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Subject: NAFTA & Inter-American Trade Monitor Vol. 5, Number 11
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NAFTA & Inter-American Trade Monitor - Vol. 5, Number 11 May 29, 1998
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Table of Contents
- U.S.-CANADIAN GRAIN DISPUTES
- NAFTA LABOR CHARGES IN U.S., MEXICO
- CENTRAL AMERICA FREE TRADE MOVES
- TRADING WITH CUBA
- FTAA DEVELOPMENTS
- BORDER X-RAYS FAIL ON PRODUCE
- RESOURCES/EVENTS
U.S.-CANADIAN GRAIN DISPUTES
With the price of U.S. grain at a five-year low, U.S. Trade
Representative Charlene Barshefsky said in early May that existing rules
governing U.S.-Canada wheat trade do not treat U.S. producers fairly.
She indicated that the United States may bring up the issue of
differences over the bilateral wheat trade at the World Trade
Organization negotiations on agriculture, which are set for 1999.
U.S. growers charge that the Canadian Wheat Board calculates its
acquisition price lower than it should be. Canada calculates the price
as the initial payment the CWB makes to producers plus storage and
handling, a definition that was upheld in a 1993 dispute settlement
panel brought by the United States under the U.S.-Canada Free Trade
Agreement. The United States wants a broader calculation of the
acquisition price. The bilateral agreement states that neither country
should sell to the other's market below the acquisition price of its
grain.
The CWB represents growers in Manitoba, Saskatchewan, Alberta and areas
of British Columbia, making an initial payment to producers when the
grain is delivered. If the CWB gets a higher payment when it sells the
grain, the CWB pays the difference to producers.
The U.S. General Accounting Office has begun an investigation into
whether the CWB competes unfairly in the U.S. market, but the
investigation has stalled because of CWB refusal to disclose information
on confidential sales contracts sought by the GAO.
In 1997, Canada exported $733 million in grain to the United States,
which exported only $214 million to Canada. Processed grain product
exports also showed a balance in favor of Canada, which sold $635
million to the United States, and bought only $448 million from the
United States.
While price is a factor in the imbalance, it is not the only factor. An
expert from the U.S. Department of Agriculture insisted that there are
"a lot of barriers blocking our ability to export wheat to Canada." For
example, Canada licenses individual varieties of wheat for production
and keeps them separate. The United States does not segregate varieties,
and the need to keep U.S. wheat separate from Canadian wheat in
elevators poses a major barrier to U.S. exports to Canada.
Canada also requires that U.S. wheat be laboratory-tested for karnal
bunt fungus before crossing the border, refusing to accept blanket U.S.
certification that wheat has come from a karnal bunt-free state.
U.S. wheat producers face other problems that exacerbate their concerns
over Canadian competition. Both disaster aid and price supports were
slashed under the "Freedom to Farm" law passed in 1996. Minnesota state
legislator Jim Tunheim says "They should have called it 'Freedom to go
broke.' We're going to disappear at this rate." Wheat producers across
the northern plains of the United States also suffered from an excess of
moisture and attendant crop diseases. Net farm income in North Dakota
fell from $764 million in 1996 to $15 million in 1997 for the state's
30,000 farmers. North Dakota Senator Conrad predicts that 3,000 of his
state's farmers will be forced out of business this year.
"Barshefsky Says U.S. May Press Canada on Wheat Trade in WTO Talks,"
INSIDE U.S. TRADE, May 8, 1998; Brian Rustebakke, "Free Trade vs. Fair
Trade," AGWEEK, May 4, 1998; Barry Wilson, "CWB Rejects U.S. Request to
Audit Sales Contracts," WESTERN PRODUCER, April 30, 1998; Scott Kilman,
"On the Northern Plains, Free-Market Farming Yields Pain, Upheaval,"
WALL STREET JOURNAL, May 5, 1998; Courtney Tower, "U.S. Farmers Seek to
Even Grain Trade Imbalance," JOURNAL OF COMMERCE, April 17, 1998;
Senator Conrad on Wheat and Barley in North Dakota, CONGRESSIONAL
RECORD, May 4, 1998.
NAFTA LABOR CHARGES IN U.S., MEXICO
On May 27, four Mexican unions filed a NAFTA complaint with the Mexican
government office charged with administration of the NAFTA labor side
accord. The complaint charges that the U.S. government, Washington State
and the apple industry have failed to uphold worker rights guaranteed in
the labor side accord, including protection from dismissal or
retaliation for union activities, minimum wage and overtime laws, and
that workers face "high exposure to dangerous chemicals, safety hazards
and unsanitary conditions in fields and warehouses."
The unions filing the complaint were the National Union of Workers, the
Democratic Farmworkers Front, the Authentic Workers Front and a metal
workers union. The International Brotherhood of Teamsters, which is
trying to unionize apple packers, and the United Farm Workers, which
wants to organize apple pickers, supported the Mexican union's action.
Both Mexican and U.S. officials say that at least half of the 45,000
apple pickers and packers in Washington State come from Mexico. This is
the second complaint filed by Mexican unions. The first charged that
Sprint Corporation improperly closed a California plant during a
unionization drive. U.S. unions have filed nine complaints against
Mexican labor practices.
