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Date: 21 Aug 94 20:13 PDT
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Subject: NAFTA & Inter-Am Monitor 8/22/9

Produced by the Institute for Agriculture and Trade Policy
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NAFTA and Inter-American Trade Monitor, vol. 1, #13
August 22, 1994
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HEADLINES

STEEL, TUNA, CEMENT STILL ISSUES FOR US, MEXICO
FREE TRADE COSTING JOBS IN US, CANADA
NAFTA OPENS MEXICAN BANKING MARKET
GE, SONY FACE MEXICAN LABOR PROBLEMS
VENEZUELA UPDATE
RESOURCES/EVENTS

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STEEL, TUNA, CEMENT STILL ISSUES FOR US, MEXICO

Despite NAFTA and GATT, long-standing trade issues between
the US and Mexico remain unresolved.  According to Mexican
attorney Adrian Vazquez Benitez, speaking at the annual
meeting of the American Bar Association, Mexico frequently
uses anti-dumping and countervailing duty laws, but revised
those laws last year to provide greater protection to "interested
parties."

In early August, Mexico's Trade Secretariat (Secofi) decided to
uphold countervailing duties on imports of US steel.  The duties
were preliminarily imposed in 1993, and are now set at 78.46
percent for sheet plate and 38.21 percent for galvanized
laminated steel.  Two separate Secofi rulings affect different
categories of steel imports, and stem from two sets of
complaints of dumping brought by Mexican steelmakers in
1992 and 1993.

Still before Secofi is a complaint from Mexican steelmakers that
US steelmakers enjoy subsidized prices, due to incentives
offered by federal and state Buy America statutes, state and
local economic development programs, and incentives from
the federal Pension Benefits Guaranty Corporation.

Three exemptions from the tariffs were made for steel used by
automakers.  The exemptions benefit Chrysler, Ford, and
General Motors manufacturing operations in Mexico, all of
whom rely on US steel.  Germany, also hit with the punitive
tariffs, threatened a protest if it does not receive a similar
exemption for Volkswagen and BMW imports of German steel.

GATT has already ruled against the US in a dispute over alleged
dumping of Mexican cement imports, but the US has not
complied with the ruling and is instead considering heavier
anti-dumping penalties.

The Mexican government also renewed a complaint before the
GATT executive council seeking to force the US to end an
embargo against Mexican tuna imports.  The US embargo is
based on allegations of environmental damage by Mexican
fishing boats, specifically in regard to the number of dolphins
captured.

Source: Kevin G. Hall, "Dumping Disputes Fail to Quash Mexico's
Hopes for US Trade," JOURNAL OF COMMERCE, 8/11/94; "Mexico
Is Relying Increasingly on Antidumping Laws, Attorney Says,"
BNA INTERNATIONAL TRADE DAILY, 8/17/94; "U.S.-Mexico
Trade Disputes Over Steel Products, Cement, & Tuna Gain
Prominence in Late July & Early August," SOURCEMEX, 8/10/94;
Kevin G. Hall, "German Steelmakers Protest Mexican Exemption
for US," JOURNAL OF COMMERCE, 8/5/94; Kevin G. Hall, "Mexico
Slaps US Steel with Huge Trade Penalties," JOURNAL OF
COMMERCE, 8/3/94

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FREE TRADE COSTING JOBS IN US, CANADA

Matsushita Television Co. announced that it will close a 330-
employee television production plant in Franklin Park, Illinois
and move production operations to Tijuana, Mexico at the
beginning of 1995.  All production jobs will be lost, but the
company said it would offer 100 positions at a new Southern
California facility to current design and engineering staff
members.  Company officials would not discuss wage levels in
Illinois and Mexico.

Two recent reports identify job losses in Canada since the US-
Canada Free Trade agreement and in the US since NAFTA's
effective date in January.  In a sample of 44 members of
Canada's Business Council on National Issues, 30 corporations
had cut employment by 171,559 workers since 1988.  Fourteen
companies in the survey added more employees or kept their
payroll at 1988 levels, but their total increase in employment
was less than 25,000 workers, showing an overall downward
trend in employment.

