Trade Week in Review and Recent Publications Friday, Febuary 11, 1994 Volume 3, Number 6 Headlines: CONGRESS MAY CONSIDER GATT THIS YEAR TAIWAN WILL IMPORT RICE AFTER GATT ENTRY BRITTAN: GATT PROVIDES DIRECTION FOR EU FARM POLICY FORUM SET TO DISCUSS WTO RULES LITTLE PROGRESS EXPECTED FROM U.S.-JAPAN SUMMIT _______________________________________________________ CONGRESS MAY CONSIDER GATT THIS YEAR The White House announced Tuesday that it would submit GATT implementing legislation to Congress for a vote sometime this year. U.S. Trade Representative Mickey Kantor said the decision to submit the legislation this year was made after the Japanese government suggested that the Diet would be willing to do the same. "The Japanese have now indicated that it is not only possible but probable that they will ratify this agreement in 1994," Kantor said. "That being the case, it was our judgment ... that the United States should not be the lone country in the world holding up (the agreement)." Japan had originally stated that it would not be able to approve the Uruguay Round of GATT until 1995 because of concerns over the soon-to-be created World Trade Organization (WTO). The global trade pact was scheduled to go into effect in July 1995, but media reports indicate the implementation date may be moved up to January 1, 1995 in light of the U.S. and Japanese decisions. Senator Daniel Patrick Moynihan (D-New York), who chairs the Senate Finance Committee, supported the administration's announcement. "If we don't (approve the agreement this year), we might be the only country holding up the rest of the world, which we don't want to do," Moynihan said Tuesday. But he cautioned that the subsidies code might block passage of the accord this year. Congressional leaders have also questioned how the U.S. will make up the $11 billion lost over five years as a result of lower tariffs under the Uruguay Round. Pay-as-you-go budget rules state the administration must recover any lost tariff revenues by either raising taxes or other tariffs, or by reducing mandatory spending. A growing number of House Republicans opposed to raising taxes support a proposal to waive current budget rules. But Kantor told the Senate Finance Committee that the administration would "have to pay for the tariffs ... We're already looking for offsets," he said. "It will be very difficult. We have a very tight budget." Sources: "Kantor Calls for GATT This Year, Promises to Pay," CONGRESS DAILY, February 8, 1994; "Sen. Moynihan Says Senate Finance Will Vote on GATT Agreement This Year," BUREAU OF NATIONAL AFFAIRS, February 9, 1994; "Spending Plan Stresses Exports, Sticks to Budget Rules," CONGRESS DAILY, February 7, 1994; "GATT Budget Waiver Gaining Ground Among GOP," CONGRESS DAILY, February 1, 1994. _______________________________________________________ TAIWAN WILL IMPORT RICE AFTER GATT ENTRY Taiwan approved several trade reform plans to ensure it gains entrance to GATT. The cabinet's GATT strategy committee agreed Monday to partially lift the country's two-decade old ban on foreign rice by gradually increasing rice imports. Taiwan, which consumes 1.6 million tons of rice per year, will allow imports equal to 4 percent of its domestic consumption over 10 years. The committee also voted to change fees levied on users of its ports and to alter its tobacco and liquor import tax system. Officials said Taiwan expects to enter GATT sometime this year. Sources: "Taiwan Plans to Ease Rice Ban," WALL STREET JOURNAL, February 9, 1994; "Taiwan Cabinet Committee Passes GATT Trade Reforms," REUTER, February 8, 1994. _______________________________________________________ BRITTAN: GATT PROVIDES DIRECTION FOR EU FARM POLICY EU Trade Commissioner Leon Brittan said provisions outlined in the Uruguay Round GATT text will provide Europe with one of several policy tools needed to push farm reforms in a more sustainable direction. "It is good news that the GATT Round put environmental aids in the Green Box," Brittan said during a speech on the future of EU farm policy. "That should make it easier to steer Union policy in the environmental direction in the future." Brittan said that as the EU begins to eliminate support prices and other agriculture subsidies, farmers will need to be granted direct aid to sustain income levels and to meet consumer demands for a more environmentally-friendly farming system. This approach for EU farm policy, Brittan said, will ensure "a more balanced, more sustainable agriculture, one which meets the challenges of rural development, of the environment and of our obligations to our neighbors." Under GATT, the European Union is obligated to cut domestic farm programs costs by 20 percent over the next six years. The EU is, however, allowed to make direct government payments to farmers and to continue subsidizing some research and conservation programs. UK National Farmers' Union (NFU) President David Naish said GATT would force the UK to pursue one of two directions, either to cut back on production or to accept reduced income supports. "Neither route can be contemplated with other than a deep sense of foreboding," Naish said. Sources: "Brittan on Speech on GATT and the Future of Farming," REUTER, February 8, 1994; "Final Agriculture Text of the Uruguay Round of the General Agreement on Tariffs and Trade, Summary of Key Provisions," IATP, January, 1994; "UK Farmers Face More Output, Price Cutbacks - Union," REUTER, February 8, 1994. _______________________________________________________ FORUM SET TO DISCUSS WTO RULES A team of trade and environment representatives established a forum this week to discuss and set policy principles for the new World Trade Organization (WTO). Richard Blackhurst, director of Economic Research at GATT, Konrad von Moltke of the World Wildlife Federation and former United Nations official Mohammed Sahnoun participated in the first round of talks. Blackhurst described the forum as a "give-and-take dialogue that has largely been missing from the trade and environment debate." Source: Robert Evans, "Expert Team Sets Trade and Environment Principles," REUTER, February 8, 1994. _______________________________________________________ OTHER TRADE NEWS _______________________________________________________ LITTLE PROGRESS EXPECTED FROM U.S.