TRADE WEEK IN REVIEW January 31 - February 4, 1994 Volume 3 Number 5 _____________________________________________________________ REPUBLICAN CONCERNS MAY POSE PROBLEMS FOR GATT FARMERS WORLDWIDE UNHAPPY WITH FINAL GATT TEXT CARIBBEAN DEBATES NAFTA PARITY MEXICO, VENEZUELA, COLOMBIA MAKE PROGRESS ON ACCORD U.S., JAPAN TALKS REMAIN DEADLOCKED RESOURCES ___________________________________________________________ GATT News Summary ___________________________________________________________ REPUBLICAN CONCERNS MAY POSE PROBLEMS FOR GATT The U.S. Senate's 44 Republicans sent a letter to Trade Representative Mickey Kantor Monday expressing concern over a subsidy code contained in the Uruguay Round GATT accord. Senators warned that under the accord, governments worldwide are free to subsidize industry research and development (R & D), regional development and environmental projects which would force the U.S. to either spend billions of dollars doing the same, or to open its borders to subsidized competition. "If approved, the GATT agreement places the U.S. in a dilemma," explained Senator Jack Danforth (R-MO). "Either we play the game of industrial subsidies or we do not. If we subsidize, we must find billions of dollars and count on the government to make intelligent choices about which industries get the money." Danforth threatened to vote against the accord when it is submitted for legislative approval unless his concerns were addressed. Sources: Lyndsay Griffiths, "Republicans Raise Red Flag Over GATT Deal," REUTER, January 31, 1994; Asra Q. Nomani, "Republicans Blast a GATT Provision That Allows Some Government Subsidies," WALL STREET JOURNAL, February 1, 1994; Peter Behr, "Senate Republicans Object to GATT Pact Provisions; Danforth Threatens to Vote Against Trade Accord, Saying it Permits Big Subsidy Increases," WASHINGTON POST, February 1, 1994; Keith Bradsher, "Republicans Complain on Trade Pact," NEW YORK TIMES, February 1, 1994. ___________________________________________________________ FARMERS WORLDWIDE UNHAPPY WITH FINAL GATT TEXT Farmers throughout the world continue to protest agricultural provisions contained in the final GATT text. Representatives from farm organizations explain that as more details of the text become available, farmers are becoming increasingly concerned about the impact of the accord on agriculture prices and production. Dairy farmers in the U.S. estimate that the minimum import standards established under GATT will force down prices of domestic production as more foreign imports of cheese, milkpowder, butter and butter oil become mandatory under GATT July 15, 1995. "While not all the details are available yet, we've seen enough to know that the GATT minimum import access rules and export subsidy reductions will put the U.S. at a serious disadvantage with foreign export competitors such as the Europeans," said Stewart G. Huber, president of the U.S. Farmers' Union Milk Marketing Cooperative (FUMMC). The FUMMC estimates that imports of cheese, butter, butteroil, and whole milk powder will increase by 28%, 2,081%, 1,021% and 99,900%, respectively, by the year 2001. Britain's National Farmers' Union (NFU) has voiced apprehension about the accord, arguing that GATT may not be compatible with the EU's Common Agriculture Policy (CAP) reforms. "The NFU has consistently challenged the view taken by the European Commission in Brussels that the GATT deal can be compatible with the CAP reforms currently affecting British agriculture," said NFU President David Nash after talks with British Prime Minister John Major. Presidents of the Committee of Agricultural Organizations and the General Committee for Agricultural Cooperation in the European Union also warned that new farm price proposals made by the European Commission signify movement toward GATT compliance and away from promises to introduce programs which would limit economic sacrifices from Europe's farmers to those set out in CAP reforms. In South Korea, more than 15,000 farmers and students attempted to march on the U.S. Embassy Tuesday to protest President Kim Young- sam's decision to lift the country's ban on rice imports under GATT. South Korea is to start importing