TRADE NEWS BULLETIN Volume 2 Number 159 Wednesday, September 8, 1993 ________________________________________________________ HEADLINES: Fifteen Percent Of Senate May Not Back NAFTA Over Agriculture EPA Angry Over Mexican Plans To Build Power Plants Along Border U.S. Oil Industry Disappointed With NAFTA Japan Offers Compromise In Eight Service Sectors Event: GATT, NAFTA, Wisconsin Agriculture: Citizen Dialogue ________________________________________________________ NAFTA News Summary ________________________________________________________ FIFTEEN PERCENT OF SENATE MAY NOT BACK NAFTA OVER AGRICULTURE Fifteen percent of the U.S. Senate may oppose the North American Free Trade Agreement if certain agricultural issues are not resolved. "My own informal survey ... indicates that as many as 15 senators have indicated that certain agricultural issues will have a critical impact upon their vote on the NAFTA," said Senate Finance Subcommittee Chairperson Max Baucus (D-Montana). NAFTA supporters expect the Senate, which has 100 members, to quickly approve the free trade accord. However, Baucus warned that the Clinton administration will need to resolve the long-standing controversy with Canada over wheat subsidies and to address the potential surge in sugar imports from Mexico. Meanwhile, members of the Minnesota Farmers Union plan to voice strong opposition to NAFTA when they travel to Washington, D.C. this month. "Despite the recent announcement of side agreements, NAFTA remains a bad deal for consumers and farmers," said MFU President David Frederickson. MFU is primarily concerned that the elimination of tariffs and other "trade barriers" would result in the lifting of U.S. bans on agricultural use of certain chemicals and the elimination of state enacted programs that provide low-interest loans to start-up businesses. "I'm not a protectionist," said Frederickson. "But I do think food safety standards, family farms and our ability to make autonomous decision are worth protecting." Sources: "Senator Warns Administration on NAFTA Opponents," REUTER, September 7, 1993; "MFU to Carry Anti-NAFTA Message to Washington," MINNESOTA AGRICULTURE, August 31, 1993. ________________________________________________________ EPA ANGRY OVER MEXICAN PLANS TO BUILD POWER PLANTS ALONG BORDER Officials at the U.S. Environmental Protection Agency (EPA) say Mexico plans to build a series of pollution-prone power plants along the U.S.-Mexican border, which could seriously jeopardize congressional support for NAFTA. Mexico intends to spend $1.8 billion on a coal-fired 1970's era generating plant called Carbon II, which EPA officials say will significantly degrade air quality in parts of the Southwest. U.S. lawmakers are said to be watching the Carbon II dispute closely, to see how the two countries would address cross- border pollution problems under NAFTA. The environmental side accord, recently drafted to deal with problems like Carbon II, rely largely on voluntary cooperation between the two countries. Representative Henry Waxman (D- California) said the supplemental accord is too weak to address Mexico's lax environmental policy. "The questions about the environment have disturbed me enough that I don't think I can vote for it (NAFTA)," Waxman said. Mexican emissions standards for power plants are currently 10 times weaker than those in the U.S. and the U.S. Park Service estimates that Carbon II emissions would reduce visibility in the U.S. Big Bend National Park by more than 30 percent. EPA and Interior Department officials have issued a number of warnings to the Mexican government, however Mexico maintains that "standards for judging visibility are subjective." One high-ranking Washington environmental official warned, "This is a very big deal, and it's definitely coming to a head." Source: Andy Pasztor, "Power Plants in Mexico Cast Pall Over NAFTA," WALL STREET JOURNAL, September 8, 1993. ________________________________________________________ U.S. OIL INDUSTRY DISAPPOINTED WITH NAFTA The U.S. petroleum industry will remain neutral over NAFTA, saying they cannot support an agreement which offers "selective" free trade. U.S. oil producers will not have access to domestic oil production in Mexico, which is currently controlled by Mexico's state-owned Petroleos Mexicanos (PEMEX). "The oil industry originally hoped NAFTA would include a mechanism or clearance to allow U.S. oil firms to negotiate with PEMEX," said a source at a major American oil company. PEMEX, the world's sixth largest oil company in terms of revenue and reserves, exported 1.35 million barrels per day of crude oil in July. Mexican President Carlos Salinas de Gortari told the U.S. petroleum industry last March that "oil ownership and control will remai "U.S. Oil Industry Disappointed It Not Part of NAFTA," REUTER, September 7, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ JAPAN OFFERS COMPROMISE IN EIGHT SERVICE SECTORS Japan has proposed opening eight new service sectors to encourage other members of the General Agreement on Tariffs and Trade to offer their own compromises to conclude the Uruguay Round of global trade talks. Tokyo offered to relax restrictions in areas of specialty design, environmental services, noise abatement and nature and landscape services. Japan has offered to open up a total of 100 service sectors, including financial services, value added telecommunications, audio visual, computer and professional services, Japanese officials said. GATT Director-General Peter Sutherland said he expects the text of the framework agreement on services to be finalized next week. More than 40 GATT members reportedly have not tabled initial market access offers needed to conclude the long-stalled Uruguay Round of GATT talks. Source: John Zarcostas, "Japan Adds 8 Sectors to Offer to Free Up Services Trade," JOURNAL OF COMMERCE, September 3, 1993. ________________________________________________________ Event: "Free Trade, Fair Trade: A Citizens' Dialogue on NAFTA, GATT and Wisconsin Agriculture," September 13, 8:30am - 4:30pm, Arlington, Wisconsin. Conference free, lunch $6.00. Contact: Lorna Miller, (608) 262-1510. Dialogue will begin with an overview discussion on NAFTA side accords, with speakers from the USDA, National Farmers Union and the American Farm Bureau. A panel discussion will follow, focusing on the implications of NAFTA and GATT for consumer safety, the environment, federal farm policy and rural communities. ________________________________________________________ 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