From iatp@igc.apc.orgFri Jul 28 14:36:11 1995 Date: Thu, 27 Jul 1995 14:41:48 -0700 (PDT) From: IATP To: Recipients of conference Subject: Trade News 7-27-95 Trade News Produced by the Institute for Agriculture and Trade Policy Volume 4, Number 10 July 27, 1995 _____________________________________ Headlines: - DEAL REACHED ON FINANCIAL SERVICES - NAFTA OPPONENTS CONTINUE TO ORGANIZE - U.S. AND JAPAN RESOLVE AIR CARGO ROW - EU ATTACKS U.S. POLICY - CANADA OBJECTS TO EU WHEAT TARIFFS - U.S. TO NAFTA PANEL: SETTLE CANADIAN FARM DISPUTE - CARICOM LEADER URGES EU TO RESIST U.S. OVER BANANAS _____________________________________ WTO NEWS SUMMARY _____________________________________ DEAL REACHED ON FINANCIAL SERVICES On July 26, an international accord on liberalizing trade in financial services was finalized after Japan and South Korea joined about 80 other countries in committing themselves to improving foreign access to their markets. The interim pact, which will run to the end of 1997, followed the breakdown of negotiations with the United States last month in the World Trade Organization (WTO). The Geneva accord will cover an estimated 90 percent of the international financial services market and will guarantee a measure of foreign access to banking, securities and insurance markets in dozens of countries. For many countries, the accord formalizes their existing degree of market openness, but the pact also contains promises of increased liberalization in east Asian and Latin American markets, including Thailand and Brazil. Commitments by Japan and South Korea to open their insurance and securities markets to foreign companies were pivotal to ensuring approval of the pact. WTO Director General Renato Ruggiero said the pact would "bring new opportunities and greater security and predictability for investors in banking, insurance and other activities in the financial sector." The European Union (EU) proposed the interim solution after the United States announced, a day before a June 28 deadline for a comprehensive deal, that it would not guarantee access to its financial services market on a most-favored-nation (non- discriminatory) basis. While refusing to sign the pact, the United States has said that companies already operating in its market will be allowed to remain there, but that it will treat new entrants on a reciprocal basis according to how their home countries treat U.S. companies. Parties to the agreement have promised to treat all of their trading partners on an equal basis. Francis Williams, Lionel Barber, Nancy Dunne, "World Financial Services Deal Agreed," FINANCIAL TIMES, July 17, 1995; Nancy Dunne, "White House Claims Boost to Bargaining Power," FINANCIAL TIMES, July 17, 1995; Paul Lewis, "Trade Accord Without U.S. Set in Geneva," NEW YORK TIMES, July 27, 1995; Bhushan Bahree and Charles Goldsmith, "WTO Countries Agree to Relax Curbs on Foreign Banking, Financial Services," WALL STREET JOURNAL, July 27, 1995. _____________________________________ REGIONAL/BILATERAL AGREEMENTS _____________________________________ NAFTA OPPONENTS CONTINUE TO ORGANIZE On June 16-17, the Chilean Network for a Peoples Initiative (RECHIP) convened an international gathering of representatives of 200 social organizations. Objectives of the conference were: informing people of their countries on the social, economic, environmental and cultural transformations that accompany free trade treaties; integrating the social, labor, economic, political, environmental, cultural and indigenous sectors that oppose Chile's entrance into NAFTA; and gathering and exchange experiences and strategies with other organizations. Delegates from the current NAFTA members described the contrast between promised benefits and the actual negative impacts of NAFTA on workers, and NAFTA's influence in increasing the power of transnational corporations at the expense of a weakening of citizens' rights. Conference delegates agreed to continue work already underway on a Continental Social Charter that will respond to NAFTA and neo- liberalism, and to continue educational activities and political opposition to NAFTA. Meanwhile, in the United States, the Citizens Trade Campaign (CTC), which worked to defeat both NAFTA and GATT, is lobbying against Chile's admission to NAFTA. The Alliance for Responsible Trade (ART), which also opposed GATT and NAFTA, circulated a letter calling for inclusion of protections in any new trade agreement, including enforcement of worker rights and environmental standards, strengthening indigenous rights, and protecting national sovereignty. Opposition to Chilean entry into NAFTA has also focused on the threat to democracy possibly posed by the Chilean military, which has been highlighted by the recent refusal of a retired general to surrender and serve a jail sentence for the 1976 assassination of Orlando Letelier in Washington, DC. Development Gap, "Final Declaration from Chile Conference," June 18, 1995; "Transition Trouble for Citizens Trade Campaign," BORDERLINES, June , 1995; Ximena Souza, "Denver, Algo Mas Que La Integración Hemisférica," SUCESOS, June 29, 1995. U.S. AND