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[email protected] Nov 18 12:22:18 1995
Date: Fri, 17 Nov 1995 13:38:22 -0800 (PST)
From: IATP <
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To: Recipients of conference <
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Subject: NAFTA & Inter-Am Trade Monitor 11-17
NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
November 17, 1995
Volume 2, Number 29
_______________________________________________________
Headlines:
- U.S. AG EXPORTS AT RECORD HIGH
- MEXICO: NEW FARM PLAN PROPOSED
- PESO STILL FALTERING
- COMMENTS ON TOMATO IMPORTS CONSIDERED
- CANADIAN TRADE SURPLUS A CHIMERA
- "CBI PARITY' BILL CHANGED
- FAST TRACK SLOWED IN CONGRESS
- NAFTA ENVIRONMENTAL CONCERNS CONTINUE
_______________________________________________________
U.S. AG EXPORTS AT RECORD HIGH
U.S. agricultural exports saw estimated growth of 22 percent
in fiscal 1995 (October 1994-September 1995) to a record $53
billion, the biggest year-to-year increase since 1988.
Agricultural exports are expected to grow by three percent in
1996 to set a new record high of $54.5 billion. U.S.
agricultural imports are expected to remain at 1995's level
of $29 billion for another year.
U.S. coarse grain exports (corn, sorghum, barley, rye, oats,
and mixed grains) fell in volume in 1995, but higher export
prices kept their value steady at 1994 levels. U.S. corn
export prices are expected to rise further in 1996. Exports
of high-value product -- fruit, vegetable, and meat exports --
continue to rise, partly as a result of market-opening
agreements and expanded international fast food sectors. In
Colombia, for example, the government has agreed to allow
imports of meat and poultry from the U.S., provided it comes
from federally inspected U.S. plants. International market
opening is a two-way street, as Argentina and Uruguay have
finally met U.S. concerns about hoof-and-mouth disease and
have gained permission to begin shipping fresh and frozen
beef to the United States.
Exports of animal products also continue to rise steadily.
U.S. beef exports rose, driven by higher sales to Japan and
South Korea. Citing "competitive priced pork products" and
record U.S. pork production, the USDA Foreign Agricultural
Service reported that the U.S. has reversed its traditional
position as a large net importer of pork, and will probably
be a net exporter of pork for the first time in 43 years.
Live cattle imports from Mexico to the U.S. increased
dramatically in 1995, as Mexican producers sold off drought-
stricken herds.
Meanwhile, Marvin Lehrer, director of the USDA's trade office
in Mexico City, predicted increasing U.S. agricultural
exports to Mexico in the future, despite 1995's sharp decline
in agricultural exports due to the peso devaluation. Lehrer
maintains that Mexico simply cannot produce enough to feed
its growing population. With decreasing tariffs under NAFTA,
U.S. products such as meat, fresh fruits and vegetables, and
processed foods are more attractive to the Mexican middle
class. Mexico will import a record ten million tons of grain
in 1995, more than a quarter of total annual grain
consumption.
"U.S. Ag Exports to Set Record in FY96," AGRICULTURAL
OUTLOOK, October, 1995; "U.S. Pork Exports Setting Record
Pace," THUMB FARM NEWS, October 2, 1995; Robert H. Brown,
"Colombia Opening Borders to U.S. Meat," FEEDSTUFFS,
September 18, 1995; Paul F. Conley, "US Live Cattle Exports
Plummet; Drought-Hit Mexico Sells Herds in US," JOURNAL OF
COMMERCE, August 30, 1995; Calvin Sims, "South American Beef
to Broaden Markets," NEW YORK TIMES, October 5, 1995; Bill
Mongeluzzo, "US Sees Farm Sales to Mexico Sprouting," JOURNAL
OF COMMERCE, September 14, 1995; Chris Aspin, "Mexico Corn
Shortage Forces Farm Policy Shake-Up," REUTER, October 19,
1995.
