From iatp@igc.apc.orgWed Aug 9 10:18:13 1995 Date: Tue, 08 Aug 1995 13:25:32 -0700 (PDT) From: IATP To: Recipients of conference Subject: Trade News, Vol. 3, No. 11 Trade News Produced by the Institute for Agriculture and Trade Policy Volume 4, Number 11 August 8, 1995 _________________________________________ Headlines: - PROGRESS SLOW ON CHINA - U.S. TRADE OFFICIAL URGES SHIFT IN APPROACH ON JAPAN - APEC NATIONS SET TO OPEN THEIR MARKETS - SOUTH KOREA, U.S. AGREE ON WHEAT - FUJI FILM DENIES KODAK'S CHARGES - BRAZIL'S AUTO QUOTAS ATTACKED _________________________________________ WTO NEWS SUMMARY _________________________________________ PROGRESS SLOW ON CHINA Despite unexpected flexibility by China on several issues, Beijing's nine-year bid to join the World Trade Organization (WTO) is set to continue well into 1996 as differences with the United States and the European Union (EU) appear to be resurfacing, according to diplomatic sources. During five days of confidential talks in Geneva in late July between China and a select group of industrialized and developing nations, including the United States, China's assistant minister of trade, Yongtu Long, offered a long list of proposals on how Beijing plans to deal with trading rights, subsidies and other non-tariff barriers. But according to Western officials, on the critical question of market access, China came forward with descriptive outlines of what it might offer rather than solid, new commitments. At the same time, diplomatic sources reported that during the deliberations, China said it would meet its WTO obligations as a developed nation on export subsidies for farm goods. But Western officials said Beijing still has a long way to go on domestic subsidies to its state- owned plants and agricultural sector. Summing up the talks, a U.S. official said "we have a lot of work to do," but added that the Clinton administration is committed to the process. John Zarocostas, "Progress Reported Slow on China's WTO Bid," JOURNAL OF COMMERCE, July 31, 1995. _________________________________________ REGIONAL/BILATERAL AGREEMENTS _________________________________________ U.S. TRADE OFFICIAL URGES SHIFT IN APPROACH ON JAPAN Last week, Jeffrey E. Garten, the U.S. Under Secretary of Commerce for International Trade, called for a new U.S.-Japan trade relationship that replaces endless bilateral crises, name-calling and confrontation with informal consultation, better planning and early warning systems. In a presentation to the Foreign Correspondents' Club of Japan in Tokyo, Garten outlined three scenarios for the future of U.S.-Japan economic relations. In the first, the two nations conduct business as usual, with more high-profile battles over issues such as autos, cellular telephones and civil aviation. "We know the pattern," he said. "Japan appears intransigent and defensive and doesn't move. America demands major changes. Sanctions are threatened." These sanctions, in turn, lead to an eleventh-hour deal that each side interprets differently, leading to subsequent enactment problems. In the end, "Japan feels bullied and resentful. The United States feels frustrated because, in its view, the agreement is not being honored." By following this scenario, Garten said, there is a very good chance the two nations will become "stuck in this rut." A second scenario has the United States becoming more multilateral in its actions. It uses the World Trade Organization (WTO) to solve all trade disputes, thereby reducing confrontation. A third scenario -- the subject of Garten's initiative -- involves a mix of bilateral, regional and multilateral approaches with an emphasis on moving away from traditional bilateral negotiations. "This is easier said than done, but it could happen," he said. However, according to Garten, in order for this third scenario to succeed, Japan would have to undergo meaningful deregulation, both governments would have to show a determination to comply with trade agreements and both governments would need to think strategically about broad mutual trade interests. Mark Magnier, "US Trade Official Pushes Change in Relationship with Japan," JOURNAL OF COMMERCE, August 1, 1995; Andrew Pollack, "US Trade Negotiator Urges Shift in Approach on Japan," NEW YORK TIMES, August 1, 1995. APEC NATIONS SET TO OPEN THEIR MARKETS In recent weeks, leaders of countries in the Asia Pacific Economic Cooperation (APEC) forum have agreed to unprecedented cuts in tariffs and other trade barriers, according to officials attending APEC planning meetings. For example, Indonesia has drafted a plan