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[email protected] Oct 7 10:57:46 1995
Date: Fri, 06 Oct 1995 13:47:46 -0700 (PDT)
From: IATP <
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To: Recipients of conference <
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Subject: NAFTA & Inter-Am Trade Monitor 106-
NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
October 6, 1995
Volume 2, Number 26
__________________________________________
Headlines:
- FAST TRACK UPDATE
- U.S. LIFTS WHEAT RESTRICTIONS
- CHANGES IN ANDEAN PACT AGREED
- MEXICAN TELECOM PRIVATIZATION MOVES AHEAD
- MEXICAN RAIL, PORT PRIVATIZATION UNDERWAY
- PESO DEVALUATION HITS AUTO INDUSTRY
- ENERGY: NATIONALISM AND INTERNATIONALISM
- RURAL COALITION CROSSES BORDERS
__________________________________________
FAST TRACK UPDATE
Republicans on the House Ways and Means Committee added six
years of fast-track negotiating authority to the budget
reconciliation bill, but excluded workers' rights and
environmental issues from the fast-track authority. Any
agreements on workers' rights and environmental issues would
have to be submitted to Congress separately, and would be
subject to amendment. Even the Clinton administration and
Democrats generally supporting extension of NAFTA are opposed
to this particular fast track provision.
Republican members of the Ways and Means Committee retracted
a previous threat to end all training and assistance for U.S.
workers displaced by trade agreements (TAA), agreeing instead
to extend TAA to October 2000, while cutting its funding by
$519 million.
The budget reconciliation bill must still be approved by the
House Rules Committee and then by full House of
Representatives. A Senate version of the budget
reconciliation bill will probably not contain the fast track
provisions. Both Senate and House versions must be combined
in a conference committee, and then passed by both houses.
Fast track authorization and TAA may be kept in or eliminated
at any of these stages.
Robert S. Greenberger and Nancy Keates, "'Fast-Track' Bill on
Trade Agreements is Backed by Key Committee in House," WALL
STREET JOURNAL, 9/22/95; Lori Wallach, "Sneak Attack," PUBLIC
CITIZEN, 9/22/95; John Maggs, "Key House Democrats Set Out
Terms for Supporting Fast-Track," JOURNAL OF COMMERCE,
September 12, 1995.
U.S. LIFTS WHEAT RESTRICTIONS
In part, because of an increase in worldwide wheat prices,
the Clinton administration has lifted restrictions on imports
of Canadian wheat. The one-year quota, which expired
September 12, was also vulnerable to challenge under the
Uruguay Round pact. U.S. Trade Representative Micky Kantor
said the United States would monitor imports of Canadian
wheat for another year while seeking implementation of
recommendations of an independent commission that studied the
wheat dispute between the two countries. U.S. wheat farmers
were skeptical about the efficacy of the commission
recommendations, noting that they did not include a mechanism
for protecting U.S. domestic markets from surges of Canadian
grain imports.
Increased worldwide demand has led Canadian producers to
export more to other markets, easing pressure that U.S. wheat
farmers felt last year from Canadian exports. International
and U.S. grain reserves have decreased to the lowest levels
in 20 years, and weather problems have also trimmed the U.S.
harvest. Citing decreasing supplies, the American Bakers
Association has asked the U.S. Department of Agriculture to
suspend the Export Enhancement Program (EEP) for wheat this
year.
John Maggs, "US Lifts Restrictions on Wheat From Canada,"
JOURNAL OF COMMERCE, September 13, 1995; "U.S., Canada trade
officials seek to defuse wheat dispute," MILLING & BAKING
NEWS, September 3, 1995; Scott Kilman, "Grain Reserves
Dwindle to 20-year Low," July 11, 1995; "Bakers Ask U.S.D.A.
to Suspend Use of Export Enhancement," MILLING & BAKING NEWS,
July 4, 1995; Juan Miguel Pedraza, "Will There Be Another
Canadian Grain Tidal Wave?" AGWEEK, September 18, 1995; Ian
Elliott, "U.S.-Canadian Grain Pact Allowed to Expire,"
FEEDSTUFFS, September 18, 1995.