MEXICO: NEW FARM PLAN PROPOSED
The Mexican government announced a new Alliance for Rural
Areas (Alianza Para el Campo - APC) as a companion to the
Alliance for Economic Recovery (APRE), and the "Alliance to
Strengthen and Modernize Social Security."
The broad objectives of the APC are increasing agricultural
profitability, combating rural poverty, providing staples at
low costs, and reducing reliance on imports of dairy and beef
products. "Mexico cannot continue importing 40 percent of the
milk it consumes nor continue importing meat," said
Agriculture Secretary Francisco Labastida. Cooking oil
production will also be supported, in order to reduce
reliance on imports and to export to Asian markets. According
to Labastida, consumer subsidies for the purchase of wheat,
cornmeal and tortillas will take the place of direct
subsidies to producers.
Specific proposals include a 20 percent subsidy to farmers
who purchase tractors (though this is offset by a 10 percent
increase in the price of John Deere tractors), and subsidies
to ranchers and dairy farmers for grass seeding,
fertilization, irrigation, and storage plants for cold milk.
Between 25 and 30 billion new pesos will fund the Programa de
Apoyos a la Capitalizacion del Campo (PRODUCE) over the next
five years. In addition, the APC will make land transfers
easier. Mexican critics faulted the APC as a subsidy program
for the sectors who need it least, the ranchers and large
agricultural producers.
The APC also calls for transferring 85 percent of the
functions of the Secretariat of Agriculture, Ranching and
Rural Development's 126 functions to state governments next
year in a massive decentralization move. Foundations operated
by producers in each state would be charged with encouraging
technology transfer. David Myhre, an expert on Mexican
Agriculture at the University of California-San Diego's
Center for U.S.-Mexican Studies, warned that the states may
not be ready to take on the federal functions and that the
foundation structure may favor large, wealthy landholders.
"There's no guarantee that transfer to state officials will
make it more democratic, participatory and efficient," said
Myhre. "Where are the checks and balances?"
Kevin G. Hall, "Mexico's Farm Plan Carries Benefits, Risks,"
JOURNAL OF COMMERCE, November 3, 1995; "Alliances for Whom?"
MEXPAZ, November 8, 1995; Matilde Perez U.," "Se Destinaran
de N$25 Mil Hasta N$30 Mil Millones en 5 Anos: Labastida," LA
JORNADA, November 2, 1995; Matilde Perez U. and Ricardo
Aleman Aleman, "El FIRA Operara Ahora Como Medio de
Financiamiento Rural," LA JORNADA, November 1, 1995.
COMMENTS ON TOMATO IMPORTS CONSIDERED
Although most members of U.S. President Clinton's cabinet
oppose new restrictions on tomato imports from Mexico, the
National Economic Council has recommended that the
administration solicit comments on the import restriction
proposal. The proposal, put forward by U.S. Trade
Representative Mickey Kantor and supported by Florida tomato
growers, would require calculation of the tomato import quota
weekly instead of twice yearly. If, as expected, President
Clinton agrees to request comments, the notice would appear
in the Federal Register and the issue would remain alive into
next year's electoral campaign season.
John Maggs, "Clinton Team to Seek Comment on Tomato Import
Restrictions," November 6, 1995.
PESO STILL FALTERING
The Mexican peso continued to show weakness in early
November, fluctuating between 7.5 and 8 pesos to the U.S.
dollar. The Bank of Mexico intervened on November 9, halting
what seemed to some to be a new free fall for the peso by
raising interest rates and buying pesos. This was the first
intervention by the central bank since February. The peso
devaluation increased Mexico's foreign debt from 853.3
billion new pesos to 908.9 billion new pesos on Friday,
November 3.
Mexican government officials angrily blamed the peso's
continuing slide on rumors originating in New York and
Chicago. The rumors, traced to the New York Stock Exchange
and Dow Jones, alleged that a military coup was imminent
and/or that Finance Minister Guillermo Ortiz had quit. Both
rumors proved false, but some questioned whether the rumors
were a strategy of speculators planning to take advantage of
a peso sell-off.
