From
[email protected] Dec 16 10:44:11 1995
Date: Fri, 04 Aug 1995 08:41:08 -0700 (PDT)
From: IATP <
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To: Recipients of conference <
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Subject: NAFTA & Inter-Am Trade Monitor 8-4-
NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
Volume 2, Number 22
August 4, 1995
________________________________________
Headlines:
- U.S. CONGRESS PROTESTS MEXICO BAILOUT
- U.S. DAIRY COMPLAINT AGAINST CANADA
- PROCAMPO FALTERS, EL BARZON GROWS
- AVOCADOS AND TOMATOES ARE FOCUS OF TRADE DISPUTES
- U.S. BEEF INDUSTRY TO FACE INCREASED COMPETITION
- EZLN-GOVERNMENT NEGOTIATIONS BUT NO PROGRESS
- CHILE FAST-TRACK STILL IN DOUBT
- TELMEX BUYS CABLEVISION
________________________________________
U.S. CONGRESS PROTESTS MEXICO BAILOUT
In July, the U.S. House of Representatives voted to prevent
any future use of the Exchange Stabilization Fund for "the
purpose of bolstering any foreign currency." This is the
fund used by President Clinton as part of the "bailout" of
the Mexican peso, when he proved unable to get Congressional
approval of the administration's first assistance plan. The
Clinton administration offered Mexico a $20 billion line of
credit in February, and had made $12.5 billion in medium-term
loans by mid-July. Senator Alfonse D'Amato (R-NY), Chair of
the Senate Banking Committee, said he will propose similar
legislation in the Senate. The legislation would not be
effective until October 1, by which time the line of credit
will have been disbursed.
The Mexican government said that the vote will have limited
effect. Mexico has used the U.S. loans of $12.5 billion and
nearly $10 billion from the International Monetary Fund to
reduce outstanding dollar-denominated tesobono debt to $7.9
billion, from a high of $29 billion at the beginning of the
year. Mexican central bank reserves are currently $13.6
billion. U.S. Treasury Secretary Robert Rubin said that the
U.S. might not need to give further aid to Mexico because the
Mexican economy is improving.
David Wessel, "House Protests Mexico Bailout in Vote on
Fund," WALL STREET JOURNAL, July 20, 1995; Daniel Dombey,
"Mexico Shrugs Off House Vote," FINANCIAL TIMES, July 21,
1995; Chris Simkins, "Rubin/Mexico Economy," VOICE OF
AMERICA, July 17, 1995; David E. Sanger, "D'Amato Seeks to
Limit Foreign Bailouts," NEW YORK TIMES, July 22, 1995.
U.S. DAIRY COMPLAINT AGAINST CANADA
The United States has asked the North American Free Trade
Commission to establish an arbitration panel to consider
Canadian tariffs on dairy products, barley, and poultry and
egg products. The Canadian government says its plans to
impose the tariffs on August 1 are in accord with both World
Trade Organization (WTO) and NAFTA rules. Canada says the
new tariffs are simply a conversion of previous quotas into
tariffs, a process known as "tariffication." While
tariffication is mandated under the GATT/WTO accord, NAFTA
prohibits imposition of new tariffs. Canada says that the
U.S., which unsuccessfully tried to get Canadian agreement to
end the tariffs under GATT, is "trying to get by the back
door what they couldn't get by the front."
Ian Elliott, "U.S. Files Ag Trade Action Against Canada Under
NAFTA," FEEDSTUFFS, July 24, 1995.
PROCAMPO FALTERS, EL BARZON GROWS
In principle, Procampo, the Rural Direct Support Program of
the Mexican government begun in 1994, offers subsidies to
some of the 60 percent of Mexican farms that are under 12.5
acres in size. The direct subsidies of $1 billion to 4
million small farmers for 26 million acres of planted grain
was criticized as a vote-buying project of the governing PRI
(Institutional Revolutionary Party) during an election year.
Program requirements were tightened in 1995 to allow
certification only for farmers who could show that they held
legal title to their farms and had planted their acreage.
