From [email protected] Feb 14 20:56:41 1996
Date: Wed, 14 Feb 1996 14:43:26 -0800 (PST)
From: IATP <[email protected]>
To: Recipients of conference <[email protected]>
Subject: re-post of 2/9/96 NAFTA Monitor

NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade
Policy
February 9, 1996
Volume 3, Number 3
________________________________________________
Headlines:
- U.S.-CANADA AG DISPUTES
- TOMATO BILL BACK TO COMMITTEE
- AVOCADO, MEAT AND GRAIN DECISIONS NEARER
- SECTION 936 ON THE WAY OUT
- ZEDILLO SEEKS TRADE ALLIES ACROSS ATLANTIC
- ONGOING TRUCKING DISPUTE
- TEXTILES FOCUS OF DISPUTES WITH COSTA RICA, MEXICO
- COFFEE PRICES FALL, PRODUCERS MEET
- CARIBBEAN SUGAR EXPORTS INCREASE; U.S. SUGAR SUBSIDY
UNCERTAIN
- FINANCIER BUYS FARM LAND
- HAITI RICE FARMERS HURT BY IMPORTS
________________________________________________
U.S.-CANADA AG DISPUTES

A binational NAFTA panel will hear the U.S. challenge to
Canadian dairy, egg and poultry products, though a
decision is not expected until May. The U.S. maintains
that high over-quota Canadian tariffs negotiated in the
Uruguay Round of trade talks violate NAFTA tariff
agreements, while Canada says Uruguay Round agreements
are exempt from NAFTA's prohibition on raising tariffs
beyond the level negotiated between the U.S. and Canada
under NAFTA.

The newly-formed Coalition for Fair Trade with Canada,
which includes the (U.S.) National Milk Producers
Federation, the National Broiler Council, and the United
Egg Association among its 165 members, urged U.S. Trade
Representative Mickey Kantor to continue pressure on
Canada to open markets to U.S. dairy, egg and poultry
products.

A study by Informetrics, a Toronto economic forecasting
firm, predict "Americanization of Canada's food supply"
and loss of 27,000 Canadian jobs if tariffs on U.S.
dairy, egg and poultry products are removed. The study
also predicts dumping of excess U.S. dairy and poultry
products on the Canadian market and infiltration by
inferior U.S. products subject to lower testing
standards, taking up about 20 percent of the Canadian
market.

After prolonged negotiations, the Canada-U.S. Joint
Commission on Grains issued a final report recommending
that the U.S. curtail export subsidies and the
CanadianWheat Board (CWB) be placed at greater risk of
profit or loss in the market and make its operations
more transparent. The CWB buys wheat from Canadian
farmers at 75 percent of its projected value, then sells
it on the world market and distributes profits back to
farmers. The final report weakened a recommendation,
made in an earlier preliminary report, for establishment
of a mechanism torecommend trade restraint penalties if
Canadian wheat exports disrupt the U.S. market. U.S.
Commissioner Alan Bergman, a grain farmer and president
of the North Dakota Farmers Union, refused to sign the
final report, citing his disappointment in the
commission's failure to address protection of U.S.
producers from surges in Canadian grain exports.

The Canadian wheat industry has seen increasing
concentration, with a decline in farms in Saskatchewan
alone from 140,000 in 1941 to 57,000 today. Over the
next three years, one in five prairie elevators run by
the Wheat Pool, the largest Saskatchewan cooperative,
will be eliminated, making way for 10 concrete inland
terminals. The Wheat Pool itself is being "privatized"
by creation of a two-tier membership system that will
allow purchase of non-voting shares by non-farmer
investors. Ontario's rural cooperative network - United
Cooperatives of Ontario (UCO) - was taken over by the
U.S. cooperative giant, Growmark of Chicago, in
1994. Growmark bought all of UCO's assets, with Canadian
member cooperatives becoming members of Growmark.

"U.S., Canada Name Panelists to Settle Dairy, Poultry
Dispute," INSIDE U.S. TRADE, January 26, 1996; "Canadian
Farmers Warn of Disaster If Tariffs Go," REUTERS,
January 29, 1996; ""Canada Warns on Farm Jobs,"
FINANCIAL TIMES, January 31, 1996; U.S.-Canada Joint
Grain Report Made Public After Four Month Delay," INSIDE
U.S. TRADE, February 2, 1996; Mitch Diamantopoulos,
"Market Forces Threaten Farm Co-ops," INTERPRESS
SERVICE, December 18, 1995; Stephen Dale, "Cooperative
Movement Moves Into the Cities," INTERPRESS SERVICE,
October 19, 1996.

