Trade Week in Review and Resources Friday, May 13, 1994 Volume 3, Number 19 _________________________________________________ Headlines: CLINTON SEEKS WAYS TO PAY FOR GATT SUTHERLAND CALLS FOR QUICK CHINA ENTRY SEARCH FOR NEW GATT CHIEF BEGINS ANC WILL PURSUE FREE-MARKET AG POLICY EU, RUSSIA FORM PROVISIONAL TRADE PACT RESOURCES _________________________________________________ GATT NEWS SUMMARY _________________________________________________ CLINTON SEEKS WAYS TO PAY FOR GATT The Clinton administration is proposing $12 billion in discretionary spending cuts and tax increases to recuperate the lost tariff revenues resulting from the new GATT pact. Congressional and administrative officials are considering the following proposals: %Cut farm programs by $3.1 billion, including a $1.6 billion cut in the Export Enhancement Program; %Raise $4.8 billion by implementing a 4 percent tax on gross revenue of all radio spectrum users, including taxis, radio and TV stations; %Reauthorize a corporate Superfund tax on hazardous waste cleanup to raise $1.5 billion; %Implement a federal gambling tax to raise $600 million; %Raise $500 million by taxing employee parking benefits; %Treat two more chemicals as CFCs to be taxed as ozone depleters, thereby raising $200 million; %Change the corporate tax filing schedule governing companies in Puerto Rico, raising $500 million. According to the WALL STREET JOURNAL, trade experts doubt Clinton will follow through with the proposed changes because of their impact on "many powerful groups -- such as broadcasting, agriculture and retailing." Many predict Clinton will seek a waiver from federal budget laws which require offsetting funds from new programs that increase the deficit. But U.S. Trade Representative Mickey Kantor told reporters the White House will not seek a waiver to make up for the lost $14 billion in tariff revenues in the first five years of the world trade pact. He said the administration was "serious" about pursuing the proposals to account for the lost income but said they were "the first part in a whole menu of items" being considered. Should Congress approve the tax and spending changes, the administration will still need to find another $2 billion during the first five years of GATT. House Appropriations Committee Chair David Obey (D-Wisconsin) said Tuesday he will firmly oppose any effort to modify current budget rules to permit discretionary spending cuts. The BUREAU OF NATIONAL AFFAIRS reports "Obey's opposition represents a possibly fatal setback" to the administration's proposals. In addition, Senate budget rules require the administration to recover tariff revenue losses during the first ten years of the trade accord -- which officials estimate will reach a total of $45 billion. Clinton told the Advisory Committee on Trade Policy and Negotiations that he would seek a waiver for the second half of the ten-year period. A waiver would require 60 Senate votes. Sources: Bob Davis, "White House Seeks $12 Billion Package to Pay for Tariff Losses Under GATT," WALL STREET JOURNAL, May 10, 1994; Lori Wallach, "Hill Update on GATTzilla," PUBLIC CITIZEN MEMORANDUM, May 3, 1994; "Obey Said Firmly Opposed to Using Discretionary Cuts to Fund GATT," BNA INTERNATIONAL TRADE DAILY, May 11, 1994; "Looking Ahead: White House Seen Seeking Budget Waiver on GATT Accord Finance," AFX NEWS, May 12, 1994; Lyndsay Griffiths, "Kantor Says U.S. to Seek Budget Waiver for GATT," REUTER, May 9, 1994; "Clinton Confirms Need for GATT Partial Budget Waiver in Senate," BNA INTERNATIONAL TRADE DAILY, May 11, 1994. _________________________________________________ SUTHERLAND CALLS FOR QUICK CHINA ENTRY GATT Director-General Peter Sutherland called for a quick conclusion to international trade talks with China, which are being led by the United States and the European Union. "All parties involved in the negotiations have to cooperate to find solutions and bring China into the World Trade Organization," Sutherland said in Beijing. U.S. reluctance to renew China's Most Favored Nation (MFN) trade status is partially responsible for the stall in China's membership application. President Clinton must decide by June 3 whether to renew MFN. At an international business seminar in Beijing, Sutherland cited a number of other issues complicating China's entry into GATT. Sutherland said GATT members are concerned about the lack of transparency in China's trade rules, the country's haphazard application of the trade regime, an absence of certainty in the treatment of foreign imports, and the anti-competitive activities of China's state trading cooperations. "I believe that China would be well advised to take these concerns seriously," Sutherland said. China, which is pushing to enter GATT as a developing country, hopes to join this year to qualify as a founding member of the World Trade Organization -- GATT's successor. U.S. and EU negotiators are preparing for discussions with Chinese representatives in Geneva next month. Sources: Tony Walker, "GATT Chief Warns Over China's Status With U.S.," FINANCIAL TIMES, May 12, 1994; "Sutherland Urges Quick Entry of China Into GATT," REUTER, May 9, 1994; "China-GATT," AP, May 10, 1994; Douglas Jehl, "Warning to China on Trade," NEW YORK TIMES, April 30, 1994; Mark O'Neill, "GATT Chief Sees China Entry Possible by Year-End," REUTER, May 11, 1994. __________________________________________________ SEARCH FOR NEW GATT CHIEF BEGINS GATT formally launched a campaign to find someone to replace current Director-General Peter Sutherland when he steps down later this year. Trade diplomats in Geneva said they hope to reach an agreement this summer. No candidates have been officially named, but possible candidates include former Italian Trade Minister Renato Ruggiero, Brazilian Environment Minister Rubens Ricupero, Mexican President Carlos Salinas de Gortari, EU Trade Minister Leon Brittan and Philip Burdon, New Zealand's trade minister. Sources: Frances Williams, "GATT Launches Drive to Find New Chief," FINANCIAL TIMES, May 11, 1994; Peter Torday, "NZ May Fill Top World Trade Post," THE INDEPENDENT, May 10, 1994. __________________________________________________ OTHER TRADE NEWS __________________________________________________ ANC WILL PURSUE FREE-MARKET AG POLICY The African National Congress (ANC), South Africa's new ruling party, has unveiled plans for a market-based agriculture policy. "We firmly believe that market principles should determine prices," said ANC agriculture spokesperson Derek Hanekom. South Africa's past food policy has been fundamentally focused on achieving food self-sufficiency. The new policy, which includes income supports and price controls, places more emphasis on achieving family food security. ANC farm policy is reportedly firmly based on World Bank and GATT principles. Source: Peter Bale, "ANC Plans Free-Market Reform of S. African Farming," REUTER, May 4, 1994. _________________________________________________ EU, RUSSIA FORM PROVISIONAL TRADE PACT The European Union and Russia agreed Wednesday to a tentative bilateral trade accord. The draft accord, which recognizes Russia as "an economy in transition," is similar to a series of partnership accords struck between the EU and other former Soviet Republics. The accords replace the now-defunct trade and cooperation agreement negotiated in 1989 between the then European Community and Soviet Union. The new tentative accord covers trade in goods, rules of establishment for companies, cross-border supply services, rules governing payments and capital, competition, intellectual property protection and economic cooperation. Source: Patrick Chalmers, "EU, Russia Agree Tentative Trade Pact," REUTER, May 11, 1994. _________________________________________________ RESOURCES _________________________________________ For copies of the following, please contact the authors or organizations listed. "The Multilateral Trading System: Analysis and Options for Change," Robert Stern, Ed., UNIVERSITY OF MICHIGAN PRESS, 1993. 564 pages. The University of Michigan Press, 839 Greene Street, P.O. Box 1104, Ann Arbor, MI 48106-1104. (313) 764-4388. Fax (313) 936- 0456. $65. "Problems in the 1994 Uruguay Round Deal and Proposed World Trade Organization (WTO)" and "American Industrial Revitalization Needs A Realistic Trade Policy," William Lovett, INSTITUTE FOR AGRICULTURE AND TRADE POLICY, 1994. 25 pages. $5. See address below. "GATTzilla v. Communities," Michael Schuman, INSTITUTE FOR POLICY STUDIES, March 17, 1994. 37 pages. Institute for Policy Studies, 1601 Connecticut Avenue, N.W., Washington, D.C. 20009. (202) 234-9382. Fax: (202) 387-7915. Free. The author requests comments on this draft paper, which will appear as an article in the Summer 1994 issue of the "Cornell International Law Journal." _________________________________________________ The following email services are offered by the Institute for Agriculture and Trade Policy: "trade.news" - includes weekly bulletins NAFTA Monitor and Trade Week "trade.library" - a storehouse of trade related documents, including analyses, reports, fact sheets, White House transcripts ... etc. "trade.strategy" - an open discussion of trade issues and events "eai.news" - a regular bulletin summarizing the latest news in Latin American integration and development "susag.news" - a regular news bulletin pertaining to sustainable agriculture "susag.library" - longer documents, studies and analyses on sustainable agriculture "susag.calendar" - a calendar of events "env.biotech" - a news bulletin about biotechnology If you are on EcoNet/PeaceNet, you may access these services by going to the "conferences" section. 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