________________________________________________________ EQUIPO PUEBLO/RMALC MEXICAN NEWS SUMMARY OCTOBER 21, 1993 (TRADE.NEWS Volume 2 Number 188) ________________________________________________________ NAFTA/ECONOMIC NEWS FROM THE MEXICAN PRESS OCTOBER 13-19, 1993 ________________________________________________________ Headlines: U.S. DOES NOT SEE SALINAS' POSITION AS ULTIMATUM MODIFYING NAFTA, AN ALTERNATIVE SALINAS TRYING TO FINALIZE REGIONAL TRADE AGREEMENTS IMPLICATIONS OF NAFTA DEFEAT FOR LATIN AMERICA THE EFFECTS OF NAFTA ON THE MAQUILADORA INDUSTRY U.S. HAS DOUBLE POLICY TOWARDS MEXICO INTERNATIONAL BUSINESS COMMUNITY IN FAVOR OF NAFTA REGIONAL SECURITY BOLSTERED BY NAFTA EDUCATIONAL COORDINATION WITHIN NAFTA SENATOR DODD PROPOSES THAT MEXICO AND U.S. EXCHANGE LETTERS 20 LAWSUITS BETWEEN U.S. AND MEXICAN COMPANIES ________________________________________________________ U.S. DOES NOT SEE SALINAS' POSITION AS ULTIMATUM According to the U.S. Ambassador in Mexico, James Jones, the U.S. government did not interpret Salinas' declaration that Mexico would consider neither the re-opening nor the deferment of NAFTA as an ultimatum. Rather, explained Jones, the White House interpreted Salinas' words as a sign that if NAFTA is not approved by the end of the year, there might not be another opportunity to negotiate a free trade agreement with Mexico in the near future. Jones expressed hope that the "intelligent" members of Congress will realize that they cannot lose this opportunity and thus will vote in favor of NAFTA. Source: La Jornada, October 13, 1993. ________________________________________________________ MODIFYING NAFTA, AN ALTERNATIVE The leader of the Mexican Senate, Emilio M. Gonzalez, said that all alternatives to ensure the approval of NAFTA should be considered, even the alteration of the agreement which has already been signed by Clinton and Salinas. Gonzalez also said that there should be concordance between the legislative approval process of NAFTA in the U.S. and in Mexico. Since the U.S Congress has proposed to vote on NAFTA on November 17, this means that it is likely that the Mexican Senate will address NAFTA in its next session beginning November 1. In contrast, Fidel Velasquez Sanchez, Secretary General of the Mexican Confederation of Workers (CTM), said that Mexico will not change the structure of its political system nor agree to re-open negotiations so that the U.S. Congress approves NAFTA. Fidel explained that Mexico has its own political and economic resources which ensure that it will neither lose ground nor stop developing if NAFTA is defeated. Sources: La Jornada, October 13 and 14, 1993; El Financiero, October 14, 1993. ________________________________________________________ SALINAS TRYING TO FINALIZE REGIONAL TRADE AGREEMENTS In the face of the uncertainty with regard to the approval of NAFTA by the U.S. Congress, the Mexican government will intensify trade negotiations with Central and South America with the goal of finalizing bilateral and regional trade agreements before the end of Salinas' presidential term. Among the most important of these regional trade agreements is that of the Group of Three (G-3) between Mexico, Colombia, and Venezuela. The presidents of these three countries met with the leaders of the Caribbean Economic Community (Caricom) to discuss further economic opening and trade possibilities. Though other regional agreements are not contingent on the approval of NAFTA, representatives from Latin American and Caribbean countries did express that the implementation of NAFTA represents the opening of new relations in the whole continent and would generate many opportunities for Latin American and Caribbean countries. Source: La Jornada, October 13 and 14, 1993. ________________________________________________________ IMPLICATIONS OF NAFTA DEFEAT FOR LATIN AMERICA At the seventh meeting of the Rio Group in Santiago, Chile, Latin American presidents announced their full support of NAFTA, warning that its defeat would provoke "a credibility crisis" for the U.S. in Latin America. They agreed that many decades will pass before the opportunity for an inter-hemispheric trade agreement presents itself again and that the defeat of NAFTA would ruin the good climate and the economic understanding that has only recently been re- established in the hemisphere. Venezuelan President Ramon Velasquez explained that Latin American and Caribbean countries have high expectations regarding NAFTA because it represents, "a change in traditional North-South politics and policies." President Salinas said that Latin American countries are looking at NAFTA as a "decisive test to define the type of relationship that the U.S. wants to maintain with Mexico, Latin America, and the Caribbean." The Presidents of Brazil, Bolivia, Colombia, Ecuador, El Salvador, and representatives from Central