From [email protected]
Date: 17 Oct 94 04:54 PDT
From: IATP <[email protected]>
To: "Recipients of conference trade.news" <[email protected]>
Newsgroups: trade.news
Subject: NAFTA & Inter-Am Monitor 10/17/94

Produced by the Institute for Agriculture and Trade Policy
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NAFTA and Inter-American Trade Monitor, vol. 1, #21
October 17, 1994
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HEADLINES

NAFTA LABOR COMPLAINTS DISMISSED
NAFTA GENERATES CUSTOMS PROBLEMS
NAFTA INVESTMENT AND TRADE FIGURES
BRAZIL OPENS TO MORE TRADE
ARGENTINA'S TRADE DEFICIT RISES
CARIBBEAN INVESTMENT NEWS

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NAFTA LABOR COMPLAINTS DISMISSED

US Labor Secretary Robert Reich dismissed the first two
complaints filed by unions under NAFTA. US and Mexican
unions accuse Honeywell and General Electric of thwarting
union organizing drives by firing dozens of workers and using
other illegal tactics, and say further that the Mexican
government condones such actions and fails to enforce its own
labor protection laws.  The companies and the Mexican
government objected to review of the unions' charges under
NAFTA, saying that the complaints concerned corporate, not
government, action, and hence did not fall under the provisions
of the NAFTA labor accord.

While Irasema T. Garza, secretary of the Labor Department's
National Administrative Office (NAO) said that the "timing of
the dismissals appears to coincide with organizing drives," she
said that available evidence "does not establish that the
Government of Mexico failed to promote compliance with or
enforce the specific laws involved."  Garza also reported that
most of the fired workers accepted severance pay rather than
contesting their dismissals, and that some cases are pending
before Mexican labor officials.

Mark A. Anderson, director of the AFL-CIO task force on trade,
expressed disappointment with the Clinton Administration,
saying it had failed to make the most of even the limited
NAFTA labor accord.

Source: Allen R. Myerson, "Reich Supports Mexico on Union
Organizing," NEW YORK TIMES, 10/13/94.

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NAFTA GENERATES CUSTOMS PROBLEMS

Despite steady growth in trade among the NAFTA partners, US
exporters complain bitterly about new Mexican customs
procedures.  Certificate of origin rules have recently been
clarified -- but not necessarily simplified.  The rules are tough
and aimed at keeping out Chinese-made textiles, apparel, and
footwear.  US exporters have trouble because they frequently
import large quantities of Asian-made goods and then re-
export some to Mexico.

Other manufacturers complain because the certificate of origin
forms must meet certain regional content requirements.  With
more and more manufactured goods made up of components
from around the world, assessing North American content is
frequently difficult.  In addition, new labeling rules requiring
original Spanish-language labeling on a number of imports will
mean higher export costs.

Smaller US exporters are particularly hard-hit by the need to
comply with sometimes complex regulations.  Some thought
NAFTA was a panacea, opening the borders to free trade.  They
have found that, even though tariffs are lowered or eliminated
by NAFTA, they must still pay for customs brokers, import
licenses, and processing paperwork.

The US Department of Commerce launched a series of seminars
on customs procedures under NAFTA this January.  Mexican
commerce officials have also attempted to simplify regulations.
An American Chamber of Commerce of Mexico survey of 225
companies operating in Mexico, showed executives almost
evenly divided on whether customs procedures under NAFTA
are the same, more difficult, or easier than before.  More than
half of the executives surveyed do believe that NAFTA will
eventually simplify customs procedures.

Source: Maria Carlino, "Rough Trade," EL FINANCIERO, 9/26-
10/2/94; Kevin G. Hall, "Apparel Importers in US Find Doors
Closed in Mexico, JOURNAL OF COMMERCE, 9/27/94.

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NAFTA INVESTMENT AND TRADE FIGURES

According to Mexico's Ministry of Trade and Industry, foreign
investment was up 29 percent during January-August 1994,
compared to the same period in 1993.  Just about half of the $9
billion was invested in the Mexican stock market.  The
remaining 49.4 percent was invested in productive sectors,
particularly in manufacturing in the areas of food, beverage
and tobacco production.

Mexico's trade deficit with the US for the January-July period
rose to $1.7 billion, but analysts predicted that increasing
export sales would help to erase the deficit within a few years.
Exports to the US rose from $22.5 billion during the first seven
months of 1993 to $27 billion during the same period in 1994.
Mexico's global trade deficit is estimated at between $17 and
$18 billion.

During January-June 1994, Canadian exports rose by 14.8
percent, compared to the same period in 1993.  Imports rose
by 16 percent, particularly in the machinery and equipment
sector.

In August, U.S. car and truck exports to Mexico reached a
record high of 6,062, compared to 936 for August 1993.
Mexican auto exports rose 25.7 percent during the first eight
months of 1994 compared to the same period in 1993.  Nissan
Motor Company said it will begin next year to make Sentra cars
for the US market in Mexico, rather than in Japan.  Nissan
expects to sell up to 20,000 Mexican-made Sentras in the US in
1995.  In early October, Ford Motor Company announced a $60
million expansion to boost production by one-third at its
Cuautitlan plant, where Ford Contour and Mercury Mystique
are produced.

Source: "Foreign Investments Up 29 Percent in1994," IPS,
9/23/94; "Nissan Plans to Build Cars for U.S. in Mexico;" "U.S.
Car Exports to Mexico Hit Record High;" " Maria Carlino, "Trade
Deficit Grows," EL FINANCIERO, 9/26-10/2/94; Catherine
Harris, "For Little Canada, Trade is a Minefield," FINANCIAL
POST, 10/1/94.

