From dwiehoff@iatp.org Fri Dec 20 01:08:14 1996 Date: 18 Dec 1996 09:03:36 From: dwiehoff@iatp.org To: Recipients of conference Subject: Trade News 12-18-96 From: Dale Wiehoff TRADE NEWS Produced by the Institute for Agriculture and Trade Policy December 18, 1996 Volume 5, Number 17 ________________________________________________ Headlines: - APEC STUMBLES ON TRADE, AGREES SOME TARIFFS CUTS - DEMONSTRATIONS BANNED AT WTO MINISTERIAL - WTO MUST PROVE ITSELF - NAFTA EXPANSION OPPOSED BY AMERICAN PUBLIC - SWISS COMPANY MAKING ITS MARK IN RUG MARKET - U.S. AG EXPORTS TO MEXICO MIXED ________________________________________________ WTO NEWS SUMMARY APEC STUMBLES ON TRADE, AGREES SOME TARIFFS CUTS The annual summit on Asia Pacific Economic Cooperation (APEC) produced little in the way of real substance on trade, except for a last minute compromise on considering trade tariffs reductions for information technology. The United States lobbied hard for the complete elimination of tariffs on information technology by the year 2000, but got only a vague commitment. Some developing APEC countries, most notably Malaysia, do not see the rapid elimination of tariffs as beneficial to their economies, and forced the compromise agreement which includes the United States year 2000 target date, but worded the agreement with the terms "substantially eliminate," and stressed the "need for flexibility" in negotiations. A spokesman for the U.S., commenting on the joint statement, said that "substantially eliminate is tradespeak for zero," although Asian countries dissented, saying that substantially eliminate means just that, and is no guarantee of zero. Further, should the World Trade Organization(WTO) not conclude the agreement at their December ministerial conference in Singapore, APEC nations will be under no obligation to act on technology tariffs by 2000. The U.S. expects an agreement on technology tariffs to be reached in Singapore, but to exclude some products in the sector. Hilary Stout, "World Trade Agreement Gets A Boost," WALL STREET JOURNAL, November 26, 1996; "Strange Bedfellows in Asia," THE ECONOMIST, November 30, 1996. DEMONSTRATIONS BANNED AT WTO MINISTERIAL Singapore has banned public demonstrations at next week's ministerial conference, saying they are disruptive to traffic and the general law and order situation necessary to conduct a successful conference. NGOs will be afforded a space to hold press briefings, but no police permits for demonstrations will be granted. Some of the NGOs are pushing for the WTO to uphold international labor rights, an initiative opposed by Singapore and other Asian countries. Officials fear that the strong NGO presence at the conference will bring unwelcome controversy to the conference and the city streets. James Kynge and Guy de Jonquieres, "Singapore Bans WTO Demonstrations," FINANCIAL TIMES, November 15, 1996; Tim Shorrock WTO MUST PROVE ITSELF Is the WTO only useful as a dispute resolution body, or can it carry out the charge to topple global barriers to trade? WTO Secretary General Renato Ruggiero expressed concern that leaders of member countries seem increasingly fearful of free trade's consequences and are slow to move on removing trade obstacles. Critics argue that the agenda for next week's Ministerial Conference has been stripped of any meat, and will perhaps accomplish nothing more than the information technology agreement brought to the fore at APEC. While the WTO is seem as an effective arbiter of disputes between countries, with 62 trade disagreements sent to them so far for resolution, some warn that if the WTO persists in its inability to take a strong stand on issues, it could lose its leading role in global trade. If that happens, regional agreements like NAFTA will need to pick up the slack. Developing countries contend that they are not fully included in WTO meetings. Others say its too soon to further liberalize trade until the actual costs of previous liberalization can be weighed. President Clinton, on the campaign trail for most of 1996, avoided free-trade this year-- U.S. hesitancy had some developing countries backing away as well. Ruggiero has recommended that the WTO create a more manageable ruling body, modeled after the UN's Security Council. Trade experts believe this is the only way the WTO will be able to get anything of substance done. Developing and smaller countries are sure to oppose such a move, however, fearing they would lose their voice in decision making. Helene Cooper and Bhushan Bahree, "World's Best Hope for Global Trade Topples Few Barriers," WALL STREET JOURNAL, December 3, 1996. NAFTA EXPANSION OPPOSED BY AMERICA PUBLIC 57% of U.S. citizens believe the U.S. government should not approve new trade pacts with Latin American countries, according