(In reality this is v2n38 -- pauls@umich.edu) TRADE NEWS BULLETIN Volume 2 Number 37 Monday, March 1, 1993 _________________________________________________________ NAFTA News Summary _________________________________________________________ ADA SHOULD BE REVISED TO COMPETE WITH MEXICO U.S. labor leaders have long argued that, if implemented, the North American Free Trade Agreement will put pressure on lawmakers to lower U.S. labor standards in order to compete with Mexico. A recent op-ed in the MINNEAPOLIS STAR TRIBUNE lends some credence to their worries. In the article, Debra Saunders takes aim at the two-year old American Disabilities Act (ADA), saying it will encourage U.S. businesses to relocate to Mexico. Many employers view the ADA as a regulatory burden involving increased cost and little benefit. Saunders cites Congressional figures showing that of the 43 million Americans deemed disabled, 16.7 percent suffer from emotional or mental illness and 11.1 percent from alcoholism or drug addiction. She suggests narrowing the ADA's definition of disability to eliminate stress and addictive behavior. Saunders says this would stimulate job growth by removing "undue burdens" which "give employers reasons to relocate to Mexico." In response to the commentary, Marty Cushing, a Minnesota businessman, rejects Saunders implication that ADA forces employers to go to "ridiculous lengths and expense to meet the letter of the law." He also criticizes Saunders' economic reasons to "put up obstacles to equal opportunity." Cushing urges President Bill Clinton to stand firm on current policy and describes the ADA as an "economic bonanza" for the business community. "There are 600,000 people with disabilities in Minnesota alone," he writes. "If a business owner could reach 5 percent of this population by making minor modifications to the physical structure of the business, that would be an additional 30,000 customers." Sources: Debra Saunders, "Americans With Disabilities Act Is Paving the Road to Mexico," MINNEAPOLIS STAR TRIBUNE, January 27, 1993; Marty Cushing, "ADA Is Justice, Not Just Another U.S. Regulatory Burden," MINNEAPOLIS STAR TRIBUNE, February 20, 1993. __________________________________________________________________ MEXICO MAY DEVALUE PESO Mexican bankers, business people and even government officials are speculating that the government will devalue the peso to maintain competitiveness in the global market. Under current policy Mexico must keep interest rates high and the budget in surplus to ensure capital flows into the country to finance the deficit. Imports have been growing at 24 percent per year since 1989 but exports at only seven percent. Because a third to one half of Mexico's capital comes from foreign investment it is considered unstable. "If NAFTA does not go through, it would act as a break on future development," said World Bank representative Eugene McCarthy. Devaluation is deemed inevitable by some economists, especially if NAFTA is postponed. Devaluation faces strong opposition from many, including Finance Minister Pedro Aspe. "It would be like committing suicide because you're afraid of death," Aspe said. Following almost every Mexican devaluation, the finance minister and central bank governor have resigned. Sources: "World Bank Sees NAFTA Key To Mexican Growth," REUTER, February 26, 1993; Stephen Fidler, Damian Fraser, "Dark Cloud of Devaluation Gathers Over Mexico," FINANCIAL TIMES, February 24, 1993. _________________________________________________________ GATT News Summary _________________________________________________________ CLINTON ANNOUNCES FREE TRADE POLICY GOALS U.S. President Bill Clinton outlined a five-point comprehensive free trade agenda on Friday. During his first international policy speech, Clinton pledged to open the U.S. economy to foreign imports and investment, providing competitors reciprocate. "We will continue to welcome foreign products and services, but our products must be welcomed in theirs on equal terms," he said. In support of the General Agreement on Tariffs and Trade (GATT), Clinton said, "Open and competitive commerce will enrich us as a nation ... We must compete not retreat." However he did not comment on when he would seek a renewal of fast-track negotiating authority, which expires today. White House officials have suggested that by letting GATT talks "slide into limbo" for a while, Europe and Japan will initiate trade concessions in hopes of completing the talks. Foreign trading partners generally viewed Clinton's speech as a positive signal, "The overall tone is to be welcomed," said a European government official. "What remains to be seen is how the trade policy actually comes out." Clinton's address came one day before Treasury Secretary Lloyd Bentsen met with G-7 finance ministers in London. The discussions were set to discuss major trade and foreign policy issues. Sources: Bob Davis, David Wessel, "Clinton's Good Cop-Bad Cop Stance on Trade Mirrors Divisions Within His Administration," WALL STREET JOURNAL, March 1, 1993; "Trade-Looking Outward," WASHINGTON POST, February 28, 1993; "Clinton Spells Out Free Trade Pledge," WASHINGTON POST, February 27, 1993; Lyndsay Griffiths, "Partners, Experts Welcome Clinton Stance on Trade," REUTER, February 26, 1993; "Clinton Rejects Protectionism; Outlines Plan," UPI, February 26, 1993. _________________________________________________________ Produced by: Kai Mander and 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)379-5982 E-Mail: kmander@igc.apc.org _________________________________________________________