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[email protected] Jan 26 15:42:10 1995
Date: 07 Nov 94 08:35 PST
From: IATP <
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To: "Recipients of conference trade.news" <
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Newsgroups: trade.news
Subject: NAFTA & INTER-AM MONITOR 11/7/94
Produced by the Institute for Agriculture and Trade Policy
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NAFTA and Inter-American Trade Monitor, vol. 1, #24
November 7, 1994
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HEADLINES
NAFTA TO BRING INTELLECTUAL PROPERTY LAW CHANGES
HERSHEY TO CUT JOBS
MEXICAN LEATHER WEAR COMPANY APPEALS US RULING
LABOR DEPARTMENT MAY AMEND NAFTA WORKER RETRAINING
PROGRAM
AFL-CIO ENDORSES NAFTA BACKERS
PRIVATIZATION CONTINUES
TRADE WITHIN ALADI NEARLY DOUBLES
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NAFTA TO BRING INTELLECTUAL PROPERTY LAW CHANGE
The International Intellectual Property Association (IIPA) names
Mexico as the seventh-biggest offender in the world, with pirated
software, books, music, and video products costing $293 million
last year. The worldwide cost of such piracy was estimated at $8
billion in 1993.
Ordinarily, the US would classify Mexico as a Special 301 Priority
Foreign Country to be watched, but NAFTA provides another
avenue to exert pressure. Mexico has agreed to legislate and
enforce new copyright laws and has invited the US-based IIPA to
submit proposals for change.
According to the IIPA, lax enforcement is the primary problem,
and the current level of fines does not meet NAFTA standards. As
an example, copyright violation fines are set at 50 to 500 times
the minimum daily wage in the Federal District -- $225 to $2,250.
Mexican law also exempts copyright violators who commit crimes
"to satisfy their most basic necessities." The IIPA considers this
defense too broad.
Source: Justin Bicknell, "Property Rights," EL FINANCIERO, 10/17-
23/94.
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HERSHEY TO CUT JOBS
Hershey Foods Corporation, headquartered in Pennsylvania,
announced plans to consolidate and streamline its North American
operations, probably cutting about 400 jobs. Hershey makes
chocolate, candies, and pasta products in the US, Canada, and
Mexico. The Canadian plants have been performing "below
expectations for three to four years," according to one analyst, and
NAFTA will enable Hershey to close those plants.
Source: Richard Ringer, "Hershey Plans Streamlining and Will Cut
About 400 Jobs," NEW YORK TIMES, 11/2/94.
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MEXICAN LEATHER WEAR COMPANY APPEALS US RULING
Maquiladora Pieles Pitic, S.A. de CV and its US importer, Pitic
Leather, have appealed a US Commerce Department ruling that
assessed countervailing duties (CVD) on some of its leather
wearing apparel. The Commerce Department review focused on
1992 imports and determined a net subsidy of zero for 65
Mexican companies, but assessed a 13.35 percent CVD on other
firms, including Pieles Pitic. This is the first challenge of a US
trade remedy decision by a Mexican company under the
international panel review established by NAFTA.
The company argued in its appeal to the US NAFTA Secretariat
that the US government "neither informed Pieles Pitic or Pitic
Leather of the 1992 review nor requested any information from
either company, and that its first information about the CVD came
after a shipment was held up for payment of the CVD. Moreover,
said attorneys for Pieles Pitic, the CVD amount was arrived at by
taking the highest rate of subsidy in the 1980s under two Mexican
subsidy programs that no longer exist.
The NAFTA review process has also been used by US and
Canadian firms.
Source: "Leather Wear Co. Is First Mexican Firm to Appeal U.S. CVD
Ruling," INSIDE NAFTA, 10/5/94.