The more stringent requirements bar many farmers who,
because of skyrocketing interest rates and irrigation costs
and the drought in northern Mexico, have been unable to
plant. An alternative disaster relief program for farmers
who could not plant gives a far lower subsidy on up to 25
acres.
President Zedillo has ordered a special government commission
to come up with concrete proposals for changing government
farm programs to increase productivity and expand the
Procampo program.
Government bridge loans to farmers have been abandoned this
year, and interest rates on available loans are so high that
Procampo subsidies could not pay them. The Agriculture
Ministry's budget has been cut, decreasing the amount of
money available for Procampo. Overdue agricultural debt
increased by 35 percent during the first quarter of 1995.
El Barzon, a debtor's organization, is demanding
renegotiation and cancellation of agricultural loans,
suspension of foreign debt payments to allow for rural credit
inside Mexico, and an entirely new federal farm policy. El
Barzon has grown to 450,000 members in 30 states and the
Federal District, including merchants, business operators,
truck drivers and taxi-cab owners, as well as farmers.
El Barzon's convention in Mexico City in late June issued an
ultimatum: El Barz�n will close every bank office in the
country beginning on September 15 unless there is a
moratorium on foreclosures and a national political dialogue
on debt. At the meeting, farmers and business people told of
"loan promoters" who offered farmers blank promissory notes,
and farmers and business people who borrowed money in
mistaken reliance on the government's promises of continuing
economic growth. Now they face foreclosure.
Bankers increasingly use collection tactics such as home
visits by lawyers accompanied by uniformed police officers
and close contacts with judges who order debtors arrested on
"contempt" charges. Such tactics have contributed to a
rising rate of suicides throughout Mexico.
Banks have also contracted with U.S. auctioneers to sell
foreclosed real estate. One, Lasalle Partners, announced in
Texas that its scheduled August auction in Mexico City offers
"an enormous opportunity to buy Mexican property." Though
Lasalle says it seeks Mexican buyers, its extensive U.S.
advertising enrages many Mexicans. "They are selling off the
patrimony of our nation to the gringos," El Barzon's national
coordinator, Alfonso Ramirez Cuellar, says. "We are not
going to permit it."
Talli Nauman, "In the Drought Zone," EL FINANCIERO, July 3-9,
1995; Mark Stevenson, "Debtors of Mexico -- Unite!" EL
FINANCIERO, July 3-9, 1995; John Ross, "Return of the
Barzonistas," THE TEXAS OBSERVER, July 14, 1995; Kevin G.
Hall, "Zedillo Sets 7-Month Deadline for Proposals on Farm
Woes," JOURNAL OF COMMERCE, July 25, 1995.
EZLN-GOVERNMENT NEGOTIATIONS BUT NO PROGRESS
The fifth negotiation session between the EZLN (Zapatista
National Liberation Army) and the Mexican government ended on
July 26 after degenerating into name-calling. No progress
was made in this meeting, as the EZLN negotiators called
government negotiators "liars" and government negotiators
said the guerrilla leaders were "insolent and lousy." EZLN
Comandante Tacho warned that "We see no will to listen from
the current government representatives. They continue with
their arrogant and haughty attitude. Their intransigence
could lead this dialogue to failure."
The next meeting between the two delegations is set for
September 5. The opposition National Action Party (PAN)
proposed a meeting between Interior Minister Emilio Chuayffet
and EZLN Subcommandante Marcos, to which the EZLN agreed "if
it will lead to peace, and if it is carried out with all the
conditions and guarantees for safety."
Margaret O'Shea, "Report on San Andres Larrainzar, Chiapas
Dialogue," GLOBAL EXCHANGE, July 26, 1995; Elio Henriquez and
Juan Antonio Zuniga, "Trabajaran Sobre un Documento y
Dialogaran el 5 de Septiembre," LA JORNADA, July 27, 1995;
EZLN COMMUNIQUE, July 25, 1995.
CHILE FAST-TRACK STILL IN DOUBT
Republican leaders in the U.S. House of Representatives are
apparently near agreement on the "fast-track" negotiating
authority needed to add Chile to NAFTA. The Senate approval,
however, is far from certain. Senate rules require a 60-member
majority to approve the fast-track legislation. Senate Majority Leader
Bob Dole, a candidate for president, seems unwilling to give President
Clinton the power to negotiate extension of NAFTA during the
1996 election campaign. Congressional Republicans also
oppose inclusion of labor and environmental protection
provisions, while Democrats, less happy with free trade in
general, insist on these protections as part of any deal.