CHANGES IN ANDEAN PACT AGREED
At the Quito, Ecuador summit of the Rio Group in early
September, the Andean Pact nations agreed to make significant
changes in the structure of the Andean Pact and in its
integration strategy. The Andean Pact countries -- Bolivia,
Colombia, Ecuador, Peru and Venezuela -- agreed to abandon
the goal of creating a single market of developing countries
trying to protect themselves from the rest of the world, but
still plan to strengthen their joint market while moving
toward integration with other subregional blocs. Political
aspects of integration were signalled by a name change to the
Andean System of Integration, and greater authority will be
vested in the presidents acting together.
Abraham Lama, "Quito Summit Produces Major Reforms in Andean
Pact," INTERPRESS SERVICE, September 6, 1995.
MEXICAN TELECOM PRIVATIZATION MOVES AHEAD
United States-based MCI Communications and Banamex-Accival
(Banacci), Mexico's largest financial group, won the first
government license to compete in Mexico's long-distance
market. Several other concessions are expected in the near
future. Other applicants include GTE, teamed with Bancomer,
Mexico's second-largest financial group; Bell Atlantic,
teamed with Iusacell, a Mexican cellular phone company; and
AT&T, teamed with Grupo Alfa, a large corporation with
diverse interests in steel, prepared food, and chemicals.
Mexico's $4 billion long-distance market will be opened to
competition on January 1, 1997. As applications are
approved, the groups are expected to begin direct
negotiations with Telefonos de Mexico (Telmex) the current
telephone monopoly. The MCI-Banacci joint venture, called
Avantel, plans to invest $1.8 billion over the next six years
to build and operate a fiber-optic network.
Leslie Crawford, "Mexico Kickstarts $7bn Telecom Opening,"
FINANCIAL TIMES, September 8, 1995; Daniel Dombey and Leslie
Crawford, "Getting in Touch With Subscribers," FINANCIAL
TIMES, September 8, 1995; Anthony DePalma, "MCI Wins Mexican
Long-Distance License," NEW YORK TIMES, September 7, 1995.
MEXICAN RAIL, PORT PRIVATIZATION UNDERWAY
Mexico is expected to begin the concessionaire sale of its
national railway in November, with sales expected to bring in
up to $10 billion. Ferrocarriles Nacionales de Mexico (FNM)
will be sold under terms requiring 51 percent Mexican
ownership. The system will be divided into two primary
north-south lines one serving the Gulf Coast and one serving
the Pacific Coast, and a number of feeder lines. Mexico will
still own the existing rails and the land beneath them, but
may sell the right-of-way for fiber optic telecommunications
lines or other utilities. FNM now owns microwave and land
stations for satellite communications.
Labor settlements with FNM workers may slow the process, as
buyers try to slash payrolls. Buyers will also need to
upgrade much of the rail system to standardize it with the
U.S. system. Pricing adjustments to enable rail
transportation to compete with trucking are also expected.
U.S. and Canadian railroads are interested in FNM, as is
Transportacisn Marmtima Mexicana, Mexico's largest ocean
carrier, which also operates a railway from Corpus Christi to
Laredo, Texas, as well as ocean and land services in 35 other
countries in North America, Latin America, Asia and Europe.
Transportacisn Marmtima has a joint venture with J.B. Hunt, a
U.S. trucking company. Kansas City Southern Industries,
which operates a 2,800 mile railroad in the United States,
announced in September that it will purchase 49 percent of
the Texas Mexican Railway in a joint venture with
Transportacion Maritima. The purchase will enable creation of
a new, single-line route between Laredo and Kansas City,
giving Canadian and eastern U.S. shippers another route into
the heart of Mexico.
Last year Mexico decentralized its port management structure,
and this July it awarded concessions for container terminal
operation. Companies awarded concessions for private port
terminals in 1993-94 have largely failed to build terminals
to date, though some say they still intend to do so and are
just waiting to see the shape and impact of rail
privatization.