As money markets showed continuing weakness, the Mexican
government introduced a bill in Congress to restructure the
nation's Social Security Institute, privatizing much of the
pension and health care systems and cutting back daycare and
cultural centers. The Mexican Social Security Institute runs
everything from hospitals in which one of every three
Mexicans is born to a chain of 16 funeral parlors that offer
$73 pine coffins and $52 wakes.
Roberto Gonzalez Amador, "Ayer, 'Mas Estabilidad' Cambiara:
BdeM; El Dolar Se Mantuvo a 8 Pesos," LA JORNADA, November
11, 1995; Michael Stott, "Wild Rumors from U.S. Hurt Mexico
Markets," REUTER, November 3, 1995; "Rumors Lead to Market
Instability," MEXPAZ, November 7, 1995; Julia Preston,
"Intervening, Mexico Halts Slide in Peso," NEW YORK TIMES,
November 10, 1995; Anthony DePalma, "Insecurity and Calls for
Change Rock a Cradle-to-Coffin System in Mexico," NEW YORK
TIMES, November 13, 1995; "Mexico Gets New Pact, Social
Security Under Attack," WEEKLY NEWS UPDATE ON THE AMERICAS,
November 5, 1995.
CANADIAN TRADE SURPLUS A CHIMERA
Although Canada typically runs a merchandise trade surplus
with the United States, analysts say that much of the surplus
is due to re-export of parts and components that had
originally been imported for use in manufacture. Many high-
value parts and components for manufactured goods are
purchased from abroad, with the result that Canadian
subsidiaries assemble products that have been researched and
designed in the United States, using U.S.-produced component
parts. If the value of these components is taken into
account, Canada's trade surplus evaporates. In 1993, for
example, taking imported parts and components into account
would change Canada's $19.5 billion merchandise trade surplus
with the United States into a $4 billion trade deficit.
David Crane, "Canada Really Importing More Than It's
Exporting," CCPA MONITOR, November, 1995.
"CBI PARITY" BILL CHANGED
Although the "CBI Parity" bill, which would grant duty-free
status to apparel products from Central America and the
Caribbean, seems to be dead in the 1995 session of Congress,
trade and labor activists claimed a small victory when
Senator Bob Graham (D-FL) agreed to include worker
protections in the proposal. The original CBI Parity bill did
not include worker protections, but Graham agreed to add a
provision explicitly authorizing a petition process for
worker rights, similar to the process in place under the
Guaranteed System of Preferences (GSP) law.
The CBI Parity legislation has the support of several U.S.
textile and apparel industry groups, who agree with the
Caribbean Basin nations that they have been disadvantaged by
NAFTA. From January to August, 1995, Mexico's apparel exports
to the United States grew by 71.6 percent, while the CBI
apparel exports grew by 26.2 percent.
While the 24 Caribbean Basin nations seek greater access
through the CBI Parity legislation, they already enjoy a
special-access textile program that allows them to negotiate
more generous import quotas for goods sewn with U.S. fabric.
This special-access program was extended in September to the
four Andean nations of Colombia, Peru, Ecuador and Bolivia.
The extension was predicated on the assumption that building
Andean export industries will provide alternatives to coca
production and export.
U.S. Trade Representative Mickey Kantor will lead a
delegation to Guatemala, Honduras, and El Salvador in mid-
November. The delegation, which will include members of
worker rights groups, will investigate progress on worker
rights in relationship to duty-free treatment of some
commodities.
"New Trade Benefit," GUATEMALA WORKER RIGHTS UPDATE, November
3, 1995; Canute James, "U.S. Business Warns Against Denying
Caribbean Parity," JOURNAL OF COMMERCE, October 31, 1995;
Paula L. Green, "Andean Nations to Join US Special-Access
Textile Program," JOURNAL OF COMMERCE, August 13, 1995; "USTR
Moves to Increase GSP Pressure," GUATEMALA WORKER RIGHTS
UPDATE, November 3, 1995.
