TRADE NEWS BULLETIN Volume 2 Number 218 Wednesday, December 8, 1993 Headlines: NEW YORK TIMES SAYS RICE DECISION MADE GATT MEMBERS UPSET BY SOME U.S./EU COMPROMISES GATT DEAL WON'T BOOST WORLD GRAIN TRADE CLINTON SIGNS NAFTA ________________________________________________________ GATT News Summary ________________________________________________________ NEW YORK TIMES SAYS RICE DECISION MADE The NEW YORK TIMES reported today that Japanese Prime Minister Morihiro Hosokawa reluctantly agreed to lift the 45-year-old ban on rice imports and will publicly announce the decision Friday. But Hosokawa told reporters he would "make a decision after reviewing each (coalition) party's views." Members of Hosokawa's coalition government reportedly scrutinized a compromise rice proposal Tuesday that calls for a partial lifting of the rice ban. Foreign Minister Tsutomu Hata said during a news conference that the proposal will be hard on farmers but Japan "must accept it." Chief Cabinet Secretary Masayoshi Takemura pleaded that the GATT proposal "is the last alternative we have." Secretary General Wataru Kubo of the Social Democratic Party (SDP), the largest party in Hosokawa's coalition government, warned that the rice decision "is a serious issue that involves our relationship with the cabinet." The SDP has repeatedly cautioned Hosokawa that a decision to remove the rice ban would weaken coalition ties. According to Kozo Watanabe, of the Japan Renewal Party, all members of Japan's ruling coalition must reach agreement before the rice ban can be lifted. Japan is also expected to submit a comprehensive farm plan to GATT by next week. The U.S., in additon to making demands on rice, has pressed Japan to reduce import tariffs on beef and orange juice. More than 30,000 farmers and politicians gathered in front of the main rail station in Seoul, South Korea this week to protest a reported "secret" deal made by South Korea President Kim Young Sam to open Korea's market to foreign rice imports. The protesters carried signs condemning the United States for pressuring their government. More than 5.5 million farmers are expected to be affected by the deal, which is reportedly similar to the one struck between the U.S. and Japan. Sources: "Japan Undecided on Farm Product Tariffs," REUTER, December 8, 1993; David E. Sanger, "Ending Sacred Trust, Will Open Rice Market," NEW YORK TIMES, December 8, 1993; Mitya New, "Japan, S. Korea Appear Ready to Open Rice Market," REUTER, December 7, 1993; Ruth Youngblood, "Coalition Leaders Scrutinize Proposal Lifting Foreign Rice Ban," UPI, December 7, 1993; "Japan Ruling Coalition Agreement Needed on Rice-MP," REUTER, December 6, 1993. ________________________________________________________ GATT MEMBERS UPSET BY SOME U.S./EU COMPROMISES U.S. Trade Representative Mickey Kantor and EU Trade Commissioner Leon Brittan yesterday urged other GATT trade ministers to accept their newly drafted proposals and push forward with concessions of their own to conclude the global trade pact. But GATT members responded to U.S. and EU compromise deals on agriculture, textiles, services and other market access sectors with less enthusiasm than expected by the lead negotiators. Koro Besscho, director of Japan's foreign office GATT section, reportedly expressed concern and anger over the U.S.-EU deal on industrial goods and services. He said the proposal put forward by Kantor and Brittan was substantially less than that agreed to during Quad negotiations last July, and hinted that Japan may revise some of its own offers in light of the weakened U.S.-EU proposals. China, India and other developing nations are worried about U.S. plans to extend the phase-out of the Multi Fiber Agreement (MFA) from 10 to 15 years. Over 90 percent of Hong Kong's textile and clothing exports are subject to some form of quota regulation under the MFA. Tony Miller, Hong Kong's director general for trade, is scheduled to discuss the issue today during multilateral talks. Latin America is likely to oppose seasonal concessions won by the United States in fruits and vegetables. Under the North American Free Trade Agreement, U.S. President Bill Clinton promised fruit and vegetable growers protection under GATT. A recent report by Christian Aid, a Britain-based nongovernment agency, concludes that current GATT proposals would prevent the poorest countries in the world from gaining better market access and in some cases actually reduce market access levels and lower trade volumes. Another report by the Organization for Economic Development indicates that the EU can expect to win $80.7 billion in trade benefits, while the African continent would lose $2.6 billion and Indonesia $1.9 billion in trade. Sources: Chakravarthi Raghavan, "U.S.-EC to Disclose Some Details in Bilaterals," SUNS, December 8, 1993; "Hong Kong Close to Agreement on MFA," SOUTH CHINA MORNING POST, December 8, 1993; Chakravarthi Raghavan, "U.S., EC Press Others to Fall in Line," SUNS, December 8, 1993; Debra Percival, "Farm Deal Could Increase Subsidized Exports," IPS, December 7, 1993; "Charity Says Developing World Big Losers in GATT Deal," REUTER, December 8, 1993; "World's Poor May Lose in Uruguay Round Deal," SUNS, December 8, 1993. ________________________________________________________ GATT DEAL WON'T BOOST WORLD GRAIN TRADE President Aat Braakenburg of the Washington-based Grain and Feed Trade Association said a GATT agreement is unlikely to help revive shrinking world trade in grain. "You have to be cautious about the outlook for the world grain market in terms of volume," Braakenburg said. "Part of the GATT agreement is precisely that we promise to disrupt the world market less with subsidized exports, not that we will export more." The International Wheat Council anticipates world grain trade for fiscal year 1993/94 to reach 175 million tons, down from 191 million tons in fiscal year 1992/93. Source: "GATT Deal Won't Boost Volume of Grain Trade-GAFTA," REUTER, December 6, 1993. ________________________________________________________ NAFTA News Summary ________________________________________________________ CLINTON SIGNS NAFTA U.S. President Bill Clinton today signed the North American Free Trade Agreement. In an auditorium packed with NAFTA supporters Clinton said the accord has "become a symbolic struggle for the spirit of our country and how we would approach this very rapidly and changing world ... We are on the verge of a global economic expansion that is sparked by the fact that the United States, at this critical moment, has decided to compete not retreat." NAFTA will go into effect January 1, 1994 . Source: "Trade - NAFTA - Sign -2Washington," REUTER, December 8, 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 ________________________________________________________