Trade Week in Review and Recent Publications October 16-22, 1993 Volume 2 Number 189 Headlines: Congressional Poll Shows NAFTA Support Weakening International Traveler Tax Hike Called Unacceptable NAFTA Unemployment Compensation Extended Economists Debate NAFTA Implications for Balance of Trade NAFTA Opposition Censored in Mexico GATT Chief Meets With Japanese Rice Farmers EC Market Access Offers Rejected by Quad Group New GATT Members? ___________________________________________________________ NAFTA News Summary ___________________________________________________________ -Congressional Poll Shows NAFTA Support Weakening- A survey of almost 400 House members found only 129 supporting or leaning toward supporting the North American Free Trade Agreement, compared to 187 who are opposed or leaning toward opposing the trade pact. The CONGRESS DAILY poll counted 118 members as undecided. The results put NAFTA some 89 votes behind the 218 needed to pass the accord. CONGRESS DAILY cautioned that its survey may not reflect the true number of supporters and opponents. -International Traveler Tax Hike Called Unacceptable- In a letter to President Clinton, 27 Republicans, all of whom had previously backed NAFTA, threatened to withdraw their support if the White House raised international transportation taxes. The tax proposal, intended to recover $2.3 billion worth of tariff revenues lost under NAFTA, would double the fee paid by international travelers entering the United States by air or sea, and increase fees on trucks and trains entering the country. Airlines and tourism industries reacted strongly to the proposal, saying the act would violate 72 international trade pacts. Senator Slade Gorton (R- Washington) warned U.S. Trade Representative Mickey Kantor that the proposal would cost the administration "supporters without converting any opponents" of NAFTA. Kantor later told the Senate Finance Committee that the tax hike would be reduced and that the administration would consider spending reductions to recover some of the lost revenues. -NAFTA Unemployment Compensation Extended- Senate Finance Committee members agreed to lengthen the worker retraining program outlined by President Clinton to aid workers who lose their jobs because of NAFTA. The program will now be offered for five years rather than 18 months, and is estimated to cost an additional $47 million. The total cost of the program is targeted at $177 million. Representative Joseph Kennedy II (D-Massachusetts) and Senator Carol Moseley-Braun (D-Illinois) cited the job retraining program as one reason they've both decided to endorse NAFTA. -Economists Debate NAFTA Implications for Balance of Trade- A number of studies have circulated in recent months concerning NAFTA's likely effect on the U.S. trade surplus with Mexico. Opponents of the accord claim that Mexican imports of U.S. manufactured goods would fall as Mexico accumulates enough foreign capital to produce consumer goods cheaper than U.S. manufacturers. Miliken & Co., a textile producer, argues that the combination of cheap labor and imported capital goods will "make Mexico the dominant manufacturing center for North America." USTR Mickey Kantor argues that the United States tends to have trade surpluses with low-wage nations, like Mexico, and trade deficits with high-wage nations, such as Japan. Some exporters agree, saying that as Mexico's economy develops, consumers there will increasingly demand more U.S. products. The U.S. trade surplus for 1992 was $5.3 billion. This year's surplus is expected to slip to $3.8 billion. -NAFTA Opposition Censored in Mexico- A Mexican television station, Televisa SA, abruptly cut off the broadcast of five Mexicans who were testifying against NAFTA to the U.S. Senate Committee. The Senate had contracted for 90 minutes of time with Televisa, but communications were abruptly cut off after less than an hour. Joseph Castaneda, one of five who testified, said the act was an example of "traditional authoritarian behavior by Televisa -- the epitome of Mexican authoritarian rule." Senator Ernest Hollings (D-South Carolina), Chair of the Commerce Committee, said, "You can't have free trade when you don't have a free society." Sources: "White House to Turn Up Heat on NAFTA," CONGRESS DAILY, October 22, 1993; "Survey Shows House NAFTA Backers Far From Goal," CONGRESS DAILY, October 21, 1993; "Poll Finds NAFTA Opponents Ahead in U.S. House," REUTER, October 21, 1993; Robert Keatley, "NAFTA Sparks Debate Over Permanence of the U.S. Trade Surplus With Mexico," WALL STREET JOURNAL, October 22, 1993; Jim Luther, "NAFTA," AP, October 21, 1993; "U.S. Airlines Complain About New Transport Tax," REUTER, October 19, 1993; "Panel Lengthens Worker Adjustment Program," CONGRESS DAILY, October 20, 1993; "Testimony by NAFTA Critics Is Terminated by Televisa," WALL STREET JOURNAL, October 22, 1993. ___________________________________________________________ GATT News Summary ___________________________________________________________ -GATT Chief Meets With Japanese Rice Farmers- Peter Sutherland, director-general of the General Agreement on Tariffs and Trade, in Tokyo met with Japanese rice growers and consumers to discuss Japan's 45-year old ban on foreign rice imports. Sutherland tried to convince the growers and consumers that lifting the ban and lowering tariffs on rice imports would not