From iatp@igc.apc.orgThu Mar 23 22:24:45 1995 Date: Thu, 23 Mar 1995 10:30:07 -0800 (PST) From: IATP To: Recipients of conference Subject: Trade News Vol. 4, No. 5 Trade News Produced by the Institute for Agriculture and Trade Policy Volume 4, Number 5 Thursday, March 23, 1995 _______________________________________________ Headlines: - US Backs Ruggiero for WTO Chief - ILO Chief: WTO Should Adopt Labor Standards - EU To Strengthen Film/TV Quotas, New Gingrich Warns of US Retaliation - French Exporters Will Test WTO in Canadian Wine Case - Developing Countries Criticize US Textile Quotas - Mexico Will Increase Protection _______________________________________________ WTO NEWS SUMMARY _______________________________________________ US BACKS RUGGIERO FOR WTO CHIEF On March 21, the Clinton administration formally declared that it would support Renato Ruggiero, a senior executive at Fiat and former Italian trade minister, to be the first Secretary General of the World Trade Organization (WTO). The endorsement, announced by US trade representative Mickey Kantor, all but guarantees Ruggiero the post, which will place him at the head of the new worldwide grouping of 124 trading nations. The US decision ends a three-way struggle that has gone on for nearly nine months, and became a divisive issue among countries in Asia, Europe, and the Americas. The US and Latin American nations had supported Carlos Salinas de Gortari, the former President of Mexico. But Salinas was forced to withdraw in the wake of Mexico's financial crisis and after his brother was arrested in connection with the assassination last year of a senior ruling party official. The other candidate, Kim Chul-su, a South Korean economist, withdrew on the day of the US announcement. He is reported to have been assured that he will receive the No. 2 post in the WTO for his concession. European nations and their former colonies backed Ruggiero. In return for its support for Ruggiero, the US insisted on a number of conditions, including an understanding that he would serve only one four-year term and that the next head of the WTO would be a non-European. A European has headed the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO, since its creation in 1947. Another condition reportedly included an agreement that agricultural issues would be the focus of the next round of global trade negotiations if another accord was sought. For his part, Ruggiero insisted that he had not agreed to any conditions on his appointment, and said his only priorities would be promoting free trade and strengthening the international trading system. David E. Sanger, "World Trade Choice Wins Modest US Praise," NEW YORK TIMES, March 22, 1995; Bob Davis and Bhushan Bahree, "Ruggiero Faces Big Challenge at WTO, Pledges an Agenda Agreeable to US," WALL STREET JOURNAL, March 22, 1995; Frances Williams, John Burton, and Nancy Dunne, "Top Fiat Man Set to Head World Trade Body," FINANCIAL TIMES, March 22, 1995; Guy de Jonquieres, "Winning the Leadership Was the Easy Bit," FINANCIAL TIMES, March 22, 1995. FRENCH EXPORTERS WILL TEST WTO IN CANADIAN WINE CASE Earlier this month, French wine exporters announced that they plan to mount a test case within the WTO against Canadian wine producers for unfair competition and failure to abide by the Uruguay Round agreement's rules on geographic origin. Under the intellectual property or TRIPS section of the Uruguay Round agreement, only wine actually coming from a designated geographic region such as Champagne--named after the French grape-producing region--can carry the name of that region on its label. Despite this, the FEVS said, Canadian-produced wines commonly have labels in French reading that the wine variety is "of the type" of "Chateauneuf-du-Pape," "Chablis Superieur," or "Bourgogne Rouge," all French wine regions. The FEVS said French complaints against Canadian practices date back to the 1970s, but that it will now use the WTO to force producers to adhere to the new rules. Tara Patel, "French Exporters to Test WTO Teeth in Canadian Wine Lawsuit," JOURNAL OF COMMERCE, March 13, 1995. ILO CHIEF: WTO SHOULD ADOPT LABOR STANDARDS Earlier this month, Director General of the International Labor Organization (ILO) Michel Hansenne called on the WTO to make the acceptance of basic labor standards to protect workers' rights a precondition for membership in the body. In a letter to WTO leaders, Hansenne urged that member states should be required to ratify ILO conventions that prohibit forced labor and accept the freedom of workers to organize in trade unions and bargain collectively. He added that he wants to see a cooperation agreement signed between the ILO