one percent of its domestic rice consumption per year, beginning in 1995. "We oppose Kim Young- sam and the United States," protesters shouted. They demanded that the president reopen GATT talks and urged lawmakers to veto a bill that would allow rice imports. The bill may be submitted to a special session of the National Assembly later this month. Opposition members have repeatedly vowed to block the bill, but they are significantly outnumbered by legislators of the ruling Democratic Liberal Party. Sources: "GATT Deal/CAP Reform Incompatible - UK Union Chief," REUTER, February 2, 1994; "GATT Dairy Rules Show Huge Import Increases," FUMMC MILK MATTERS, January 31, 1994; "COPA Criticizes Price Proposals for 1994/95 Marketing Year," COPA PRESS RELEASE, January 31, 1994; Shim Sung-won, "S.Korean Farmers Hurt in Clash Over Rice Imports," REUTER, February 1, 1994. ___________________________________________________________ Other Trade News ___________________________________________________________ CARIBBEAN DEBATES NAFTA PARITY Caribbean Community (Caricom) policy makers met last week to debate whether to push for parity with Mexico under the North American Free Trade Agreement (NAFTA), or whether to attempt to negotiate reciprocity on trade barriers with NAFTA members, Canada, Mexico and the U.S. Barbados Finance Minister David Thompson argued that the region should attempt to gain parity in order to attain Mexico's investment- drawing advantages. "Mexico has the capacity to take in the fullest advantage of improved access conditions to the United States and Canadian markets because of its proximity, lower energy costs and low wages," he said. "These characteristics will place it at a very advantageous position to attract greater levels of investment." Caribbean Development Bank President Neville Nicholls argued that any NAFTA parity arrangement that excludes those products left out of the Caribbean Basin Initiative (CBI), the region's one-way free trade agreement with the U.S., would not provide additional trade advantages for Caricom. Textiles, sugar, oil, footwear and leather goods were all excluded from the CBI. However, Nicholls said, "if CBI is given parity with NAFTA with the same range of products Mexico has as a contracting party, there would be advantages." He added that NAFTA contains safeguards that, if properly negotiated, would prevent a reciprocity arrangement from being "as devastating as it might appear on the surface." Source: "Caribbean: Policymakers Divided on the Way Forward Under NAFTA," IPS, January 28, 1994. ___________________________________________________________ MEXICO, VENEZUELA, COLOMBIA MAKE PROGRESS ON ACCORD Mexico, Colombia and Venezuela (the Group of Three: G-3) recently approved a chapter in their free trade agreement requiring state- owned companies to offer non-discriminatory sales contracts. The agreement prohibits state-owned companies from using their monopoly position in one market to dominate other markets. Negotiators also agreed to reduce subsidies that limit competition. As a result, Venezuela said it would simultaneously raise domestic energy prices and reduce subsidies. Observers say this could be a destabilizing factor in Venezuela's currently unstable political and economic climate. EL FINANCIERO sources said differing interpretations of the "rules of origin" chapter, which delayed the planned January 20 signing of the accord, must still be overcome before the G-3 trade agreement can be finalized. Source: "Monopolies Topic of G-3 Talks," EL FINANCIERO INTERNATIONAL, January 24-30, 1994. ___________________________________________________________ U.S., JAPAN TALKS REMAIN DEADLOCKED U.S. Trade Representative Mickey Kantor and W. Bowman Cutter, presidential assistant for economic policy, failed to push forward bi- lateral market access discussions with top-level Japanese officials in Tokyo this week. Officials met in an attempt to secure improved market access for U.S. autos and auto parts and other trade issues ahead of talks scheduled for next week between U.S. President Bill Clinton and Japan Prime Minister Morihiro Hosokawa. Talks were described as "severe" and "totally unacceptable" by participants