Trade Week in Review and Recent Publications December 11-17, 1993 Volume 2 Number 225 Headlines: Watered-Down GATT Deal Complete GATT Establishes World Trade Organization (WTO) Final Act May Face Trouble in U.S. Congress GATT Becomes Political Risk for Some Leaders ___________________________________________________________ GATT News Summary ___________________________________________________________ -Watered-Down GATT Deal Complete- Negotiators agreed to new trade rules under the General Agreement on Tariffs and Trade Wednesday. A number of contentious global trade issues, including aircraft, maritime, financial services and audiovisual provisions, were left out of the deal. U.S. and European negotiators held talks for more than 25 hours to settle remaining differences before the December 15 deadline, but were unable to resolve disputes in these sectors. The overall pact, tentatively agreed to by GATT's 117 participants, was based largely on U.S.-EU bilateral accords. GATT members now have until April 15, 1994 to negotiate details of the text and to sign the deal. Under the GATT 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. Negotiators also agreed to: phase-out textile quotas over the next 10 years; harmonize intellectual property rights without requiring "patents on life" or animal and plant inventions; 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. -GATT Establishes World Trade Organization (WTO)- The World Trade Organization (WTO) will replace GATT as a global trade watchdog January 1, 1995. The WTO, as officially described in the GATT Final Act, envisages a single institutional framework encompassing GATT, all agreements and arrangements concluded under its auspices and the complete results of the Uruguay Round. The WTO will be more far-reaching and powerful than GATT. Many GATT members felt GATT's present dispute settlement system was weak and inefficient because countries continually imposed unilateral sanctions in spite of panel rulings. The Citizens Trade Campaign (CTC), a coalition of U.S. consumer, environmental and farm organizations, criticized the proposed World Trade Organization and said it was prepared to fight the new GATT deal when it comes up for a vote in Congress. CTC's Lori Wallach said the WTO's powers to persuade countries to abide by panel rulings is another example of decision-making shifting away from democratically accountable bodies to secretive international agencies. "Under the new procedure, if your domestic law is ruled to be in conflict with international trade rules then you will have to either change your law or pay the penalties," Wallach said. Venezuela announced earlier this week it would challenge in GATT a domestic U.S. environmental law. Venezuelan Energy Ministry Alirio Parra said an Environmental Protection Agency clean air ruling discriminates against Venezuela's gasoline exports and violates GATT rules. -Final Act May Face Trouble in U.S. Congress- U.S. lawmakers may challenge the global trade pact when it comes up for a vote next year, according to several congressional leaders. In a letter to the INTERNATIONAL HERALD TRIBUNE, U.S. Representative Bill Richardson (D-New Mexico) and Tom Spencer, a member of the European Parliament, said that many U.S. lawmakers would be unwilling to vote for the Uruguay Round text unless environmental provisions, similar to those created under the North American Free Trade Agreement, were included. "The U.S. Congress would not have approved NAFTA had it not been for its strong environmental side agreement," warned Richardson. 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 the GATT agreement, but I make that assertion with less confidence than I did a few weeks ago," Hamilton said. "Its passage is not guaranteed." -GATT Becomes Political Risk for Some Leaders- Many unhappy industry groups and government officials around the world are pressing leaders for compensation under GATT. Others are so outraged by elements of the accord they are calling for certain officials to resign. The German farmers union (DBV) has asked the European Union for the same compensation granted to French farmers. The EU agreed to make compensatory payments to French farmers for subsidies lost under GATT, and to pay Portugal's textile industry 400 million ECU to compensate for increased imports of clothing and textiles. "Compensation rules should be the same for all countries," said DBV President Constantin Heereman. Farmers in Japan will receive some sort of compensation under GATT to soften the impact of increased imports of rice and 20 other farm products. Prime Minister Morihiro Hosokawa set up and will chair an emergency farm aid committee to support affected farmers. 