TRADE NEWS BULLETIN Volume 2 Number 164 Thursday, September 16, 1993 HEADLINES: New Mexican Ambassador Says NAFTA Will Pass Group Of Three Will Sign Free Trade Agreement In January 1994 Parallel Accords Will Be Sent To Senate Polluting Businesses Hit With $5.2 Billion Worth Of Fines Study Reveals Loss Of 395,830 Jobs Due To Economic Slowdown Changes In Banking Due To Nationalization And Re-Privatization Private Sector Calls For More Privatizations Conference Focuses On Poverty And Development In Latin America _________________________________________________________ NAFTA/Mexican News Summary _________________________________________________________ NEW MEXICAN AMBASSADOR SAYS NAFTA WILL PASS The new U.S. ambassador to Mexico, James R. Jones, said last week upon arriving in Mexico, that he was confident the North American Free Trade Agreement would be passed this year, and pledged to work closely with the U.S. administration and members of Congress to win approval. Jones said he plans to invite US legislators to "come to Mexico and see the good things that have happened here, the changes that have taken place economically and in other respects...S Jones said he will focus his work on several long-time problems such as drug trafficking, migration and pollution. RI believe that both countries are determined to make those problems much more manageable and they will be if we succeed in approving the NAFTA,S Jones said. When asked about various problems along the border, Jones said the United States is promoting Refficient and effective administrationS in the maquiladora zone. Source: La Jornada, September 8, 1993. _________________________________________________________ GROUP OF THREE WILL SIGN FREE TRADE AGREEMENT IN JANUARY Mexico, Venezuela and Colombia -- the Group of Three nations -- announced last week that they will sign a free trade agreement in January, 1994. In addition, Mexico expects to sign bilateral trade agreements with each of the Central American countries except Panama, based on the framework agreement approved in August 1992 to liberalize trade between Mexico and Central America. Panama has reportedly not initiated negotiations with Mexico over a bilateral free trade agreement because it plans to negotiate directly with the U.S. in an attempt to join the proposed NAFTA. Source: La Jornada, September 6, 1993. _________________________________________________________ PARALLEL ACCORDS WILL BE SENT TO SENATE According to Senate Trade Commission President Carlos Sales Gutierrez, NAFTA supplemental accords will be sent to the Mexican Senate this week and passed to the respective Senate committees for analysis. The parallel accords will not be voted on by the Senate until sometime in November, when easy passage is expected. In Mexico, only the Senate needs to approve international treaties. Source: La Jornada, September 7, 1993. _________________________________________________________ POLLUTING BUSINESSES HIT WITH $5.2 BILLION WORTH OF FINES According to the Federal Attorney for Environmental Protection, Santiago Onate Laborde, between July 1992 and August 1993 the Mexican government imposed $5.2 billion worth of fines on businesses that failed to comply with federal environmental regulations. In the past year the government performed 9,900 inspections, permanently closed 110 businesses and temporarily closed over 1,000 businesses. Onate said that in many states, like Jalisco and Puebla, where there is a lot of economic activity, businesses fail to comply with 50 percent of environmental laws. In Nuevo Leon, approximately 35 percent of environemental laws are ignored and in the Mexico City Metropolitan area, more than 30 percent of environmental laws are violated. He warned that Mexican industries must achieve competitive environmental protection levels before NAFTA is ratified. Source: La Jornada, September 3, 1993. _________________________________________________________ STUDY: LOSS OF 395,830 JOBS IN 1993 DUE TO ECONOMIC SLOWDOWN A recent study by the Confederation of Mexican Workers (CTM) estimates that 395,830 jobs were lost in 1993 due to economic slowdown and lack of credit in Mexico. The study indicates that manufacturing and services were hurt the most. More than 153,700 manufacturing workers, 35,821 hotel/restaurant and service workers, and 66,356 government employees were laid off. Small industries, which have limited credit access and are sensitive to economic downturns, account for the majority of laid off workers. According to the Secretary of Trade and Industrial Development (SECOFI), during the first four months of 1993, 715 manufacturing establishments closed, while 510 others opened, resulting in a negative balance of 205 closed businesses. However, they also claim that during the first trimester of the year, 68,300 jobs were created in manufacturing, contradicting CTM numbers and previously released reports from the National Institute of Statistics, Geography and Information (INEGI) and the Mexican Social Security Institute (IMSS) which all suggest a decline in manufacturing jobs during this period. Source: La Jornada, September 4, 1993; La Jornada, September 13, 1993. _________________________________________________________ CHANGES IN MEXICAN