Canadian officials negotiating with Chilean, Mexican, and
U.S. representatives in Mexico City expressed hope that a
NAFTA pact with Chile could be reached by the end of 1995.
John Maggs, "House Backs Fast-Track on Chile Deal," JOURNAL
OF COMMERCE, July 26, 1995; Kevin G. Hall, "Canadian Official
Says Nafta Pact Possible With Chile by Year's End," JOURNAL
OF COMMERCE, July 26, 1995.
AVOCADOS AND TOMATOES ARE FOCUS OF TRADE DISPUTES
On July 3, the U.S. Department of Agriculture proposed a new
rule that would allow imports of fresh Hass avocados grown in
approved orchards in Michoacan, Mexico. The public hearing
and comment period will delay implementation of the rule, but
it is expected that Mexican avocados will be shipped to 19
Northeastern states by some time early in 1996. California
avocado growers oppose the change, arguing that Mexican
imports could be transshipped from the 19 Northeastern
states, resulting in introduction of pests to California
fields.
Mexican avocados are already shipped through the United
States to Canada and Alaska in sealed containers. The USDA
says that new pest-control measures within Mexico, special
inspection and shipment procedures, and restriction of
imports to colder states where the pests cannot survive will
be adequate control measures. Mexico is the world's biggest
avocado produce3r, with 45 percent of total world production
and production costs less than half of California's.
California's crop accounted for 90 percent of U.S. avocado
consumption last year.
Florida Congressman Mark Foley (R-FL) recently introduced
legislation that would link the tomato tariff rate to the
Mexican peso devaluation, effectively raising the tariff rate
and making Florida-grown tomatoes more competitive with
Mexican imports. Florida growers, who sell mainly to the
U.S. winter market, have suffered from increased Mexican
competition under NAFTA, with Florida's share of the fresh
winter tomato market in the U.S. dropping from 70 percent in
1993 to 36 percent earlier this year. Florida growers filed
a complaint last March, alleging harm to the winter tomato
industry and asking for imposition of tariffs to protect
them. The U.S. International Trade Commission denied relief,
apparently finding that the Florida growers represented too
narrow a portion of the U.S. tomato industry.
Peter M. Tirschwell, "US May Lift 80-Year Ban on Mexican
Avocados," JOURNAL OF COMMERCE, July 10, 1995; Tom Karst,
"Avocado Imports: Rule Could Open Door," THE PACKER, July 10,
1995; Larry Waterfield, "Mexican Tomato Tariffs: Bill Hinges
Tax Rates on Pesos," THE PACKER, June 5, 1995; Leslie Alan
Glick, "What NAFTA Giveth," TWIN PLANT NEWSLETTER, June,
1995.
U.S. BEEF INDUSTRY TO FACE INCREASED COMPETITION
Uruguay and Argentina are both expected to begin exporting
fresh and frozen meat to the United States as soon as they
win U.S. Department of Agriculture (USDA) approval on
eradication of hoof and mouth disease, expected later this
year. Each country was awarded a 20,000 metric ton beef
quota for this year under GATT, the General Agreement on
Tariffs and Trade. The imports will have little effect on
the U.S. beef import market, which totaled about 751,455
metric tons last year. Most of the imports are expected to
be bulk pack meats for the fast-food hamburger market, and
will compete with Australian, New Zealand, and Canadian beef
already heavily supplying that market. The entire U.S. beef
market is oversupplied at present, with beef prices at a 20-
year low.
The major impact of the Argentine and Uruguayan entry into
the U.S. beef market is expected to be displacement of
Australian beef exports. In turn, Australia is expected to
increase exports to Japan where they will compete with U.S.
beef exports. The U.S. sent 368,984 metric tons of beef and
beef variety meats, 59 percent of all U.S. meat exports by
value, to Japan in 1994.
