Trade News for the Week of August 7-13, 1993 Volume 2 Number 146 ___________________________________________________________ HEADLINES: Supplemental Accords Completed EC Will Hold GATT Farm Talks In September New Japanese Government Committed To GATT Maritime Reforms Urged ___________________________________________________________ NAFTA News Summary ___________________________________________________________ SUPPLEMENTAL ACCORDS COMPLETED Trade ministers from the United States, Canada and Mexico completed labor and environmental side accords to the North American Free Trade Agreement late yesterday after resolving a last-miniute impass over enforcement mechanisms. Canadian Prime Minister Kim Campbell interrupted final negotiations Wednesday saying she was not yet ready to agree on side accords which would expose Canada to trade sanctions. However, negotiators continued to work by phone and fax last night to create acceptable enforcement mechanisms. Under the agreement, the United States and Mexico will be subject to sanctions or duties for repeated violations of the trade pact, but Canada will not. Canada Not Subject to Sanctions Canada's negotiating objections were met in the supplementals, according to Hockin. "Canada was successful in proposing important safeguards for enforcement without instituting the kind of barriers the NAFTA was designed to eliminate," Hockin said. Canada will be subject to fines imposed by domestic Canadian courts, rather than a tri-national panel, for any violations of the free trade deal. U.S., Mexico Agree on Environmental Funding The United States and Mexico agreed to spend between $5 billion to $7 billion on environmental border cleanup over the next ten years. Although details of the agreement were not released, the U.S. administration submitted a funding proposal to Mexico last week suggesting that environmental infrastructure spending be limited to the border region. Under the proposal, a border authority would plan and coordinate border projects such as waste water treatment, water pollution and municipal solid waste. Environmental projects outside the border region would not be addressed under the plan. Labor Accord Rumored to Exclude Bargaining Rights The labor supplemental accord is rumored to exclude adequate worker rights provisions. Workers' rights to collectively organize and bargain for higher wages and other benefits may not be protected under the labor side accord. Negotiators allegedly decided to narrow the scope of the labor supplemental accord to only include provisions for worker safety and child labor laws. NAFTA Now Faces Congressional Opposition The free trade accord must now pass the U.S. congress, the Mexican Senate and final Canadian approval before the pact can take affect January 1, 1994, as targeted. The U.S. Congress is divided roughly fifty-fifty over NAFTA, and more than 100 members, mostly democrats, remain undecided. House Majority Whip David Bonior (D- Michigan) leads the pact's main opposition, arguing that thousands of U.S. jobs will be lost. House Majority Leader Richard Gephardt (D- Missouri) says he will support NAFTA, providing side accords address labor and environmental concerns. Sources: Lyndsay Griffiths, "U.S. Announces Breakthrough NAFTA Agreement," REUTER, August 13, 1993; Jerry Kronenberg, "NAFTA Clears Critical Hurdle," UPI, August 13, 1993; "Canada Says Will Not be Hit by Sanctions in NAFTA," REUTER, August 13, 1993; Stuart Auerbach, "U.S. Mexico, Canada Break NAFTA Impasse," WASHINGTON POST, August 13, 1993; Asra Q. Nomani, "Trade Accord's Side Talks Stall Over Sanctions," WALL STREET JOURNAL, August 13, 1993; "Talks Continue by Phone and Fax on NAFTA Side Accords," UPI, August 12, 1993; "U.S. Funding Proposal to Mexico Only Covers Border Environment," INSIDE U.S. TRADE, Volume 11, Number 31, August 6, 1993. ___________________________________________________________ GATT News Summary ___________________________________________________________ EC WILL HOLD GATT FARM TALKS IN SEPTEMBER EC foreign and farm ministers will meet jointly on September 20 to discuss global trade and farm issues currently stalling conclusion of the Uruguay Round of the General Agreement on Tariffs and Trade. "Ministers will discuss the Uruguay Round, not just Blair House," said a spokesperson from Belgium. France, backed by other EC members, argues that the Blair House deal, struck between the U.S. and EC last November, will require unacceptable sacrifices of its farmers. Paris is expected to present a memorandum at the end of the August defining France's position in GATT. Source: "EC to Hold Jumbo GATT Talks in September," REUTER, August 12, 1993. ___________________________________________________________ NEW JAPANESE GOVERNMENT COMMITTED TO GATT Morihiro Hosokawa, newly elected prime minister of Japan, offered reassurance to other GATT members this week when he said Japan would remain committed to trade liberalization under GATT. "For an ocean-going country, free trade is in the greatest national interest ... Through some means I would like to resolve (the Uruguay Round)," Hosokawa said. Japan's former ruling party, the Liberal Democratic Party, was recently replaced by a coalition of seven parties. Rice Markets Remain Closed, Agriculture Minister May Hold Talks Japanese rice markets will remain closed, despite earlier speculation that Hosokawa would agree to some reforms as outlined under the GATT Dunkel-draft. "The coalition government