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LABOR DEPARTMENT MAY AMEND NAFTA WORKER RETRAINING
PROGRAM
The US Labor Department is considering whether to ask Congress
to make it easier for displaced workers to qualify for worker
retraining programs under NAFTA Trade Adjustment Assistance
(NAFTA-TAA). State representatives at a recent meeting raised a
number of concerns about the program, and organized labor
sources have maintained that problems include lack of familiarity
with the program by local officials, inaccurate or incomplete
advice given to workers, and too-rigid time limits. Because of the
difficulty in qualifying for NAFTA-TAA, many organized labor
officials have encouraged workers to apply for standard TAA
benefits.
Source: "Labor Dept. May Seek to Amend NAFTA Worker
Retraining Program," INSIDE NAFTA, 10/5/94.
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AFL-CIO ENDORSES NAFTA BACKERS
Despite threats of retribution against members of Congress who
voted for NAFTA, the AFL-CIO is supporting 64 members who
backed NAFTA. AFL-CIO President Lane Kirkland said that labor
support could not hinge on a single vote. Union leaders have been
concerned about Democratic losses in the coming elections for the
Senate and House of Representatives.
Source: "Bygones Are Bygones: AFL-CIO Endorses 64 Who Backed
NAFTA," NEW YORK TIMES (reprinted in STAR TRIBUNE),
10/27/94.
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PRIVATIZATION CONTINUES
% In Venezuela, the sale of the state thermoelectric plant
"Plantacentro" has been delayed until 1995 to allow time for six
interested investment groups to participate. Southern Electric
Company of the US has reserved the right to equal the best offer.
Plantacentro is Latin America's largest thermoelectric plant, and
its value approaches one billion dollars. GTE, another US company,
already holds 40 percent of the shares in CANTV.
% Venezuela may also be ready to abandon public auctions as a
method of privatization, selling the government's 49 percent of
the national telephone company (CANTV), estimated at $5-6
billion in value, directly and without bids. A consortium led by
GTE already holds 40 percent of the shares in
CANTV, with 11 percent reserved for employees.
The agreement to let Southern Electric equal the best offer on
Plantacentro is another retreat from public bidding, as are plans
to privatize three racetracks and a recreation center by using
concessions. Thirty projects are scheduled for privatization by
1996. Companies from Canada, Italy, Japan, and Switzerland have
indicated interest in buying the government's 39.6 percent
interest in the Venezuelan Dairy Products Industry, with Italy
planning to offer cash payment if the stock is put up for direct
sale.
% In Brazil, the government hopes to sell provincial banks that are
currently owned by state governments. The provincial banks
often call on the national government for bailouts, and many are
dedicated more to financing local governments than to fostering
economic development.
% In Nicaragua, the legislature has proposed privatization of the
state telecommunications firm, TELCOR. The sale is strongly
opposed by the opposition Sandinista party, but government
officials say that the president may pass it by decree if the
legislature fails to act. Privatization of TELCOR has been promised
to international credit institutions.
% As the Grenadian government put the light and power company
on the market, Grenadians rushed to buy shares, quickly using up
all available share application forms. The government is selling
40 percent of the shares to the public and holding on to 10 per-
cent. A controlling 50 percent interest has already gone to the US
firm, WRB Enterprises. Polls taken prior to the sales showed 61
percent of Grenadians opposed to the privatization.
% In Mexico, speculation on the future of Pemex, the state-owned
oil monopoly continues, with analysts identifying three scenarios:
maintenance of the status quo, which allows strictly limited
private participation; complete privatization of Pemex and
deregulation of the oil industry, which seems unlikely; and
gradual deregulation and opening, primarily in the areas other
than exploration and production. The Mexican Constitution
prohibits opening the oil industry to private or foreign
investment, so the Zedillo Administration will have to work
around the constitutional provision, possibly through mixed
participation subsidiaries.
% In Panama, newly-elected President Ernesto Prez Balladares, a
wealthy businessman, says his government will sell state-run
companies to raise funds for social investment. Panama may also
repeal labor laws to make its work force more attractive to
foreign investors. The minimum wage is presently 94 cents an
hour, with benefits at least 31 cents an hour more, due in large
part to mandatory social security and insurance and job security
for workers. Panama also plans to slash import tariffs.
