TRADE NEWS BULLETIN Volume 2 Number 144 Wednesday, August 11, 1993 ________________________________________________________ HEADLINES: U.S. Submits Environmental Funding Proposal Proposals Offered Linking NAFTA, CBI, Asia EC Pressures U.S. on Maritime Industry Reforms Citizen Critical of GATT Benefits ________________________________________________________ NAFTA News Summary ________________________________________________________ U.S. SUBMITS ENVIRONMENTAL FUNDING PROPOSAL The U.S. administration delivered an environmental funding proposal to Mexico last week which would limit suggested infrastructure spending under the North American Free Trade Agreement to the U.S.-Mexican border region. Under the proposal, a border authority would plan and coordinate border environmental infrastructure projects such as waste water treatment, water pollution and municipal solid waste. Bridges and roads would not be directly funded by the government under the U.S. proposal, nor would be environmental projects in areas outside the border region. Mexico and the United States would be required to contribute a combined total of $5 billion over the next five years. Government- sponsored funds would be used to issue bonds, raising an estimated $20 billion to fund the environmental infrastructure projects. A separate institution, called the Border Environment Finance Facility (BEFF), would provide government assistance in the form of direct loans and private-sector loan guarantees. The BEFF, housed in and associated with the Inter-American Development Bank, would reportedly play a secondary role in the funding process, financing only those projects approved by the border authority. Source: "U.S. Funding Proposal to Mexico Only Covers Border Environment," INSIDE U.S. TRADE, Volume 11, Number 31, August 6, 1993. ________________________________________________________ PROPOSALS OFFERED LINKING NAFTA, CBI AND ASIA Representatives Sam Gibbons (D-Florida), J. J. Pickle (D-Texas) and Charles Rangel (D-New York) introduced a NAFTA parity bill earlier this year which would extend free trade benefits to the 24 beneficiary nations of the Caribbean Basin Initiative (CBI). CBI countries would have the same U.S. market access benefits as Mexico for three years after NAFTA ratification, and could then join NAFTA or negotiate a separate trade accord with the United States. Caribbean and Central American leaders have expressed concern that the pending NAFTA will divert investment and trade away from their countries. Congressional aides say the parity bill will not be addressed until after NAFTA ratification. Meanwhile, Paula Stern, a senior economic and trade advisor to President Clinton during his campaign, wrote recently that U.S. negotiators should pursue links between NAFTA and Asian countries. Stern argues that economic regionalism in Asia is inevitable, and the United States should therefore support regional trade efforts in moving toward a global economy. Stern suggests admitting Singapore to NAFTA at the same time Chile joins, if the pact is completed. "This would be the first step to building a bridge between the Asia-Pacific Economic Cooperation (APEC) and NAFTA, ultimately creating a Pacific Area Free Trade Agreement," Stern wrote recently. Source: Paula Stern, "Special Report on U.S. Policy and Asia," INTERNATIONAL STRATEGIES, June/July, 1993; "CBI Fights for NAFTA Parity," GLOBAL PRODUCTION, July/August, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ EC PRESSURES U.S. ON MARITIME INDUSTRY REFORMS European Community member states are expected to push for swift liberalization of the international maritime industry under the General Agreement on Tariffs and Trade. The European Community is calling for full liberalization of bulk cargo, passenger, closed conferences and cargo reservations and full access to and use of ports. The United States recently agreed to open up its port and auxiliary services, but adamantly opposes the inclusion of ocean shipping in the Uruguay Round. "There is no way we are going to do it," said one senior U.S. official. John Meager, a Washington attorney who represents several shipping companies, says the U.S. cannot negotiate any further liberalization accords on shipping because of powerful shipping lobbyists, who Meager says have "hardened" in recent months. EC o ns liner code, requires each country to purchase 40% of its shipping freight from a trade partner and limits purchases from third country shipping lines to 20%. The EC is willing to open up all shipping bids to international competition. Source: John Zarocostas, "U.S. Showdown Looms Over Maritime Plan," JOURNAL OF COMMERCE, August 4, 1993. ________________________________________________________ CITIZEN CRITICAL Oolin Hines of Middlesex, England writes that the $200 billion income gain expected immediately after a global trade accord is completed is based on partial information taken from a study by the Organization for Economic Development (OECD). In the 40-page OECD report, authors included a corollary stating that it will take at least 10 years for income benefits to accrue, and that some GATT members, particularly developing countries, will be hurt by the accord. According to Hines, Jean Claude-Paye, OECD secretary general, called the report "pretty theoretical" and criticized media misuse of the figure. Authors of the study said "they've been misunderstood and that people are hoping for the moon." Hines also points out that the model used to arrive at the $200 billion figure was not an economic forecast model, and so "could not answer questions about what effect the conclusion of the round could have on the current world recession." Hines ends the letter saying, "At the end of the day ... the real question is not how many computer guesstimates can you get on a pinhead, but what the actual effects of a GATT Uruguay Round will be for the world's poor, its unemployed and for the environment." Source: Colin Hines, "Expected Benefits of Uruguay Round May Not Materialize," FINANCIAL TIMES, August 10, 1993. ________________________________________________________ Editors: 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 ________________________________________________________