TRADE NEWS BULLETIN Volume II Number 21 Wednesday, February 3, 1993 _________________________________________________________ NAFTA News Summary _________________________________________________________ ITC STUDY: NAFTA BIG BOOST FOR MEXICO The North American Free Trade Agreement will sharply benefit Mexico in the way of increased economic output and higher employment, while providing small gains for the U.S. and Canada, an International Trade Commission (ITC) study concluded. The independent federal agency also predicted the new competition from Mexico under NAFTA would eliminate five percent of jobs in the U.S. auto and apparel industries, and up to 15 percent in the major household appliance, glass and ceramic tile industries. The study anticipated a 16.2 percent increase in Mexican annual economic output under NAFTA, compared to increases of three- tenths of one percent in the United States and five-tenths of one percent in Canada. Employment would rise by 6.6 percent in Mexico, eight-hundredths of a percentage point in the U.S. and six-tenths of a percentage point in Canada. The study was sent to the Senate Finance and the House Ways and Means committees Monday, and will be made public later this week. Senator Max Baucus (D-Montana), the chair of the Finance Committee's trade panel, introduced legislation to revive the expired Super 301 law, which sets a fixed schedule for the president to take action against foreign countries that trade unfairly. Source: Keith Bradsher, "Study Says Trade Pact Will Aid U.S. Economy," NEW YORK TIMES, February 3, 1993. _________________________________________________________ GATT News Summary _________________________________________________________ EC MINISTERS CONSIDER RETALIATORY MEASURES AGAINST U.S. European Community trade and foreign ministers met in Brussels yesterday to consider counter-measures against the U.S for threatening to bar EC companies from bidding on millions of dollars worth of U.S. government contracts. The EC ministers refrained from announcing measures, saying they wanted to resolve the disputes through negotiations. "The most important thing is to tell the Americans they're on the wrong track," said Danish Foreign Minister Niels Helveg Peterson. "Trade wars and threats of trade wars" deflate business confidence, and thus endanger economic recovery, he added. Commission officials estimate government procurement contracts represent as much as 15 percent of EC gross domestic product. The Clinton Administration said it would begin the restriction on March 22 and also threatened to withdraw from the General Agreement on Tariffs and Trade's multinational government procurement code. The U.S. action, which follows an announcement earlier this week of new duties on steel imports, is a response to a new EC "utilities directive" which, the U.S. says, discriminates against U.S. telecommunications and electrical equipment by allowing EC governments to purchase EC-made products over non-EC products even if the price is as much as three percent higher. During EC-US negotiations in January, the U.S. rejected an EC offer to drop temporarily the three percent clause in exchange for suspension of the Buy American Act at five federal power facilities, representing 25 percent of the market. During their meeting, the EC ministers hoped to reach a compromise on lifting or harmonizing import restrictions, but resistance from countries seeking liberalized trade blocked a deal. The European Commission has proposed uniform procedures for imposing anti- dumping duties on non-EC imports, but some countries, such as the United Kingdom, Germany and the Netherlands, argue the plan would give the Commission greater power to enact duties. Source: Bob Hagerty, "EC Threatens Trade Sanctions to Counter U.S.," WALL STREET JOURNAL, February 3, 1993; Andrew Hill, "EC Ministers Fail to Agree Import Curbs," FINANCIAL TIMES, February 3, 1993; Nancy Dunne, "US Adopts Tough Line on Public Contracts," FINANCIAL TIMES, February 3, 1993; Andrew Hill, "Indignant EC Springs to Defence of Its Directive," FINANCIAL TIMES, February 3, 1993. _________________________________________________________ Resources: Speeches and commentaries from a September 1992 symposium entitled, "Environmental Quality and Free Trade: Interdependent Goals or Irreconcilable Conflict? are now available in Washington and Lee's LAW REVIEW, Fall 1992. For a copy, write to: Law Review, Washington and Lee University, Lexington, Virginia 24450. _________________________________________________________ Events: "The Free Trade Agreement: Canada and the United States -- An Assessment of the Agricultural Dimensions," a free seminar hosted by the Canadian Studies Centre, Michigan State University, Kellogg Center. February 8, 1993. 9 am-4 pm. Call (517)-355-2350 for more information. _________________________________________________________ Produced by: 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 _________________________________________________________