TRADE NEWS BULLETIN Volume 2 Number 121 Wednesday, July 7, 1993 Headlines: CLINTON TO APPOINT 'NAFTA CZAR' U.S. COMPANIES LOOKING TO MEXICO WITH OR WITHOUT NAFTA QUAD LEADERS COMPLETE PACKAGE, G-7 LEADERS BEGIN TALKS ________________________________________________________ NAFTA News Summary ________________________________________________________ CLINTON TO APPOINT 'NAFTA CZAR' President Clinton plans to appoint a White House aide to guide the North American Free Trade Agreement through Congress. Officials said Clinton, who is considering a number of people for the full-time post, hopes to have someone in place by August. Candidates include: John Sasso, a Massachusetts political strategist; Jim Jones, a former Oklahoma congressman and current nominee for U.S. ambassador to Mexico; Eli Segal, the director of the National Service Office; and Tom Donilon, assistant secretary for public affairs at the State Department. The White House is also considering whether to hire a communications official to help promote the trade pact to the American public. Source: Michael K. Frisby, "Clinton to Name Aide to Promote Free- Trade Pact," WALL STREET JOURNAL, July 7, 1993. ________________________________________________________ U.S. COMPANIES LOOKING TO MEXICO WITH OR WITHOUT NAFTA Despite the uncertainty over NAFTA's future, many of the largest U.S. companies seem as eager as ever to relocate or establish operations in Mexico. More than 2,000 corporate executives attended a convention in Chicago last week to participate in a series of workshops and presentations on how to do business in Mexico. Many of those attending said they were undaunted by legal snags to NAFTA and that they have long-term plans for business in Mexico even if the trade pact falters. "It's almost a free market anyway," said Charles Lutz, real-estate manager for Xerox Corporation. A survey taken this year of members of the National Association of Corporate Real Estate Executives found that 11 percent, or 100 large U.S. corporations, plan to expand or relocate to Mexico within the next 24 months. "A lot of firms that are not there now perceive the need to be there to be cost competitive," said Terry Rees, vice- president of Landauer Associates. Cheap wage rates in Mexico continue to attract U.S. firms. Convention participants received a chart comparing average U.S. wages and benefits, at $14.32 an hour, with those in Taiwan, South Korea, Singapore and Mexico. Mexico's average was the lowest, at $1.63 an hour. "Hourly labor costs one-tenth that of the United States," Rees said. "And that's a fully loaded rate." Others at the convention argued that another advantage to operating in Mexico is that Mexican workers are unlikely to collectively organize for higher wages. "They are not likely to surprise you in terms of (seeking) parity in benefits or wages," said Franc Pigna of CP Real Estate Partners. Mexican workers are often fired or refused work if they have a history of bargaining or are suspected organizers. Source: Kristin Downey, "U.S. Companies Are Already Making a Run for the Border," MINNEAPOLIS STAR AND TRIBUNE, July 6, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ QUAD LEADERS COMPLETE PACKAGE, G-7 LEADERS BEGIN TALKS The Quad countries -- the United States, Japan, Canada and the European Community -- completed a partial market-access package this morning, agreeing to cut tariffs in 18 sectors of trade. The pact proposes eliminating all tariffs for pharmaceuticals, medical equipment, construction equipment, steel, farm equipment, beer, furniture and distilled spirits. Ceramics, glass, textiles and apparel sectors would face 50 percent tariff reductions. Although other sectors such as agriculture, services and public procurement still need to be finalized, officials said they have made some progress in these areas. Group of Seven leaders hailed the package as a crucial step to concluding the Uruguay Round of the General Agreement on Tariffs and Trade. U.S. Trade Representative Mickey Kantor told reporters after completing "the biggest tariff cut in history" that he is confident a GATT deal can be concluded by December 15. British Prime Minister John Major acknowledged that a lot of work remains but said nearly "85 percent of a GATT agreement is now practically together." Although Kantor said the tariff cuts will produce "No winners nor losers," some of GATT's 116 members are likely to object to the agreement. "A lot of people will not be keen to agree on zero-for- zero tariffs in some of the areas the Quad wants them," warned an envoy from a developing country. Trade diplomats involved in the Uruguay Round outlined four major areas which could prevent a global trade agreement: %U.S. insistence that all tariffs are removed, including sensitive steel and pharmaceutical sectors; %Continuing problems in the service sector, particularly over U.S. suggestions that maritime and audio-visual services negotiations be dropped; %French opposition to cutting farm subsidies, and other global agricultural disputes; %U.S. insistence that it has the right to take unilateral action against other countries which it deems to be dumping or selling goods in the U.S. at prices below the cost of production. Meanwhile, some senior officials and economists questioned the usefulness of the G-7 summit altogether, indicating that too many goals have been set which relatively unpopular leaders are now expected to meet. Noting that the average popularity rate of the current G-7 leaders is around 30 percent, Yoshihisa Kitai, a senior economist with Bank of Japan Ltd. said, "Maybe it should be called the lame duck summit." A senior EC official, who called the G-7 summit "the long and painful death of a good idea," recommended that more informal negotiations replace the political hype of G-7 summits. "My view is that we should come back to a much more informal thing, the heads only if possible, very short preparation and no paper, or as little as possible," the official said. Sources: "Text of Quadrilateral Tokyo Pact on Market-Opening," REUTER, July 7, 1993; "Logjam Broken on Stalled GATT Accord -- Clinton," REUTER, July 7, 1993; "Major Says 85 Percent of GATT in Place," REUTER, July 7, 1993; Robert Evans, "GATT Diplomats Hail Trade Deal But Hurdles Remain," REUTER, July 7, 1993; Michiyo Nakamoto, Peter Norman, "G-7 Summit Prospects Brighten on Trade Talks," FINANCIAL TIMES, July 7, 1993; Andrew Pollack, "Officials Report Progress on Cutting Trade Barriers at Tokyo Talks," NEW YORK TIMES, July 7, 1993; Mark Magnier, "Value of G-7 Summits Called Into Question," JOURNAL OF COMMERCE, July 6, 1993; "EC Official Questions Usefulness of G-7 Summits," REUTER, July 2, 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 ________________________________________________________