Charles Thurston and Lisa Bono, "Sale of the Century," TWIN
PLANT NEWS, September, 1995; Kevin G. Hall, "Few Terminal
Projects Emerge From Privatization," JOURNAL OF COMMERCE,
August 31, 1995; "Kansas City Southern in Deal With Mexican
Rail Operator," NEW YORK TIMES, September 6, 1995; Rip Watson
and Kevin G. Hall, "Rail Partnership Would Bolster US-Mexico
Links," JOURNAL OF COMMERCE, September 6, 1995.
CAR MAKERS HIT HARD BY PESO CRISIS
Although automobile exports from Mexico increased by 25
percent through June of this year, compared to last year,
auto manufacturing in Mexico is in trouble. The five major
auto makers -- Chrysler, Ford, General Motors, Nissan and
Volkswagen -- had expected a thriving internal market.
Instead, domestic sales dropped by 74 percent in the first
half of 1995, compared to the same period in 1994.
The big companies have felt the Mexican economic crisis
through the travails of their dealers in Mexico. Even with
interest rates heading back down, Mexicans simply cannot
afford to buy new cars. Ford has extended generous terms to
its 136 dealers, losing money in order to keep its
distributor network relatively intact. Despite extending
below-market rate credit to its 150 dealers, Chrysler has
seen 20 of them go out of business. Chrysler's Mexican
dealers have complained about relations with Chrysler de
Mexico and demanded a meeting with Chrysler officials in
Detroit.
Mexico's national automobile manufacturers association has
asked the federal government for tax and regulatory relief to
help them compensate for drastic sales declines, including
relief from the increase in the value-added tax (IVA) from 10
percent to 15 percent.
Exports of car parts from Mexico have increased this year. A
Goodyear Tire plant at Tultitlan moved from producing mostly
for the domestic market to exporting more than half its
production to the United States, South America, and Europe,
and has actually increased production. Workers complain
about the decrease in purchasing power due to the peso
devaluation. Goodyear management claims that workers at the
Tultitlan plan average $10.50 per hour in wages and benefits,
compared to $17 per hour in wages alone the United States,
but workers say they earn far less.
Auto workers, hard-hit by the peso devaluation and ensuing
inflation, struck the Ford Motor Company plant in Nuevo
Laredo, Tamaulipas in July. Workers took control of the
factory when they were told on July 17 that the CTM union
leadership has signed an agreement with Ford accepting a 7
percent salary increase for the year, instead of the 30
percent that workers had demanded. The CTM union leaders,
however, had negotiated a 30 percent increase for themselves.
After a four-day wildcat strike, Ford agreed to new union
elections and a 30 percent bonus, to be paid in coupons
redeemable at major stores rather than in cash.
Kevin G. Hall, "Mexico's Ailing Carmakers Ask Government for
Help," JOURNAL OF COMMERCE, July 27, 1995; Julia Preston,
"Mexican Peso Fall Leads to Auto-Sales Standstill," NEW YORK
TIMES, August 10, 1995; Kevin G. Hall, "Mexican Industry
Seeks Answers to Economic Turmoil," JOURNAL OF COMMERCE,
August 17, 1995; "Ford Workers Strike for a Living Wage," CJM
NEWSLETTER, Summer, 1995; Allen R. Myerson, "Out of Crisis,
An Opportunity," NEW YORK TIMES, September 26, 1995; "Mexican
Chrysler Dealers Irate," ASSOCIATED PRESS, August 24, 1995;
Mark Stevenson, "Too Many Luxury Cars," EL FINANCIERO
INTERNATIONAL, September 18-24, 1995.
ENERGY: NATIONALISM AND INTERNATIONALISM
North American and European energy companies are investing in
a network of natural gas pipelines across the continent,
planning to take advantage of both vast untapped natural-gas
fields and growing Latin American needs for new, clean fuel
supplies. Argentina, Peru and Bolivia are rich in natural
gas, while Chile and Brazil, with comparatively little gas of
their own, have fast-growing economies that offer markets for
gas. U.S. electric companies also plan to build power plants
in Chile in the near future.
