TRADE NEWS BULLETIN Volume 2 Number 191 Tuesday, October 26, 1993 Headlines: LIBERALS WIN CANADIAN ELECTION, PLAN TO REVISE NAFTA CONGRESSIONAL MEMBER SAYS NAFTA STUDIES FLAWED U.S., MEXICO AGREE IN PRINCIPLE TO BORDER FUNDING CEOS "LOVE" NAFTA CONSUMER GROUPS PUSH TOP PRIORITIES IN GATT ________________________________________________________ NAFTA News Summary ________________________________________________________ LIBERALS WIN CANADIAN ELECTION, PLAN TO REVISE NAFTA Canada's Liberal Party, which has promised to renegotiate the North American Free Trade Agreement, won yesterday's parliamentary election. Led by new Prime Minster Jean Chretien, the Liberals also oppose 1989's Canada-U.S. Free Trade Agreement (CUSTA). "We are not against free trade but we also believe in fair rules," said Peter Donolo, Chretien's spokesperson. Liberals promised not to pull out of either agreement altogether, but demanded the following changes: %the renewal and strengthening of certain development subsidies; %enforcement of anti-dumping codes; %a more effective dispute settlement mechanism; %improved energy provisions to give Canada the same protection for energy resources granted to Mexico. Until now, the United States has rejected all proposals to renegotiate NAFTA or CUSTA. But a senior U.S. official today hinted that Canadian concerns over NAFTA might be addressed through side-letters. "It's conceivable that if they have specific concerns about NAFTA, you can work them through without renegotiating," the official said. Sources: Robert Kozak, "Canada's Liberals Want to Renegotiate NAFTA," REUTER, October 26, 1993; Anne Swardson, "New Government Faces Threat of U.S. Wheat Quotas," WASHINGTON POST, October 26, 1993; John Urquhart, "Canada Election Won by Liberals Led by Chretien," WALL STREET JOURNAL, October 26, 1993; Leo Ryan, "Canada's Liberals Pledge to Seek NAFTA Changes," JOURNAL OF COMMERCE, October 22, 1993; "Clinton Says Canada Vote Won't Derail NAFTA," REUTER, October 26, 1993. ________________________________________________________ CONGRESSIONAL MEMBER SAYS NAFTA STUDIES FLAWED Representative David Obey (D-Wisconsin) released a report Monday claiming that most recent studies of NAFTA are "either flawed in design, limited in scope or unable to accurately predict the future or economic consequences of NAFTA." The Clinton administration has used many of the studies to argue that 200,000 jobs would be created by NAFTA. "A lot of false claims have been made about the NAFTA based on these studies," said Obey, chair of the House Joint Economic Committee (JEC). The JEC report found that 500,000 U.S. workers would be dislocated over a five to 10 year period under NAFTA. Obey also responded to a statement issued by the White House last week that 19 out of 20 comprehensive NAFTA studies expect positive results from NAFTA. "The math in that conclusion is seriously flawed, including double counting some studies and excluding others," Obey said. Sources: "As Obey Unveils Report Discrediting NAFTA Studies," CONGRESSDAILY, October 25, 1993; Martin Crutsinger, "NAFTA-Jobs," AP, October 25, 1993; Lyndsay Griffiths, "U.S. Lawmaker Scoffs at NAFTA Studies by Both Sides," REUTER, October 25, 1993. ________________________________________________________ U.S., MEXICO AGREE IN PRINCIPLE TO BORDER FUNDING The United States and Mexico last week reached an agreement, in principle, on border cleanup under NAFTA. "The general shape of the agreement has been agreed to by both parties," said a U.S. official. U.S. Treasury Secretary Lloyd Bentsen told the Senate Environment and Public Works Committee that the United States and Mexico would provide equal shares of $225 million each in capital to fund the project. "We believe we can leverage that into $2 billion initially and perhaps eventually up to $3 billion in financing through loans and guarantees," Bentsen said. The Border Environment Fund will be financed by the Inter-American Development Bank and the World Bank. Mexico's attorney general for the protection of the environment, Santiago Onate, said NAFTA would ensure that Mexico's commitments to environmental protection would be met. Sources: "U.S., Mexico Reach Agreement on NAFTA Border Cleanup," REUTER, October 18, 1993; "Bentsen Sees $8 Billion NAFTA Border Fund," REUTER, October 19, 1993; "U.S., Mexico to Sign Environment Loan," JOURNAL OF COMMERCE, October 21, 1993; "Mexico Atty Gen- NAFTA to Boost Environment Efforts," REUTER, October 19, 1993. ________________________________________________________ CEOS "LOVE" NAFTA A poll of business leaders attending BUSINESS WEEK's 1993 Symposium of Chief Executive Officers showed that 36 percent "loved" NAFTA, while 64 percent said they "like it in spite of the negatives." U.S. Treasury Secretary Lloyd Bentsen, who spoke during the Symposium, urged CEOs "to get the message out to the people" that NAFTA is a good agreement. Source: "Bentsen Calls on CEOs for Trade Pact Support," BNA INTERNATIONAL TRADE DAILY, October 25, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ CONSUMER GROUPS PUSH TOP PRIORITIES IN GATT The International Organization of Consumers' Unions (IOCU), which represents 180 member groups in 70 countries, urged negotiators to put consumer interests first as they work toward conclusion of the Uruguay Round of GATT talks. "Consumers lose out heavily from protectionism -- and worst affected of all are those in developing countries, who have been persistent victims of Western trade restrictions, especially in agriculture and textiles," IOCU said in a statement before meeting with GATT Director-General Peter Sutherland. IOCU outlined a number of trade actions they deemed necessary for a consumer-sensitive GATT accord: a cut in tariffs on industrial goods; a reduction in farm subsidies of at least one third; and the rapid lifting of quotas on textiles from developing countries. They concluded that consumers in wealthier countries would gain from greater choice and lower prices, while those in poorer countries would profit from better access to work in industry and agriculture under this type of GATT agreement. Source: S. Nebehay, "Consumer Groups Denounce Trade Protectionism," REUTER, October 26, 1993. ________________________________________________________ Editors: Gigi DiGiacomo 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 ________________________________________________________