>From iatp@igc.apc.org Wed Oct 6 19:16:33 1993 TRADE NEWS BULLETIN Volume 2 Number 177 Wednesday, October 6, 1993 HEADLINES: U.S. Administration Report Says NAFTA Will Create Auto Jobs Investors Outline NAFTA Goals in Private Report EC Members Meet to Discuss GATT Trade Campaign Japan Likely to Import Rice ________________________________________________________ NAFTA News Summary ________________________________________________________ U.S. ADMINISTRATION REPORT SAYS NAFTA WILL CREATE AUTO JOBS A U.S. Commerce Department report, released yesterday, claims that U.S. auto parts and vehicle sales will rise $2 billion during the first year of the proposed North American Free Trade Agreement. U.S. exports of cars, trucks and component parts would be bolstered as Mexico's high import tariff barriers are phased out under the trade pact. The report, based largely on previous analysis performed by the auto industry, is the first of 37 Clinton administration reports studying the impact of NAFTA on economic sectors. Auto industry executives, who have been strong supporters of NAFTA, claim the agreement will create 15,000 auto-related jobs in the first year alone. However, Representative William D. Ford of Michigan, home of the nation's largest auto producers, argued that NAFTA would encourage job shifting to Mexico. Ford cited a study by the Office of Technology Assessment which shows that employment in auto parts factories located in Mexico had grown by 120,000 jobs over the past 11 years, while auto parts factories in the U.S. lost 154,000 jobs. "The U.S. auto parts companies have been laying off people in the United States and adding jobs in Mexico," said Thea Lee, an economist at the Washington-based Economic Policy Institute. "That was partly to take advantage of cheap labor and ... that hasn't changed." Sources: "Clinton Report Says NAFTA Is Good for Auto Industry," WALL STREET JOURNAL, October 6, 1993; Martin Crutsinger, "NAFTA- Autos," AP, October 6, 1993; Jeff Bater, "Commerce Report Claims NAFTA a Big Plus for U.S. Automakers," UPI, October 5, 1993. ________________________________________________________ INVESTORS OUTLINE NAFTA GOALS IN PRIVATE REPORT According to an investment report by Jefferies and Company, NAFTA would achieve two main policy goals. First, it would promote peace by breaking down the current wage gap between workers in industrial and Third World nations; and second, it would secure access to Mexican oil stocks. "At present, there is no political way of resolving growing belligerence other than the type of political program that NAFTA represents," states the report. It also contends that NAFTA will set a precedent for future agreements and specifically notes that by narrowing the present wage gap which exists among the United States, Canada and Mexico and by reducing reliance on overseas oil reserves, NAFTA would promote economic welfare in North America. Source: "Goals of NAFTA," THE MONEY ANALYST, September, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ EC MEMBERS MEET TO DISCUSS GATT TRADE CAMPAIGN EC ministers met Monday to discuss trade concessions on services and textiles as promised by other members of the General Agreement on Tariffs and Trade. "We want to push the other partners to put their offers on the table," said an EC diplomat. "We are trying to avoid any new split over agriculture and show the EC is working together on all other areas." Ministers instructed the European Commission to insist that other GATT members match Community goals for reducing trade barriers in financial and shipping services and textiles. The EC also decided to defend its current television and film rules in GATT talks, as demanded by more than 4,000 European artists and film makers last week. French government officials reiterated the EC's call for a more unified GATT campaign while defending themselves in Parliament Tuesday against opposition charges that they had abandoned French farmers in global trade talks. "It must be recognized that our country, with one percent of the world's population and six percent of world trade, cannot by itself paralyze world trade negotiations," said French Trade Minister Gerard Longuet. "The French government needs to build alliances in order to give it power." Socialist lawmaker Alain Le Vern accused the government of having been "vague and irresponsible" during farm negotiations with the European Community and United States. Longuet outlined France's new goals in upcoming U.S.-EC agriculture negotiations saying he would pursue the subsidized export of large food stocks, the curbing of cereal substitute imports and the protection of EC farm policy against U.S. legal challenges. Sources: Nelson Graves, "European Community Launches GATT Trade Campaign," REUTER, October 5, 1993; "French Government Defends GATT Stance," REUTER, October 5, 1993; "Commission Proposes Strengthening of Trade Weapon," REUTER, October 4, 1993. _________________________________________________________ JAPAN LIKELY TO IMPORT RICE Japan is expected to import at least 200,000 tons of rice this year and may agree to a minimum access arrangement in the future, according to Japanese daily newspaper, SANKEI SHIMBUN. The Japanese government announced plans to import emergency rice stocks last month, due to this year's poor harvest, but received strong criticism from local farmers and lawmakers. Japan has imposed a ban on all rice imports for the past 45 years despite GATT demands for a more open market. The current GATT proposal calls for a conversion of all non-tariff farm trade barriers to tariffs, which would be eventually phased out. Japanese Prime Minister Morihiro Hosokawa must now decide whether to allow emergency rice imports this year only or to end the ban and proceed with the Uruguay Round of global trade talks. Opinion is divided among government officials, analysts and GATT members as to what Hosokawa will decide. "It's our view that Japan will not let the Round fail for the protection of its rice farmers," said Charlene Barshefsky, deputy U.S. trade representative. "Hosokawa personally wants to liberalize the rice market," speculated professor Atsushi Kusano of Keio University. "This year's weather could be his chance to teach farmers that they can survive some imports." However, analyst Takayoshi Miyagawa argued, "Hosokawa has no intention of liberalizing rice ... He has a lot of other priorities facing him. Who needs a big political battle over rice?" Members of Hosokawa's seven-party coalition government are also divided over the issue. The Komeito Party has endorsed the prospect of rice liberalization, while the Socialist Party firmly opposed the idea. Sources: "Japan May Partly Open Rice Market in November- Newspaper," REUTER, October 5, 1993; T.R. Reid, "Japan Rice Crisis May Mean Import Ban Ends," WASHINGTON POST, October 5, 1993; "U.S. Optimistic Japan Won't Undercut GATT Over Rice," REUTER, October 5, 1993. ________________________________________________________ Editor: Gigi DiGiacomo 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 ________________________________________________________