The Bolivian government has begun a privatization process
that will double the net worth of Yacimientos Petroliferos
Fiscales Bolivianos (YPFB), the state-owned oil firm, and
transfer its administration and half of its share to a
private investor. No private Bolivian firm will be able to
compete, since the Bolivian government demands that bidders
have a net worth of at least $500 million. YPFB and the
Brazilian Petrobras are negotiating final details of a sale
of Bolivian gas to supply the industrial market of Sao Paulo,
including construction of a 2,200 kilometer pipeline that
will cost more than $2 billion. So far, the bidders for YPFB
include U.S., Argentine, Brazilian, Canadian, Dutch, Spanish,
and French firms, and the Brazilian branch of British Gas.
Argentina and the United Kingdom have reached a tentative
agreement on oil exploration and exploitation in disputed
waters around the Falkland Islands. Britain and Argentina
fought a 10-week war over the Falkland Islands, called the
Malvinas by Argentina, in 1982. Argentina still claims the
territory, but has put aside its claim of sovereignty to work
out business arrangements.
The framework agreement on oil will allow Argentine companies
to participate in joint ventures in the disputed waters, but
the Argentine government will draw no royalties from the
explorations. Revenue from the oil activity in the so-called
Cooperation Zone will be split equally between Britain and
Argentina, which will require modification to the Argentine
hydrocarbons law. According to some experts, the Falklands
could have as much oil as the North Sea.
"Untapped Latin Gas Fields Lure N. American, European
Investors," REUTERS (in JOURNAL OF COMMERCE), September 15,
1995; Juan Carlos Rocha, "Oil-Bolivia: Privatisation Process
Seduces International Giants," INTERPRESS SERVICE, August 23,
1995; David Pilling and Jimmy Burns, "Oil Cash for
Argentina," FINANCIAL TIMES, September 20, 1995; "UK and
Argentina, One-Time Enemies, Draft Falklands Pact," REUTERS
(in JOURNAL OF COMMERCE), September 18, 1995.
RURAL COALITION CROSSES BORDERS
The Rural Coalition, active since 1978 in promoting
sustainable development and long-term viability in rural
communities through community organizing and development of
cooperatives and credit unions, expanded beyond the United
States into Mexico through a 1993 alliance with the
Chihuahua-based Frente Democratico Campesino (FDC). Two
cross-border projects -- one focusing on rural cooperative
marketing and the other on health and environment -- have
begun.
The alternative marketing project will offer information on
marketing networks and training in cooperative and credit
union structures and government programs. It may also
facilitate projects that eliminate intermediaries, thus
increasing profit for farmers. One such project, in the
planning stages, will market Chihuahuan blue corn directly to
Spanish-speaking communities in the United States and another
will market organic coffee from Oaxaca. The marketing will
involve a cooperative relationship between the U.S.
Federation of Southern Coops/Land Assistance Fund and the
FDC.
The environmental health assessment project, which involves
identifying and monitoring pesticide use, documenting related
health hazards, and training farm workers, began with a May
training session for representatives of the FDC, the El Paso-
based Union de Trabajadores Agrmcolas Fronterizos, and farm
workers associations in Florida and New Jersey.
Loretta Picciano-Hanson and Carlos Marentes, "Rural Coalition
Develops Alternatives to Globalization," BORDERLINES, July,
1995.
RESOURCES/EVENTS
Bittersweet Harvests for Global Supermarkets by Lori Ann
Thrupp with Gilles Bergeron and William F. Waters, World
Resources Institute, Baltimore, MD: 1995. 202 pp. Order from
WRI Publications, P.O. Box 4852, Hampden Station, Baltimore,
MD 21211. Telephone 800/822-0504 or 410/516-6963, email
[email protected]. $19.95 + $3.50 s&h. Analyzes key
characteristics and challenges in diversification of
agricultural exports in developing countries, with particular
emphasis on non-traditional, high-value fruits, vegetables,
flowers in Latin America.
____________________________________________
NAFTA & Inter-American Trade Monitor is produced by
the Institute for Agriculture and Trade Policy and edited by
Mary C. Turck. Electronic mail versions are available free
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