America, Mexico, Paraguay, Peru, Uruguay, Venezuela, Argentina , Jamaica, and the Caribbean Economic Community (Caricom) sent a letter to President Clinton announcing their support of NAFTA. The document said that "with NAFTA our hemisphere will increase its competitive capacity and its capacity to generate a better standard of living for our populations, that which is essential for democracy." The missive also said that if NAFTA is defeated "all of Latin America will receive a negative message about the U.S.' willingness to get close to the region." President Clinton responded by sending a message to the Latin American presidents who attended the meeting of the Rio Group saying that he hopes to work together to build a hemispheric community of democracies united by extensive economic ties and common political values. Clinton applauded the bold economic reforms initiated by many of the current Latin American presidents to establish the base for an unprecedented and prolonged period of economic growth. He added that he is committed to the concept of open hemispheric trade as a long term goal for the region. Source: La Jornada, October 14, 16, and 17, 1993. ________________________________________________________ THE EFFECTS OF NAFTA ON THE MAQUILADORA INDUSTRY The Clinton administration initiated the public debate with the U.S. Congress about NAFTA by announcing the virtual disappearance of the maquiladora industry in Mexico and the confirmation that Mexico will no longer belong to the General SystemKf Preferences(SOT+Yd NAFTA takes effect. Head NAFTA negotiator, Rufus Yerxa, pointed to {the changes in the laws regarding the maquiladora industry as defined in chapter 303 of NAFTA and explained that the implementation of the changes will end the maquiladora industry as we know it. According to the text, a number of products will be able to enter the U.S. from Mexico free of taxes, a mechanism which will help to advance the development area in Northern Mexico, alleviating unemployment and increasing salaries in comparison to the rest of the country. According to a recent study by the University of Nuevo Leon, the {maquiladora industry may change under NAFTA but it will also grow up to 20% in the next few years due to reduced tariffs and operation costs which will encourage companies to opt for direct investment rather than co-investment. Sources: El Financiero, October 14 and 19, 1993. ________________________________________________________ THE U.S. HAS A DOUBLE POLICY TOWARDS MEXICO xDLuis Wybo Alfaro, director of the Borders Department of the Ministry on Foreign Relations, said that there exists)yo Washington a contradictory policy towards Mexico: on the one hand is the interest in signing a free trade agreement, and on the other is the imposition of unilateral means to block the migratory flow of co- nationals whom the U.S. blames for its present economic crisis. Alfaro complained that President Clinton has not followed through on his promise to address the immigration issue within discussions regarding NAFTA. Source: La Jornada, October 17, 1993. ________________________________________________________ INTERNATIONAL BUSINESS COMMUNITY IN FAVOR OF NAFTA The international business community met in Cancun on October 17 where members of the International Congress on Trade (CCI) expressed their conviction that the Mexican government will launch a fierce defense of NAFTA before the debates surrounding the approval of NAFTA begin in the U.S. Congress. Members are confident that Mexico will sustain its position that if NAFTA is not implemented by January 1994, the U.S. will have lost the opportunity for the economic integration of the hemisphere. Due to the International Congress on Trade's (CCI) campaign in favor of multilateral trade negotiations carried out by business leaders from the 123 countries that make up the Congress, President Salinas has asked for their help in pushing the ratification of NAFTA forward. Taffan Jerneck, Secretary General of the CCI, said that if NAFTA is not approved by December, it is very unlikely that the Uruguay Round of the GATT will be concluded this year. First because many of the negotiations of the trade agreement with Mexico are also subjects of the GATT, and second because the U.S. government has put NAFTA above the GATT. The international business community is pushing for the ratification of NAFTA as a means of promoting the GATT from which they will directly benefit. Jerneck said that European companies are using their U.S. subsidiaries to pressure U.S. legislators to vote in favor of NAFTA. Source: El Financiero, October 18, 1993; La Jornada, October 18, 1993. ________________________________________________________ REGIONAL SECURITY BOLSTERED BY NAFTA NAFTA and the economic integration of Latin America are vehicles used by the Clinton administration to re-orientate the national security