In the US, the Labor Department reported that 4,487 workers
who lost their jobs between January 1 and mid-May of this
year have been certified for trade adjustment assistance
because their job losses were due to NAFTA.  The Office of
Trade Adjustment Assistance received petitions from 150
companies in 33 states from January 1 to June 20, and
determined that 53 of the petitions were eligible for aid -- 36
due to job shifts from the US to Mexico or Canada and 17
because of increased imports.  AFL-CIO economist Sheldon
Friedman called the report the "tip of the iceberg."

Source:  Stephen Franklin, "Franklin Park Quasar Output
Mexico-bound," CHICAGO TRIBUNE, 7/30/94; "30 Big Canadian
Companies Employing 171,559 Fewer Workers Than in 1988,"
CCPA MONITOR, July/August, 1994; "Over 4,000 Workers Have
Lost Jobs to NAFTA," SOLIDARITY, 8/94

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NAFTA OPENS MEXICAN BANKING MARKET

During the first weeks after Mexico's banking industry opened
to foreign firms through NAFTA, more than a hundred foreign
financial institutions filed applications to open bank operations.
A top Mexican finance ministry official said that at least 15-20
applications are likely to be approved.

NAFTA allows foreign banks as a group to hold up to eight
percent of the capital in the Mexican banking system, with no
individual foreign bank holding more than 1.5 percent of the
country's capital.  Foreign banks are expected to increase
competition in the corporate banking sector, provide a fast
infusion of capital in the financial sector, and dominate the
non-bank banking sector by the end of the year.  Limits on
foreign holdings will end at the end of the decade.

First Chicago Corp. is the eighth US bank to ask permission to
enter the Mexican market under NAFTA next year. First
Chicago, the 10th-largest bank in the US, has acquired 10
smaller banks over the past several years, and is currently
cutting 600 workers in a reorganization of its US operations.

Citibank is the only foreign bank that currently has retail and
corporate operations in Mexico, due to a concession it received
65 years ago.  Citibank has now applied for status as a financial
group complete with a brokerage firm and for a full 1.5 percent
share of capital.  Citicorp chair John Reed is not optimistic about
the short-term outlook with the expected influx of foreign
banks in the next two to three years.  "It will get a hell  of a lot
worse before it gets better," said Reed.  "The place is clearly
going to get overbanked in the short-term and there will be
some very stupid deals done."

Source: Jeff Franks, "Mexico Banking Facing Lean Years,"
REUTER, 8/10/94; Damian Fraser, "Foreign Finance Lines Up at
Mexico's Doors," FINANCIAL TIMES, 8/10/94; William Smith,
"First Chicago to Cut 600 Bank Workers," CHICAGO TRIBUNE,
8/17/94; "First Chicago Eyes Mexico,"  CHICAGO TRIBUNE,
8/17/94

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GE, SONY FACE MEXICAN LABOR PROBLEMS

The metalworkers' union, STIMAHCS, filed a demand that
General Electric negotiate a contract with the Mexican Labor
Arbitration and Conciliation Board on August 8.  The demand
covers workers employed in GE's Compania Armadora (CASA)
motor plant in Juarez, the subject of the first labor complaint
filed under NAFTA.  A US union, the United Electrical, radio and
Machine Workers of America (UE), working together with
STIMAHCS, filed that complaint on behalf of CASA workers
fired by the company, allegedly for their union organizing
activity.

Under Mexican law, unions can negotiate with the company for
a collective bargaining agreement, or they can file a collective
bargaining agreement with the Mexican labor board and set a
strike date.  According to a STIMAHCS spokesperson, the latter
route was made necessary by the company's threats to close
the plant if workers insist on the union and a contract.

In other labor news, US and Mexican labor organizations filed a
complaint against Sony in mid-August, alleging violations of
worker rights at its Nuevo Laredo, Mexico plant.  The complaint
was filed with the US National Administrative Office.  The
International Labor Rights Education and Research Fund and
two Mexican organizations charge that Sony maintained
surveillance on unionists, fired striking workers, pressured
employees to work on national holidays, and violated Mexican
labor laws.  The groups say that the Mexican government has
failed to enforce labor laws calling for freedom of association
and limiting hours of work.

