From iatp@igc.apc.orgMon Dec 4 18:57:02 1995 Date: Mon, 04 Dec 1995 06:47:05 -0800 (PST) From: IATP To: Recipients of conference Subject: Trade News 11-8-95 TRADE NEWS Produced by the Institute for Agriculture and Trade Policy November 8, 1995 Volume 4, Number 17 _________________________________________________ Headlines: - EU SLOWS SELECTION OF APPEALS BODY - QUAD GROUP STANDS FIRM ON CHINA - KANTOR: U.S., EU MUST ADDRESS BARRIERS - JAPANESE FIRMS SEEK END TO SEMICONDUCTOR PACT - EU-U.S. MAKE PROGRESS IN TRADE TALKS - U.S. SAYS CHINA STILL PIRATING CDs, VIDEOS - U.S. TRADE DEFICIT DOWN IN AUGUST _________________________________________________ WTO NEWS SUMMARY _________________________________________________ EU SLOWS SELECTION OF APPEALS BODY Last month, strong objections by the European Union (EU) to a draft list of candidates recommended for appointment to the world trade appeals court forced members of the World Trade Organization (WTO) to postpone the final selection. In a move to avert a regional fight, the chairman of the WTO's dispute settlement body, Australia's Don Kenyon, decided to adjourn the meeting in order to hold further consultations. Some EU member states, led by France, believe the current list of judge candidates to the seven member body favors the Asia-Pacific region. These countries want to see a geographical adjustment. The current list of seven finalists, selected from an original field of 32 nominees from 23 nations, are from the United States, the European Union, Japan, the Philippines, New Zealand, Uruguay and Egypt. EU ambassador to the WTO Jean-Pierre Leng said many other possible candidates are available. But WTO director general Renato Ruggiero said it would be "very difficult to rearrange the geographical equilibrium." Similarly, Booth Gardner, deputy U.S. trade representative, said the United States is satisfied with the short list of candidates. "We don't think it needs to be rearranged," he said. As the supreme arbiter of any international trade dispute, the court, to be known as the "appellate body," will wield enormous influence in shaping new global trade norms. For example, the court will have the power to uphold, modify or reverse the legal findings of any WTO trade dispute panel and its rulings will be "unconditionally" accepted by all parties. John Zarocostas, "EU Objections Slow Selection of WTO Trade Appeals Body," JOURNAL OF COMMERCE, November 2, 1995. QUAD GROUP STANDS FIRM ON CHINA Last month, the world's leading trade powers refused to ease conditions for China's accession to the World Trade Organization (WTO), dashing hopes of a speedy resumption of negotiations with Beijing that have been stalled since early summer. The meeting of the so-called Quad Group -- the United States, the European Union (EU), Japan, and Canada -- revealed a hardening of attitudes toward China's membership. U.S. trade representative Mickey Kantor said the Quad nations were "deeply concerned at China's failure so far to meet even the minimum requirements" for WTO membership. "Chinese membership in the WTO is an important objective," said the EU's trade commissioner Sir Leon Brittan, "but we think it has to be done on the basis of acceptance of the fundamental rules of the organization." Meanwhile, China rejected as unacceptable the conditions set by the Quad countries for its entry into the WTO, insisting that it be treated as a developing country. "Their demands exceed the level of China's economy and are against the basic principles of the WTO," said a Chinese ministry of trade spokeswoman. The dispute centers on the terms of China's acceptance to the WTO and whether it should be treated as a developing economy eligible for lenient enforcement, as Beijing demands, or as a partially developed country, as the Quad countries insist. "China Rejects Conditions for Admission to WTO," JOURNAL OF COMMERCE, October 25, 1995; Bruce Barnard, "Quad Group Takes a Tough Line on Chinese Membership in WTO," JOURNAL OF COMMERCE, October 24, 1995. _________________________________________________ REGIONAL/BILATERAL AGREEMENTS _________________________________________________ KANTOR: U.S., EU MUST ADDRESS BARRIERS On October 23, U.S. trade representative Mickey Kantor announced that the United States hopes to launch a joint study with the European Union (EU) to address existing trade barriers and future opportunities to bolster U.S.