TRADE NEWS BULLETIN Volume 2 Number 219 Thursday, December 9, 1993 Headlines: NATIONS REQUEST ENVIRONMENTAL WORK PROGRAM UNDER GATT NEW CONCESSIONS: SOUTH KOREA RICE IMPORTS, MTO CREATION MIXED U.S. BUSINESS REACTION TO GATT DEALS NAFTA WILL HURT MEXICAN INDUSTRIES ________________________________________________________ GATT News Summary ________________________________________________________ NATIONS REQUEST ENVIRONMENTAL WORK PROGRAM UNDER GATT The European Union, India and Brazil are calling for the creation of an environmental work program to study and recommend policy links between the environment and global trade. Negotiators tabled a confidential draft proposal on the work program, which they hope to adopt during a ministerial conference next April, convened to ratify the Uruguay Round agreement. The confidential draft was approved by all developing countries involved. The proposal falls short of demands from the United States, Switzerland and some Nordic countries, which have pushed for the creation of a GATT committee on trade and environment. According to the FINANCIAL TIMES, the U.S. is isolated in its firm opposition to the compromise. The U.S. continues to call for a more transparent GATT, one in which environmental groups could submit briefs in trade disputes, or observe and comment on dispute panels. "We are trying to be flexible, but need more hard assurances," said Jim Marston of the Environmental Defense Fund. Source: David Dodwell, "Environment Moves Up the Agenda," FINANCIAL TIMES, December 9, 1993. ________________________________________________________ NEW CONCESSIONS: SOUTH KOREA RICE IMPORTS, MTO CREATION GATT Director-General Peter Sutherland has turned his attention to "multilateralizing" the bilateral agreements reached by the United States and European Union this week. Sutherland will also present new proposals brought forward by other GATT members. South Korea and the United States made two key concessions in hopes of paving the way for a successful conclusion of the Uruguay Round. South Korean President Kim Young-sam announced Thursday he would permit foreign rice imports. "We are on the verge of being isolated from the world," Kim said in a televised address. "Accordingly we have no choice but to adopt this critical position." Japan, however, may temporarily postpone its decision on rice imports. Prime Minister Morihiro Hosokawa made the announcement to Parliament Wednesday after the Social Democratic Party, the largest member of Japan's eight-party coalition government, drafted a resolution urging Hosokawa to delay his decision on rice imports. The decision was expected Friday. According to the WALL STREET JOURNAL, the United States accepted French demands for the establishment of a new world trade organization that would police GATT members and "ensure fair play." Details of the bilateral decision have not been released. Negotiators still have a number of other unresolved issues to settle, including audiovisual, steel and aircraft provisions, U.S. tax exemption and anti- dumping proposals and an internal EU decision over French demands for cash compensation for its farmers. Sources: "Japan Rice Decision May Be Delayed by Socialists," REUTER, December 8, 1993; "South Korea Agrees to Lift Ban on Rice Imports," REUTER, December 8, 1993; "Official Says Japan Knows It Must Make Further Concessions," BUREAU OF NATIONAL AFFAIRS, December 9, 1993; Peter Gumbel, "France Is Getting What It Wants by Taking Hard Line on GATT," WALL STREET JOURNAL, December 8, 1993; Paul Taylor, "France Demands EC Cash as Price for GATT Accord," REUTER, December 8, 1993; Nelson Graves, "Optimistic GATT Negotiators Race Against Time," REUTER, December 8, 1993. ________________________________________________________ MIXED U.S. BUSINESS REACTION TO GATT DEALS U.S. business leaders have mixed reactions to proposed trade liberalization measures under GATT. While some industries are satisfied with provisions under the global agreement, high-tech companies, steel manufacturers, and apparel and textile makers are among the many businesses that feel their interests have been sold out during recent GATT negotiations. High-tech computer and chip manufacturers are disappointed by EU offers to lower tariffs on these U.S. products. One industry official, who criticized the EU offer, warned that semiconductor makers and other companies might oppose the GATT deal during Congressional debate if the Clinton administration does not seek changes. Steel companies are upset with proposals thus far under the Multilateral Steel Agreement, and with U.S. failure to preserve anti- dumping laws under GATT. Steel companies worry that they will no longer be able to apply anti-dumping duties against cheap foreign steel and steel product exports. Myron E. Ullman 3d, chair of R.H. Macy Company, criticized U.S. plans to extend the phase out of textile tariffs from 10 to 15 years. "Ten years is more than enough time for U.S. textile companies to take the necessary steps to become more competitive," Ullman said. In addition, it would "inflate U.S. consumer prices on imported clothing and textiles" he argued. "While most consumers don't realize it, they pay $46 billion a year to subsidize U.S. textile and apparel producers." Sources: Nelson Graves, "Array of Business Interests Square Off in GATT Round," REUTER, December 8, 1993; Ted Bunker, "High-Tech Firms See Little for Them in GATT Pact," INVESTOR'S BUSINESS DAILY, December 9, 1993; Myron E. Ullman 3d, "Another $46 Billion in Taxes," NEW YORK TIMES, December 9, 1993. ________________________________________________________ NAFTA News Summary ________________________________________________________ NAFTA WILL HURT MEXICAN INDUSTRIES Arturo Nava Bolanos, president of the Social Union of Mexican Businesses, said Mexico's textile, electronics and agriculture industries will be hardest hit under NAFTA. The electronics industry, for example, reportedly lacks updated equipment, which will make it difficult for them to compete with U.S. and Canadian companies operating in Mexico. Mexico's farming industry is also expected to suffer in competition with the United States and Canada for powdered milk, chicken, meat and eggs commodities. The National Rural Credit Bank announced last month that it would provide loans to Mexican farmers in an attempt to help them adjust to economic integration. Source: "NAFTA, Crisis for Textile, Electronics, and Agriculture Industries," EQUIPO PUEBLO/RMALC, December 1, 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 ________________________________________________________