>From kmander@igc.apc.org Thu Sep 30 21:04:33 1993 TRADE NEWS BULLETIN Volume 2 Number 174 Thursday, September 30, 1993 Headlines: COUNTRIES CAN WITHDRAW FROM NAFTA CHILE COULD ENTER NAFTA MEXICAN CHEMICAL INDUSTRY AT DISADVANTAGE UNDER NAFTA MEXICO WILL NOT JOIN COFFEE PACT DUE TO NAFTA ACTIVISTS PREVENTED FROM DISTRIBUTING NAFTA MATERIAL SALINAS DEFENDS FREE TRADE TO EUROPEAN PARLIAMENT SERIOUS DIFFERENCES IN HEALTH SECTOR UNDER NAFTA FOREIGN INVESTMENT IS 38% HIGHER THAN PREDICTED USANAFTA: CONGRESSIONAL SUPPORT FOR NAFTA ERODING _________________________________________________________J NAFTA/ECONOMIC NEWS SUMMARY FROM THE MEXICAN PRESS _________________________________________________________ COUNTRIES CAN WITHDRAW FROM NAFTA The United States can terminate the North American Free Trade Agreement if Mexico's environmental standards diminish after the agreement has taken effect, according to Deputy U.S. Trade Representative Rufus Yerxa. Appearing before the House Subcommittee on Energy, Yerxa said the agreement has been negotiated on the understanding that Mexico's environmental standards continue to improve. He said that if Mexico lowers its standards after the accord has been ratified, discussions will be held about whether to continue NAFTA. Yerxa told the committee that each NAFTA member-nation has the right to unilaterally end its participation in the accord, provided they give at least six months notice to other members. According to Sergio Reyes Lujan, director of Mexico's National Institute of Ecology, if NAFTA is not ratified, collaboration between the United States and Mexico on environmental issues will diminish, and Mexico's environmental projects will be negatively affected. He argued that U.S. companies will also be hurt since they provide a large part of the engineering and technology necessary for Mexico's environmental programs. U.S. government statistics estimate that the environmental goods and services market in Mexico will be worth about $1.4 billion in the next period. Sources: El Financiero, September 23 and 24, 1993; La Jornada, September 26, 1993. _________________________________________________________ CHILE COULD ENTER NAFTA Mexican President Carlos Salinas de Gortari will visit Chile from October 13-16 to discuss the possibility of Chile's inclusion in some sections of NAFTA. Salinas will find out if Chilean officials want to negotiate a separate trade agreement with the United States or if they would like to work through NAFTA. For now,the two countries have agreed to create a binational commission to complete the bilateral accords. One of the first agreements to be developed may deal with tourism. Meanwhile, Central American presidents want to meet with U.S. President Bill Clinton to discuss the possibility of entering into a NAFTA-type agreement with the U.S. Salomon Cohen-Orantes, the vice-chancellor of Guatemala, said that the presidents o JGuatemala, Nicaragua, Costa Rica, El Salvador, Honduras, and Panama are planning a regional meeting for the end of October to discuss their strategies before their proposed meeting with Clinton in November. Sources: El Financiero, September 22, 1993; La Jornada, September 26, 1993. _________________________________________________________ MEXICAN CHEMICAL INDUSTRY AT DISADVANTAGE UNDER NAFTA Twenty-five percent of tariff reductions contemplated under NAFTA correspond to the chemical industry, the US's strongest industry and one with which Mexico will have a tough time competing. According to recent statistics,Jthe U.S. holds a 20 - 1 advantage within the chemical industry in terms of production, installed capacity, and marketing. Of the 3,000 chemical and petro-chemical products included in NAFTA, 70% are not produced in Mexico, which means that the United States and Canada are in a good position to access the Mexican market if NAFTA is passed. More than 2,000 products from Canada and the United States will be exported to Mexico free of quotas, tariffs and non-tariff barriers. Tariffs on the remaining 900 chemical and petro-chemical products that are produced in Mexico will be reduced over a 15-year period. Source: El Financiero, September 23, 1993. _________________________________________________________ MEXICO WILL NOT JOIN COFFEE PACT DUE TO NAFTA Mexico chose not to join the coffee producing countries of Latin America, Africa and Asia in the Association of Coffee Producing Countries (ACPC) because of its anticipated participation in NAFTA and other free trade agreements. According to Guillermo Funes, president of the Mexican Council for Coffee, Mexico prefers to sell its coffee to the United States to benefit from clauses in NAFTA. He said that under NAFTA Mexico is assured 40% of the U.S. coffee market. Mexico also reportedly declined to join the ACPC because the agreement to limit exports conflicts with Mexico's agreement with Canada which