-JAPAN SUMMIT Few analysts expect the United States and Japan to make significant progress on trade matters during today's summit between U.S. President Bill Clinton and Japan Prime Minister Morihiro Hosokawa. Negotiators failed to break the impasse over market access for U.S. autos and auto parts during a series of meetings held earlier this month. "Everything has come to an impasse," Hosokawa said Thursday. Japanese Foreign Minister Tsutomu Hata flew to Washington Thursday in an unsuccessful attempt to unlock the stalled talks The United States continues to push for quantitative market access goals. But Japan is refusing such proposals, calling them managed trade. "The U.S. should understand that putting up a certain quantitative goal and trying to achieve it ... isn't something that can happen in the real business world," said Japanese ambassador to the U.S., Takakazu Kuriyama. Hosokawa released Japan's draft 1994 budget and economic stimulus package today and is expected to bring it to Washington as an "offering" to push talks forward. But U.S. officials have already dubbed the package a "moderate step." The Clinton administration hinted earlier that it would consider trade sanctions against several key Japanese trade sectors, including semiconductors and telecommunications, unless significant market access offers are made during this weekend's summit. Sources: William Dawkins, "Tokyo Lays Groundwork for U.S. Talks," FINANCIAL TIMES, February 10, 1994; Michiuyo Nakamoto, "Japan Resists U.S. Pressure on Trade," FINANCIAL TIMES, February 10, 1994; "Administration Contemplating Japanese Trade Sanctions," CONGRESS DAILY, February 9, 1994. _______________________________________________________ CENTRAL EUROPE WILL SPEED UNION Senior Central European trade officials signed a declaration late last week to speed up trade liberation under the Central European Free Trade Agreement (CEFTA). The agreement, which took effect in March 1993, will eliminate 54-60 percent of designated tariffs by January 1, 1998. Officials also voted to expand the scope of the accord to include new items for tariff reduction. Representatives will vote on the new items by April 1. Items not included in the plan include: agriculture, textiles, metals and automobiles. The JOURNAL OF COMMERCE reports that expert panels will immediately begin discussions on how to resolve conflict over these items. CEFTA was signed by the Czech Republic, Hungary, Slovakia and Poland in December 1992 with the aim of establishing a free trade zone by 2001. Source: Michele Kayal, "Nations Agree to Speed Up Central European Free-Trade Move," JOURNAL OF COMMERCE, February 7, 1994. _______________________________________________________ RESOURCES: "Recent Trade Liberalization in Developing Countries: The Effects on Global Trade and Output," Susan Hickok, FEDERAL RESERVE BANK OF NEW YORK, Volume 18, Number 3, Autumn 1993. First copy free. Public Information Department, 33 Liberty Street, New York, NY 10045-0001. Tel: (202) 720-6134. Third World Resurgence, THIRD WORLD NETWORK, Number 41, KDN PP6738/1/93, January, 1994. Contact organization for price. 87 Cantonment Road, 10250 Penang, Malaysia. Fax: 60-4-368106. This issue includes the following articles on the completion of the Uruguay Round of the General Agreement on Tariffs and Trade: "Uruguay Round Ends but Pressures on South Will Continue,"; "Order or Disorder After the Uruguay Round,"; "Third World Loses Out in GATT Deal," ; "Indian Government Fails to Protect National Interests,"; "World Reactions to GATT Deal". "List of World Bank-Financed Projects With Potential For NGO Involvement," WORLD BANK, December, 1993. Free. Arthur Thomas, International Economic Relations Division, Operations Policy Department, 1818 H Street, N.W., Room No. T-8102, Washington, D.C. 20433. (202) 473-1151. Fax: (202) 676-0576. _______________________________________________________ EVENTS: "Founders of the Bretton Woods Institutions," October 15-17, 1994, Bretton Woods, New Hampshire. The conference will bring together many of the founders and key leaders of the Bretton Woods system to reflect on the past 50 years of work and to discuss the system's future. Contact IATP for more information. "1994 Global Market Series," WORLD ECONOMIC DEVELOPMENT CONGRESS. $850.00 each conference. 1000 Winter Street, Suite 3700, Waltham, MA 02154-9419. (800) 767-9499 or (617) 487- 7900. Fax: (617) 487-7937 or (617) 487-0146. Upcoming conferences include: "Anticipating the New Cuba," March 17-18, Tampa, Florida; "Investing in Vietnam: Understanding Asia's Next Tiger," May 19-20, San Francisco, California; "Post-Election South Africa: Investing in the Future," June 2-3, New York, New York; "Investing in China: Strategies for Sustaining Growth," June 23-24, New York, New York. _______________________________________________________ Editors: Kai Mander, Gigi DiGiacomo, Steven Suppan Institute for Agriculture and Trade Policy (IATP) 1313 5th Street, SE, Suite 303 Minneapolis, MN 55414 tel: (612) 379-5980 fax: (612) 379-5982 email: kmander@igc.apc.org _______________________________________________________