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Date: Fri, 24 Mar 1995 11:38:46 -0800 (PST)
From: IATP <
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To: Recipients of conference <
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Subject: NAFTA & Inter-American Trade Monito
NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
Volume 2, Number 8
Friday, March 24, 1995
_______________________________________________
Headlines:
- MEXICAN TAX INCREASE PASSES, DESPITE WIDESPREAD PROTEST
- CONTINUED CLASHES, POSSIBILITIES OF PEACE IN CHIAPAS
- SONY BOYCOTTS NAFTA HEARING
- NAFTA AND TRANSPORTATION
- TRINATIONAL AGRICULTURAL EXCHANGE
- ENVIRONMENTAL CLEANUP DESPITE MEXICAN CRISIS?
_______________________________________________
MEXICAN TAX INCREASE PASSES, DESPITE WIDESPREAD PROTEST
On March 17, after ten hours of bitter debate and some opposition
even from ruling party PRI deputies, the Mexican government's
proposal to increase the Value Added Tax (VAT) from 10 percent to
15 percent as part of its austerity program was passed by the
Congress. The government threatened PRI congressional rebels with
expulsion from the party, bringing all but one PRI deputy and one
PRI senator back in line to vote for the VAT increase.
On March 19, various social sectors, including business, clergy,
political parties, and citizen's groups in Nuevo Len, Sonora, Zacatecas,
Nayarit, Yucatn, and Tamaulipas demonstrated against the VAT
increase. Two PRI deputies who had voted for the VAT increase were
attacked in Monterrey as they left a television station after having
appeared on the air to defend their position. Business leaders around
the country said that many businesses would be forced to close as a
result of the tax increase. Government officials estimated that
250,000 people had lost their jobs during the first two months of
1995, and predicted that 500,000 more jobs would be lost during the
first half of the year.
A nationwide debtors' strike on March 16, called by the El Barzon
agricultural organization, shut down 874 bank branches. El Barzon's
Mexico City coordinator, Alfonso Ramirez, characterized the
organization as "members of the chamber of commerce, not your
traditional leftists," and warned that the government's austerity plan
presents "a problem ... more explosive than Chiapas." A committee of
shopkeepers in Chiapas declared a two-year moratorium on past-due
debt totaling $70 million. The Mexican Action Network on Free Trade
(RMALC) has called for renegotiation of the foreign debt and for
development financing focused on the domestic market.
"Mexico's Zedi-Shock 'More Explosive Than Chiapas,'"WEEKLY NEWS
UPDATE ON THE AMERICAS, 3/19/95; David Carrizales, Jess Moreno,
Angel Amador, Jess Narvez, Luis Boffil, LA JORNADA, 3/20/95;
Roberto Gonzlez Amador, LA JORNADA, 3/21/95; Leslie Crawford,
"Mexico Austerity Plan Boosted by VAT Rise," FINANCIAL TIMES,
3/20/95; Roberto Gonzalez Amador, "Onate: Quedaran 750 Mil Sin
Empleo," LA JORNADA, 3/11/95.
CONTINUED CLASHES, POSSIBILITIES OF PEACE IN CHIAPAS
Renewed negotiations between the government and the Zapatista
National Liberation Army (EZLN) appear likely despite continued
conflict in Chiapas, including a confrontation between opposition
party PRD and PRI members that left at least six people dead and
eight more wounded. The EZLN maintains that it cannot begin face-
to-face negotiations until the army withdraws to its pre-February 8
positions. Nonetheless, in mid-March the EZLN General Command
offered to begin an exchange of letters with the government, through
the National Mediation Commission (CONAI). CONAI, headed by
Bishop Samuel Ruiz, has been the official mediator between the
parties since early 1994. Such a dialogue could open the way, for the
second time since January 1994, to replace the military conflict with
political negotiation, though low-intensity conflict seems certain to
continue.
The PRD-PRI battle took place in the ejido Teoquipa El Bascn in Salto
de Agua, and grew from disputes over the taking of land. In parallel
developments, cattle ranchers and landowners in the municipality of
Venustiano Carranza, warned by members of campesino organizations
that they were about to invade, evacuated 25 properties. Landowner
associations in the Coalition of Organizations (COC) said they will begin
to drive out people occupying more than 2,000 properties in the state.
