TRADE NEWS BULLETIN Volume 2 Number 223 Wednesday, December 15, 1993 Headlines: GATT NATIONS AGREE TO WATERED-DOWN TRADE PACT MIXED REACTIONS TO GATT ACCORD U.S. LAWMAKER UNSURE OF CONGRESSIONAL GATT APPROVAL MEXICO MAY NOT FOLLOW THROUGH WITH ENVIRONMENT PROMISES ________________________________________________________ GATT News Summary ________________________________________________________ GATT NATIONS AGREE TO WATERED-DOWN TRADE PACT Members of the General Agreement on Tariffs and Trade agreed to new trade rules Wednesday, based largely on U.S.-EU bilateral accords. The final global trade pact will not include provisions for audiovisuals, aviation, shipping and financial services. U.S. and EU negotiators "agreed to disagree" over the contentious trade areas, after 25 hours of talks, in order to complete a GATT deal by today. "It's not exactly as ambitious as we had hoped," admitted EU negotiator Hugo Paemen. The NEW YORK TIMES described the pact as "smaller in scope than intended" and warned that failure to resolve disputes in the service sector "may bear the seeds of future trade wars." Under the deal, tariffs will be cut on most goods by an average of 50 percent, with agricultural tariffs dropping an average 36 percent in industrial nations and 24 percent in developing nations. Textile tariffs will be phased-out over 10 years. Negotiators also agreed to: form a Multilateral Trade Organization (MTO) to replace GATT; open some service sectors, including banking, tourism and telecommunications; prohibit governments from forcing foreign investors to use local products in manufacturing operations; ban all manufacturing subsidies that boost industrial exports, except those to poorer regions and for research purposes; and set new dispute settlement standards, including anti-dumping provisions. The GATT Trade Negotiations Committee is scheduled to vote on "The Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations," tonight. The Final Act includes two documents listing individual commitments from GATT members to reduce or eliminate tariffs and other barriers in the unresolved service sector. Sources: Nelson Graves, "Weighty GATT Treaty Covers a World of Trade Issues," REUTER, December 15, 1993; Peter Passell, "U.S. and Europe Clear the Way for a World Accord on Trade, Setting Aside Major Disputes," NEW YORK TIMES , December 15, 1993; "EC Agrees to GATT Deal," AGENCE FRANCE PRESSE, December 15, 1993; "GATT-Key Provisions," AP, December 15, 1993; Nelson Graves, "Some Seeds of Discord Remain Despite U.S.-EC Truce," REUTER, December 14, 1993; Keith Bradsher, "Big Cut in Tariffs," NEW YORK TIMES, December 15, 1993; David Dodwell, Frances Williams, "EU and U.S. Clear Final Hurdles to World Trade Deal," FINANCIAL TIMES, December 15, 1993; Amelia Torres, "Portugal Keeps Hard Line on Textiles, But Might Accept Deal," REUTER, December 14, 1993. ________________________________________________________ MIXED REACTIONS TO GATT ACCORD While the governments of GATT signatory nations were hailing the benefits of a new GATT accord, farmers, workers, citizen groups and representatives of some industries criticized the terms of the deal. Angry French farmers took to the streets of Paris and several provincial towns to demonstrate against French concessions in the talks. Riot police were called in to disperse more than 300 farmers who marched toward the residence of Prime Minister Edouard Balladur. Paris' Arc de Triomphe was draped with a banner declaring "No to GATT" for a half-hour before police removed demonstrators from the roof of the monument. "Europe laid down and France capitulated," center-right deputy Philippe de Villiers told farmers gathered on the lawn in front of Napoleon's tomb. The deputies present, ranging from Communist to extreme right, said they would vote "no" Wednesday in a vote of confidence on the general policy of Balladur's government. Farmers in India held day-long sit-ins and members of Parliament reacted angrily following the news that Indian Prime Minister P.V. Narashimha Rao had agreed to the deal. The government is "selling India to U.S. imperialists and foreign multinationals," shouted a Marxist lawmaker. In Seoul, over 400 students shouted "Yankee go home" near the U.S. embassy to protest U.S. pressure to end South Korea's rice ban. Japanese farmers are also protesting the end of their country's ban on rice