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BRAZIL OPEN TO MORE TRADE

As Fernando Henrique Cardoso prepares for his inauguration as
Brazil's new president, increased trade appears to be the
prescription of the day.  Cardoso has promised to allow foreign
investment in oil, telecommunications, mining, and public
works.  Despite nearly $5 billion in income from privatization
anticipated in the 1995 budget, the budget deficit will still
reach nearly $10 billion.

The government will also open banking and insurance sectors
in November (to be followed by stock markets, transportation,
and ports) to at least the other Mercosur countries,
circumventing constitutional protections for these industries by
taking advantage of a loophole for international accords.
Foreign investors can be expected to enter the expanding
telecommunications sector, where a billion dollars in
installation contracts could be awarded in the next few years.

Sergio Amaral, Secretary of International Affairs of the Finance
Ministry, said that Brazil's economy will expand with the
elimination of obstacles to imports.  According to Amaral,
regulation of cleaning and personal hygiene products by the
Health Ministry and of US agricultural imports by the
Agriculture Ministry will be eliminated.

Brazil's imports have increased by 50 percent, to $30 billion,
over the past two years, with new foreign investment rising to
$23 billion. Brazilian government officials predict that trade
will increase to $120 billion by 1996.  Imports from the US
alone are expected to rise by 25-35 percent in 1994.
Argentina, which last year had a $756 million trade deficit with
Brazil on total trade of $6.4 billion, also looks forward to
greater Brazilian imports and to increasing Brazilian
consumption, which will reduce Brazilian exports to Argentina.

Source: "Brasil Vai Abrir Mercado de Servicios," IBASE,
10/6/94; James Brooke, "For Brazil, New Praise and Potential,"
NEW YORK TIMES, 10/10/94; "Economic Opening to Expand
Service Sector," IPS, 10/6/94; "Some State Monopolies to Admit
Private Capital," IPS, 10/6/94; "Cardoso Victory Seen as Good
News for Argentina," IPS, 10/4/94.

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ARGENTINA'S TRADE DEFICIT RISES

Argentina's trade deficit for the first eight months of 1994 is
$3.8 billion, compared to a $3.7 billion deficit for all of 1993
and a $2.6 billion deficit for all of 1992.  Argentine government
officials and International Monetary Fund representatives say
the deficit may reach $6 billion by year's end.  Argentina sold
$2.21 billion in goods to Mercosur members, while importing
$2.83 billion.

The government attributes the rising trade deficit to increased
capital goods purchases in the industrial sector during the first
half of the year.

Source: "January-August Trade Deficit Tops Total for 1993,"
IPS, 10/6/94.

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CARIBBEAN INVESTMENT NEWS

% Garment and textile industries in Central America and the
Caribbean suffered a trade setback with the Clinton
Administration's move to decouple Interim Trade Program
(ITP) provisions from GATT fast-track legislation.  The ITP
would provide parity with Mexico for Caribbean Basin
Initiative (CBI) countries.  Clothing and textile exports from CBI
countries to the US have grown in recent years, despite the
continuing 17-21 percent tariffs.  Exporters from Caribbean
and Central American countries lost ground this year, as tariffs
on Mexican clothing and textiles were reduced.

%JDespite 60 percent popular opposition, the government of
Grenada has given control of the local light and power
company, Grenlec, to the US firm, WRB Enterprise.  WRB bought
half of the shares of Grenlec for $5.6 million.  Opposition parties
and trade unionists say the price is too low.  Much of the
opposition stems from a sentiment in favor of national
ownership of such a key enterprise, although neighboring
countries have recently sold their power companies.  The
Grenadian National Commercial Bank was sold to Trinidadian
investors two years ago, and ten more state companies will
soon be sold.

%JGuyana has seen heavy Canadian investment in its mining
industry, including recent deals for granite quarries, gold
mines, and waste rock.  US mining concerns have also moved
into Guyana's mining sector.

% Jamaica's Digiport International (JDI) in the Montego Bay Free
Zone is owned by AT&T of the United States, Cable and
Wireless of Britain, and Telecommunications of Jamaica.  JDI
offers high-speed information processing and international toll-
free switched and dedicated services for order processing.  The
market for off-shore information processing is rapidly
expanding, and JDI is part of the Jamaican government's effort
to expand its traditional export earnings base.

% Suriname, devastated by a civil war following a 1980
military coup, is seeking increased export earnings, turning
from its Dutch colonial focus to the Caribbean and the United
States sphere of influence.  Pittsburgh-based Alcoa is the most
substantial foreign investor, running the Suralco bauxite mine
and alumina refinery since 1915.  Other US firms are planning
offshore drilling activities and a fertilizer plant.  The biggest
potential investor is Indonesia's MUSA Group, which wants to
invest $1 billion in lumber operations in six million hectares of
Suriname's Amazon hardwood forests -- a third of the
country's territory.  Environmentalists oppose MUSA, pointing
to its clearcutting of Indonesian forests.  A Malaysian firm
already heavily involved in neighboring Guyana also wants a
million hectares of rain forest.

Source: Edward Orlebar, "U-Turn by US Hits Caribbean
Exporters," FINANCIAL TIMES, 10/11/94; Hamlet Mark, "Power
Passes to Overseas Investors," IPS, 10/6/94; "Canadian
Investors Find Country a Gold Mine of Opportunity," IPS,
9/20/94; Canute James, "Jamaica's Window to the World,"
U.S./LATIN TRADE, 10/94; Larry Luxner, "Suriname Blues,"
U.S./LATIN TRADE, 10/94.

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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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For more information about the Institute for Agriculture and Trade
Policy, send email to [email protected].

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Produced by: Mary C. Turck, Institute for Agriculture & Trade
Policy, 1313 Fifth St. SE, Suite #303, Minneapolis, MN  55414-
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