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[email protected] Apr 4 10:43:10 1995
Date: Mon, 03 Apr 1995 15:02:12 -0700 (PDT)
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 9
Friday, March 31, 1995
_______________________________________________
Headlines:
- UN SOCIAL SUMMIT HIGHLIGHTS DIVISIONS BETWEEN RICH,
POOR COUNTRIES
- MERCOSUR REJECTS ARGENTINE REQUEST TO RAISE
EXTERNAL TARIFFS
- CONGRESS CONSIDERS CARIBBEAN PARITY
- CUBA TRADE UPDATE
- RMALC PROPOSES ALTERNATIVE PLAN FOR ECONOMIC
RECOVERY
AND SUSTAINABLE DEVELOPMENT
- CANADA-EU FISHING DISPUTE
- VENEZUELA IN ECONOMIC CRISIS
_______________________________________________
UN SOCIAL SUMMIT HIGHLIGHTS DIVISIONS BETWEEN RICH,
POOR COUNTRIES
With 182 of the United Nations' 185 member-states
represented, the UN Social Summit that was held in
Copenhagen in early March came to no concrete agreement
about narrowing the gap between those whom Mexico's
Minister of Foreign Relations, Jose Angel Gurria, characterized
as "one billion persons [who] concentrate 70 percent of
the resources and income of the planet" and "one in every four
human beings [who] live in extreme poverty." Delegates
approved a 90-page plan that commits governments to
eradicating poverty and reducing the billions of dollars in debt
owed by poor countries. However, the plan contains no binding
promises or specific programs.
Non-governmental organizations (NGOs) meeting at an
"alternative summit" in Copenhagen said the plan did not go far
enough. The Latin American caucus declared itself in
agreement with the NGO consensus that "the world is living in a
profound global social crisis." The Latin American caucus went
on to declare that "our continent, more than poor, is an unjust
continent. The caucus said that contributing factors to the social
crisis included debt, uncontrolled action of transnational
corporations, over-exploitation of natural resources, expanded
consumption by the North at the expense of the resources of
the South, financial speculation, and capital flight as
contributing factors. The Latin American caucus denounced
neo-liberal economic models for providing no solutions to
poverty, unemployment, and social disintegration, and even
failing to stabilize economies.
A February 2 letter to the U.N. Secretary General in regard to
the Social Summit, which was signed by NGOs comprising the
Civil Initiative for Central American Integration (ICIC), insisted
that programs of structural adjustment aimed at increasing
exports do not support productive development, equitable
distribution of wealth, or ecological sustainability. ICIC called
on the Social Summit to negotiate with the International
Monetary Fund and World Bank in order to change their policy
of privileging short-term investments and commerce to a
policy of supporting social development, including access for
poor groups to credit, technology, education, and land for
small farmers and rural workers. While expressing
disappointment that no rural organizations had been consulted
in drawing up preparatory documents for the Social Summit,
the Comisin Coordinadora de la Va Campesina called on the
Summit to give priority to ethics over technology and to put
human beings at the center of the development process.
The World Bank, under attack from poorer nations at the
Summit, claimed that it now gives priority to social spending,
but opposed writing off the debt of the developing world.
Jose Angel Gurria, "Palabras del Secretario de Relaciones
Exteriores de Mexico," 3/12/95; "Caucus Latinoamericano:
Cumbre Mundial Sobre Desarollo Social," 3/10/95; Nicholas
Doughty, "U.N. Poverty Summit Plods Towards Final Resolution,"
REUTERS, 3/12/95; "America Central: Carta a Cumbre Social,"
ALAI, 3/8/95; "Campesinos Contra Cumbre Social," ALAI,
3/7/95; Mahesh Unyal, "Social Summit-World Bank: Invest In
People," INTERPRESS SERVICE, 3/10/95.
MERCOSUR REJECTS ARGENTINE REQUEST TO RAISE EXTERNAL
TARIFFS
Argentina withdrew a proposal to its Mercosur partners to
raise Mercosur's common external tariff after Brazil, Uruguay,
and Paraguay all indicated opposition. Both Brazil and
Argentina stood to benefit from the proposed increase. Brazil's
imports have doubled in recent months, creating a trade deficit.
Argentina's economy has suffered a crisis of confidence since
the December 20 Mexican peso devaluation, with $5 billion
transferred out of Argentine banks since December. Paraguay
and Uruguay opposed the tariff increase from the beginning.