imports. Environmental groups denounced the agreement as a major threat to the planet, saying the Uruguay Round undermines the Montreal Protocol and other existing agreements on environmental protection. Greenpeace's Colin Hines said GATT signatory nations can challenge international environmental agreements as barriers to trade and contrary to GATT's principles. Greenpeace is calling upon GATT to modify its trade rules by the April 15 governmental meeting and provide for citizen involvement in this process. Greenpeace activists hung a banner reading, "Pollution Free Trade: Green the GATT Now!" on GATT headquarters in Geneva. Many industries throughout the world expressed deep concerns about the results of the GATT talks. While France's film and television industries were relieved France maintained its right to limit U.S. entertainment programs, Motion Picture Association of America President Jack Valenti criticized European "protectionism" in the GATT talks. "The EC's refusal to negotiate seriously in audiovisual is blatant protectionism unmasked. In a global treaty supposed to reduce trade barriers, the EC erected a great wall to keep out the works of non-European creative men and women," Valenti said. U.S. steelmakers expressed concern over the apparent weakening of U.S. trade laws, steel tariffs and dispute settlement provisions. The Specialty Steel Industry of the United States (SSIUS) criticized the government's willingness to eliminate all steel tariffs. The SSIUS says steel tariffs should only be cut if foreign governments agree to stop subsidizing their industries. Sources: "Mixed Reaction to Expected GATT Agreement," AP, December 15, 1993; "Some Farmers Try for Last Hurrah Against GATT," AP, December 14, 1993; "Mixed Reactions to GATT Accord in France," UPI, December 14, 1993; "U.S. Film Industry Chief Criticizes EC 'Protectionism' in GATT Accord," AFX, December 14, 1993; "SSIUS Withholds Endorsement of GATT, Will Review," PR NEWSWIRE, December 14, 1993; "Greenpeace Demands GATT Go Green Now," PRESS RELEASE, December 15, 1993. ________________________________________________________ U.S. LAWMAKER UNSURE OF CONGRESSIONAL GATT APPROVAL Lee Hamilton, chairperson of the U.S. House Foreign Affairs Committee, said congressional approval of the weakened GATT accord is uncertain. "I expect Congress to approve a GATT agreement, but I make that assertion with less confidence than I did a few weeks ago," Hamilton said during a State Department forum. "Its passage is not guaranteed." Under fast-track legislation, President Clinton must notify Congress of intent to sign a GATT pact by midnight tonight. He then has until April 15, 1994 to clarify any details of the pact with other GATT members and sign the accord. Clinton can submit implementing legislation to Congress anytime after April 15. Once the legislation has been sent to Congress, lawmakers will have 60 days to debate the pact and vote either "yes" or "no" on its passage. Sources: "U.S. House Leader Not Sure of GATT Approval," REUTER, December 14, 1993; Bob Davis, "From 'Fast Track' to French Films, Making Sense of World Trade Talks," WALL STREET JOURNAL, December 13, 1993. ________________________________________________________ NAFTA News Summary ________________________________________________________ MEXICO MAY NOT FOLLOW THROUGH WITH ENVIRONMENT PROMISES Researcher Domingo Gonzalez of the Texas Center for Policy Studies wonders if the Mexican government will follow through with promises made during the NAFTA debate to clean up the environment. "When we were debating NAFTA, they had to come to the table and talk. We made some real progress," Gonzalez said. "Now the incentive to listen to those voices is gone." President Carlos Salinas de Gortari and U.S. President Bill Clinton agreed to spend more than $8 billion over the next eight years on infrastructure and environmental cleanup projects. Gonzalez speculates that the Mexican government may be more interested in funding profitable industrial development projects than much needed waste water treatment facilities. "The border has been ignored for generations," said Gonzalez. "Who's to say that won't continue?" Source: Leon Lazaroff, "The Polluted Border," EL FINANCIERO INTERNATIONAL, November 29-December 5, 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 ________________________________________________________