From iatp@igc.apc.orgTue Aug 22 10:29:46 1995 Date: Mon, 21 Aug 1995 12:20:19 -0700 (PDT) From: IATP To: Recipients of conference Subject: Trade News 8-21-95 TRADE NEWS VOL. 4 N0. 12 AUGUST 21, 1995 ----------------------------------------------------- CONTENTS -------------------------------------------------------- --------------- THAIS WIN TEXTILE FIGHT WITH US U.S. TO FILE EU BANANA COMPLAINT THAIS TO FILE EU TAX COMPALINT SUTHERLAND HIRED BY GOLDMAN SACHS CARIBBEAN NATIONS FORM TRADE BLOC U.S. JAPAN CLOSE ON AUTO PACT -------------------------------------------------------- -------------- -------------------------------------------------------- -------------- WTO NEWS SUMMARY THAIS WIN TEXTILE FIGHT WITH U.S. Earlier this month, Thailand won a landmark victory at the World Trade Organization (WTO), when the WTO's Textiles Monitoring Body threw out Washington's attempts to introduce quotas on Thais underwear exports to the United States. "It was the first case brought before the Textiles Monitoring Body . . .," said Thailand's deputy director-general of trade, Boontiopa Simasakul. "We won the case. It means the U.S. cannot set specific quotas on underwear." More broadly, she said, the decision will automatically cancel the United States' right to apply so-called safeguard measures to other items in the future. The textile panel held that the underwear exports to the United States did not cause serious injury, as they represent only a small portion of the U.S. market. But it did warn that further increases in imports could become a threat to U.S. producers. The United States originally called on Thailand, Honduras, Costa Rica and Turkey to negotiate underwear quotas by the end of March 1995. While the other three opted for a compromise, Thailand pursued the case through the WTO. Ron Corben, "WTO Win Buoys Thais in Textile Fight with U.S.," Journal of Commerce, August 3, 1995. U.S. TO FILE EU BANANA COMPLAINT Last week, the Clinton administration announced that the United States would file a complaint in the World Trade Organization (WTO) in September, 1995 against the European Union's (EU) policy on bananas. The case would be the first complaint initiated by the United States against the EU in the WTO. The administration charges that the EU's system of quotas and import-and-export licensing arrangements with Caribbean nations discriminates against American companies. U.S. Trade Representative Mickey Kantor has put the losses, which mostly involve reductions in Chiquita Brands International's exports of Latin American bananas to Europe, in the hundreds of millions of dollars "at the minimum." An American trade official, who asked not be identified, said that the administration was moving to the WTO because the EU had failed to reach an internal agreement on how to modify the policy. The United States began an investigation of the EU banana regime last October in response to a Section 301 complaint by Chiquita and the Hawaii Banana Industry Association. "U.S. Plans Trade Appeal in Europe Banana Case," NEW YORK TIMES, August 19, 1995. THAIS TO FILE EU TAX COMPLAINT Thailand plans to complain to the World Trade Organization (WTO) over alleged unfair tax calculations by the European Union (EU) on Thai rice exports. The petition will be filed with the dispute settlement body of the WTO. According to Thai officials, the EU adjusts its import tariff every three months using a formula based on the difference between an intervention price and the import price. The intervention price is based on rice prices established during trade within the EU. The import price is based on representative rice prices in Rotterdam, Thailand and the United States. "Thais to Go to WTO With Tax Complaint," JOURNAL OF COMMERCE, August 15, 1995. SUTHERLAND HIRED BY GOLDMAN SACHS Last month, the founding director-general of the World Trade Organization (WTO), Peter Sutherland, announced that he will join Goldman Sachs in as the head of the U.S. investment bank's European operations.In September 1995, Sutherland will become chairman and managing director of Goldman Sachs International, the subsidiary which covers Europe, the Middle East and Africa. Sutherland will not immediately take a seat on Goldman's nine member management committee, but it is presumed within the organization that he will eventually join the firm's highest executive body. Sutherland said his move to Goldman Sachs, to which he was an advisor between 1990 and 1993, is a long-term commitment. "It is not a stepping stone to anything else," he said. The hiring of Sutherland comes as Goldman Sachs is recovering from falls in the bond market in 1994 and a plunge in profitability. Nicholas Denton, "Goldman Sachs Hires Former World Trade Organization Head," FINANCIAL TIMES, July 17, 1995. REGIONAL/BILATERAL AGREEMENTS CARIBBEAN NATIONS FORM TRADE BLOC Last week, presidents and prime ministers of 25 countries in the Caribbean Basin met in Trinidad to create the world's newest trade bloc. The new grouping is potentially the fourth largest in the world -- after the European Union (EU), the Asia-Pacific Economic Cooperation (APEC) forum, and the North American Free Trade Area (NAFTA), and will offer some protection for the small economies in the region which are endangered by rapid changes in global trade. The creation of the Association of Caribbean States (ACS) follows two and a half years of attempts by the Caribbean Community (Caricom) to establish a larger economic bloc in the region. The 14-nation Caricom, which is made up of the English-speaking countries of the region and Surinam, is being joined in the ACS by the Group of Three (Colombia, Mexico and Venezuela), the countries of Central America, Cuba, the Dominican Republic and Haiti. The convention establishing the ACS also offers associate membership to 15 dependent territories in the region, including Puerto Rico and the U.S. Virgin Islands. "This region, with many small economies, is in danger of being overwhelmed by the many changes in international trade," said a member of Venezuela's delegation to the summit. "To the North we have NAFTA, and to the south we have Mercosur which is strengthening itself to be a more potent force in hemispheric and regional trade. We in this region are likely to be either squeezed, or left out, or both, and we cannot allow this to happen." The ACS will seek the expansion of trade among its members. It will also seek to increase the level of functional cooperation in several sectors, including energy, seabed mining, agricultural and industrial development, transportation and communication. The ACS will take a common approach on behalf of its members in international trade negotiations, such as with the EU and with NAFTA. The membership of Mexico is regarded by many smaller countries as important to the success and the enhancement of the stature of the ACS. Mexico's membership is NAFTA offers the ACS a "bridge" to North America, said delegates. Cuba's involvement in the ACS has sparked some controversy, but members of the new bloc say the island is a part of the region, and must be included. The ACS will have a market of 204 million people, and an estimated gross national product of $500 billion, with an annual trade volume of about $180 billion. Canute James, "Caribbean Leaders Meet to Forge Trade Bloc," JOURNAL OF COMMERCE, August 17, 1995; Canute James, "New Trade Bloc Holds Summit," FINANCIAL TIMES, August 17, 1995. U.S., JAPAN CLOSE ON AUTO PACT The United States and Japan are expected to sign their bilateral pact on cars and car parts this week, although a key provision over monitoring the deal's progress has yet to be reached. The signing has been delayed by disputes over details. A background document describing the pact was released last week by the office of the U.S. trade representative, but Tokyo found some technical mistakes which would have to be resolved. According to the background document, the pact contains "enforceable commitments" by Japan to: promote increased purchases from alternative parts suppliers in Japan, the United States and other countries; address a list of specific performance and technical standards that hinder car imports; and broadly deregulate barriers to selling replacement parts in the Japanese replacement auto parts market. Japan has promised government support and financial incentives to facilitate more imports into Japan. Nancy Dunne, "U.S., Japan Closer on Car Pact," FINANCIAL TIMES, August 17, 1995.