FAST TRACK SLOWED IN CONGRESS
Republicans in the U.S. House of Representatives continued to
block any consideration of labor or environmental issues in
trade agreements, effectively ending the possibility of a
"fast track" provision passing Congress this year. Although
current U.S. law allows trade sanctions to be used in the
case of unfair labor practices, Republicans demanded that
such provisions be specifically excluded from any fast track
authority. "Fast track" negotiating authority would allow the
Clinton administration to negotiate the addition of Chile to
NAFTA by guaranteeing that there would be no amendments to
any agreement reached. While the three NAFTA partners and
Chile continue negotiations and report progress in their
talks, no deal will be reached unless the United States has
fast track negotiating authority.
John Maggs, "Agreement on Fast Track Trade Authority Proves
Elusive," JOURNAL OF COMMERCE, October 17, 1995; "NAFTA
Partners Make Progress in Talks With Chile," REUTERS, October
25, 1995.
NAFTA ENVIRONMENTAL CONCERNS CONTINUE
In a contentious meeting in Mexico in mid-October,
environmental ministers from the United States, Canada and
Mexico argued over wording of two reports, one focusing on
bird deaths in Guanajuato and the other on a regional action
plan to eliminate lead, cadmium, DDT and PCB pollution.
Mexican Environment Secretary Julia Carabias was apparently
concerned about language in the commission report attributing
the deaths of 40,000 birds in the Silva Reservoir to raw
sewage. Carabias wanted to ensure that the language did not
appear to dictate what Mexico should do. Mexico also objected
to naming all four pollutants in the regional action plan,
and the final accord named only PCBs, with a provision to add
the other chemicals at a later date. Mexico wants to expedite
action on PCBs because it has 11-12 million tons of PCBs in
need of destruction, while the United States has 380 million
tons. Mexico would like to export PCBs to the United States
for disposal, instead of continuing to send them to Finland
for environmentally safe handling.
In late October, environmental groups blasted Mexico's
relaxation of requirements for environmental impact
statements. Instead of conducting environmental impact
studies, many businesses will be allowed to file prevention
plans giving sketchy outlines of their plans to protect the
environment. If the National Ecological Institute (INE) does
not respond to a filed prevention plan within 30 days, the
company can move ahead with plant construction. The INE has
2,000 files currently awaiting review, and environmentalists
doubt that adequate review of new filings will be possible.
"What we're seeing," says Dan Seligman, a senior fellow with
the U.S. Sierra Club, "is a race to the bottom in
environmental standards as countries compete for foreign
investment." The Sierra Club and the Mexican Environmental
Law Center say that the new rules may be appealed under
Article 14 of NAFTA's environmental side agreement.
Kevin G. Hall, "Disputes Mar Nafta Environmental Meeting,"
JOURNAL OF COMMERCE, October 16, 1995; Kevin G. Hall, "Nafta
Countries Agree to Focus on PCB Elimination," JOURNAL OF
COMMERCE, October 17, 1995; Kevin G. Hall, "Environment Rule
Change Draws Fire in Mexico," JOURNAL OF COMMERCE, October
26, 1995
ESOURCES/EVENTS
Planning the Border's Future: The Mexican-U.S. Integrated
Border Environmental Plan, by Jan Gilbreath Rich. University
of Texas at Austin: 1992. 48 pp. Order from U.S.-Mexican
Policy Studies Program, Lyndon B. Johnson School of Public
Affairs, University of Texas at Austin, P.O. Drawer Y,
University Station, Austin, TX 78713-7450. Environmental
policy analyst presents brief history of economic trends
leading to Plan, responses to plan gathered from public
hearings in 1991, and final version of plan developed after
hearings.
INTERCONNECT, a quarterly publication aimed at "grassroots
movement-building and sharing of resources within the US-
Latin America solidarity community." 10 pp. INTERCONNECT, 57
South Main Street., Pittsford, NY 14534; telephone 716/381-
5606; fax 716/381-3134. Profiles organizations and
resources.
____________________________________________
NAFTA & Inter-American Trade Monitor is produced by
the Institute for Agriculture and Trade Policy, Mark Ritchie,
President. Editor: Mary C. Turck. Electronic mail versions
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