TRADE NEWS BULLETIN Volume 2 Number 32 Friday, February 19, 1993 _________________________________________________________ NAFTA News Summary _________________________________________________________ STUDY PREDICTS NAFTA WILL CREATE U.S. JOB GROWTH A study by the Washington based Institute for International Economics (IIE), predicts the U.S. economy will gain a net of 171,000 new jobs as a result of the North American Free Trade Agreement (NAFTA). "There has been a huge sucking sound, as Perot described, but it has been due to U.S. exports and the creation of American jobs," said the Director of IIE, Fred Bergsten. The study presses for a trinational commission to enforce labor standards and authorize sanctions if governments fail to end abuse. It also calls for Mexico to commit to "the aggressive enforcement of national labor laws and regulations." The authors, Gary Hufbauer and Jeffrey Schott, recommend allocating $3bn toward environmental clean-up along the U.S.- Mexican border, and $300m per year from each three countries for "green fees;" assessments on countries violating environmental standards. The World Bank announced it will commit Mexican lending priorities through 1998 to the environment, reduction of poverty and infrastructure. Sources: David Dodwell, "Study Offers Tips on NAFTA Fine- Tuning," FINANCIAL TIMES, February 18, 1993; CONGRESS DAILY, February 17, 1993; "World Bank Sees Modest Growth in 1993," February 17, 1993. _________________________________________________________ GATT News Summary _________________________________________________________ OPEN RICE MARKETS WON'T REDUCE U.S. TRADE DEFICIT The U.S. trade deficit with Japan will not be significantly reduced should Japan accept the General Agreement on Tariffs and Trade (GATT) proposal to open its rice and wheat markets. "Under the GATT plan, only a limited volume would enter Japan other than the minimum access," requirement, said a Tokyo- based grain trader. China and Australia are expected to sell over half of the allowed rice imports. The U.S. would supply only a small amount and risk losing its current "privileged" market share of wheat imports as Canada and Australia would gain greater access. Japan has been pressured by the U.S. to end its 51 year old ban on rice imports for decades. Treasury Secretary Lloyd Bentson reiterated last week, the importance of opening the rice markets and its significance in reducing trade surpluses with the U.S. and other countries. However even if the Japanese ate only American rice, the total cost would amount to between $3.0 and $7.5 billion, depending on crop quality. Considering that Japan's total trade surplus with the U.S. was $46.67 billion in 1992, and $2.95 billion for January alone, the impact of "open" markets will not be very substantial. Source: Risa Maeda, "U.S. Would Gain Little If Japan Opened Rice Market," REUTER, February 18, 1993. _________________________________________________________ _________ FRENCH FARM MINISTER WILL VETO GATT FARM DEAL French farm ministers announced today that they will veto the GATT farm deal between the U.S. and EC, if it is put to formal approval. "France will say loud and clear that it cannot approve this deal, and since this will be the first time a formal agreement is proposed, it will be 'no' and I shall veto it," sounded Jean-Pierre Soisson, France's agriculture minister. The farm ministers meeting is expected to review GATT discussions and the compatibility of the controversial farm deal with internal farm reforms. The side proposal by the EC to cut exports and oilseed production is not on the agenda for discussion though it has sparked much support for hardline groups like Coordination Rurale, which will block the country's railways on Monday to voice opposition. Source: "France Threatens to Veto GATT Farm Deal," REUTER, February 19, 1993; "French Farmers Plan to Block Railways Next Monday," REUTER, February 17, 1993. _________________________________________________________ Other News: __________________________________________________________________ _ U.S. TRADE DEFICIT INCREASES 29% IN 1992, LOW EXPORTS The U.S. Commerce Department announced today that U.S. imports rose 29 per cent over exports in 1992, representing the first decline in the improvement of the overall trade balance in four years. "It basically shows us how much our recovery depends on recovery in our major trading partners," responded Robert Hormats, vice chairman of Goldman Sachs International. Almost all of U.S. export growth came from sales to developing and middle-income countries while other industrialized economies remain in recession. Source: Keith Bradasher, "U.S. Trade Deficit Grew 29% in 1992," NEW YORK TIMES, February 19, 1993. _________________________________________________________ Produced by: Gigi Boivin 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)3795982 E-Mail:kmander@igc.apc.org _________________________________________________________