TRADE NEWS BULLETIN Volume 2 Number 190 Monday, October 25, 1993 Headlines: CANADA EXPECTED TO PUT LIBERALS IN POWER WHITE HOUSE DROPS PLAN FOR TRANSPORT TAX CLINTON CONSIDERING NAFTA ESCAPE CLAUSE COMMONWEALTH LEADERS URGE GATT COMPLETION ________________________________________________________ NAFTA News Summary ________________________________________________________ CANADA EXPECTED TO PUT LIBERALS IN POWER Liberal Party Leader Jean Chretien is expected to become Canada's Prime Minister following today's general elections. Chretien has vowed to seek changes to the North American Free Trade Agreement but says he would withdraw from the pact only as a last resort. In a development that could increase anti-NAFTA sentiment in Canada, the FINANCIAL POST reported the United States could take harsh action against Canada's cultural industries under a measure to be introduced in the U.S. Congress. The measure, which would be added to NAFTA implementing legislation, would allow the U.S. to retaliate under Section 301 of the U.S. Trade Act if Canada tries to use the exemption it gained for cultural industries in the Canada-U.S. Free Trade Agreement to block U.S. movies, recordings, books, software or other intellectual property. "This is critical. This is kind of a bottom line in terms of the issue of trade," said Representative Robert Matsui (D-California), who introduced the measure. Matsui heads President Clinton's efforts to win NAFTA votes in the House. Sources: Clyde H. Farnsworth, "Effects on Trade Accord Are Seen From Canadian Voting Tomorrow," NEW YORK TIMES, October 24, 1993; Kelly McParland, "U.S. Steps Up Culture Threat," FINANCIAL POST, October 22, 1993. ________________________________________________________ WHITE HOUSE DROPS PLAN FOR TRANSPORT TAX Following a meeting with House Republicans on Friday, the Clinton administration dropped its plan for new transport taxes and customs fees to replace over $2 billion in tariff revenues lost under NAFTA. The Clinton administration, which desperately needs the support of large numbers of Republicans if NAFTA is to have any chance of passing, vowed to work for alternative sources of revenue. Many Republicans are urging the administration to cut federal programs to raise the money. Clinton needs Republican support because as many as two-thirds of House Democrats are expected to vote "no" on NAFTA when the House votes on November 17. THE NEW YORK DAILY NEWS reported last week that Clinton promised to deny support to any anti-NAFTA Democrat who might challenge freshman Republican Peter King in next year's congressional elections. "King said he received the Clinton pledge after telling the president of his concerns about a possible NAFTA backlash in his reelection campaign next year," the newspaper reported. King said Clinton promised he would "personally repudiate" any Democrat who tried to use NAFTA against him. Sources: Jackie Calmes, "Plan for Transport Taxes, Custom Fees Dropped in Bid for GOP Votes on NAFTA," WALL STREET JOURNAL, October 25, 1993; "Clinton Picks Up More GOP NAFTA Support," CONGRESSDAILY, October 22, 1993; "Freshman Republican Claims Clinton Gave Him A Pass for '94," NAFTA NOTES, October 21, 1993. ________________________________________________________ CLINTON CONSIDERING NAFTA ESCAPE CLAUSE While the Clinton administration is eager to keep Republican support for NAFTA, it is also trying to convince many Democrats to vote in favor of the pact. U.S. Trade Representative Mickey Kantor told reporters Friday that the administration is considering a possible escape clause that would allow the United States to withdraw from NAFTA if it is shown to have cost American jobs. The proposal would include language in the implementing legislation to require a review after three years to determine whether more U.S. jobs were lost than gained. Kantor said he had not raised the issue with Canada or Mexico, and suggested the review approach might work if it were advisory only, with the president making the final decision. Supporters of NAFTA hope the escape clause will convince undecided members of Congress to vote for the pact. "It could make the difference in five or 10 Democratic votes," said Representative Bill Richardson (D-New Mexico), who is in favor of the trade pact. But opponents were not impressed. "I don't think it solves the problem," said House Majority Leader Richard A. Gephardt (D-Missouri) during a television interview. Sources: Martin Crutsinger, "NAFTA," AP, October 23, 1993; Keith Bradsher, "Clinton and Congress Discuss 3-Year Test of the Trade Pact," NEW YORK TIMES, October 23, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ COMMONWEALTH LEADERS URGE GATT COMPLETION Commonwealth leaders stressed the urgent need for a completion of the Uruguay Round of GATT trade talks. In remarks clearly aimed at France, Australian Prime Minister Paul Keating criticized countries blocking progress in the talk. "Some 'rich countries' still seem to believe they can avoid making difficult concessions but still reap the advantages of the Round," Keating told the 50-member association meeting in Cyprus. Australia and Britain have begun a coordinated effort to enlist support for trade reform from the Commonwealth, whose membership spans French-speaking Africa, the Cairns group and many of the world's poorest countries. Association Secretary General Chief Emeka Anyaoku said completion of the Uruguay Round would promote democracy in the Commonwealth nations. "Like armies, democracies march on their stomachs. The successful completion of the Uruguay Round promises an addition to global income of $213 billion by the year 2002." Anyaoku said Canada, Barbados, Ghana, Malaysia and Mauritius would form a mission that would visit world capitals to insist on a GATT deal by December 15. Meanwhile, African trade ministers met in Tunis over the weekend to discuss Africa's position on international trade and on GATT. Salim Ahmed Salim, secretary general of the Organization of African Unity, told the opening session that conflicts in Africa were obstructing trade between African states. "All the hopes and aspirations for intra-African trade and economic development of our countries can only be realized if peace reigns on the African continent," he said. Sources: Michael Holman, "Commonwealth Focuses on GATT and Rights," FINANCIAL TIMES, October 22, 1993; "Commonwealth Selects Mission to Lobby on GATT," REUTER, October 24, 1993. ________________________________________________________ Editor: 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 ________________________________________________________