TRADE NEWS BULLETIN Volume 2 Number 117 Wednesday, June 30, 1993 Headlines: CITIZENS WIN ENVIRONMENTAL LAWSUIT, NAFTA STALLED STUDIES: MEXICAN PRODUCTIVITY GROWING FASTER THAN WAGES CLINTON, MENEM TALK FREE TRADE DUNKEL RETIRES, CALLS FOR GATT DEAL THIS YEAR ________________________________________________________ NAFTA News Summary ________________________________________________________ CITIZENS WIN ENVIRONMENTAL LAWSUIT, NAFTA STALLED Today's ruling by a U.S. district judge in favor of three citizen groups will effectively block passage of the North American Free Trade Agreement for months or even years. U.S. District Judge Charles R. Richey said the Bush Administration violated the National Environmental Policy Act (NEPA) last year when it refused to conduct an environmental impact statement for NAFTA. "Such an impact statement is essential for providing the Congress and the public (with) information needed to assess the present and future environmental consequences of, as well as the alternative to, the NAFTA when it is submitted to the Congress for approval," Richey said. The NEPA is a federal law requiring the government to conduct an environmental impact statement for all major government actions. Richey noted that NAFTA would allow companies to pre-empt various federal and state domestic health and environmental laws, such as those pertaining to pesticides and pollution control standards. Public Citizen, the Sierra Club, and Friends of the Earth filed the lawsuit in January, after their initial complaint was rejected in 1991. "We have been trying to get compliance by the United States Trade Representative's Office with the NEPA for over two years," said Joan Claybrook, president of Public Citizen. The Bush and Clinton administrations argued that the NEPA did not apply to the free trade accord. Judge Richey said in the 23-page ruling that "The defendant conveniently ignores the fact that the power to regulate commerce with foreign nations is given to Congress under the Constitution." The Clinton Administration may submit an appeal to the Federal District Court in Washington, DC. Sours: Matt Yancey, "Free Trade," AP, June 30, 1993; Public Citizen, "White House Must File Environmental Impact Statement Before Submitting NAFTA to Congress, Judge Rules," PRESS RELEASE, June 30, 1993. ________________________________________________________ STUDIES: MEXICAN PRODUCTIVITY GROWING FASTER THAN WAGES Two recent studies conclude that, under NAFTA, U.S. businesses would benefit from both cheap labor and high productivity in Mexico. The Democratic Study Center found that Mexican productivity levels have been outpacing growth in wage rates over the past 13 years. "Why should companies invest in a high skill, high wage strategy in the United States when a high skill, low wage strategy is available in Mexico?" asks Harley Shaiken, author of the report. Many NAFTA proponents argue that under the free trade pact U.S. companies would not move to Mexico because perceived low productivity levels there would outweigh any gains achieved by cheap wage rates. But the report found that Mexican productivity levels now rival those in the United States, particularly for automobile engine production, and demonstrate the ability to match or surpass "first world" labor standards. In a separate report released yesterday, Economic Policy Institute (EPI) President Jeff Faux concludes that productivity in Mexican export industries is 80 to 100 percent of those in similar U.S. industries, while wages are only 10 to 15 percent of U.S. levels. Faux says one reason for the rise in productivity is due to the construction of new plants and inexpensive wage rates. "Where labor is cheap to hire, it is cheap to train," Faux writes. "The disparity between Mexican wages and productivity is also largely due to government policies and lack of labor rights." Jeff Faux, "The Failed Case for NAFTA: The Ten Most Common Claims for the North American Free Trade Agreement and Why They Don't Make Sense." 15 pages. The Economic Policy Institute, 1730 Rhode Island Avenue, NW, Suite 200, Washington, DC 20036. Tel: 1-800- 537-9359. Fax: 703-243-2489. $5.00. Sources: William Scally, "U.S. Report Warns Mexico Mixes High-Tech, Low Wages," REUTER, June 29, 1993; Jeff Faux, "The Failed Case for NAFTA: The Ten Most Common Claims for the North American Free Trade Agreement and Why They Don't Make Sense," EPI, June 28, 1993. ________________________________________________________ CLINTON, MENEM TALK FREE TRADE U.S. President Bill Clinton and Argentine President Carlos Menem met in Washington yesterday to discuss the expansion of the North American Free Trade Agreement. Clinton said once the free trade accord is completed, it should be quickly expanded to include other trade partners, notably Argentina. "Freer trade promotes the kind of economic and democratic reforms we see in Argentina," Clinton said. "It clearly benefits our economy as well as that of our neighbors." Menem is the first Latin American leader to visit Clinton in the White House. Sources: "Clinton Says He'll Push to Lower Trade Barriers in Latin America," INVESTOR'S BUSINESS DAILY, June 30, 1993; Thomas Ferraro, "Clinton, Menem Want Expanded NAFTA," UPI, June 29, 1993; Jorge A. Banales, "Argentina's Menem to Talk Trade With Clinton," UPI, June 28, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ DUNKEL RETIRES, CALLS FOR GATT DEAL THIS YEAR Arthur Dunkel will step down today after 13 years as head of the General Agreement on Tariffs and Trade. Dunkel called on all GATT members to implement trade reforms aimed at concluding the seven-year-old Uruguay Round. "The time has come," Dunkel said, "for governments to face realities and live up to their responsibilities." Dunkel criticized Western governments for stalling progress in the talks. "While the major industrial countries have tried vainly to find a politically acceptable point at which to settle, the rest of the world has had to wait with increasing frustration," Dunkel said. Peter Sutherland, former chairman of Allied Irish Banks, will replace Dunkel as GATT chief tomorrow. He will meet with British Prime Minister John Major in London on Friday to discuss the G-7 summit next week. Sources: "New GATT Chief to Meet Major Ahead of G-7," REUTER, June 30, 1993; "GATT Head Calls for Uruguay Round Deal by Year-End," REUTER, June 29, 1993. ________________________________________________________ Editors: Gigi Boivin and Kai Mander 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 ________________________________________________________