When Brazil withdrew its support and joined them in
opposition, Argentina withdrew its proposal.
Instead, Argentina will impose a different three percent tax
that affects imports, as an emergency measure to slow imports
and raise revenues. The Argentine House of Representatives
has approved a three percent Value-Added Tax (VAT) hike
requested by the International Monetary Fund, raising the VAT
from 18 to 21 percent. If the measure is also passed by the
Senate, experts predict an increase in inflation and in
unemployment, officially at 12.2 percent. Most wages have
been frozen for four years.
"Argentina Desiste de Negociar Tarifa Externa Comum," FOLHA
DE SAO PAULO, 3/24/95; Oscar Florman, "Gobierno Propondra
Aumentar Arancel Comun de Mercosur," INTERPRESS SERVICE,
3/15/95; Carlos Castillo, "Holdups on the Road to Integration,"
INTERPRESS SERVICE, 3/95; Angus Foster, "Brazil Will Support
Import Tariff Increase in Mercosur," FINANCIAL TIMES,
3/17/95.
CONGRESS CONSIDERS CARIBBEAN PARITY
The United States Congress is currently considering Caribbean
Basin Parity legislation to reduce the disadvantage suffered by
Caribbean textile manufacturers relative to Mexican textile
manufacturers, now that NAFTA has slashed duties and quotas
for Mexico. While Caribbean apparel imports to the U.S. grew
by nine percent last year, the volume of imports from Mexico
increased by 43 percent. In 1993, before NAFTA, each region
had increased imports by 20 percent. Many manufacturers
have shifted production to Mexico as a result of NAFTA.
U.S. apparel manufacturers and importers are pushing for the
Caribbean Basin Parity legislation, and for the tariff preference
levels (TPLs) that would let Caribbean manufacturers use
fabric imported from the Far East. The TPLs, which can be
implemented by executive authorization, are needed because,
unlike Mexico, the Caribbean nations do not have the mills to
produce their own fabric. The Clinton administration says it
does not object to the TPL provisions, and supports the parity
legislation. Senate approval of the legislation may be difficult
to obtain. Last year the Clinton administration withdrew
similar legislation because of fear that it would impair the
chances of GATT passage, and because of opposition by U.S.
garment workers unions.
Caribbean apparel sales to the U.S. totaled $3.9 billion in 1993,
with the industry employing 450,000 workers, mostly in the
Dominican Republic, Costa Rica, Guatemala, Honduras, and
Jamaica.
Paula L. Green and John Maggs, "House Panel Set to Vote on
Parity for Caribbean and Mexican Apparel," JOURNAL OF
COMMERCE, 3/27/95; Scott West, "Region Sees Hope in New
'Parity' Legislation," INTERPRESS SERVICE, 3/17/95; Canute
James, "Peso Devaluation Adds to Caribbean Woes," FINANCIAL
TIMES, 2/21/95.
CUBA TRADE UPDATE
Foreign investment in Cuba is growing, despite the 33-year-old
U.S. trade embargo. Some conservative politicians and many
business leaders in the United States advocate replacing the
embargo with free trade, and letting U.S. firms have a chance at
the Cuban market. Johns Hopkins University recently
completed a study that shows the U.S. embargo costs U.S.
businesses $750 million annually.
Official Cuban sources say that 180 associations with capital
from 38 countries now have more than $1.5 billion invested in
26 economic sectors. Canada, China, France, Mexico, and Spain
lead the list of investors. Signs in Havana advertise the "United
Colors of Bennetton" and Mitsubishi. While this year's sugar
crop suffers from delayed cultivation, foreign financing will
boost production next year, and Cuban sugar deals with China
and Russia will generate cash and oil. Cuba's nickel production,
hurt by the collapse of the Soviet Union, may be buoyed by
$100 million in investment by Canada's Sherrit, Inc. over the
next five years.
According to Cuban government figures, Cuba showed economic
growth of 0.7 percent in 1994, and a budget deficit reduction of
72 percent. Changes adopted by the government last year
include price and tariff increases, a new tax law, and
elimination of many subsidies. The fourth Congress of the
National Economists Association in Cuba, meeting in March,
called for decentralized management of businesses, granting
traditional sectors levels of autonomy close to those of the
mixed venture companies that now account for 13 percent of
all Cuban industry. Restructuring and reorganization of state
enterprises has begun, despite fears of displacement of
workers.
