From iatp@igc2.igc.apc.orgSat Feb 25 00:57:41 1995 Date: Fri, 24 Feb 1995 14:31:44 -0800 (PST) From: IATP To: Recipients of conference Subject: Trade News 2-24-95 Trade News Produced by the Institute for Agriculture and Trade Policy February 24, 1994 Vol. 4 No. 3 _________________________________________________ HEADLINES _________________________________________________ -US: RIVALS FOR WTO S-G SHOULD WITHDRAW -WTO, CUSTOMS GROUP TO DEVELOP UNIFORM RULES OF ORIGIN -TAIWAN CLOSER TO JOINING GATT/WTO -MINISTERS WILL DISCUSS WESTERN HEMISPHERE TRADE -US-CHINA TRADE DISPUTE APPEARS TO EASE -EU WILL NOT ALTER BANANA REGIME -US TRADE DEFICIT GROWS IN 1994 _________________________________________________ WTO NEWS SUMMARY _________________________________________________ US SAYS RIVALS FOR WTO CHIEF SHOULD WITHDRAW Earlier this week, US Ambassador to the World Trade Organization (WTO) Booth Gardner announced that the deadlock in the contest for the Director General's job at the WTO could only be broken if the three candidates now vying for the position withdrew. He said the United States wants to see a fourth person chosen for the post after the apparent failure of international consultations to decide among Carlos Salinas de Gortari, the former Mexican president, Renato Ruggiero, the former Italian trade minister, and Kim Chul-su, a veteran South Korean trade diplomat. Results from the latest round of international consultations show Ruggiero is preferred by 57 countries, well ahead of Kim and Salinas with 29 and 28 votes respectively. WTO rules require a unanimous vote for Director General. In the absence of a breakthrough, trade officials expect Peter Sutherland, interim WTO chief, to be asked to stay on beyond his planned leaving date of March 15, 1995. Source: Francis Williams, "Rivals Urged to Withdraw from Race to be WTO Chief," FINANCIAL TIMES, February 23, 1995; Francis Williams, "Deadlock on Top Job at WTO," FINANCIAL TIMES, February 21, 1995. WTO, CUSTOMS GROUP TO DEVELOP UNIFORM RULES OF ORIGIN Earlier this month, the WTO and the World Customs Organization (WCO) launched a joint effort to implement a new global agreement on rules of origin. The new rules, which are aimed at easing technical barriers to world trade, are part of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which was signed in April 1994. The agreement commits WTO members to implement and clarify rules of origin. Interim WTO Director General Peter Sutherland said cooperation with the 150-member WCO was necessary to facilitate implementation of the rules and build new rules "from the ground up." The WCO will also be involved in a three year work program to formulate harmonized rules of origin. The old GATT had nothing to say about rules of origin, Sutherland said. Furthermore, current rules not only vary from one country to another; in some cases, the same country applies different rules of origin to the same good in different cases. James W. Shaver, Secretary General of the WCO, said the new rules of origin would have an "enormous" impact on international trade, finance, investment and employment. Source: "WTO, Customs Group to Tackle Uniform Pact on Rules of Origin," JOURNAL OF COMMERCE, February 7, 1995. TAIWAN CLOSER TO JOINING GATT/WTO Taiwan expects to complete its procedures for reaching bilateral agreements with members of the General Agreement on Tariffs and Trade (GATT) by June. This is the first step in Taiwan's effort to join the GATT. Taiwan already has been accepted as a WTO observer, a status it also enjoys in the GATT. But it cannot become an official member until its signs GATT-conforming trade agreements with every GATT member. If Taiwan does become a GATT member, it will then automatically become a member of the WTO. However, if a trade war between the United States and mainland China breaks out, the chances for Taiwan to become a GATT member may be affected, since there is a consensus within GATT that Taiwan and mainland China should both become GATT members at the same time. Source: "Taiwan to Complete Negotiations with GATT Members by June," CHINA ECONOMIC NEWS SERVICE, February 7, 1995. _________________________________________________ REGIONAL AND BILATERAL RELATIONS _________________________________________________ MINISTERS WILL DISCUSS WESTERN HEMIPHERE TRADE Earlier this month, US Trade Representative Mickey Kantor announced that trade ministers from 34 Western Hemisphere countries will meet June 30 in Denver, Colorado to help lay the groundwork for a hemispheric free trade area by the year 2005--the goal endorsed by US President Clinton and other hemispheric leaders in December 1994. At the meeting, billed as the Hemispheric Trade and Commerce Forum, the ministers are expected to