to a pre-presidential election poll sponsored by BankBoston. The poll, surveying 1,003 people, was released November 7 in New York during a business conference on hemispheric business opportunities. A spokesman for BankBoston said the survey "should be a wake up call to the U.S. business community to engage in a broad re-education campaign....It is clear that any effort to liberalize trade agreements even in our own hemisphere will require an intensive educational campaign because most people are profoundly skeptical of trade pacts." The national poll results (conducted November 1 through 4 by Wirthin Worldwide on behalf of BankBoston) showed that 51% believe that free trade results in fewer U.S. jobs (23% believe more jobs are created); 73% believe labor and environmental issues should be negotiated as part of trade agreements (21% believe those issues should be treated apart from trade pacts); 52% said they have a less favorable view of free trade than a year ago with what they know about NAFTA and GATT (27% have a more favorable opinion). 45% described themselves as "fair traders," supporting a combination of pursuing new agreements and applying sanctions to open up markets; 25% described themselves as "free traders," supporting the elimination of all trade barriers to all markets. 23% classify themselves as "protectionist," in favor of imposing barriers to block foreign imports. "Poll Shows Public Believes Trade Pacts Cost U.S. Jobs," BankBoston, November 7, 1996; Paula L. Green, "Study: 57% of U.S. Public Against Free-Trade Pacts With Latin America," JOURNAL OF COMMERCE, November 8, 1996. SWISS COMPANY MAKING ITS MARK IN RUG MARKET Veillon S.A., one of Switzerland's largest mail order houses, has taken an aggressive approach toward insuring its line of Oriental rugs are not made with child labor. Noting the experiences of companies in the U.S. and the widespread outcry in Europe against companies that carry rugs and other textiles made with child labor in developing countries, Veillon called for a code of conduct from its rug manufacturers higher than perhaps any in the industry. Veillon fears that the Rugmark, instituted by the Foundation For a Just Trade in Rugs (with the German acronym, STEP) provides Europeans with a clear conscience but does not offer sufficient guarantees that rugs were not made with child labor. The company worked with the International Labor Organization to develop a rugmark that can more strongly assure adherence to Rugmark principles. Veillon cited the breadth of carpet looms STEP has to contend with as a reason for developing their own rugmark program. STEP is charged with monitoring between 200,000 and 600,000 looms, and as of last June had only inspected 7,000 Indian looms for child labor violations. Veillon believes the point of difference between the STEP Rugmark and the Veillon code is that the company will only have to inspect looms which manufacture for them, and that accept the Veillon conditions before the company signs a contract with them. Veillon's rugmark requires that suppliers provide the name and addresses of manufacturing sites, and the right of Veillon to visit them unannounced; assurances that laborers are not forced to work, that they leave the loom when the days labor is complete, and that no injury is incurred from the work. Inspection of the looms will be conducted by the Swiss foundation Association Francois-Xavier Bagnoud. John Tagliabue, "Europe Fights Child Labor in Rug Making," THE NEW YORK TIMES, November 19, 1996. U.S. AG EXPORTS TO MEXICO MIXED Intra-NAFTA trade in agricultural products is expected to reach $30 billion by 2005, compared to the 1995 level of $19 billion, according to a report on NAFTA by the Economic Research Service. At present, however, U.S. - Mexico trade has fallen, however, (down 22% in 1995 vs. 1994) due to the severe collapse in the Mexican economy. Canada and the U.S. will continue to be the dominant suppliers of wheat to Mexico, which imports between 1.3 and 1.8 million tons a year. The 1996 Mexican wheat import tariff under NAFTA is 10.5% (versus 15% for non-NAFTA countries), and will be reduced to zero for NAFTA countries by 2003. "USDA: Trade Liberalization to Boost Agricultural Exports," MILLING AND BANKING NEWS, November 5, 1996. RESOURCES Foreign Policy In Focus briefs on a range of trade related issues, including human rights and the Eximbank, are available from the Interhemispheric Resource Center, P.O. Box 4506, Albuquerque, NM 87196. Phone 505/388/0208; Fax 505/388/0208; Email : Dale Wiehoff Executive Director Institute for Agriculture and Trade Policy 2105 First Avenue South Minneapolis, MN 55404 USA tel: 612-870-0453 fax: 612-870-4846 direct line: 612-870-3401 email: dwiehoff@iatp.org URL: http://www.iatp.org/iatp