doctrine in the hemisphere and to create an intervention army to protect and stimulate democratic markets, said Mary Lucy Jaramillo, Sub-secretary of the Defense for Inter- American Affairs. Clinton proposes creating an armed branch of the Organization of American States (OAS) which would mediate regional conflicts. This would require a redefinition of the inter-American security programs set out in the Rio Treaty. According to Jaramillo, the U.S. government plans to use its financial, diplomatic, and military resources to promote democracy and free- market economies. Source: El Financiero. October 19, 1993. ________________________________________________________ EDUCATIONAL COORDINATION WITHIN NAFTA James Jones, U.S. Ambassador to Mexico, attended the congressional reading of "Educational Cooperation, Important Element for Economic Integration." Jones fully supported discussions on educational integration and said that the integration of North America will depend on the mobility of professionals in the face of national, cultural, and language barriers. He added that the U.S. Department of Education and the Mexican Ministry of Public Education (SEP) have increased cooperation as a result of discussions regarding NAFTA. Source: La Jornada, October 19, 1993. ________________________________________________________ SENATOR DODD PROPOSES THAT MEXICO AND U.S. EXCHANGE LETTERS Senator Christopher Dodd (D-Connecticut) during a press conference in Mexico City proposed a simple exchange of letters stating general guidelines for the implementation of NAFTA between the governments of the two countries to alleviate concerns over the effects of NAFTA. James Jones, U.S. Ambassador to Mexico agreed with the proposal saying that it would create a dialogue in which to clarify concerns and show that NAFTA is a "fair agreement." He added that one of the major obstacles to the approval of NAFTA is incorrect information and that one of the important things to do in the next few weeks is to present the facts and try to dilute the concerns that exist, especially in the border region. Dodd explained that he has been led to believe that certain adjustments to the agreement could be made through interpretation - the simple exchange of letters - rather than through re-negotiation. Dodd also believes that a more accurate discussion of the Parallel Accords could help curb fears about possible negative effects of NAFTA. Source: La Jornada, October 19, 1993. ________________________________________________________ LAWSUITS BETWEEN U.S AND MEXICAN COMPANIES NAFTA does not address arbitration between private companies in the three countries, it only regulates commercial trade differences that might arise between the three countries, or in this case, between foreign investors and the respective governments. Nevertheless, there are presently around 20 lawsuits being filed between Mexican and U.S. companies for anywhere from $2 million to $50 million, said Claus von Wobesor, President of the Arbitration Commission- Mexico Chapter of the International Congress on Trade (CCI). Wobesor explained that differences between private companies within NAFTA will have to be decided under systems of arbitration that have not yet been established. He commented that by not including disputes between private companies within NAFTA, organizations like the International Congress on Trade will be called upon to make important decisions. Source: La Jornada, October 19, 1993. ________________________________________________________ Events: Town Meeting on NAFTA, Saturday, October 30, 12:00 pm. Statehouse Lawn, Montpelier, Vermont. (Rain site is Montpelier City Hall at 39 Main Street). Free. Sponsored by Congressman Bernie Sanders (I- Vermont), the AFL-CIO, Sierra Club, Rural Vermont, Teamsters, Peace and Justice Center and United Electrical, Radio and Machine Workers Union. For more information call: 1-800-339-9834. The meeting will examine NAFTA's job and wage implications for U.S. workers. "International Symposium on Trade and the Environment," November 10-12, Minneapolis Convention Center, Minneapolis, MN. $475.00. For registration forms and a complete speaker schedule contact: Maya Klibaner, Minnesota State Bar Association. Tel: (612) 227-8266 Fax: (612) 227-6262. The symposium will include presentations on the international legal framework around trade and the environment. Speakers, including Canadian Trade Minister Tom Hockin and GATT Secretariat Richard Blackhurst, will report on GATT and NAFTA, sustainable development and a number of specific legal and economic "problem" areas. ________________________________________________________ The Thursday edition of Trade.News is 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 (temporary) 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 E-mail: iatp@igc.apc.org ________________________________________________________