TRADE NEWS BULLETIN Volume 2 Number 224 Thursday, December 16, 1993 Headlines: GATT WILL BOOST, RUIN SOME POLITICAL CAREERS WORLD TRADE ORGANIZATION WILL REPLACE GATT GERMAN FARMERS ASK FOR COMPENSATION UNDER GATT NAFTA PROMOTES ASIAN, EUROPEAN TRUCK MAKERS IN MEXICO ________________________________________________________ GATT News Summary ________________________________________________________ GATT WILL BOOST, RUIN SOME POLITICAL CAREERS The political ramifications of a GATT deal could prove to boost the careers of some leaders and bust others. The Uruguay Round outcome for audiovisuals and agriculture was clearly a victory for Europe and France in particular. The French daily newspaper LE MONDE called the final GATT outcome a "personal victory" for French Prime Minister Edouard Balladur and hinted that Balladur's success in the talks could earn him France's presidency in 1995. "It's incredible what the French have pulled off," said a senior GATT source. "Balladur has turned the GATT into an open door to the French presidency." However, protests have taken place throughout the world and signs of political consequences are already appearing. South Korean President Kim Young-sam accepted the resignation of Prime Minister Hwang In- sung today to calm public discontent over the opening of South Korea's rice market. "The world has just entered an era of indefinite competition. The president accepted (the) resignation in order that a new cabinet can be formed to suit public feeling," said spokesperson Lee Kyung-jae. In Japan, Prime Minister Morihiro Hosokawa's decision to open rice markets was called "politically embarrassing" by the ASSOCIATED PRESS. Maki Murasawa, Japan parliamentary vice minister of agriculture and legislator of the Social Democratic Party, said yesterday that he would resign over dissatisfaction with the government's decision on rice. Indian deputies paralyzed parliament Wednesday over Prime Minister P.V. Narasimha Rao's decision to endorse the GATT Final Act. Several Indian opposition deputies, upset with GATT rules allowing the patenting of seeds and cuts in agriculture subsidies, have demanded Rao's resignation. "The South Korean prime minister has resigned owning moral responsibility for this unequal agreement," shouted upper house communist deputy Garudas Dasgupta. "Why should Mr. Rao be spared?" Deputies also objected to the government's backing the GATT accord without first consulting parliament. "At this late stage, we can only express impotent rage that the government is signing the dubious agreement behind our backs," said Jaswant Singh, a senior deputy of the right-wing Hindu Bharatiya Janata Party. Sources: Bernard Edinger, "Balladur Presidency Hopes Boosted by GATT Success," REUTER, December 15, 1993; Boris Johnson, "GATT Deal: Paris Plays Obstinate and Wins at Every Turn -- Analysis," DAILY TELEGRAPH, December 15, 1993; Chakravarthi Raghavan, "Weary Delegates Finally Clear the Way to End the Round," SUNS, December 15, 1993; Jawed Naqvi, "Indian Parliament Paralyzed Over GATT Agreement," REUTER, December 15, 1993; Jawed Naqvi, "India Deputies Seek Prime Minister's Resignation," REUTER, December 16, 1993; "SDP Vice Farm Minister to Resign Over Rice Mart Opening," KYODO NEWS SERVICE, December 15, 1993; "S.Korean PM's Resignation Said Linked to Rice Deal," REUTER, December 15, 1993; Dirk Beveridge, "GATT Help for U.S. Rice Farmers at Expense of Japanese, South Koreans," AP, December 14, 1993. _______________________________________________________ WORLD TRADE ORGANIZATION WILL REPLACE GATT The World Trade Organization (WTO), as officially described in the GATT Final Act, envisages a single institutional framework encompassing the GATT, all agreements and arrangements concluded under its auspices and the complete results of the Uruguay Round. The WTO, which was originally going to be called the Multilateral Trade Organization, will replace GATT January 1, 1995 as a permanent and more powerful watchdog for global trade partners. A Japanese envoy said Tokyo welcomed the establishment of the WTO because it would be more efficient in solving international trade disputes. "The WTO should make clear the procedure for solving international trade disputes. This is a remarkable progress," said Japanese trade ambassador Nobutoshi Akao. Many GATT members felt GATT's present dispute settlement system was weak and inefficient because countries continually imposed unilateral sanctions despite panel rulings. GATT Director-General Peter Sutherland will direct the WTO. Sources: "Text Excerpts of Uruguay Round 'Final Act'," REUTER, December 15, 1993; "GATT's Successor to Be Called WTO, Not MTO," REUTER, December 15, 1993; Lyndsay Griffiths, "Forget GATT, Scrap MTO, Brace for WTO," REUTER, December 15, 1993; "Japan Welcomes New Post-GATT World Trade Body," REUTER, December 15, 1993. ________________________________________________________ GERMAN FARMERS ASK FOR COMPENSATION UNDER GATT The German Farmers' Union (DBV) has asked the European Union for the same compensation granted to French farmers under GATT. "Countries shouldn't get special conditions," said DBV President Constantin Heereman. "Compensation rules must be the same for all countries." The EU agreed to pay French farmers compensatory payments for subsidies lost under GATT. Sources: "German Farmers Want Same Compensation as French," REUTER, December 15, 1993. ________________________________________________________ NAFTA News Summary ________________________________________________________ NAFTA PROMOTES ASIAN, EUROPEAN TRUCK MAKERS IN MEXICO U.S. negotiators failed to include in the North American Free Trade Agreement a clause that would limit exports of Asian and European trucks built at Mexican plants. Mexico's EL FINANCIERO newspaper writes: "The pieces are in place to give U.S. multinationals a run for their money, right in the territory that most assume was annexed under NAFTA." Negotiators hammered out the details of an auto deal under NAFTA which would set local integration limits specifically targeted at Asian and European exports of passenger cars. But the limits are apparently still low enough to make it economically efficient for Nissan, Saab and Mercedes-Benz to produce pick-up trucks and lease bus and truck fleets in Mexico. Nissan will benefit by producing trucks and it is rumored that Honda will move a plant from Canada to Mexico to do the same. Saab-Scandia of Sweden is spending $20 million to build an assembly plant in San Luis Potosi that will produce 600 heavy trucks and buses a year. Mercedes-Benz is slowly expanding operations in Mexico to produce truck fleets for leasing. Leasing allows Mercedes-Benz to sidestep a special two percent annual tax imposed on purchases of capital goods. Source: Alva Senzek, "Trucks Make Comeback," EL FINANCIERO INTERNATIONAL, December 6-12, 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 ________________________________________________________