BANKING The Mexican banking system has reported growth in all areas, except two, since its nationalization on September 1, 1982 and its reprivatization 11 years later. The number of banking employees and the number of clients have been on the decline. Between December 1982 and March 1993, the 18 institutions which comprise Mexico's banking system lost 58 percent of their clientele, or 18.5 million customers. As a result of the decree nationalizing the banking system by Lopez Portillo and the decree reprivatizing it by Salinas de Gortari, 10,944 employees were laid off (8.65 percent of the total, which in March 1993 was 166,125). However, 26,000 executives were contracted, indicating a rise in global employment levels. The net profit generated by each employee grew 37,860 percent between 1982 and 1992. Source: La Jornada, September 5, 1993. _________________________________________________________ PRIVATE SECTOR CALLS FOR MORE PRIVATIZATIONS Members of the business elite in Mexico called for the privatization of National Railroads, The Federal Electricity Commission, Mexican Petroleum (PEMEX), and primary and secondary care within the Mexican Social Security Institute (IMSS). They also demanded an increase in concessions to build highways with private capital and implicitly called for changes in the Federal Labor Law. The Commission of the Mexican Employers Confederation (Coparmex) argues that it is important to introduce Rthe functional and geographical mobility that allows the employer to adopt a flexible work process and the relocation of workers according to the needs of businesses, without detriment to labor rights.S Coparmex recognized that the Mexican labor force RisnUt that expensive compared with other countries," but said Mexico's "productivity measured in dollars per hour is one of the lowest.S Source: La Jornada, September 10, 1993. _________________________________________________________ CONFERENCE ON POVERTY AND DEVELOPMENT IN LATIN AMERICA The World Bank, the United Nations Development Program, and the Mexican government sponsored a conference on social development and poverty in Oaxaca September 8 - 11. During the conference, the United Nations, member governments and a few Non-Governmental Organizations discussed the problems of growing poverty in Latin America. World Bank representative Armeane M. Choksi said Rstrong fiscal and monetary disciplineS must be continued in developing countries in order to maintain low levels of inflation and Rapply policies that promote a structure of economic growth that makes efficient use of the labor of the poor.S Choksi denied that the World Bank has RimposedS adjustment policies on countries and said that the growing number of poor in Latin America is not due to structural adjustment policies. RThe Bank does not impose, governments were the ones that approached the World Bank, and the ones that accepted all of the reforms to their economic systems in exchange for financial resources.S Shaid Husain, vice president of the World Bank's regional office for Latin America and the Caribbean, said poverty in Latin America is directly tied to the unequal distribution of wealth. In Latin America, the poorest 20 percent of the population receives less than four percent of the income, while the richest 10 percent receives more than 30 percent of the income. In the decade of the eighties, the number of poor people in the region grew by 40 million. One third of Latin America's population reportedly lives in poverty and 70 million inhabitants of the region subsist on less than one dollar per person per day. In Mexico, 17 million people live on less than a dollar per day. Over 165 social organizations from 16 states in Mexico gathered in Oaxaca September 4 - 6 for a "counter summit" entitled, Mexican Civil Society: The Poor Constructing their Social Policy. The event was a to the official summit on poverty organized by the World Bank, UNDP and the Mexican government. One of the speakers at the event, researcher Jose Luis Calva argued that the neoliberal model in Mexico has benefited 154 businesses in exchange for an economic disaster which includes the bankruptcy of nearly 5 million peasants and agricultural producers and the destruction of 60 percent of the manufacturing sector. Total agricultural production for 1992 was less in absolute terms than during 1980-1981. During the same time-period, peasants lost approximately $40 billion. Source: La Jornada, September 9, 1993; September 11, 1993; La Jornada, September 6, 1993. _________________________________________________________ Co-produced by Equipo PUEBLO and RMALC. Equipo PUEBLO, Francisco Field Jurado 51, Col. Independencia 03630, Mexico DF, MEXICO Tel: 011-525-556-0642 Fax: 011-525-672-7453 E-mail: pueblo@laneta.igc.apc.org Red Mexicana de Accion Frente al Libre Comercio (RMALC) Address: RMALC, Godard 20, 07790 Mexico DF, MEXICO Tel: 011-525-556- 0642 Fax: 011-525-556-9316 E-mail: pueblo@laneta.igc.apc.org (temporarily) Edited and distributed by the Institute for Agriculture and Trade Policy (IATP), 1313 5th Street, Suite 303, Minneapolis, MN, 55414- 1546. Tel: 612-379-5980 Fax: 612-379-5982 E-mail: kmander@igc.apc.org _________________________________________________________