and parliament have both agreed to retain Japan's current rice policy, and we must honor these agreements," Hosokawa announced Tuesday. But, Eijiro Hata, Japan's agriculture minister, indicated that he may visit the United States and Europe to discuss the rice issue. "I would like to hold meetings," Hata told the Jiji Press news agency. Japan currently bans commercial imports of foreign rice to maintain self-sufficiency. Apple Market Reforms Expected in September, Growers Will Press for Sanctions Some analysts expect Hosokawa to open Japan's apple market this year in exchange for its closed-door policy on rice imports. Japan's apple market would suffer less under liberalization than would the rice markets, which is why some trade organizers expect Hosokawa to announce an end to the apple ban this fall during a trade summit in Seattle, Washington. U.S. apple growers, frustrated by continuously changing Japanese import standards, say they will petition U.S. Trade Representative Mickey Kantor to begin an investigation of Japan's apple policy. If the USTR agrees to begin an investigation, he will have one year to complete the job and decide whether or not to impose sanctions. Sources: "Hata May Visit U.S., Europe on Rice Issue," AGENCE FRANCE PRESSE, August 10, 1993; "Japan Must Take Broad Look at Rice Policy -- Hosokawa," REUTER, August 10, 1993; "Japan Will Back Uruguay Round Conclusion -- Hosokawa," REUTER, August 10, 1993; John Davies, "Apples Prove Key to Unlocking Japan's Markets," JOURNAL OF COMMERCE, August 6, 1993. ___________________________________________________________ MARITIME REFORMS URGED The European Community is calling for swift liberalization of the global maritime industry under GATT, but faces strong opposition from the U.S. shipping industry. The EC is pushing for full liberalization of bulk cargo, passenger, closed conference and cargo reservations, all of which the U.S. has adamantly refused. John Meager, a Washington attorney who represents several U.S. shipping companies, says powerful shipping lobbyists have "hardened" their positions during the past few months. But a recent report, prepared by a U.S. federal task force to reduce government spending, suggesting $23 billion worth of reforms to the U.S. maritime industry. The report recommends that Congress deregulate the maritime industry by eliminating cargo preference laws, ending an operational subsidy program and eliminate mandatory tariff filling with the Federal Maritime Commission. According to reports from the JOURNAL OF COMMERCE, maritime lobbyists were shocked and angered by the report proposals. Sources: Tim Shorrock, "Gore Study Calls for Deregulation of Ship Industry," JOURNAL OF COMMERCE, August 11, 1993; John Zarocostas, "U.S. Showdown Looms Over Maritime Plan," JOURNAL OF COMMERCE, August 4, 1993. ___________________________________________________________ Recent Publications on International Trade ___________________________________________________________ For copies of the following, contact the authors or organizations listed. All prices in U.S. dollars. "World Investment Report 1993: Transnational Corporations and Integrated International Production," UN CONFERENCE ON TRADE AND DEVELOPMENT, 1993. UN Publications, DC 2, Room 0853, New York, NY 10017. (212) 963-8302. $48.50. The report finds that the strategies of TNCs are fostering world-wide economic integration and that companies are locating central functions in whichever country is most cheap or efficient. "The Status of the General Agreement on Tariffs and Trade in the United States Domestic Law," Ronald A. Brand, STANFORD JOURNAL OF INTERNATIONAL LAW, Vol . 26, No. 435, 1990. 30 pages. Stanford University, Stanford CA, 94305. (415) 723-1375. Contact publisher for prices. This study finds that where GATT rules conflict with federal legislation enacted after U.S. entry into the GATT, federal legislation should prevail. "Democratizing Global Power Relations: Steps Toward a Political Foundation for a Global NGO Campaign to Reshape the Bretton Woods Institutions," Lisa Jordan and Peter van Tuijl, July 1993. 30 pages. Institute for Agriculture and Trade Policy. $4. "International Business Taxation: A Study in the Internationalization of Business Regulation," Sol Picciotto, QUORUM BOOKS, 1992. Greenwood Publishing, P.O. Box 5007, Westport, CT 06881. (203) 226-3571. $55. This book addresses international taxation problems such as transfer pricing and tax havens for TNCs. The author also gives a detailed description of international taxation principles. "Statement of Douglas Hellinger regarding the FY 1994 Foreign Assistance Authorization and U.S. Policies and Programs for International Economic Development," Douglas Hellinger, DEVELOPMENT GAP, May 1993. 10 pages. 927 15th St. NW, 4th Floor, Washington, DC 20005. (202) 898-1566. Fax: (202) 898-1612. Free. In his statement, Hellinger concludes that the tragic result of the billions of dollars in adjustment lending has been a deepening and expanding poverty around the globe, as well as exacerbated environmental problems. "The New Protectionism: Protecting the Future Against Free Trade," Tim Lang and Colin Hines, EARTHSCAN, 1993. 120 Pentonville Road, London, England N1 9JN. (071) 278-0433. Fax: (071) 278-1142. $25. ___________________________________________________________ Editor: 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 _____________________________________________________________ _________