% Cuba will allow foreign investment in any productive sector of
the economy, including sugar production, said Vice-President
Carlos Lage. Lage said that representatives of 69 US companies
interested in doing business in Cuba had visited the island during
the first six months of the year.
% Bolivia is planning for the transfer to the private sector of state
enterprises together making up one-eighth of all economic activity
in the country, though not calling the process privatization. The
Bolivian plan, called capitalization, will invite foreign companies to
buy strategic equity stakes in six enterprises, and then will
distribute up to half of the remaining shares to the 3.9 million
adult Bolivians in the form of special pension accounts to be
drawn on as annuities when the holders turn 60. The companies
to be capitalized include the state oil and mining industries,
railway and airline, and electricity and telephone.
Source: "Electric Company Privatization Set for 1995," IPS,
10/27/94; Humberto Marquez, "An End to 'Public' Privatization?"
IPS, 10/94; "Minister Rules Out Rapid Sale of Phone Company,"
IPS, 10/14/94; "Dairy Industry Intrigues Foreign Companies," IPS,
10/20/94; "Government to Privatize Provincial Banks," IPS,
10/21/94; "Storm Brewing Over Planned Privatisation," IPS,
10/20/94; "Power Company's Shares are a Hot Item," IPS,
10/12/94; Victor Rodrguez-Padilla, "The Future of Mexico's Oil
Industry," EL FINANCIERO, 10/17-23/94; "Cuba is Removing
Limits for Foreign Investments," WALL STREET JOURNAL,
10/31/94; Stephen Fidler, "Bolivia's Way to Shed State Sector,"
FINANCIAL TIMES, 10/26/94.
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TRADE BETWEEN ALADI MEMBERS NEARLY DOUBLES
The volume of trade between members of the Latin American
Integration Association (Aladi) grew by 92 percent from 1991 to
1993, totaling $23.4 billion in 1993. The increase was attributed
to consolidation of regional commercial blocs such as the Andean
Pact (Bolivia, Colombia, Ecuador, Peru, and Venezuela), Mercosur
(Argentina, Brazil, Paraguay, and Uruguay), and the Group of
Three (Mexico, Colombia, and Venezuela.) Mercosur will realize a
free trade zone and customs union in 1995, while the Group of
Three plans a free trade zone by 2005 and the Andean Pact is
negotiating a common external tariff.
All is not rosy, however, as Argentina continues to experience a
growing trade deficit, which includes a deficit of more than half a
billion dollars with fellow Mercosur members during the first half
of 1994, and a $1.6 billion deficit with NAFTA members. Peru has
also had a growing negative balance of trade with the US since the
former eliminated tariffs and import limitations in 1991.
Source: "Trade Between Aladi Members Up 92 Percent," IPS,
10/26/94; "El Deficit Comercial de Argentina con el Mercosur y el
TLC Sigue Creciendo," SUCESOS, 10/94; "Trade Imbalance With
United States Grows," IPS, 10/24/94.
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RESOURCES/EVENTS
"The NAFTA Handbook: Your Real-Life Guide to Business Under
NAFTA." Baker & MacKenzie. CCH INCORPORATED, 1994. 273
pages. Attn: International Organization, CCH Incorporated, P.O. Box
5490, Chicago, IL 60680-9882; Fax (708) 940-9570. Telephone 1-
800-835-5224, Dept. 4819.
$38 plus postage and handling.
According to CCH, "The NAFTA Handbook is a thorough resource
for agriculturalists and other business people who are interested
in exploring trade options with Mexico and Canada. The structure
of NAFTA's agricultural provisions is explored in-depth, as are
tariffs, safeguards, subsidies, dispute resolution, sanitary and
phytosanitary measures and selected country perspectives."
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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-
1546 USA
Tel: (612) 379-5980, Fax: (612) 379-5982, email:
[email protected]