Also on the Cuban economic horizon is a revaluation of the
peso, still officially pegged at one peso to the dollar despite a
black market trade at a 35:1 ratio. Although no specific plans
have been announced, government officials say that a new
exchange rate will have to be set soon.
As United States legislators, ranging from Senator Jesse Helms
(R-N.C.) to Representative Robert Torricelli (D-N.J.) sign on to
ever more punitive proposals to strengthen the U.S. trade
embargo, the United States finds itself more and more isolated
internationally. In November, more than 100 countries in the
U.N. General Assembly condemned the embargo. The General
Agreement on Tariffs and Trade forbids such trade restrictions
between members of the World Trade Organization (WTO), and
both Cuba and the United States are full members of the WTO.
French President Mitterand called the embargo "stupid," and
British Conservative Baroness Young warned that it "cannot but
cause serious problems" between the U.S. and the United
Kingdom.
The Helms proposal would force foreign-based U.S. subsidiaries
to stop grade with Cuba and would punish foreign firms that
trade with or invest in Cuba. Torricelli claims that "the Castro
regime is clearly on its last leg," and that tightening sanctions
will hasten his departure.
U.S. President Bill Clinton denied rumors that it was considering
easing the sanctions imposed on Cuba last summer, including
travel restrictions and a ban on cash remittances from Cuban
exiles to their families still in Cuba. Some administration
officials are pushing for a "roadmap" to tell Cuban President
Fidel Castro exactly what steps could be taken to receive
concessions or open the way for negotiations between the two
nations.
"Cultivation of Sugar Cane Plantations Lags in Cuba," JOURNAL
OF COMMERCE, 3/17/95; Pascal Fletcher, "Cuba Secures Chinese
Sugar Deal But Loses Out on Nickel," FINANCIAL TIMES,
3/23/95; "Analysts Call for Realistic Exchange Rate,"
INTERPRESS SERVICE, 3/21/95; Dalia Costa, "Economists Call for
Reversal in Business Policy," INTERPRESS SERVICE, 3/23/95;
Wayne S. Smith, "Washington Ignores Reality, Law in Undying
Obsession with Castro," LOS ANGELES TIMES (reprinted in STAR
TRIBUNE, 3/27/95); Daniel Williams and Ann Devroy, "Clinton
May Ease Sanctions on Cuba," WASHINGTON POST, 3/7/95;
"Clinton Rejects Any Softening of Sanctions," INTERPRESS
SERVICE, 3/7/95; Dalia Costa, "No Shortage of Foreign
Investors," INTERPRESS SERVICE, 3/20/95; Dan Burton,
Robert Torricelli, "Burton and Torricelli Blast Idea of Easing
Cuban Embargo," CONGRESSIONAL RECORD, 3/7/95; Carla Anne
Robbins, "Odd Allies Await Clinton If U.S. Shifts Cuba Policy,"
WALL STREET JOURNAL, 3/16/95;
RMALC PROPOSES ALTERNATIVE PLAN FOR ECONOMIC
RECOVERY AND SUSTAINABLE DEVELOPMENT
Attributing the Mexican economic crisis to the free trade
economic model followed during the past 12 years, the Mexican
Action Network on Free Trade (RMALC) proposed an
alternative to "Zedishock" economic austerity. RMALC's plan
emphasizes the necessity of sustainable development that
places priority on raising the economic level of the majority of
the population and preserving the environment. Generating
more jobs and slashing interest rates are among the key
elements of the RMALC plan, which includes tax reforms that
will alleviate the burden on individuals and small businesses
and will tax financial speculators. Increased wages for
workers and increased economic development to generate jobs
are key to the RMALC plan.
RMALC Grupo Tecnico de Analisis Economico, "Plan de
Recuperacion Economica y Desarrollo Sustentable," 3/17/95.
CANADA-EU FISHING DISPUTE
A three-hour sea chase, machine-gun fire across the bow of the
ship, and the final seizure of a Spanish fishing vessel by the
Canadian Coast Guard were called "gunboat diplomacy" by
admiring Canadians and "piracy" by incensed Europeans. The
dispute has its roots in declining fish stocks in the Northwest
Atlantic, part of a worldwide problem. According to the United
Nations Food andAgricultural Organization, 70 percent of the
world's fish stocks are overfished and their viability is
threatened.