Although President Ernesto Zedillo ordered troops to withdraw from
municipalities in Chiapas on March 14, soldiers remained in the public
squares and in front of churches and schools in Margaritas and
Guadalupe Tepeyac a day later. CONAI noted on March 16 that the
Mexican army "remains in its positions in the zone of conflict in
Chiapas and up until the present we have not seen that they have
withdrawn from a single roadblock."
Many of the 26,000 people displaced since January 1994 have begun
to return to their communities. All returnees are registered by the
army and judicial police, some are taken to new areas, and some are
charged for new parcels of land they are going to receive. Many of
the returnees are PRI members who left the area when the EZLN
emerged in 1994, but others are more recent refugees from the
advancing military. Some report being interrogated about Zapatista
leaders.
The federal government has promised 15 million new pesos (about
$2.5 million) to the members of the "Indigenous Groups of the
Motozintla Sierra Madre" (ISMAM) to be used for the harvest and sale
of over 20 thousand quintals (2,200 tons) of coffee. The government
also promised to mediate in the clarification of the murder of Hipolito
Hernandez and Darinel Recinos Gordillo, members of ISMAM, as well
as the kidnapping of ISMAM's president, Carmelino Ramirez Garcia.
Alonso Urrutia and Jess Aranda and Candelaria Rodrguez, "Chocan
Militantes del PRI y PRD en Chiapas, Al Menos 6 Muertos," LA
JORNADA, 3/15/95; Elio Henrquez and Jos Gil Olmos, "Mantienen
Retenes Militares en Margaritas y Guadalupe Tepeyac," LA JORNADA,
3/15/95; AMDH SPECIAL BULLETIN, 3/1-6, 7-13/95; Juan Antonio
Ziga, LA JORNADA, 3/20/95; Jos Gil Olmos, "EZLN Declara," LA
JORNADA, 3/17/95; "Gobierno Accepta Dialogar con EZLN," LA
JORNADA, 3/17/95; "Peace in Southern Mexico, War on the Internet?"
WEEKLY NEWS UPDATE ON THE AMERICAS, 3/19/95.
SONY BOYCOTTS NAFTA HEARING
Sony Corporation refused to appear at the U.S. National
Administrative Office (NAO) hearing in San Antonio, Texas on
February 13. Businesses argue that the NAFTA side accords apply to
the governments of Canada, Mexico, and the United States, and do not
obligate individual companies. NAO Secretary Irasema Garza agreed
that the labor side accord is a government-to-government
agreement, noting that her office has no subpoena power.
The AFL-CIO protested Sony's absence, calling it part of a pattern of
U.S. companies' avoiding public participation in the NAO hearing
process, but praised NAO officials' handling of the hearing. The
February 13 hearing focused on complaints that management of
Magneticos de Mexico (a Sony subsidiary) conspired with the
Mexican government in Nuevo Laredo and the current union to
prevent independent union organizing. The AFL-CIO also charged
that workers who had participated in the hearing were intimidated
by the company.
In related NAFTA labor news, Canadian John S. McKennirey has been
named executive director of the NAFTA Labor Secretariat, located in
Dallas, Texas. McKennirey will serve a three-year term at the head
of a secretariat staffed by 15 consultants, lawyers, economists, and
administrators from all three countries. Each country also has a
National Administrative Office (NAO), which serves as a contact
between the Secretariat and that country. In addition to the NAOs
and the Secretariats, the NAFTA labor side accord set up a Ministerial
Council, consisting of labor ministers from the three countries, and a
tri-national Commission for Labor Cooperation governed by the
Ministerial Council.
"Firms' Absence from U.S. NAO Hearings Comes Under Attack by
Labor," INSIDE NAFTA, 2/22/95; Rafael Anchia, "The NAFTA Labor
Secretariat Becomes a Reality," INTER-AMERICAN TRADE AND
INVESTMENT LAW, 3/3/95.
NAFTA AND TRANSPORTATION
Mexican truckers, about to face NAFTA-mandated direct foreign
competition in border states, are already reeling from deregulation,
devaluation, and the sharp drop in imports caused by devaluation.
Mexico's trucking industry generates five percent of the Gross
Domestic Product and employs more than 1.2 million workers,
carrying 85 percent of land cargo and 98 percent of passengers on
public transportation. NAFTA mandates a lifting of restrictions on
foreign carriers in January 1997.