adopt specific recommendations for the proposed free trade negotiations. The forum will be co-hosted by Kantor and US Commerce Secretary Ronald Brown. Meanwhile, the United States, Canada and Mexico--the three North American Free Trade Agreement (NAFTA) members--will start formal negotiations in May with Chile on its bid to join the regional agreement. Kantor described the Chilean initiative as "a first step" toward hemispheric free trade and rejected suggestions that Mexico's financial crisis casts a shadow over Chile's bid. To the contrary, he argued, Mexico's problems point up the need for closer ties with Chile and other countries. Source: Richard Lawrence, "Ministers to Meet June 30 to Discuss Hemisphere Trade," JOURNAL OF COMMERCE, February 10, 1995. US-CHINA TRADE DISPUTE APPEARS TO EASE Earlier this week, US Trade Representative Mickey Kantor said that he has received "welcome" signs that the trade confrontation with China over intellectual property protection might be easing. Kantor cited the increased number of raids on Chinese factories that sell pirated goods, an invitation from the Chinese for Deputy US Trade Representative Charlene Barshefsky to join the negotiations, and "the measured comments by Chinese officials on these talks." He warned, however, that the US is prepared to go ahead with sanctions against China if the two sides do not settle. Two weeks ago the US said it would impose 100 percent tariffs on $1.08 billion of Chinese exports. China promptly retaliated by announcing sanctions of its own on US exports of compact disks, video games, film, cigarettes and alcohol. The US sanctions, set to go into effect on February 26, follow months of wrangling over China's inability to enforce laws protecting patents, copyrights and other intellectual property. Source: "US-China Trade Dispute Shows Signs of Easing," WALL STREET JOURNAL, February 23, 1995. EU WILL NOT ALTER BANANA REGIME EU trade commissioner Sir Leon Brittan announced earlier this month that the EU has no plans to change the "fundamental nature" of its policy restricting banana imports, despite US demands to do so. "It would be an illusion to think that the fundamental nature of the regime that has been set up is one that we would contemplate changing," Brittan said. "Nonetheless, we recognize the concerns of the United States and will see whether, within that context, it is possible to do anything to help." On January 9, US Trade Representative Mickey Kantor issued a preliminary finding saying that the EU regime has cost US banana marketing and distribution firms hundreds of millions of dollars in lost sales "at a minimum," and warned that the US might retaliate. Kantor's investigation began in October 1994 after Chiquita Brands International and the Hawaii Banana Industry Association filed complaints under Section 301 of US trade law. The EU imports bananas from African, Caribbean and Pacific countries tariff-free, but imposes quotas on so-called dollar bananas from Latin America under an import regime implemented in July 1993. Source: "EU Will Not Alter `Fundamental Nature' of Banana Import Policy, Official Says," BNA INTERNATIONAL TRADE DAILY, February 2, 1995. _________________________________________________ WORLD TRADE ROUND-UP _________________________________________________ US TRADE DEFICIT GROWS IN 1994 The United States last year posted its largest overall trade deficit in seven years, more than $108 billion in goods and services, and set record deficits with Japan and China, the two countries that confront the US with its most persistent trade problems. The Clinton Administration said that while the numbers looked disturbing--the deficit widened 42 percent, or $32.4 billion--they also reflected the underlying strength of the US economy which pulled in a record volume of imports. Most economists expect the trade gap to narrow this year, as the US economy slows and the economic recoveries in Japan and Europe accelerate. But there are worries that Mexico, while a smaller trading partner than Europe or Japan, will start contributing to the trade deficit next year because of the devaluation of the peso. Source: David E. Sanger, "Trade Gap Set Record Last Year," NEW YORK TIMES, February 18, 1995. ________________________________________ Trade News is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Editor: Orin Kirshner. E-mail versions of Trade News are available free of charge for Econet/IATP Net subscribers. For more information about fax or email subscriptions, contact: Institute for Agriculture and Trade Policy, 1313 Fifth Street S.E., Suite 303, Minneapolis, MN, 55414 Phone 612-379-5980. To learn more about IATP's contract research services, please contact Dale Wiehoff at dwiehoff@igc.apc.org.