The Northwest Atlantic Fisheries Organization (NAFO) decided
unanimously last September to restrict the total allowable
catch of turbot to 27,000 tons in 1995. National quotas within
the 27,000 ton limit were contested, but the vote finally
assigned Canada 60 percent of the total and restricted
European Union (EU) fishermen to 3,400 tons, compared to the
37,000 tons annually that they took between 1991 and 1993.
On March 1, the EU rejected the quota assignment and
unilaterally assigned themselves a quota of 18,630 tons -- 70
percent of the allowable catch for all NAFO members. On
March 3, Canada adopted protection laws extending its
authority beyond its internationally-recognized 200-mile
"exclusive economic zone" to the "nose and tail" area of the
Grand Banks. On March 8, the Canadian frigate Halifax
arrived in the "nose and tail" of the Grand Banks after 45
Spanish fishing boats were reported there. On March 10,
Canadian navy gunboats pursued and captured the Estai.
Canadians charged that the Estai was using illegally-sized nets
to capture small fish and contained a hidden hold with an
excess catch of turbot. The ship was released on $250,000
bond on March 15, with Canada and the EU agreeing to talks at
the next NAFO meeting. On March 28, renewed clashes
between Spanish fishing trawlers, Spanish naval vessels, and
Canadian patrol boats were reported.
While more than 75 percent of the turbot is within Canada's
200-mile zone, catches in the area have fallen from 30,000 tons
in 1987 to just over 5,000 tons in 1993, as catches on the edges
of the zone have risen from 2,000 tons to 45,000 tons during
the same time. The overall catch in the NAFO area has dropped
42 percent since 1973, with disastrous consequences for the
Canadian fishing industry. The EU and Japan have resisted a
binding international fishing treaty. When Spain and Portugal
joined the EU in 1986, the previous EU members required them
to agree not to fish in other European waters for 16 years, thus
putting further pressure on Canadian waters.
"FAO: Fishery Ministers Call for Protection of Resources,"
INTERPRESS SERVICE, 3/19/95; Clyde H. Farnsworth, "Canada
and Spain Face Off Over Atlantic Fishing Zone," NEW YORK
TIMES, 3/12/95; James Harding and Deborah Hargreaves," Fish
Knives Out in Defence of Canada's Turbot," FINANCIAL TIMES,
3/11-12/95; Bernard Simon, "Spanish Go Home Smiling Despite
Empty Nets;" Caroline Southey and David White, "EU and
Canada Talk in Effort to End Fishing Row," FINANCIAL TIMES,
3/17/95; "Just for the Halibut," JOURNAL OF COMMERCE,
3/17/95; "Ottawa May Seek to 'Delay' NAFO Talks," INTERPRESS
SERVICE, 3/17/95; Alicia Fraerman, "Conflict With Canada
Symptom of Broader Issue," INTERPRESS SERVICE, 3/15/95;
Robert Hart, "Spanish Fishermen Return to Disputed Fishing
Grounds," REUTERS, 3/28/95.
VENEZUELA IN ECONOMIC CRISIS
Venezuelan finance minister Julio Sosa Rodrguez resigned in
early February, and was replaced by Luis Raul Matos Azocar,
who is rumored to share President Caldera's skepticism of the
free-market orientation of the previous administration. During
Caldera's first year in office, he declared a state of economic
emergency, took over several troubled banks, and imposed
price and wage controls. Official economic figures for 1994
show 71 percent inflation, 9 percent "open" (i.e. officially
reported) unemployment, and 80 percent currency
devaluation. While some analysts advocate creation of a
new currency known as the gold bolivar and replacing the
Central Bank with an Argentine-style "exchange house," most
cabinet-level officials oppose such economic shock therapy as
destructive and ultimately ineffective.
Humberto Marquez, "Caldera's First Year Marked by Economic
Crisis," INTERPRESS SERVICE, 2/1/95; "Venezuelan Finance
Minister Resigns Amid Banking Crisis," WEEKLY NEWS UPDATE
ON THE AMERICAS, 2/12/95; Humberto Marquez, "Currency
Adjustment Proposed to Control Inflation," INTERPRESS
SERVICE, 3/95.
_______________________________________________
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
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[email protected]. For information about
IATP's contract research services, contact Dale Wiehoff at 612-
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