Cross-border trucking grew rapidly in 1994, but southbound traffic
dropped drastically this year, creating a trailer shortage for Mexican
truckers. Mexican truckers have a ratio of one trailer to each tractor,
while U.S. carriers typically have a higher trailer to tractor ratio.
Since fewer trailers are coming to Mexico, Mexican shippers have
difficulty finding trailers to carry the now-heavier northbound
traffic. They are further handicapped by a fleet of trucks in which
more than a third are more than 11 years old and 22 percent are 16-
20 years old. Mexican truckers who want to purchase new rigs in
the U.S. face steep lending rates and higher costs because of the
economic crisis.
The new austerity package will also handicap Mexican truckers, most
obviously in the immediate 35 percent hike in fuel prices, which will
increase by an additional 0.8 percent monthly for the next year.
Bridge and highway tolls and airport and railroad user fees will also
rise by 2.5 percent monthly.
U.S. shippers are not allowed to engage in "cabotage," domestic point-
to-point hauling within Mexico. A network of "gentleman's
agreements" divides high-density routes among shippers, but also
ensures that no domestic carriers operate nationwide. M.S. Carriers,
one of the major U.S. truckers doing business in Mexico, has found
that differences in shipping practices make their partnership with
Transportes Easo more difficult than anticipated. "We felt like we
could come in and spend $10 million, and we're going to equip Easo
with new tractors and trailers, we're going to give them computer
software ... [and] telecommunications systems ... [and] we're going to
triple their utilization and we're going to make a fortune," said Craig
Coyan, head of M.S. Carriers' international business division. Coyan
cited different ordering and return practices as a source of expense
for Mexican carriers.
Intermodal shipping between Mexico and the U.S. (where barges
connect at ports directly to railroads to transfer bulk and
containerized loads) has suffered from start-up problems. Traffic
imbalance, with more volume going into Mexico than out during
1994, handicapped shippers, and weather conditions at Veracruz,
Mexico's main barge port, also slowed traffic. Problematic rail
connections in Mexico and high rates charged by Ferrocarriles
Nacionales de Mexico also made intermodal shipping less attractive.
Mercosur countries, too, are experiencing transport difficulties as a
barrier to free trade. High port fees make shipping expensive, but
shipping between Brazil and Argentina increased by 25 percent from
1993 to 1994. Rail transport is slow and differing rail gauges make
border transfers of cargo necessary. While truck transportation is
favored, it also has drawbacks, as only a quarter of the trucks in
Mercosur nations are authorized to operate in more than one
country. Air transport is expensive for shippers.
Lino Javier Calderon, "Growth or Extinction? The Future of the
Mexican Trucking Industry," EL FINANCIERO (Import/Export
Supplement), February-March/95; Kevin G. Hall, "Bubble Bursts for
Mexican Trckers," JOURNAL OF COMMERCE, 3/8/95; Paul Conway,
Kevin G. Hall, "M.S. Carriers Finds That the Road to Mexico is Riddled
With Potholes," JOURNAL OF COMMERCE, 3/9/95; Allen R. Wastler,
"Mexico-US Barge Runs May Stage Comeback," JOURNAL OF
COMMERCE, 3/9/95; Kevin G. Hall, "Mexican Businesses Prepare for
Bitter Period of Austerity," JOURNAL OF COMMERCE, 3/13/95; Kevin
G. Hall, "Mexican Turf Wars Intensify Shippers' Distribution
Headaches," JOURNAL OF COMMERCE, 3/10/95; Ricardo de
Bittencourt, "MERCOSUR: The Transport Challenge," INTERPRESS
SERVICE, 3/95.
TRINATIONAL AGRICULTURAL EXCHANGE
Meeting in Lincoln, Nebraska, farmers from Mexico, Canada, and the
United States discussed common concerns at the Trinational
Agricultural Exchange in January. About 40 farmers, rural activists,
and agricultural analysts representing 22 groups from the three
countries met to analyze the impact of global trade on agriculture
and issues of particular concern to farmers in the three countries,
including the Mexico-United States white corn market, continuing
Canada-United States wheat disputes, the 1995 U.S. farm bill, and
Chiapas. Farm organizations from Uruguay, Brazil, and Costa Rica
also participated.