TOMATO BILL BACK TO COMMITTEE

As Mexican legislators threatened retaliation against
U.S. meat, grain, and dairy imports, the leadership of
the U.S. House of Representatives sent a tomato
protection bill back to committee on January 30,
delaying action until at least March. The bill,
advocated by the Florida Fruit & Vegetable Association,
has been passed by the Senate and initially reached the
House floor without committee hearings. U.S. commodity
groups, including meat, grain and egg producers, oppose
the legislation, fearing that a protectionist move in
regard to one commodity will lead to counter-measures
that will limit exports of their products.

The proposed legislation would redefine who can qualify
for import protection under Section 301 of U.S. trade
law, broadening the category to include producers of
"seasonal" perishable commodities. The Clinton
administration backs the bill, which opponents say would
violate NAFTA and World Trade Organization rules.
Meanwhile, U.S. tomato growers and fast food restaurants
are pushing Japan to end a ban on U.S. tomato imports,
which they say would be better in quality and 80 to 90
percent cheaper than Japanese-grown tomatoes.

Richard Lawrence, "Tomato Import Proposal Derailed,"
JOURNAL OF COMMERCE, January 31, 1996; Larry Waterfield,
"Groups Speak Out Against Tariff Quotas," THE PACKER,
January 29, 1996; Peter M. Tirschwell, "A Slice of the
Market," JOURNAL OF COMMERCE, January 251996.

AVOCADO, MEAT AND GRAIN DECISIONS NEARER

The U.S. Department of Agriculture (USDA) is reviewing a
final rule that will lift an 81-year-old ban on imports
of Mexican avocados, allowing them to enter 19
Northeastern states, according to Mark Affleck,
president of the California Avocado Commission. USDA
officials insisted that internal review was continuing
and no decision has yet been made. The Avocado
Commission plans to challenge any rule change in court.

The USDA is also completing a regulatory framework for
import of meat and livestock from regions of Mexico and
other foreign countries. The new framework, agreed to
under the Uruguay Round trade negotiations, will allow
imports from regions deemed to be free of disease, even
if other parts of a country are not disease-free. Even
before the framework is complete, the USDA will probably
approve pork imports from the Mexican state of Sonora,
after extensive assessment of Sonora as a disease-free
region.

The United States is pushing Mexico not to implement
proposed phytosanitary regulations that would set a zero
tolerance for the ergot fungus in grain imports, a level
the United States calls impossible to certify. Both
sides agreed to refer the issue to the North American
Plant Protection Organization, a standards-setting body
for all three NAFTA members.

Peter M. Tirschwell, "USDA Said to Soon Lift Ban on
Mexican Avocados," JOURNAL OF COMMERCE, February 6,
1996; "USDA Close to Finishing Regulations to Allow
Mexican Meat Exports," INSIDE U.S. TRADE, January 26,
1996.

SECTION 936 ON THE WAY OUT

Section 936 of the U.S. Internal Revenue Code, which has
saved U.S. companies operating in Puerto Rico about $480
billion in taxes over the past two decades, is slated
for repeal when some version of a budget bill finally
passes the U.S. Congress. Both Democrats and Republicans
agree that the provision, passed to boost the Puerto
Rican economy, costs taxpayers too much and shows too
little benefit to Puerto Rico. According to
representatives Dan Burton (R-IN) and Peter Deutsch (D-
FL), "Unemployment in Puerto Rico has remained
chronically high, between 15 and 17 percent . . . [and]
the manufacturing sector on the island provides
approximately 101,000 jobs - the same as 20 years ago."
U.S. and Caribbean businesses strenuously oppose repeal
of Section 936.

Caribbean countries have benefited by $1 billion in
loans from a lesser-known part of the 936 program.
Section 936 required U.S. companies in Puerto Rico to
keep their profits on deposit in Puerto Rico, and some
of these funds were designated for use as low-interest
loans to Caribbean countries that signed Tax Information
Exchange Agreements with the United States. Trinidad and
Tobago and Jamaica were the major beneficiaries,
receiving $775 million in loans. While Section 936
would be phased out over 10 years, the interest rates on
already-disbursed 936-derived loans would immediately
revert to market rate.