On April 28, U.S. Labor Secretary Alexis M. Herman sent a letter to her
Mexican counterpart, Javi�r Bonilla, requesting formal consultations on
the issue of the Mexican government's favoritism toward unions aligned
with the ruling Institutional Revolutionary Party. The letter came after
a six-month U.S. Labor Department review of a disputed election at the
Han Young maquiladora in Tijuana. The Mexican Labor Ministry responded
that the United States was "supporting the demands of one side in this
dispute, stirring up emotions and generating hopes that go beyond the
terms of the North American Free Trade Agreement."
The Han Young complaint was filed in October under the terms of a NAFTA
side accord on labor rights. Han Young workers charged that government
labor boards refused to certify an independent union even after workers
voted to switch from the government-affiliated union to the independent
union by a 2-1 margin. The Mexican Labor Ministry intervened in December
to support the independent union's victory in a second election.
On May 22, more than 40 of Han Young's 120 workers went on strike over
what they say is management's refusal to negotiate a new contract with
their union. Plant manager Pablo Kang said that salaries average $63 a
week and that workers "don't deserve more money." Han Young make struck
chassis for Hyundai Precision America in San Diego.
In its plant in Saltillo, Chrysler Corporation discovered that it can
produce Dodge Ram pickups not only cheaper, but also faster and better,
than in U.S. factories. Chrysler, General Motors, and Volkswagen all
plan to increase auto production in Mexico. Between 1992 and 1997, the
total value of automotive trade between the United States and Mexico
more than doubled to $36.3 billion, while the U.S. automotive trade
deficit with Mexico grew by more than five times to $13.4 billion. Bob
King, a regional director for the United Auto Workers union, blames
NAFTA for encouraging companies to shift production to low-wage Mexican
plants, abandoning U.S. workers.
Steven Greenhouse, "Mexicans Were Denied U.S. Rights, Suit Says," NEW
YORK TIMES, May 28, 1998; Sam Dillon, "Bias Said to Hurt Independent
Mexican Unions," NEW YORK TIMES, April 30, 1998; "Mexico: Han Young
Workers Strike," WEEKLY NEWS UPDATE ON THE AMERICAS, May 24, 1998; John
Lippert, "Mexico Growing Into an Auto Zone: Plants Making cheaper, and
Better, Cars," HOUSTON CHRONICLE, April 29, 1998.
CENTRAL AMERICA FREE TRADE MOVES
Chilean president Eduardo Frei said during a May 9-10 visit to Costa
Rica that his country is eager to sign a free trade agreement with
Central American countries by 1999. Frei said trade talks between Chile
and Central American countries will begin by July. Panamanian officials
said that they will begin talks on a free trade agreement with
Honduras, El Salvador and Guatemala in June or July, and that similar
talks with Chile may begin in October.
The five Central American Common Market Countries - Costa Rica, El
Salvador, Guatemala, Honduras, and Nicaragua - signed a partial free-
trade agreement with the Dominican Republic on April 16. On April 18-19
at the Summit of the Americas, the CACM countries signed preliminary
trade agreements with Chile and with the Southern Cone Common Market
(Mercosur).
The free trade agreement with the Dominican Republic exempts from its
coverage sugar, grain-based alcohol, coffee beans, wheat flour,
petroleum derivatives, liquor and some kinds of oil. Some other
exemptions may be added by the Dominican Republic within the next six
months. Still at issue are the treatment of products produced at
Dominican maquiladora plants and some clauses regarding rules of origin
and intellectual property rights. Tariffs on non-exempt goods and
services will be eliminated on January 1, 1999.
"Chile Wants Free Trade With Central America," CENTR-AM NEWS, May 10-16,
1998; "Free Trade is the Theme of Talks Among Central American
Countries," CENTR-AM NEWS, May 10-16, 1998; "Central America Negotiates
Free-Trade Agreements With Caribbean & South American Nations,"
ECOCENTRAL, May 7, 1998.
TRADING WITH CUBA
"It will be a cold day in you-know-where before the EU convinces me to
trade the binding restrictions in the Helms-Burton law for an agreement
that legitimizes their theft of American property in Cuba," said Senate
Foreign Relations Committee Chair Jesse Helms (R-NC), as he was joined
by congressional allies in criticizing the agreement reached by the
United States and the European Union to resolve a dispute over the
Helms-Burton law. The U.S.-EU agreement would impose disciplines on
investment in properties that are expropriated in violation of
international law, in exchange for changes to the Helms-Burton law that
would allow the President to waive application of the Title IV bar to
entry into the United States for executives of firms investing in
contested property in Cuba.
Title III, which creates a right to sue in U.S. courts over alleged
expropriations in Cuba, could also be changed. So far, application of
Title III has been waived by the president. "The EU can drop dead on a
[permanent] Title III waiver," said a Helms aide.
In contrast to the hostile reception on Capitol Hill, EU member states
raised no objections to the agreement in a May 20 meeting. But EU
Commission President Jacques Santer and British Prime Minister Tony
Blair specified that the United States must continue to waive Title III
of Helms-Burton.
