[In reality this is issue #123 -- pauls@umich.edu] TRADE NEWS WEEK IN REVIEW July 3- 9, 1993 Volume 2 Number 122 _____________________________________________________________ Headlines: NAFTA MOVES ON QUAD LEADERS AGREE ON TARIFF REDUCTIONS, GATT FAR FROM DONE _____________________________________________________________ NAFTA News Summary ___________________________________________________________ NAFTA MOVES ON The North American Free Trade Agreement is still on target for approval by January 1, 1994, according to U.S. and Mexican officials. Parallel talks on labor and the environment began this week with indications that Mexico is willing to accept stronger enforcement mechanisms as proposed by the United States. U.S. President Bill Clinton has also taken a number of administrative steps to overcome NAFTA hurdles. "We want to move to closure by the end of the month," said U.S. Trade Representative Mickey Kantor. "That's our goal." -- Negotiators Meet on Side Accords, Mexico May Accept Sanctions -- Negotiators from the United States, Canada and Mexico met in Cocoyoc, Mexico yesterday to begin the fifth round of talks on labor and environmental accords. Trade negotiators "entering the final stage" of discussions are expected to revise progress made since their last meeting in May and to "give instructions to both the (labor and environmental) groups to begin technical negotiations," said the Mexican Commerce Ministry. However, enforcement mechanisms, which have stalled progress thus far, will not be discussed until a later round, according to Juan Gallardo Thurlow, an adviser to the Mexican negotiating team. The United States favors the creation of an independent commission empowered to levy sanctions against companies who violate labor and environmental standards. Mexico had previously opposed the use of sanctions but is reportedly willing to accept the U.S. proposal in an attempt to secure NAFTA ratification. "Sanctions have now been accepted by Mexico," said Sergio Sarmiento, a political commentator in Mexico City. "It's a position Mexico didn't like, but it also improves NAFTA's chances for (U.S.) passage." Canadian negotiators continue to reject the U.S. proposal, but remain open to the idea of fining repeat offenders. -- U.S. Takes Steps to Push NAFTA Forward -- President Clinton is taking several steps to overcome NAFTA opposition and to ensure ratification. Clinton urged the U.S. appeals court to conduct a swift review of last week's court ruling requiring the United States to conduct an environmental impact statement (EIS) on NAFTA before submitting the trade pact to congress. Justice Department lawyers said the U.S. government would suffer "irreparable harm" if the appeal is not considered quickly. An appeal decision is not expected until sometime after August 10. Clinton is also planning to appoint a White House aide to guide NAFTA through Congress. Clinton aides say he is considering a number of candidates for the full-time post and hopes to have someone in place by August. "There has been a lot of discussion about this," said one U.S. official. The White House may also hire a communications official to help promote NAFTA to the American public. Sources: "U.S. Expects NAFTA Deal on Environment, Labor," REUTER, July 8, 1993; "Mexico-NAFTA," UPI, July 8, 1993; "Mexico-Trade," AP, July 8, 1993; "Negotiators Begin NAFTA Parallel Accord Talks," REUTER, July 8, 1993; L. McQuillan, "Clinton Ponders Choices to Head NAFTA 'War Room'," REUTER, July 8, 1993; M. Frisby, "Clinton to Name Aide to Promote Free-Trade Pact," WALL STREET JOURNAL, July 7, 1993; "U.S. Asks For Quick Consideration of NAFTA Appeal," REUTER, July 2, 1993. GATT News Summary ___________________________________________________________ QUAD LEADERS AGREE ON TARIFF REDUCTIONS, GATT STILL FAR FROM DONE Negotiators from the United States, Canada, Japan and the European Community agreed to tariff reductions for 18 product sectors this week when they met in Tokyo prior to the Group of Seven summit. The pact would eliminate all tariffs for pharmaceuticals, medical and construction equipment, beer, steel, farm equipment, furniture and some distilled spirits. Glass, ceramics, textiles and apparel tariffs would be cut in half providing all 111 GATT members agree. G-7 leaders and negotiators were optimistic that this Tokyo accord would push the Uruguay Round of the General Agreement on Tariffs and Trade toward completion, but many observers were less optimistic. The NEW YORK TIMES called the tariff reduction package a "modest step" toward a global trade agreement. "All they did in Tokyo was announce tariff cuts on manufactured goods that for the most part had already been offered." WALL STREET JOURNAL reporters write similarly that the pact "fell short of a broad tariff- cutting compromise that could have assured a successful end to this round of talks over the GATT by a December 15 deadline." -- Remaining Obstacles -- Several controversial sectors, such as agriculture, services, intellectual property rights and public procurement were not successfully negotiated. The United States insists that all tariffs be removed in steel and pharmaceutical sectors, which other trade partners object to as long as the U.S. continues to impose unilateral action against alleged violators under Section 301 of the U.S. Trade Law. Similar problems exist in the maritime and audiovisual sectors where concessions are far from close. Agriculture remains stalled as leaders failed to address concern over the U.S.