and WTO that would enable the labor organization to play an important role in monitoring WTO member states to ensure they abided by the labor standards. Hansenne's letter excluded the more controversial issues of child labor and workplace discrimination. Robert Taylor, "WTO Urged to Stress Labor Standards," FINANCIAL TIMES, March 9, 1995. _______________________________________________ REGIONAL/BILATERAL RELATIONS _______________________________________________ EU TO STRENGTHEN FILM/TV QUOTAS, NEWT GINGRICH WARNS OF US RETALIATION Marcelino Oreja, the European Union commissioner for audio- visual affairs, announced on March 22 that he will push to strengthen EU television and film quotas to protect those industries against foreign competition. Specifically, he will seek agreement within the EU to require 51 percent of all material shown by European TV to be of European origin. The system, he said, will be phased out in ten years. Senior EU officials expect Orejia's proposal to break a deadlock over a revised EU quota system by striking a balance between countries such as France, Greece, Portugal and Belgium, which want a stronger quota system, and others, such as Britain, which want it scrapped altogether. Meanwhile, Newt Gingrich, Speaker of the Republican- controlled US House of Representatives, and seven other Republicans met with US film industry executives last week to discuss the possibility that the EU would strengthen its film and TV quotas. After the meeting, Gingrich warned that the US could easily retaliate by passing a law cutting off imports of Europe's "most sensitive, high-technology, high-growth areas." According to Jack Valenti, president of the Motion Picture Association of America, Gingrich agreed to establish a task force of key committee and subcommittee chairmen to work with the industry to develop goals which could be developed into legislation. For his part, Valenti said he would prefer to deal with the EU quota issue peacefully. Caroline Southey, "EU Set to Strengthen Film and TV Quotas," FINANCIAL TIMES, March 22, 1995; Nancy Dunne, "Gingrich Warns of Retaliation by Washington," FINANCIAL TIMES, March 22, 1995. _______________________________________________ WORLD TRADE ROUND-UP _______________________________________________ DEVELOPING COUNTRIES CRITICIZE US TEXTILE QUOTAS Earlier this month, developing country textile exporters complained that the US may leave its import restrictions in place until the end of the 10-year period set for eliminating them in the Uruguay Round of global trade talks. The International Textiles and Clothing Bureau, which represents 21 exporting nations, said more than 90 percent of existing quotas by value would remain until January 1, 2005--the fourth and final stage for bringing textiles and clothing under normal fair trade rules. Under the accord reached in the Uruguay Round, countries agreed to phase out over 10 years the restrictive Multi-Fiber Arrangement governing most developing country exports of textiles and clothing. The agreement required importing nations to bring 16 percent of1990 trade under normal trade rules last January, followed by another 17 percent in January 1998 and 18 percent in January 2002. But both the US and the EU have started with products already unrestricted, leaving real liberalization for as late as possible. Frances Williams, "US Textile Curbs Come Under Fire," FINANCIAL TIMES, March 9, 1995. MEXICO WILL INCREASE PROTECTION In another attempt to rescue the ailing Mexican economy, president Ernesto Zedillo Ponce de Leon pledged last week to use "the full weight of Mexican law" to protect domestic manufacturers from low-cost goods from abroad. Speaking to a gathering of the Mexican Association of Importers and Exporters, Zedillo said that foreign capital flows to Mexico would be smaller than in past years and spoke of the need for a new approach to trade policy. "As for imports, we will supply a more level playing field," he said. "We will apply the full weight of Mexican law in those cases where Mexican producers suffer from unfair international trade practices," he added. The Zedillo administration shocked the US government and business groups earlier in the month by announcing it would seek maximum allowable tariffs for footwear, apparel, leather goods and confectionery goods coming from countries with which Mexico does not have a trade agreement. John M. Nagel, "Zedillo Vows to Protect Mexico's Manufacturers," JOURNAL OF COMMERCE, March 16, 1995. ______________________________________________ Trade News is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Editor: Orin Kirshner. 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