Source: "Mexican Union Demands General Electric Contract," UE
LABOR NEWS, 8/8/94; James Harding, "Unions Accuse Sony
Under Nafta Accord," FINANCIAL TIMES, 8/17/94

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VENEZUELA UPDATE

Venezuela's economic state of emergency has not succeeded in
stopping inflation, reported at nine percent during the month
of June.  Fluctuations in interest rates, caused in large part by
government measures to control the economy, bear part of the
blame for price increases.  The country's banking crisis
continues as well, with the government taking steps in early
August to salvage eight more troubled banks, including the
Banco de Venezuela, now the country's second-largest bank.

The government outlined a stabilization plan that would
require action by banks that consistently fail to meet clearing
house and reserve requirements.  Such banks will be taken
over by government-appointed executives, and owners or
major stockholders will be asked to increase capital and to
pledge personal assets to cover government financial
assistance.  Some owners may be directed to carry out mergers,
sell assets, reduce expenses, and otherwise cut financial losses.
The government rescue package for Banco de Venezuela will
cost $265-294 million, mostly in loans to cover losses.

The banking crisis only indirectly affects most Venezuelans,
just 20 percent of whom are able to adequately satisfy their
basic needs, according to a recent study by the Foundation
Centre of Studies for Growth and Development of the
Venezuelan Population (FUNDACREDESA).  FUNDACRESA
also reported that 36 percent of the population live in
poverty and can satisfy basic needs only with difficulty, and
that 44 percent live in absolute poverty and cannot meet basic
needs.  Children from the latter sector are, on the average,
seven centimeters shorter than their wealthier counterparts.

Source: Joseph Mann, "Sticks and Carrots for Venezuela's
Banks," FINANCIAL TIMES, 8/11/94; "Venezuela Takes Over
No. 2 Bank and Plans Steps to Add Capital," WALL STREET
JOURNAL, 8/10/94; Joseph Mann, "Venezuela Moves to Prop Up
Eight Troubled Banks," FINANCIAL TIMES, 8/10/94; Pilar
Pascual, "Gap Between Rich and Poor Can Be Measured in
Height," IPS, 8/94

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RESOURCES/EVENTS

"Understanding the North American Free Trade Agreement,"
Leslie Alan Glick.  KLUWER LAW & TAXATION PUBLISHERS,
1994.  147 pages.  Kluwer Law & Taxation Publishers, 6
Bigelow Street, Cambridge, MA 02139.  Tel: (617) 354-0140;
Fax: (617) 354-8595.  $45.00.
Summary and analysis of major provisions and side
agreements, projecting changes in laws and practices in the US,
Mexico and Canada.  Background for business and legal
planners.

"The Mexico-U.S. Free Trade Agreement," ed. Peter M. Garner.
MASSACHUSETTS INSTITUTE OF TECHNOLOGY, 1993.  317
pages.  MIT Press, Massachusetts Institute of Technology,
Cambridge, MA 02142.
Collection of seven economists' essays addressing issues such as
environmental and wage impacts of NAFTA, water use,
automobiles, financial services market in Mexico, and regional
and local production and employment effects.

"Free Trade or Fair Trade?"  Monthly newsletter produced by
the Latin American Institute for Alternative Legal Services
(ILSA) and the Regional Coordinator of Economic and Social
Investigation (CRIES), with the collaboration of CUSO.  6 pages.
ILSA, Calle 38 No. 16-45, A.A.: 07844, Bogot, Colombia.  Email:
ax!ilsabog or [email protected].
Monthly newsletter, subtitled Latin American and Caribbean
trade alert, focuses on free trade and the new world order as
they accentuate inequalities and social exclusions.

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The NAFTA and Inter-American Trade Monitor is available in
both English and Spanish on Association for Progressive
Communications (APC) computer networks on the conference
eai.news.  It can also be faxed or sent  via mail on request.  We
welcome your comments and contributions.

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Trade Policy, send email to [email protected].

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Policy, 1313 Fifth St. SE, Suite #303, Minneapolis, MN
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