-EC farm deal, which France strongly opposes. "It says in black and white in the text that there has been no agreement on the problem of agricultural market access so we will have to continue discussions in Geneva," said Alain Juppe, France's foreign minister. Each GATT member must approve the Tokyo deal and any future tariff agreements. -- Mixed Business Reaction -- Reaction by U.S., European and Japanese businesses was mixed and cautious tothe tariff reduction announcements. For example, manufacturers of drugs construction equipment welcomed the agreement, while beer, steel, electronic and chemical producers were less enthusiastic. One of the largest U.S. construction equipment producers, Caterpillar Corporation, called the zero-tariff pact a "grand slam." Michael Milbach, a director at the U.S. and world's leading semiconductor producer, Intel Corporation, was disappointed, saying, "We got nothing." and recommended that more informal negotiations replace the political hype of G-7 summits. "My view is that we should come back to a much more informal thing, the heads only if possible, very short preparation and no paper, or as little as possible," said one European official. Meanwhile, members of The Other Economic Summit (TOES) criticized G-7 leaders for supporting "huge transnational companies." Ward Morehouse, chairman of the Intermediate Technology Development Group of North America said, "The GATT talks are not negotiations for all members but for the main players among them." TOES represents alternative groups who gather in the host country of G-7 talks each year. Sources: "Hyping the Trade Agreement," NEW YORK TIMES, July 9, 1993; S. Auerbach, P. Behr, "Reaction to Pact Is Mixed in U.S.," WP, July 8, 1993; "Companies Welcome Export Opportunities," FINANCIAL TIMES, July 8, 1993; D. Wessel, J. Schlesinger, "G-7 Negotiators Agree to Lower Certain Tariffs," WALL STREET JOURNAL, July 8, 1993; "NGO's Say G-7 Summit Is a Party for the Rich," REUTER, July 7, 1993; "Value of G-7 Summits Called Into Question," JOC, July 6, 1993; "EC Official Questions Usefulness of G-7 Summits," REUTER, July 2, 1993. ___________________________________________________________ Recent Publications on International Trade ___________________________________________________________ For copies of the following resources, contact the authors or organizations listed. All prices in U.S. dollars unless otherwise indicated. TWIN PLANT NEWS: THE MEXICO OPTION, Magazine of the Maquiladora and Mexican Industries, Vol. 8, No. 5, December 1992. 82 pages. 4110 Rio Bravo Dr., Suite 108, El Paso, TX 79902. (915) 532-1567. Fax: (915) 544-7556. $7 (rates vary outside of the U.S.). This issue is a primer on the how-to's of doing business in Mexico. "Breaking Boundaries: Women, Free Trade and Economic Integration," ALTERNATIVE WOMEN-IN-DEVELOPMENT, June 1993. 12 pages. Center of Concern, 3700 - 13th St. NE, Washington, DC 20017. (202) 637-2757. $1.50. "Minimum Wages and NAFTA," AFL-CIO TASK FORCE ON TRADE, February 1993. 5 pages. 815 16th St. NW, Washington, DC 20006. (202) 637-5166. Free. This discussion paper concludes that NAFTA will result in a loss of up to 550,000 U.S. jobs and depress U.S. wages without any real promise for raising wages in Mexico. "Heading South: The High Cost of NAFTA," PRAIRIE JOURNAL, Vol. 4, No. 1, Spring 1993. 15 pages. Prairiefire Rural Action, 550 11th St., Des Moines, IA 50309. (515) 244-5671. $2. "Moral and Economic Reasons the Religious Community Should Oppose This NAFTA: Work for a Fair Trade Policy," Philip Wheaton, CONVERSION FOR RECLAIMING EARTH IN THE AMERICAS, 1993. 13 pages. 16th & Harvard Sts. NW, Washington, DC 20009. (202) 588- 0978. $2.50. "Haiti After the Coup: Sweatshop or Real Development?" NATIONAL LABOR COMMITTEE EDUCATION FUND IN SUPPORT OF WORKER AND HUMAN RIGHTS IN CENTRAL AMERICA, April 1993. 90 pages. 15 Union Square West, New York, NY 10003-3377. (212) 242-0700. Fax: (212) 255-7230. $5.00. This study finds that Haitian businesses in support of the coup are still allowed to export to the U.S. despite U.S. policy guidelines, and despite the OAS embargo, U.S. companies imported over $67 million worth of apparel from Haiti last year. Also, U.S. companies are paying wages of only 14 cents an hour in Haiti. "Public Participation in International Pesticide Regulation: When the Codex Commission Decides, Who Will Listen?" Lewis Rosman, VIRGINIA ENVIRONMENTAL LAW JOURNAL, Vol. 12, No. 2, Winter 1993. 35 pages. University of Virginia School of Law, Charlottesville, VA 22903-1789. (804) 924-3683. $12.50. "U.S.-Mexico Trade: Pulling Together or Pulling Apart?" U.S. CONGRESS, OFFICE OF TECHNOLOGY ASSESSMENT, October 1992. 232 pages. Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 1520-7954. Fax: (202) 512-2250. $12. "Mask of Democracy: Labor Rights Suppression in Mexico Today," Dan LaBotz, SOUTH END PRESS/INTERNATIONAL LABOR RIGHTS FUND, 1992. 223 pages. 100 Maryland Ave. NE, Washington, DC 20002. (202) 544-7198. Fax: (202) 544-7213. $14 plus postage. ________________________________________________________ Produced by: Gigi Boivin and Chirag Mehta 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