to unilaterally eliminate all tariffs by 2010, far beyond the more modest cuts it has previously announced. Meanwhile, six APEC nations from Southeast Asia have agreed to embrace tough new rules for protecting patents and copyrights years ahead of other developing nations. These six, members of the Association of Southeast Asian Nations (ASEAN), are also expected to speed up plans to eliminate tariffs to each other under a free trade agreement. All these commitments will be unveiled in November at the annual meeting of APEC leaders in Osaka, Japan. At the very least, APEC countries are expected to agree to accelerate tariff cuts of about 35 percent which were approved at the Uruguay Round of world trade talks, completing them in two years instead of four. John Maggs, "APEC Nations Are Ready to Open Up Their Markets," JOURNAL OF COMMERCE, July 31, 1995. SOUTH KOREA, U.S. AGREE ON MEAT Last month, South Korea and the United States struck a deal on the shelf life of imports of U.S. produced meat and other foodstuffs, eliminating the biggest stumbling block to bilateral trade relations. Under the agreement, Korea will liberalize the shelf life of meat and other frozen food beginning in July 1996. But Seoul will impose temporary shelf life regulations on vacuum-packed chilled meat and other frozen meat and foodstuffs until then. During the grace period, vacuum-packed chilled beef and pork will be allowed to be on the shelves of stores for 90 days and 45 days, respectively. The shelf life will be 12 months for frozen beef, nine months for frozen pork and chickens, three months for processed ground meat; three months for sausages; and nine months for frozen food other than meat. With the conclusion of the bilateral agreement, U.S. trade officials said they will immediately cancel the complaint they filed last year with the World Trade Organization (WTO) and stop their investigation into any unfair practices involving Korea's shelf life regulations. "Seoul, Washington Agree on Shelf Life of US Meat," THE KOREA HERALD, July 21, 1995. FUJI FILM DENIES KODAK'S CHARGES Last week, the Fuji Film Company denied it had engaged in unfair trade practices to keep the Eastman Kodak Company out of the Japanese market, and argued that Kodak's small market share is the result of mismanagement. "Kodak's [charge] is nothing more than a[n] . . . attempt to shift the blame for Kodak's own poor management and performance in Japan from Kodak to the Japanese photographic industry and the Japanese government," a Fuji spokesman said. Kodak contends that Fuji unfairly dominates the Japanese market for photographic film and paper. It filed a petition in May under Section 301 of U.S. trade law, which gives the president the power to impose sanctions on foreign products and companies that are shown to be damaging U.S. industry. U.S. trade officials said in July that they would investigate trade practices in Japan's photographic market. "Fuji Denies Kodak's Contention of Unfair Trade," NEW YORK TIMES, August 1, 1995. _________________________________________ WORLD TRADE ROUND-UP _________________________________________ BRAZIL'S AUTO QUOTAS ATTACKED Last week in Geneva, more than a dozen auto exporting nations took Brazil to task over its June 13 decision to limit automobile imports because of a ballooning trade deficit. Booth Gardner, deputy U.S. trade representative, said the Clinton administration "continues to be concerned about the economic implications of these restrictions, as well as the implications for the integrity of the WTO." The United States, the European Union (EU), Japan, South Korea and Mexico told the World Trade Organization's General Council that they want to begin consultations with Brazil over the matter. On June 13, Brazil announced a quota for the number of autos that it will allow to be imported in the second half of the year. Brazil asserts that the measure was necessary in view of the "negative evolution" of the nation's trade balance which, after five years of surpluses, plunged into deficit during the first five months of 1995. Brazil contends that the trade deficit has threatened its balance of payments position. Under WTO rules, a nation can temporarily impose quotas to protect its balance of payments position. However, the United States and other countries are concerned about the way Brazil is using the balance of payments provisions of the WTO. "Auto Exporting Nations Hit Brazil Quotas," JOURNAL OF COMMERCE, August 1, 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 mail 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