TRADE NEWS BULLETIN Volume 2 Number 106 Tuesday, June 15, 1993 ________________________________________________________ Headlines: MEXICO PREPARES TO BOOST INVESTMENT EVEN IF NAFTA REJECTED PUCHE SAYS SIDE DEALS NEAR COMPLETION STRENGTHENING OF INTERNATIONAL LABOR REGULATIONS URGED KANTOR PUSHES FOR FAST-TRACK, PUT HOLD ON SUPER 301 ________________________________________________________ NAFTA News Summary ________________________________________________________ MEXICO PREPARES TO BOOST INVESTMENT EVEN IF NAFTA REJECTED Mexican President Carlos Salinas de Gortari is pushing forward with a number of economic reforms and investment incentives negotiated under the pending North American Free Trade Agreement. "We're reflecting what was negotiated," said Fernando Heftye Etienne, director general of foreign investment in Mexico's commerce ministry. Salinas said he hopes the economic reforms will prove to foreign investors that Mexico will continue to liberalize markets even if NAFTA is rejected. The Mexican congress passed one of Salinas' most important decrees last week, granting independence to the Central Bank. "An independent Central Bank would imply that the next Mexican President will find it quite difficult to reverse the economic reforms currently in place," states a report by First Boston Corporation. Other economic mechanisms that reduce regulations and make it easier for foreign countries to invest in Mexico have already been implemented. Heftye expects foreign investment to reach $10 billion to $15 billion this year without NAFTA ratification. He estimates that a NAFTA approval could potentially raise investment by an additional 20 percent. "We don't think it's a disaster scenario for Mexico if NAFTA is put off until the first or second quarter of next year," said Carl Ross, an economist for Bankers Trust Securities Corporation. "We think that investors in this market are relatively sophisticated and pay more attention to underlying economic fundamentals." Mexican business leaders warned that the new laws won't have as much foreign investment pull as NAFTA because the multilateral treaty would require permanent commitments. They stress that NAFTA would make it far more difficult for future Mexican governments to undo liberalization. Sources: Matt Moffett, "NAFTA or Not, Salinas Pursues Free Market," WALL STREET JOURNAL, June 15, 1993; Kevin Hall, "With or Without NAFTA, Mexico to Ease Investment," JOURNAL OF COMMERCE, June 11, 1993. ________________________________________________________ PUCHE SAYS SIDE DEALS NEAR COMPLETION Supplemental negotiations on labor, the environment and import surges are near completion, according to Mexico's secretary of commerce, Jaime Serra Puche. Puche told a business group in Chicago yesterday that the United States and Mexico are in the "bracket eliminating stage" of drafting NAFTA side accords. He said NAFTA implementation remains targeted for January 1, 1994. Supplemental talks moved to the ministerial level last week after negotiators failed to resolve conflicts over the enforcement of labor and environmental standards. The United States continues to press for sanction rights to enforce the pact -- a proposal which Mexico and Canada oppose. Source: "U.S./Mexico Trade Talks Near End," REUTER, June 14, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ STRENGTHENING OF INTERNATIONAL LABOR REGULATIONS URGED Marcello Malentacchi, general secretary for the International Monetary Fund, called for the creation of stronger international labor regulations under the General Agreement on Tariffs and Trade. "Labor standards must be established so that worker exploitation is not the primary focus of economic competition," Malentacchi said. He suggested that the International Labor Organization (ILO), whose conventions seek to establish minimum labor standards, draw up a GATT social clause giving all workers the right to collectively bargain for higher wages, better working conditions and basic worker rights. Jack Otero, deputy under-secretary of the U.S. Labor Department, pointed to the need for stronger international labor regulations during a convention in Zurich yesterday. He said international regulations are needed "so that businesses cannot play one country against the other in the search for ever lower wages." But, Otero would not say whether he supported a GATT-led social clause. Owen Barber, president of the American United Auto Workers, warned that without a social clause, the pending North American Free Trade Agreement between the United States, Canada and Mexico would intensify pressures for downward harmonization of wages and working conditions -- "exactly the opposite of what should occur." Source: David Goodhart, "U.S. Urges Rules on Exploitation of Cheap Labor," FINANCIAL TIMES, June 15, 1993. ________________________________________________________ KANTOR PUSHES FOR FAST-TRACK, PUT HOLD ON SUPER 301 U.S. Trade Representative Mickey Kantor said yesterday that renewal of fast-track negotiating authority must remain separate from other trade initiatives, such as the Super 301 law, to assure quick congressional approval. President Clinton hopes to have fast-track negotiating authority approved before the Group of Seven summit in Tokyo July 7-9. Kantor told the Senate Finance Committee, which favors linking the two trade laws on one bill, that the Super 301 could face opposition in Congress, stalling fast-track approval. "We are trying to separate these two issues in order to move forward as quickly as possible," Kantor said. "I don't believe that at this particular time Super 301 would be helpful" in advancing the Uruguay Round of GATT negotiations. If renewed, fast-track would allow Congress to vote "yes" or "no" by December 15, 1993 on a concluded GATT deal. Kantor said he plans to attach the Super 301 to another bill later this year. Sources: Martin Crutsinger, "Kantor-Trade," AP, June 14, 1993; "Kantor Urges Congress Not to Stall Fast-Track Bill," REUTER, June 14, 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 ________________________________________________________