Mexican beef exports to the U.S. increased dramatically in
recent months due to the impact of the drought in northern
Mexico, but the financial benefit to Mexican cattlemen was
diminished because of low average cattle weights. The USDA
has also ended an in-bond program for Mexican cattle that
allowed Mexican cattle growers to export cattle to the U.S.
to take advantage of lower U.S. feed costs, and then to re-
import the cattle for slaughter. The U.S. National
Cattlemen's Association and the Mexican National Livestock
Confederation (CNG) both support bringing back the in-bond
program. The CNG has also asked for suspension of Mexican
import duties on imported animal feeds. Mexico is expected
to see a beef shortage later this year, and U.S. beef imports
are still priced too high to win market share in Mexico.
Meanwhile, both Cargill Foods and IBP plan to expand
processing capacity in Alberta, Canada, and to import U.S.
cattle for processing there. Cargill spokesperson John
Simons says that, despite stagnant U.S. and Canadian demand
for beef, Japan, Taiwan and Korea offer strong markets. Some
Montana ranchers say that Canadian cattle imports negatively
affect U.S. cattle prices.
Montieth Illingworth, "Uruguay, Argentina Plan to Re-Enter US
Meat Market," JOURNAL OF COMMERCE, June 26, 1995; Peter M.
Tirschwell, "Argentina's Comeback Worries US Beef Sector,"
JOURNAL OF COMMERCE, June 5, 1995; Chris Aspin, "Mexican
Cattlemen to Discuss Devaluation, Drought," REUTERS, June 11,
1995; "U.S. Cattle Chief Questions Mexico Program Loss,"
REUTERS, June 14, 1995; "Cargill Wants to Process Montana
Beef in Alberta," FARM AND RANCH GUIDE, July 14, 1995.
TELMEX BUYS CABLEVISION
Telmex, Mexico's telephone monopoly, will buy 49 percent of
Televisa's cable television subsidiary, Cablevisi�n in a deal
approved by the Mexican Federal Commission on Competition
(CFC) on June 20. The deal will unite two of Mexico's
largest companies and two of its wealthiest men, Carlos Slim
and Emilio Azcarraga. Competitors acknowledge the
technological benefits of uniting the two companies, but a
director of Marcatel, another company bidding to enter the
long-distance market, argues that the merged operation will
simply be "a new super monopoly made up of two separate
monopolies."
The deal was opposed by such large competitors as US-based
GTE and its Mexican partner, Bancomer, who wrote to the CFC
that: "Such combination would result in monopolistic control
over the Mexican telecommunications market," and warned that
the deal would be an "unprecedented and plainly uncompetitive
alliance of dominant players." Bell Atlantic and Grupo
Iusacell argued that the deal violated the terms of Telmex's
1990 privatization, which forbade its participation in
broadcast television programming. Other U.S. companies which
would be affected by the deal include MCI and Sprint.
When the CFC began considering the Telmex-Televisa proposal
last November, it was headed by Santiago Levy, a committed
opponent of monopolies. Levy was replaced by Fernando
S�nchez Ugarte under the new Zedillo administration. The
deal must still be approved by the Communications and
Transportation Ministry.
Claudia Fern�ndez, "The Empire Strikes Back," EL FINANCIERO,
June 26-July 2, 1995; Anthony DePalma, "Telmex Gains in
Attempt to Buy Cable-System Stake," NEW YORK TIMES, June 22,
1995.
________________________________________
RESOURCES/EVENTS
________________________________________
"Assessing the Rural Reforms in Mexico, 1992-1995," a
research workshop of the Ejido Reform Research Project of The
Center for U.S.-Mexican Studies, University of California,
San Diego, August 25-26, 1995. More than 20 papers will be
presented, some in English and some in Spanish, covering
various aspects of changing agrarian institutions and laws.
Pre-register by August 15. Workshop is free, lunches each
day cost $7.50. Workshop will be held at the International
Conference Center, Institute of the Americas Complex,
University of California, San Diego. Contact David Myhre by
email at
[email protected] or by fax to 619-534-6447, or
mail to Center for U.S.-Mexican Studies; University of
California, San Diego 0510, La Jolla, CA 92093-0510.
___________________________________________
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:
[email protected]