JAPAN RESOLVE AIR CARGO ROW Last week, the United States and Japan reached agreement on air cargo services that is expected to extend the rights of both countries. According to the agreement, Washington will get seven new air routs via Japan to high-growth Asian destinations in exchange for a promise to review air cargo trade with Japan, which is expected to produce one new route for Nippon Cargo Airways from Kansai airport to Chicago. The deal ends three months of heated negotiations and the threat of mutual sanctions. In addition, the two sides agreed to start fresh talks on air cargo services in September 1995, which are expected to last six months. After that, according to Japanese officials, they have an unwritten understanding to extend the talks to passenger traffic. William Dawkins, " Japan and US Reach Accord on Air Cargo Services," FINANCIAL TIMES, July 22/23, 1995; Andrew Pollack, "US and Japan Again Pull Back from the Brink," NEW YORK TIMES, July 22, 1995. EU ATTACKS U.S. POLICY In a report released on July 6, the European Commission warned the Clinton administration that use of unilateral trade sanctions threaten improved European Union (EU) trade and investment relations with the United States. "Unilateralism in U.S. trade legislation is a major concern," the Commission said, adding that the EU expected the U.S. to "abide by its WTO obligations" which "left no room for unilateral measures." The report singled out U.S. retaliation against the EU's ban on the use of hormones in farm produce as a "violation of international obligations," and expressed growing concern about threatened U.S. action over the EU's banana import regime. The Commission also warned that Washington's commitment to implementing the Uruguay Round GATT agreements on intellectual property "may be going astray." The Commission's report listed remaining U.S. trade barriers as: U.S. legislation which blocks international trade and investment, particularly the U.S. Cuban embargo policy; import, procurement and investment restrictions introduced in the name of national security; a wide variety of "Buy American" provisions which affect the EU's ability to compete for public procurement contracts; and arbitrary tariff reclassifications and technical barriers to trade, such as state regulations which make it difficult for companies to operate without offices in the U.S.. Caroline Southey, "Brussels Attacks US Trade Policy," FINANCIAL TIMES, July 7, 1995. CANADA OBJECTS TO EU WHEAT TARIFFS On July 6, Canada said it would lodge a complaint at the World Trade Organization (WTO) over the European Union's (EU) new system of wheat import duties. The EU system, introduced on July 1 to comply with the WTO world farm trade agreement, involved the conversion of import quotas and variable levies into tariffs which would be progressively reduced over six years. "We are challenging the principle not the numbers," a Canadian official said, adding that Canada had issued four high level warnings, the last on May 17, that it would call a WTO disputes panel. Canada has attacked the EU system because it is based on U.S. reference prices even though the U.S. supplies only 25 percent of EU durum and high quality wheat imports. Canada says it supplies two- thirds of the 1.5 million tons of these grains that the EU imports each year and wants duties based on the cost of individual shipments. "Our objective is to have a consignment price system -- in our view it's the only one which will work," the official said. The EU has rejected the idea as a "non-runner." According to a European Commission agricultural spokesman, a shipment by shipment system would be impossible to control and open to fraud. "Canada Objects to EU Wheat Duties," FINANCIAL TIMES, July 7, 1995. U.S. TO NAFTA PANEL: SETTLE CANADIAN FARM DISPUTE On July 14, U.S. Trade Representative Mickey Kantor brought a formal complaint under the North American Free Trade Agreement (NAFTA) against Canada's restrictions on poultry and dairy product imports. Under NAFTA's dispute settlement procedures, Kantor asked that "an arbitral panel" be set up to consider the U.S. complaint. The complaint also applies to tariffs that Canada plans to put into effect August 1, 1995 on raw U.S. barley and barley products. "US Asks NAFTA Panel to Settle Ag Row with Canada," REUTERS LTD., July 14, 1995. CARICOM LEADER URGES EU TO RESIST U.S. OVER BANANAS On July 14, the chairman of the Caribbean Community (Caricom), Edison James, urged the European Union (EU) not to bow to pressure from the United States to import more "dollar bananas" from Latin America. The United States has threatened to complain to the WTO if the EU does not change its banana import regime, which U.S. companies contend discriminates against imports of bananas from U.S.-owned plantations in Latin America. Washington says the EU favors more expensive imports from African, Caribbean and Pacific (ACP) members of the Lome Convention. "Caricom Leader Urges EU to Resist US in Banana Row," REUTERS LTD., July 14, 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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