-EU trade and economic ties. Kantor said the joint study should look at confidence building measures, as well as concrete efforts on specific trade issues that will result in further liberalization. The initiative is expected to be formally announced in December. "Kantor Says U.S., EU Must Examine Barriers," JOURNAL OF COMMERCE, October 24, 1995. JAPANESE FIRMS SEEK END TO U.S. SEMICONDUCTOR PACT On November 3, Japan's electronics industry called for the termination of a nearly-10-year old semiconductor trade agreement between the United States and Japan, in what could be the opening salvo in a new trade dispute. The call, by the Electronic Industries Association of Japan, is the first time the group has taken a public stand against the semiconductor trade agreement. While the Japanese government is expected to back the association's position, the group's announcement comes eight months before the agreement is set to expire and before the two governments have begun serious discussions on whether it should be renewed. The Electronic Industries Association said the agreement should be allowed to expire in July 1996 because it had achieved its purpose. Foreign computer chip manufacturers are not "firmly established" in the Japanese market, so that government intervention is no longer warranted, it said. The American semiconductor industry, however, maintains that the Japanese market is not fully open and that the pact should be renewed, setting up a potential clash. For its part, the Clinton administration is expected to push for a renewal of the agreement, which has served as a model for the administration's approach to trade with Japan. Speaking in Washington last week, U.S. trade representative Mickey Kantor said: "We are not going to give it up. We have a long way to go, and it would be a big mistake for Japan and the U.S. not to renew it in some form." The semiconductor agreement, first signed in 1986 and then renewed in 1991, has what Japan termed an "expectation" that American and other foreign companies would attain 20 percent of Japan's market for microelectronic chips. That goal was first reached at the end of 1992. In the second quarter of this year, foreign manufacturers held 22.9 percent of Japan's market, according to calculations made by the U.S. government. That is up from under a nine percent share back in 1986. Andrew Pollack, "Japanese Seek to End Semiconductor Pact with U.S.," NEW YORK TIMES, November 3, 1995. EU-U.S. MAKE PROGRESS IN TRADE TALKS Last week, the European Union (EU) and the United States made significant progress in talks on compensating the U.S. for export losses to the EU resulting from expansion of the Union. Meeting in Brussels, EU trade commissioner Sir Leon Brittan and U.S. trade representative Mickey Kantor discussed differences over a compensation plan, and expectations are that an accord will be reached fairly soon. The United States wants compensation for higher tariffs imposed by Austria, Finland and Sweden when they joined the EU earlier this year. Kantor has threatened to use World Trade Organization (WTO) rules to withdraw tariff concessions for EU goods on December 31, 1995 if there is no agreement on enlargement by December 1. But according to Brittan's spokesman, progress at this latest meeting suggested that the "Americans want to push for an agreement," and that a WTO panel will not be convened. "EU Makes Progress with U.S. in Trade Talks," REUTER, November 3, 1995. U.S. SAYS CHINA STILL PIRATING CDs, VIDEOS On November 3, U.S. trade representative Mickey Kantor announced that Chinese factories are still turning out pirated music, videos and software, despite a seven- month-old trade accord with the United States to protect intellectual property rights. While Kantor praised Beijing for cracking down on retail sales of pirated products, he said China still has a long way to go on intellectual property rights. "The atmosphere for enforcement in China is greatly improved," he said, "but they are not addressing the heart of the problem: large- scale manufacturing and distribution." He said, for example, that 29 compact disc factories continue to operate. Kantor also said that progress on bilateral trade issues would give the United States confidence that China's accession to the WTO could work. "Kantor Says China Pirating CDs, Videos," UPI, November 3, 1995. _________________________________________________ WORLD TRADE ROUND-UP _________________________________________________ U.S. TRADE DEFICIT DOWN IN AUGUST Record high exports of both goods and services trimmed the U.S. trade deficit in August to $8.8 billion, the smallest monthly deficit since December 1994. Heading the August export advance were autos and auto parts, civilian aircraft, computer accessories, grains and precious metals. Exports of both capital and consumer goods reached new monthly highs, as did combined shipments of foods, feeds and beverages. The biggest gains came in trade with Canada, Mexico and the 15- nation European Union (EU). Despite the improved August balance, the United States still is headed for a record merchandise trade deficit this year of more than $180 billion, excluding military shipments. But the U.S. services trade surplus appeared likely to top $60 billion, also a new high. Richard Lawrence, "Booming Exports Narrow Deficit to 8- Month Low," JOURNAL OF COMMERCE, October 19, 1995. ___________________________________________ Trade News is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Editor: Orin Kirshner. E-mail versions of Trade News are available free of charge for Econet/IATP Net subscribers. For more information about fax or mail subscriptions, contact: Institute for Agriculture and Trade Policy, 1313 Fifth Street S.E., Suite 303, Minneapolis, MN, 55414 Phone 612-379-5980. To learn more about IATP's contract research services, please contact Dale Wiehoff at dwiehoff@igc.apc.org