Speaking to the May 19 meeting of the World Trade Organization, Cuban
President Fidel Castro called the U.S.-EU accord "unclear, contradictory
and lacking in ethics," and called on the World Trade Organization to
"prevent economic genocide," referring to U.S. trade embargoes.
On May 13, U.S. President Bill Clinton authorized direct air flights
between the United States and Cuba, along with some humanitarian aid,
family remittances and sale of some medicines. But the State Department
indicated that there would be tight controls on flights, remittances,
and money spent by U.S. citizens visiting Cuba.
Dalia Acosta, "Flexibilisaton With as Tough a Face as Ever," INTERPRESS
SERVICE, May 14, 1998; "U.S., Europe Reach Cuba Accord," WEEKLY NEWS
UPDATE ON THE AMERICAS, May 24, 1998; Gustavo Capdevila, "Castro
Proposes New Strategy for Developing World," INTERPRESS SERVICE, May 19,
1998; "Congress Strongly Criticizes U.S.-EU Agreement on Helms-Burton
Law," INSIDE U.S. TRADE, May 22, 1998; "Member States Poised to Accept
U.S.-EU Agreement on Helms-Burton," INSIDE U.S. TRADE, May 22, 1998;
David White, Robert Graham and Stefan Wagstyl, "Companies Welcome Deal
on U.S. Sanctions," FINANCIAL TIMES, May 19, 1998; "Helms Aide Tells EU
to 'Drop Dead' on Request for Helms-Burton Fix," INSIDE U.S. TRADE, May
29, 1998.
FTAA DEVELOPMENTS
Canadian Trade Minister Sergio Marchi warned on May 13 that the United
States will need fast-track trade negotiating authority by early next
year if negotiations for the Free Trade Area of the Americas are to
proceed on schedule. Marchi said he believed U.S. President Clinton
could win fast track approval from Congress: "Going into a new
millennium, he can do that, because it is inconceivable that America
should be looking inward at its belly button, rather than outward in
terms of galvanising the international community."
U.S. Ambassador Richard Brown, director of the State Department's Office
of Inter-American Economic Policy, and Kathryn McCallion, Canada's chief
hemispheric trade negotiator, said that the next two months will be
crucial for structuring mechanisms for public input into the FTAA talks.
The structure for the Committee of the Chair will be decided in
Argentina in June. The Committee of the Chair will receive input from
non-governmental groups. This committee will be the only mechanism for
presenting labor and environmental concerns, but will also be a place
for businesses to have input on the FTAA.
Kevin G. Hall, "Business Pressed for Input on Hemisphere Trade," JOURNAL
OF COMMERCE, May 15, 1998; Guy de Jonqui�res, "Fast-Track Authority 'Key
to FTAA Talks,'" FINANCIAL TIMES, May 14, 1998.
BORDER X-RAYS FAIL ON PRODUCE
Though they were billed as a way to avoid intensive Customs examinations
involving unloading trailers full of cargo, the sophisticated X-ray
machines that U.S. Customs is using along the Mexican border do not work
with truckloads of produce. The machines, which look like giant garages
with doors on both ends, x-ray entire trucks as they drive through. But
the x-ray machines work by detecting organic material in a truck, and
they cannot distinguish between drugs and vegetables.
While shipments of electronics, plastics and other non-organic cargo can
speed through customs with the machines, trucks of produce are still
subject to random "intensive" inspections, which require unloading
perishable produce in the border heat.
Paul Conley, "X-rays Keep an Eye on Border Crossings," THE PACKER, May
11, 1998.
RESOURCES/EVENTS
Restarting Fast Track. Jeffrey Schott, ed. Institute for International
Economics, Washington, DC, April 1998. 86 pp. Compilation of papers
presented at February 1998 conference on fast-track legislation,
sponsored by the Institute for International Economics, including
suggested changes in legislation, questions about social justice and
discussion of domestic adjustment in an age of rapid globalization. For
further information, contact Institute for International Economics, 11
Dupont Circle NW, Washington, DC 20036-1207. Telephone 202/328-9000; fax
202/328-5432.
http://ww.iie.com
Vital Signs 1998: The Environmental Trends That Are Shaping Our Future.
Lester Brown et al. Worldwatch Institute. Washington, DC: 1998. Reports
on more than 50 environmentally related indicators, describing rising
incomes, growing populations, and increased stresses on the environment.
Also includes discussion of human health trends, especially AIDS/HIV
pandemic and cigarette smoking. Contact Mary Caron, Worldwatch
Institute, 1776 Massachusetts Ave. NW, Washington, DC 20036-1904.
Telephone: 202/452-1999; fax 202/296-7365. WEB: www.worldwatch.org.
Chiquita Secrets Revealed. Mike Gallagher and Cameron Whirter. THE
CINCINNATI ENQUIRER, May 3, 1998. 100+ pages of in-depth reporting and
analysis of Chiquita Banana and banana trade in South America generally.
Includes information ranging from working conditions to pesticide use to
World Trade Organization case. Access report at
http://enquirer.com/
chiquita/
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