affect Japan's ability to remain self sufficient. "There will be no big changes in self-sufficiency of Japan's rice even if tariffication is carried out," Sutherland said. Yoshiharu Sato, president of the Central Union of Agricultural Cooperatives (ZENCHU), rejected Sutherland's call. "As farmers in the world's largest net food importer nation, we cannot accept a tariffication plan without any exceptions," Sato said. Rumors circulating last week indicated that Japan was close to ending the rice ban. -EC Market Access Offers Rejected by Quad Group- The European Community said it would reduce 75 percent of its highest industrial tariffs by at least half if other Quad members (Japan, Canada and the United States) reciprocated. "We are doing what we can to convince our Quad colleagues to go along with that," said an EC official. The Quad group met for two days this week to address market access concerns and to develop a common approach in GATT negotiations over tariff reduction. However, U.S. negotiators called the EC proposal insufficient, and other Quad members said they needed to see more information on the proposal. -New GATT Members?- GATT working groups outlined conditions under which Taiwan and China would be granted membership to the global trade body. Leading industrialized nations agreed to support Taiwan's GATT application providing it joined as a developed nation and locked in tariff cuts negotiated for industrialized countries. Taiwan was also pressured to sign aviation and procurement codes upon acceptance to GATT. Meanwhile, the United States, which heads the GATT Working Party on China's application, repeated its call for China to reduce agriculture tariffs on beef, wine and fruits and vegetables. China currently sets tariffs ranging from 50 percent to 120 percent on these goods. "We would certainly like and hope to see those kind of tariffs reduced, especially since China wishes to enter the GATT community," said U.S. Trade Representative Mickey Kantor. Sources: Abi Sekimitsu, "GATT Chief, Japan Farmers Meeting Leads Nowhere," REUTER, October 21, 1993; "Talks Between GATT Chief and Japanese Rice Growers End in Impasse," UPI, October 21, 1993; "U.S., EC Meet Again on Trade, But Are Unable to Reach Accord," INVESTOR'S BUSINESS DAILY, October 22, 1993; "Key Nations Back Taiwan Bid If Taipei Accepts Established Codes," JOURNAL OF COMMERCE, October 14, 1993; Andrew Quinn, "Senior U.S. Official Urges China to Act on Rights," REUTER, October 20, 1993. ___________________________________________________________ Recent Publications on International Trade ___________________________________________________________ For copies of the following, contact the authors or organizations listed. "Pandora's Box: Corporate Power, Free Trade and Canadian Education," John Calvert and Larry Kuehn, OUR SCHOOLS/ OUR SELVES, July/August 1993. 178 pages. 1698 Gerrard St. East, Toronto, Ontario, Canada M4L 2B2. (416) 497-4110. $11.50. "NAFTA's Environmental Side Agreement: A Review and Analysis," Mary Kelly, TEXAS CENTER FOR POLICY STUDIES, September 1993. 17 pages. P.O. Box 2618, Austin, TX 78768. (512) 474-0811. Free. "The Carbon II Dilemma: A Case Study of the Failings of U.S./Mexico Environmental Management in the Border Region," Chris Green and Mary Kelly, TEXAS CENTER FOR POLICY STUDIES, September 1993. 43 pages. P.O. Box 2618, Austin, TX 78768. (512) 474-0811. $3. "Biodiversity Protection in the Texas: Mexico Border Region," TEXAS CENTER FOR POLICY STUDIES, September 1993. 44 pages. P.O. Box 2618, Austin, TX 78768. (512) 474-0811. $5. "Environmental and Health Issues in the Interior of Mexico: Options for Transnational Safeguards," Laura Durazo, Dick Kamp and Geof Land, BORDER ECOLOGY PROJECT, February 1993. 37 pages. Drawer CP, Bisbee, Arizona 85603. (602) 432-7456. $10. Also available in Spanish. "The North American Free Trade Agreement: Opinion for Action Canada Network," Carolyn McCool and Charles E. Reasons, B.C. PUBLIC INTEREST ADVOCACY CENTRE, 1993. 31 pages. #701-744 West Hastings St., Vancouver, B.C. V6C 1A5. (604) 687-3063. $20. The authors identify the parameters within which a constitutional, or other, challenge to the NAFTA might be made. "North American Free Trade Agreement," AMERICAN-AG VOICE, Issue 3, September-October 1993. 31 pages. 13600 Kirkwood Rd., Sidney, OH 45365. (513) 492-2730 (phone and fax). $4. This magazine includes several articles about agriculture and the NAFTA. "The Case Against Free Trade: GATT, NAFTA, and the Globalization of Corporate Power," EARTH ISLAND PRESS, 1993. 230 pages. 300 Broadway, San Francisco, CA 94133. (415) 788-3666. $10. This book is a compilation of articles from 15 different authors. "The New Protectionism: Protecting the Future Against Free Trade," Tim Lang and Colin Hines, THE NEW PRESS, 1993. 186 pages. W.W. Norton and Company Inc., 500 Fifth Ave., New York, NY 10110. (800) 233-4830. Fax: (800) 458-6515. $11.95. "What Every Dog Knows," David Peterson, September 1993. 4 pages. Institute for Agriculture and Trade Policy. $1.50. The author critiques corporate strategy and economic globalization and their manifestation in the NAFTA and GATT. ___________________________________________________________ Editors: Gigi DiGiacomo, Chirag Mehta and Kai Mander 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 ___________________________________________________________