Canute James, "Caribbean Decries Program's End," JOURNAL
OF COMMERCE, January 11, 1996; Yvette Collymore, "More
Cheers Than Tears as Credit Scheme Approaches the Axe,"
INTERPRESS SERVICE, January 18, 1996.

ZEDILLO SEEKS TRADE ALLIES ACROSS ATLANTIC

During his first state visit to Europe, Mexican
President Ernesto Zedillo advocated a free trade
agreement between Mexico and the European Union and
insisted that free trade is the way to solve Mexico's
economic problems. The Mexican president credited NAFTA
with increasing bilateral trade with the United States
and noted that Mexico already has free trade agreements
with Chile, Costa Rica, Colombia, Venezuela and Bolivia,
and is working on other agreements with Nicaragua,
Honduras, and El Salvador.

"Free trade works," Zedillo told the Royal Institute for
International Affairs in London. "Mexico strongly
believes that free trade has, and will continue to be,
the true engine for growth." Zedillo visited Spain, the
United Kingdom and Italy, as well as attending the World
Economic Forum in Switzerland.

Darius Bazargan, "Free Trade the Answer, Says Zedillo,"
INTERPRESS SERVICE, January 31, 1996; Leslie Crawford,
"Zedillo to Seek Closer EU Ties," FINANCIAL TIMES,
January 19, 1996.

ONGOING TRUCKING DISPUTE

The Teamsters union launched a radio ad campaign calling
for continuing the ban on Mexican trucks in the United
States. The ads say that Mexican trucks are older and
heavier than U.S. trucks and that drivers earn only
seven dollars a day and lack training to handle
hazardous materials. Under NAFTA, border states were
supposed to open to foreign trucking on December 18, but
U.S. officials said that they would not act on
applications by foreign truckers pending further talks
on safety issues.

The U.S. government has said it will not move on
applications, at least 29 of which have been filed, and
the Mexican government reportedly has 20 applications
pending. Mexican Commerce Undersecretary for external
trade Raul Ramos denied reports in the Wall Street
Journal that Mexico would begin processing applications
from U.S. and Canadian truckers, saying that discussions
with the United States were continuing.

"Mexican Officials Deny Rumors of Border Opening,"
KNIGHT RIDDER, February 5, 1996; "Union Seeks Permanent
Ban on Mexican Trucking in US," JOURNAL OF COMMERCE,
January 31, 1996; Kevin G. Hall, "US, Mexico Play Game
of Tit for Tat in Nafta Row," JOURNAL OF COMMERCE,
January 31, 1996.

TEXTILES FOCUS OF DISPUTES WITH COSTA RICA, MEXICO

The United States and Costa Rica will resolve their
underwear trade dispute before the World Trade
Organization, after Costa Rica sought "consultation"
before the WTO Dispute Settlement Body. In March 1995,
the United States unilaterally restricted underwear
imports from Costa Rica, claiming damage to U.S.
manufacturers. Costa Rica maintains that its exports are
not a significant factor, particularly when more than
half of U.S. underwear imports from all countries are
products assembled abroad from U.S. components. Some
Costa Rican workers have been laid off or work shorter
weeks as the export quota fills up, and Costa Rican
officials also fear that foreign investors will go
elsewhere.

Meanwhile, U.S. exporters object to new textile and
apparel labeling rules published by Mexico on January
24. The rules require that goods assembled in a foreign
country with fabric from a third country say that on the
label. The U.S. Apparel Exporters Association termed the
requirement "just another obstacle," while Mexican
officials defended it as necessary to stop a flood of
Asian exports that has hurt domestic manufacturers.

Mexico's maquiladoras, which assemble textiles and other
goods for export, make up 18 percent of the country's
total manufacturing jobs and 34 percent of the total
value of Mexican exports. During the first eleven months
of 1995, 432 new plants were approved and 635 plants
built additions, bringing the total number of
maquiladora workers to 742,700 in more than 3,000
plants.  Caribbean Basin apparel exporters also expanded
sales to the United States by some 24 percent during the
first three quarters of 1995, despite CBI arguments that
their U.S. market is threatened by Mexico's open access
under NAFTA.

