, June 4, 1993. ________________________________________________________ U.S. NAMES POLICY GOALS FOR JAPAN TRADE The Clinton Administration presented Japan with a broad trade proposal yesterday, setting specific targets for imports of U.S. goods and services. "We're looking for a substantial reduction in (Japanese) imbalances that would bring them to a rather broadly defined range," said a senior official. U.S. and Japanese officials are expected to review the proposal in detail on Friday when they meet in Washington. The proposal calls for Japan to reduce its global trade surplus to between 1.5 percent and 2 percent of economic output by 1996. Japan enjoyed a trade surplus with the United States worth $50 billion last year, about three percent of its economic output. Clinton's plan also presses for the elimination of Japanese trade barriers and an increase in imports for more than 12 markets. The proposal outlines five main areas which need to be addressed: %An increase in import demand for U.S. autos and auto parts; %The settlement of procurement disputes over computers, supercomputers and construction services; %The opening of regulated industries, such as financial and banking services; %The removal of barriers to foreign investment in Japan; %Compliance with 28 bilateral trade agreements already in place with the United States, such as the 1991 agreement to open 20 percent of Japan's semiconductor market to U.S. industry. Japan, which is opposed to setting targets, is expected to reject the deal. "Our neighboring countries are telling us that if Japan concedes and allows the United States to set numerical targets, then they know that will be the fate of the rest of East Asia tomorrow," said Noboru Hatakeyama, Japan's minister of International Trade and Industry. "We, of course, agree with them." Sources: Bob Davis, "Officials Who've Done Business With Japan Frame Trade Policy," WALL STREET JOURNAL, June 8, 1993; Keith Bradsher, "U.S. Gives Trade Plan to Japan," NEW YORK TIMES, June 8, 1993; Lyndsay Griffiths, "U.S. to Seek Big Cut in Japan Trade Surplus," REUTER, June 7, 1993; David Sanger, "Japan is Rallying Asian Nations Against New U.S. Trade Policies," NEW YORK TIMES, June 7, 1993; John Maggs, Keith Rockwell, "Clinton Adopts Tough Japan Policy; Tokyo Lays Out Framework for Talks," JOURNAL OF COMMERCE, June 4, 1993. ________________________________________________________ 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 ________________________________________________________