According to Karen Lehman, of the Institute for Agriculture and
Trade Policy's Program on Interamerican Integration, the meeting
gave participants a sense that they can cooperate together in a
continuing network. Representatives from all countries agreed
that agriculture is increasingly controlled by transnational
corporations. Export-driven agriculture, favored by the
transnationals and supported by NAFTA and GATT trade agreements,
has increased rural unemployment and forced migration from rural
to urban areas.
Leslie Wirpsa, "Farmers Cross Borders to Face Free Trade,"
NATIONAL CATHOLIC REPORTER, 2/17/95; Karen Lehman, interview,
3/20/95.
ENVIRONMENTAL CLEANUP DESPITE MEXICAN CRISIS?
According to North American Development Bank (NAD Bank) deputy
director Victor Miramontes, Mexico's current economic crisis may
actually benefit environmental projects along the border. With pesos
in short supply and Mexican lenders charging very high interest
rates, NAD Bank environmental loans are an opportunity for
relatively low-interest borrowing. NAD Bank can lend to individuals,
cities, corporations, or governments on either side of the border. The
Border Environmental Cooperation Commission (BECC) must define
criteria for projects and approve the loans, which can be made for
environmental infrastructural projects. Both Mexico and the United
States have deposited funds in NAD Bank, which plans to make its
first loan by this summer. NAD Bank's priorities are wastewater,
drinking water, and municipal solid waste treatments.
However, since the effects of Mexico's economic crisis are felt
throughout the economy, Mexican businesses are likely to be less
optimistic about environmental investment than the NAD Bank staff.
According to the Mexican National Council of Ecological Industries, 95
percent of large industries are in compliance with ecological
requirements, but the compliance rate drops to 30 percent for
medium-size industry and to 11 percent for small industry.
Postponing enforcement of environmental regulations may be sought,
as small and medium-size businesses struggling to stay afloat
scrutinize the cost of investment in environmental programs.
Ron Mader, "BECC & NAD Bank Updates," MEXICAN ENVIRONMENTAL
BUSINESS, 1/25/95; "Role of NAD Bank," MEXICAN ENVIRONMENTAL
BUSINESS, 2/9/95; Jos F. Garca Quintanilla, "Mexico 1995: Balancing
the Environment and Jobs," INTER-AMERICAN TRADE AND
INVESTMENT LAW, 1/27/95; Baron F. Levin, "Can Mexico Clean Up
Its Act?" TWIN PLANT NEWS, 3/95; Kevin G. Hall, "NADBank's
Leaders Want to Make an Early Mark With Small Projects," JOURNAL
OF COMMERCE, 3/20/95.
_______________________________________________
RESOURCES/EVENTS
_______________________________________________
"A Citizen's Guide to NAFTA's Environmental Commission." Friends of
the Earth and the Interhemispheric Resource Center, February 1995,
16 pp. Order from Friends of the Earth, 1025 Vermont Avenue NW,
3rd Floor, Washington, DC 20016; telephone 202/783-7400; fax
202/783-0444; email
[email protected] or from Interhemispheric
Resource Center, P.O. Box 4506, Albuquerque, NM 87196; telephone
505/842-8288; email
[email protected]. $2 first copy, 50"
each additional copy. Description of the North American Commission
for Environmental Cooperation, created by NAFTA's Environmental
Side Agreement, including structure and procedures of NACEC and
list of advisory board members.
"North American Free Trade Agreement: Structure and Status of
Implementing Organizations." United States General Accounting
Office, October 1994, 46 pp. Order from U.S. General Accounting
Office, P.O. Box 6015, Gaithersburg, MD 20884-6015. Telephone
202/512-6000, fax 301/258-4066 or TDD 301/413-0006. Document
GAO/GGD-95-10BR. Describes organizations created to implement
NAFTA, such as Free Trade Commission, Border Environment
Cooperation Commission, North American Development Bank, etc.
_______________________________________________
Produced by the Institute for Agriculture and Trade Policy, Mark
Ritchie, President. Edited by Mary C. Turck. The NAFTA & Inter-
American Trade Monitor is available free of charge to Econet and
IATPNet subscribers. For information about fax or mail
subscriptions, or other IATP publications, contact: The Institute for
Agriculture and Trade Policy, 1313 5th Street SE, Suite 303,
Minneapolis, MN 55414. Phone: 612-379-5980; fax: 612-379-5982;
e-mail:
[email protected]. For information about IATP's contract research
services, contact Dale Wiehoff at 612-379-5980, or e-mail:
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