and observers. "It is fair to say at this point that we have no agreement on any points of our proposal with Japan," said U.S. Commerce Undersecretary Jeffrey Garten. "We have a disagreement, in fact, about the purpose of the framework, let alone the details." Officials say they are considering the creation of a commission, staffed by members of the private industry and academics from both countries, to analyze stumbling blocks and make recommendations. Sources: M. Nakamoto, "Japan Braced for U.S. Pressure on Trade," FINANCIAL TIMES, February 2, 1994; "Japanese Trade Talks in Trouble, Commerce Official Says," CONGRESS DAILY, February 3, 1994; M. Nakamoto, "Japanese Resist U.S. Trade Talks Pressure," FINANCIAL TIMES, February 3, 1994; Andrew Pollack, "U.S. and Japan Study Private Panel on Trade," NEW YORK TIMES, February 3, 1994. ___________________________________________________________ Recent Publications on International Trade ___________________________________________________________ For copies of the following, contact the organizations listed. "Growth for Whom?: Rethinking Foreign Aid, Development, and the Meaning of Human Progress," David Korten, PEOPLE-CENTERED DEVELOPMENT FORUM, 1993. 11 pages. Public Citizen. 215 Pennsylvania Avenue SE, Washington, DC 20003. (202) 546-4996. Fax: (202) 547-7392. Free. "A Deeper Look at 'Sustainable Development'," David Korten, PEOPLE- CENTERED DEVELOPMENT FORUM, 1992. 10 pages. Public Citizen. Free. A packet of articles and memoranda concerning the Citizens Trade Campaign, PUBLIC CITIZEN, 1994. This packet includes "Dispute Resolution Under the Uruguay Round," "GATT Would Be Transformed Into A More Powerful 'World Trade Organization'" and "The Uruguay Round of GATT Jeopardizes Food Safety and Other Health, Safety, and Environmental Standards." $5. "State of the World 1994," Worldwatch Institute, W.W. NORTON CO., 1994. 265 pages. 500 Fifth Avenue, New York, NY 10010. (800) 233-4830. Fax: 212-869-0856. $11.95. "The Moving Pictures Bulletin," Television Trust for the Environment (TVE). A monthly guide on films and videos about development and the environment. The October 1993 issue features India. TVE also assists broadcasters and filmmakers. Centre for Environmental Communications, Prince Albert Road, London NW1 4RZ, UK. (44-71) 586-5526. Fax (44-71) 586-4866. E-mail: GEO2: TVE-UK. $3.75/ issue. "United Nations Publications Catalogue 1992/93," United Nations Publications, Sales Section, 2 United Nations Plaza, Room DC2-853, Dept. 421, New York, NY 10017. (212) 963-8302 or (800) 253-9646. Fax: (212) 963-3489. Free. "GATTing the Greens: Not Just Greening the GATT," Daniel Esty, FOREIGN AFFAIRS, November/ December, 1993. 5 pages. Reader Services, 58 East 68th Street, New York, NY 10021. Fax: (212) 861- 2759. $7.95/ issue; $38/year. Reprints are available. "NAFTA: Myths vs. Facts," William A. Orme, Jr. FOREIGN AFFAIRS, November/ December, 1993. 10 pages. $7.95/ issue; $38/year. Reprints are available. "El Financiero International Edition." Weekly newspaper on the Mexican economy and society. Very useful for tracking NAFTA. 2300 So. Broadway, Los Angeles, CA 90007. (213) 747-7547. Fax: (213) 747-2489. Subscription is $140/year or $80/six months. "The Road to Marakech: An Interim Report on Environmental Reform of the GATT and the International Trade System," Rodrigo J. Prudencio and Steward Hudson, NATIONAL WILDLIFE FEDERATION, January 25, 1994, 24 pages. The authors invite feedback that may be incorporated in a final version of their report , to be published in March 1994. 1400 16th St. NW, Washington, DC 20036-2266. (202) 797-6668. Fax: (202) 797-5486. $3/ students and Non- Governmental Organizations; $10/others. "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations," Original GATT Text, $30.00. Available as book or on disk. 504 pages. Government Printing Office (GPO), Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Tel: (202) 783-3238. Order Number: 041-001-00422-0. _____________________________________________________________ Editors: Gigi DiGiacomo, Hannah Holm and Steven Suppan 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 _____________________________________________________________