prevents Mexico from adopting mechanisms that limit the free flow of coffee. Source: La Jornada, September 24, 1993. _________________________________________________________ ACTIVISTS PREVENTED FROM DISTRIBUTING NAFTA MATERIAL A group of 39 labor activists, mostly from the United States and Canada, were ordered not to distribute anti-NAFTA pamphlets in front of a plastics factory in Tijuana, in the Mexican state of Baja California. The activists were taken to a local immigration office where theyJwere informed that they needed special permits to hand outJpamphlets and could only remain in Mexico as tourists. TheJforeigners chose to leave Tijuana and return to the United States.JThe group, which was brought together by representatives of anJautomotive industry union based in California, included 33 Americans, five Canadians, and a Dutch citizen. TheirJpamphlets contained information regarding the factory's poorJenvironmental and labor practices. They said Plastics of Baja California and other plants in the border zoneJcause excessive pollution and put workers' health at risk. TheJpamphlets also denounced NAFTA asJ"another element used to continue exploiting Mexico." Source: La Jornada, September 24, 1993. _________________________________________________________ SALINAS DEFENDS FREE TRADE TO EUROPEAN PARLIAMENT Salinas told the European Parliament that "Mexicans are not putting "all their eggs in one basket" with NAFTA. He announced, "We are looking in all directions and will not remain outside of any regional integration," and expressed Mexico's enthusiasm over the framework agreement between the European Community and Mexico, the most comprehensive agreement the EC has signed with a Latin American country. "We want to benefit from the geographic situation of being neighbors with the largest economy in the world, but at the same time we are giving great importance to the diversification of our economic and trade relations," he said. In an interview for French television, he added, "When one decides to have such an intense relationship with such a powerful neighbor, it is useful to get closer to more distant friends." The European Community, for its part, announced that in December it will begin a study on the possibility of strengthening its commercial relations with Mexico. Source: La Jornada, September 23, 1993; El Financiero, September 24, 1993. _________________________________________________________ SERIOUS DIFFERENCES IN HEALTH SECTOR UNDER NAFTA According to a recent study by the National Academy of Medicine (ANM), the major differences between Canada, the US, and Mexico in the health sector will create serious challenges under NAFTA. The report notes Mexico's greatest weakness in the health system is the varying quality of service among institutions. The report indicates that among the many differences between the three countries, Mexico's lack of registration and certification of health centers, as well as the licensing of practitioners, stands out as a serious problem. Source: El Financiero, September 24. _________________________________________________________ FOREIGN INVESTMENT IS 38% HIGHER THAN PREDICTED Foreign investment in Mexico during the Salinas regime has reached $33.8 billion dollars, which is 38% higher than the goal set by the Salinas administration during its tenure, according to a report released by Secofi (Ministry of Trade and Industrial Development).The report notes that the historic balance of foreign investment in Mexico is $57.2 billion, of which $34.1 billion was channeled to the Mexican stock market. In this year alone, foreign investment reached $6.9 billion, of which more than half went into the stock market. Under the Salinas administration, 63.2% of foreign investment has come from the U.S., followed by France and England, with 5.1% each. Source: La Jornada, September 27, 1993. _________________________________________________________ USANAFTA: CONGRESSIONAL SUPPORT FOR NAFTA ERODING A confidential survey of U.S Representatives carried out by the pro- NAFTA coalition of corporations, USANAFTA, reflects a decline in support for the free trade accord since August 6. It also shows that Clinton's September 14 speech urging support for NAFTA had little effect. USANAFTA suggests that Clinton could win more votes if he makes some specific concessions to undecided members of Congress. For example, the study argues that an agreement between Mexico and the US that protects the US sugar industry from a possible surge in imports, would win 8 votes in the House of Representatives and 4 in the Senate. Source: El Financiero, September 28. _________________________________________________________ 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, SE, #303, Minneapolis, MN, 55414- 1546. Tel: 612-379-5980 Fax: 612-379-5982 Email: iatp@igc.apc.org _________________________________________________________