TRADE NEWS BULLETIN Volume II Number 20 Tuesday, February 2, 1993 _________________________________________________________ NAFTA News Summary _________________________________________________________ CHINA SAYS NAFTA THREATENS GATT The North American Free Trade Agreement threatens the future of GATT and could decrease investment in China, a leading Chinese newspaper said yesterday. The GUANGMING DAILY said, NAFTA "will inevitably strengthen the overall trading position of [Canada, the United States and Mexico] and damage the conditions of other countries." The newspaper said Mexico, which exports many of the same products as China, will enjoy competitive advantages under NAFTA. China is also concerned that other countries will set up operations in North America as a method of gaining access to the market, decreasing the amount of capital and technology transfers into China. While Congress must still develop NAFTA's implementing legislation, analysts say the only sure-fire way to gain privileged access to the market is to build the products in North America. Japan's leading auto manufacturers, including Toyota, Suzuki and Mazda, are already studying ways to tap into North America, which some analysts predict could represent 3 million new car sales a year within 15 years. "You flat out can't meet all the requirements without producing in Mexico," says Toni Harrington, a Honda North America official. The GUANGMING DAILY, a conservative voice in China's communist party, said China should try to strengthen its position in North America before NAFTA goes into effect next year. Over the past year, China has adopted market-opening measures and worked to strengthen copyright laws in hopes of being readmitted to GATT. Meanwhile, the CHINA DAILY expressed concern the Clinton Administration would revoke China's Most Favored Nation (MFN) trade status. Last year, President Bush quashed Congressional attempts to tie MFN with human rights, arms exports and other issues, but China fears Clinton will not be as friendly. Japan cautioned the United States today against ending MFN status for China. "We believe that the U.S. government had better be very cautious in taking such an extreme measure," Foreign Ministry spokesman Masamichi Hanabusa told reporters. Foreign Minister Michio Watanabe is expected to ask President Clinton to maintain MFN for China during a visit to Washington February 11. Source: "China Condemns NAFTA as Threat to Global Trade," FINANCIAL TIMES, February 2, 1993; "China Sees Danger in NAFTA Accord," REUTER, February 1, 1993; "Japan Worried About U.S. Moves to End China's Men," REUTER, February 2, 1993; Lindsay Chappell, "Japanese Seek Mexican Trade," CRAIN'S DETROIT BUSINESS, Winter 1992; "Japan Worried About U.S. Moves to End China's MFN," REUTER, February 2, 1993. _________________________________________________________ GATT News Summary _________________________________________________________ U.S. THREATENS TO BLOCK EC BIDS ON UTILITY CONTRACTS United States Trade Representative Mickey Kantor said the U.S. would prohibit European Community companies from bidding on U.S. utility and service contracts if the EC does not end discrimination against U.S. goods by March 22. The move comes in response to an EC directive, which came into effect January 1, giving preference to EC electrical and telecommunications equipment. The EC's top trade official, Leon Brittan, criticized the announcement and said the U.S. had rejected an EC proposal to delay action until a global solution could be found. "I cannot believe it is in anybody's interest, European or American, to attempt to deal with trade issues in this way," said Brittan. "We do not accept this form of unilateral bullying." Referring to a U.S. decision to impose steel import duties, Brittan said the latest announcement, marks "the second aggressive trade measure in the first two weeks of the new administration," but declined to label them as protectionist. He said he would discuss the matter with Kantor February 11 during a visit to Washington. Clinton Administration officials denied they were "bullying" the EC. "The president believes in free trade but it has to be free," said Press Secretary Dee Dee Myers. "If other countries don't want to play by our rules, we'll play by theirs." Source: Keith Bradsher, "U.S. Fights A European Trade Move," NEW YORK TIMES, February 2, 1993; "EC Rejects US 'Bullying' on Award of Utility Contracts," FINANCIAL TIMES, February 2, 1993; Robert Trautman, "U.S. Plans to Curb Purchases From Some EC Nations," REUTER, February 1, 1993; "White House Defends U.S. Stand on EC," REUTER, February 1, 1993. _________________________________________________________ MOYNIHAN PUSHES FOR FAST-TRACK EXTENSION Senator Daniel Patrick Moynihan (D-New York), the new chair of the Senate Finance Committee, recommended a two-year extension of fast-track negotiating authority. Speaking to business people and lobbyists at the U.S. Chamber of Commerce, Moynihan said the extension was necessary to complete the Uruguay Round of GATT. Source: "Moynihan Urges GATT Fast-Track Extension," JOURNAL OF COMMERCE, January 29, 1993. _________________________________________________________ Resources: THINGS AMERICA'S FARMERS AND CONSUMERS NEED TO KNOW ABOUT NAFTA: HOW IT MAY AFFECT THEIR LIVES AND LIVELIHOOD, produced and distributed by the National Farmers Union, 600 Maryland Avenue SW, West Wing, Washington, D.C. 20024. Tel: (202) 534-1600. _________________________________________________________ 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 _________________________________________________________