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, announced Wednesday he would resign because of his dissatisfaction with the government's decision on rice. Farmers in India held day-long sit-ins and members of Parliament reacted angrily following news that Indian Prime Minister P.V. Narashimha Rao had agreed to the GATT deal. Several opposition party deputies are calling for Rao's resignation because of his decision to sign the GATT Final Act. A number of U.S. industry groups, including the Motion Picture Association of America and the Specialty Steel Industry of the United States, were upset with the final deal and felt their interests had been sold-out at the last minute. Environmental groups, like Greenpeace, are calling on GATT to amend the new trade rules by April 15, 1994 to include environmental standards and to provide for citizen involvement in this process. Sources: Lionel Barber, "GATT Accord Wins Approval," FINANCIAL TIMES, December 16, 1993; Chuck Freadhoff, Frances Williams, "Protection for Patents Raised," FINANCIAL TIMES, December 16, 1993; "Venezuela to Appeal 'Discriminatory' U.S. EPA Ruling," REUTER, December 16, 1993; "GATT Facing Battle in Congress as NAFTA Foes Rearm for Fight," INVESTOR'S BUSINESS DAILY, December 17, 1993; Bill Richardson, Tom Spencer, "For GATT, a Model in Green," INTERNATIONAL HERALD TRIBUNE, December 14, 1993; Martin Crutsinger, "GATT-What's Next," AP, December 16, 1993; "U.S. House Leader Not Sure of GATT Approval," REUTER, December 14, 1993; "German Farmers Want Same Compensation as French," REUTER, December 15, 1993; "Japan to Set Up Emergency Farm Aid Committee," REUTER, December 16, 1993; Abi Sekimitsu, "Japan Agricultural Traders Gripe Over GATT Deal," REUTER, December 16, 1993; Jawed Naqvi, "Indian Deputies Seek Prime Minister's Resignation," REUTER, December 16, 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. ___________________________________________________________ Recent Publications on International Trade ___________________________________________________________ For copies of the following, contact the authors or organizations listed. "Proposals for Voting Reform Within the International Monetary Fund," Richard Gerster, SWISS AID AGENCIES COALITION, 1993. 21 pages. Institute for Agriculture and Trade Policy. $3. "Accountability of Executive Directors in the Bretton Woods Institutions," Richard Gerster, SWISS AID AGENCIES COALITION, September 1993. 42 pages. Institute for Agriculture and Trade Policy. $5. "Overcoming Global Hunger: NGO Statement to the World Bank Hunger Conference," INTERACTION, November 30, 1993. 15 pages. Attn. Karen Hust, 1717 Massachusetts Ave., NW, 8th Floor, Washington, DC 20036. (202) 667-8227. Fax: (202) 667-8236. "GATTzilla?" Monika Bauerlein, UTNE READER, January/February 1994. 3 pages. Box 1974, Marion, OH 43305. (800) 736-UTNE or (614) 382-3322. $4. "Blair House: A Look at the Blair House Agreement and Its Consequences for Small Farmers North and South," Robin Jenkins, EUROPEAN ECUMENICAL ORGANIZATION FOR DEVELOPMENT, November 1993. 20 pages. Centre Oecumenique Europeen, 174 Rue Joseph II, B-1040 Bruxelles. (32-2) 230-6105. Fax: (32-2) 231-1413. Contact organization for prices. "Aggressive Unilateralism: America's 301 Trade Policy and the World Trading System," Jagdish Bhagwati and Hugh T. Patrick, UNIVERSITY OF MICHIGAN PRESS, 1990. 45 pages. P.O. Box 1104, Ann Arbor, MI 48106. (313) 964-4392. Fax: (800) 876-1922. $16.95. "Rethinking Bretton Woods: A New World System?" International Economic Insights, INSTITUTE FOR INTERNATIONAL ECONOMICS, Vol. 4, No. 5, September/October 1993. 48 pages. 11 DuPont Circle, NW, Washington, DC 20036-1207. (202) 328-9000. Fax: (202) 328-5432. $5. "The World Trading System at Risk," Jagdish Bhagwati, PRINCETON UNIVERSITY PRESS, 1991. 113 pages. California Princeton, Fulfillment Services, P.O. Box 10769, Newark, NJ 07193. (609) 883-1759. $20.95. "Making Development Sustainable," Finance and Development, INTERNATIONAL MONETARY FUND AND THE WORLD BANK, Vol. 30, No. 4, December 1993. 53 pages. 700 19th St., NW, Washington, DC 20431. (202) 623-8300. Fax: (202) 623-4738. $7.50. This issue includes articles regarding the sociologist's, ecologist's and economist's approach to sustainable development and how to measure environmentally sustainable development. ___________________________________________________________ Editors: Gigi DiGiacomo, Chirag Mehta 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 ___________________________________________________________