From iatp@igc.apc.orgWed Mar 8 11:14:07 1995 Date: Tue, 07 Mar 1995 11:54:49 -0800 (PST) From: IATP To: Recipients of conference Subject: Trade News 3-7-95 Trade News Vol. 4 No. 4 Tuesday, March 7, 1994 ------------------------------------------------------- Headlines: - Salinis Withdraws From WTO S-G Contest - US and China Resolve Trade Dispute - Launch of ACS Delayed - US Says It Will Support Investment Treaty with OECD - EU Threatens Retaliation Over New Canadian Tariffs - Japanese Vehicle Exports Fall -------------------------------------------------------- WTO NEWS SUMMARY SALINAS WITHDRAWS FROM WTO S-G CONTEST Former Mexican president Carlos Salinas de Gortari has withdrawn from the race to head the new World Trade Organization (WTO). Salinas' move followed the arrest on February 28 of his elder brother Raul on charges of orchestrating the assassination last year of a senior ruling-party official. Raul Salinas was a member of the ruling-party's right wing during his brother's administration. He served as a senior official in the government's food distribution company and functioned as an intermediary for businesses trying to make deals with the government. According to trade diplomats in Geneva, Salinas' withdrawal from the WTO race appears to improve the prospects of Renato Ruggiero, the candidate backed by the European Union (EU). Ruggiero, a former Italian trade minister, had already garnered the support of nearly one-half of the WTO's member nations. Trade diplomats warn, however, that a solution to the long-running contest, formally launched last July, could still be blocked by US antipathy to Ruggiero. Although some senior US officials, including Vice-President Al Gore, have said that Ruggiero is "a good candidate," US Trade Representative Mickey Kantor is believed to be strongly against him. Because the WTO's Secretary General can only be selected by consensus, the US can block Ruggiero's appointment by voting against him. "Salinas Withdraws Bid for Top Position at WTO," WALL STREET JOURNAL, March 2, 1995; Paul B. Carroll and Dianne Solis, "Brother of Former President of Mexico Arrested in Ruling-Party Official's Killing," WALL STREET JOURNAL, March 1, 1995. __________________________________________ REGIONAL/BILATERAL RELATIONS US AND CHINA RESOLVE TRADE DISPUTE Averting a long-threatened trade war with the United States, China agreed last month to crack down on the piracy of intellectual property such as computer software, compact disks and videotapes. In a detailed agreement, China also pledged to open its huge market to US movies, music and computer software. "This agreement will go a long way to improving the balance of our economic relationship with China," said US Trade Representative Mickey Kantor. President Clinton issued a statement saying the pact will "mean thousands of jobs for Americans in key industries, including computer software, pharmaceuticals, agricultural and chemical products, books and periodicals, and audio-visual products." As part of the agreement, China pledged to implement a detailed enforcement plan and regularly consult on it with the United States; establish long-term antipiracy task forces; step up raids against retail outlets and inspect factories alleged to be engaging in piracy; strengthen penalties against enterprises found to be producing pirated products and increase the power of enforcers to crack down on violators; open its market for audio-visual and published products; make the censorship process more transparent; and allow audio-visual and computer software companies to set up joint ventures in China. According to informed observers, the agreement should help China gain entry into the World Trade Organization (WTO). The United States has been the primary barrier to China's entry into the WTO. While Kantor has maintained that the intellectual property fight had nothing to do with China's negotiations to join the WTO, he said that China's "ability to reach agreement in this critical area will help clear away many of the problems many countries had with China's entry into the WTO." Tony Walker, "A `Maturing' Marks Copyright Deal," FINANCIAL TIMES, February 28, 1995; Helene Cooper and Kathy Chen, "China Averts Trade War with the US, Promising a Campaign Against Piracy," WALL STREET JOURNAL, February 27, 1995; Seth Faison, "US and China Sign Accord to End Piracy of Software, Music Recordings and Film," NEW YORK TIMES, February 27, 1995. LAUNCH OF ACS DELAYED The launch of a 24-nation trade and economic group in the Caribbean Basin is being postponed because of protracted negotiations over the size of the budget, and a delay by some countries in ratifying their membership. The Association of Caribbean States (ACS) was to have been launched at the beginning of this year, but trade officials and ministers now say a delay until at least the second half of the year is inevitable. The prospective membership of the ACS includes Colombia, Mexico and Venezuela, the central American states (except El Salvador), Cuba, the Dominican Republic and Haiti, and the members of the Caribbean Community (Caricom). With about 15 European and US dependent territories as associate members, the ACS would have a market of about 200 million people, with an estimated combined gross national product of $500 billion, and an annual trade volume of about $180 billion. Canute James, "Caribbean Group Launch Delayed," FINANCIAL TIMES, February 28, 1995. US SAYS IT WILL SUPPORT INVESTMENT TREATY WITH OECD Last month, the US said it would support negotiations over a multilateral investment treaty to be launched at the next ministerial meeting of the Organization of Economic Cooperation and Development (OECD) in May 1995. According to Sir Leon Brittan, the European Union's (EU) trade commissioner, the purpose of such a treaty is to make foreign investment easier among the OECD countries by giving companies access to a fully convertible currency, allowing them to repatriate their profits, and leaving them free from "unduly onerous performance requirements." While the EU has pushed for consideration of an investment pact under the auspices of the World Trade Organization (WTO), the US has opposed the move, fearing that such an agreement would be riddled with exemptions. Global foreign investment is currently governed by a web of bilateral investment treaties, many of which are decades old. Business organizations, such as the European-American Chamber of Commerce, are pushing hard for a multilateral pact that would require countries to treat subsidiaries of foreign companies no less favorably than their own. They want harmonization of rules governing taxes and prohibitions on performance requirements, such as technology transfers and the export of intellectual property. Nancy Dunne, "US Indicates Support for Proposed Talks on OECD Investment Treaty," FINANCIAL TIMES, February 22, 1995. EU THREATENS RETALIATION OVER NEW CANADIAN TARIFFS Last month, the European Union (EU) warned of possible retaliation against Canada's decision to raise tariffs on selected European imports. Canada said it will raise tariffs on imports of vodka, crystal cut glass, perfume and toilet waters and high-value shoes from the EU in response to higher tariffs on Canadian exports to the EU's three new member states. Canada said it faces additional tariffs of $6.1 million (US) a year following the accession of Austria, Finland and Sweden to the EU on January 1. The three countries had to apply higher EU tariffs on a range of Canadian goods, including aluminum, fish and seafood, wood and snowmobiles. The Canadian move was "wholly unjustified," according to an aid to Sir Leon Brittan, the EU's trade commissioner. "Retaliation against this unfair and unfriendly gesture remains a possibility," he said. Bruce Barnard, "EU Threatens Retaliation Over Canada Tariff Moves," JOURNAL OF COMMERCE, February 23, 1995. _____________________________________ WORLD TRADE ROUND-UP JAPANESE VEHICLE EXPORTS FALL Japan's vehicle exports fell to a 17-year low in 1994, declining 11.1 percent to 4.46 million vehicles, according to figures released by the Japanese Automobile Manufacturers Association in January. Last year was the ninth consecutive year in which Japan's vehicle exports have fallen in the face of stiff foreign competition in US and European markets and the appreciation of the yen. Analysts said exports were likely to remain subdued in 1995 as Japanese companies switched production to low cost plants overseas. Japan's vehicle exports fell 16.5 and 20.2 percent respectively to the EU and Asia. However, they rose 1.6 percent to the United States. Krishna Guha, "Japanese Vehicle Exports Fall 11%," FINANCIAL TIMES, January 31, 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. 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