In the United States, plant closings continue. "If you
own a business and you could get a product made for a
bowl of rice a day, or you could pay someone $6 an hour,
what would you choose?" asks Douglas Benad, whose Texas
garment factory closed in December. Phillips-Van Heusen
Corp. cited the "impact of NAFTA, GATT and other trade
laws that are reducing tariffs and quotas" in closing
three Alabama manufacturing facilities. In October,
Fruit of the Loom, the largest underwear maker in the
United States, announced closings of six U.S. plants and
cutbacks at two others, with layoffs of 3,300 workers or
about 12 percent of its U.S. work force. According to
American Apparel Manufacturers Association president
Larry Martin: "[O]ur attitude always has been that it's
better to do this [apparel assembly] work in this
hemisphere than in the Far East."

"U.S., Costa Rica Clash Over Justification for Underwear
Quota," INSIDE U.S. TRADE, January 26, 1996; Paula L.
Green, "Costa Rica, US Seek to Avert Textile Showdown
Before WTO," JOURNAL OF COMMERCE, January 31, 1996;
Chakravarthi Raghavan, "Costa Rica Complains Over U.S.
Textile Restrictions," INTERPRESS SERVICE, February 1,
1996; Kevin G. Hall, "Mexican Labeling Rules to Hit
Asian Goods," JOURNAL OF COMMERCE, January 30, 1996;
"Mexico's Maquiladoras Provide 742,700 Jobs," JOURNAL OF
COMMERCE, January 11, 1996; "Free Trade: Clean Air,
PCBs, Maquilas," WEEKLY NEWS UPDATE ON THE AMERICAS,
January 21, 1996; Canute James, "Caribbean Apparel
Exports to US Rise Despite Failure to Win Easier
Access," January 16, 1996; "U.S. Plant Closings
Continue," BOBBIN, January, 1996; Barnaby J. Feder,
"Citing Trade Treaties, Fruit of the Loom Will Close,"
NEW YORK TIMES, October 31, 1995; Sam Howe Verhovek, "In
Small-Town Texas, the Sewing Stops," NEW YORK TIMES,
January 15, 1996.

COFFEE PRICES FALL, PRODUCERS MEET

After coffee prices peaked at more than two dollars a
pound in July 1994, they fell steadily to less than a
dollar a pound in December 1995, despite coffee
producers' attempts to control supply and despite a
worldwide coffee shortage. Brazilian National Coffee
Council president Gilson Ximenes explains the
combination of low prices and low production as market
manipulation by the four giants of the staple goods
market, including General Foods and Nestle. In a highly
concentrated market, roasters counter producer retention
plans by using up old stocks instead of buying fresh
coffee.

Last year the Association of Coffee Producing Countries
(ACPC) agreed to restrict world coffee exports to 60.4
million 60 kilogram bags for the year. Meeting in London
in January, the ACPC decided to continue supply
restrictions past 1996. World production is expected to
reach 83.4 million sacks on 1995-96, 10 percent lower
than the preceding year, but production is expected to
rebound in 1996-97.

Coffee production supports 10 million people in Brazil,
350,000 families in Colombia, 62,000 in Venezuela and
82,000 in Honduras. The Costa Rican coffee sector
employs 60,000 people, 22 percent of all agricultural
workers. Guatemala's National Coffee Association claims
that the sector employs 11 percent of the work force and
affects half the population.

Darsha Damavanthi and Mario Osava, "Coffee, Free Market
Make Strange Brew," INTERPRESS SERVICE, January 21,
1996; Julia Meehan, "Coffee Nations to Extend Supply
Curbs to Buoy Prices," REUTER, January 23, 1996.

RESOURCES/EVENTS

Special Issue Report by Washington Office on Haiti
focuses on the Rice Corporation of Haiti, its ties to
the former military regime, and its impact on rice
farmers and consumers in Haiti. Washington Office on
Haiti, P.O. Box 29218, Washington, DC 20017. Telephone
202/319-4464. Donation requested.
____________________________________________
NAFTA & Inter-American Trade Monitor is produced by
the Institute for Agriculture and Trade Policy, Mark
Ritchie, President. Edited by Mary C. Turck.  Electronic
mail versions are available free of charge for
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contact: IATP, 1313 Fifth Street SE, Suite 303,
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