WEEK IN REVIEW 1-7-94

[Kai Mander <kmander@xxxxxxxxxxx>]

Trade Week in Review and Recent Publications
Volume 3 Number 1
Friday, January 7, 1994

Headlines:
CHINA STILL ON TRACK FOR GATT DESPITE U.S. TARIFFS
BALLADUR URGES EU ACTION ON UNFAIR TRADE
GATT MAY EXACERBATE FOOD DISPUTES
ASEAN TRIES TO REVIVE FREE TRADE ZONE
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GATT News Summary
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CHINA STILL ON TRACK FOR GATT DESPITE U.S. TARIFFS

The United States slapped new tariffs on Chinese textile imports this
week.  U.S. Trade Representative Mickey Kantor said the measures
are needed to combat China's practice of avoiding import quotas by
illegally transshipping textiles through third countries.  Kantor said
the U.S. action would not hurt China's chances of joining the General
Agreement on Tariffs and Trade by the end of the year.

As part of its ongoing efforts to gain admittance to the global trade
body, China announced last week that it would unify its two-tier
exchange-rate system and let the value of its currency, the yuan, float
at market rates.  The move, which brings China closer to making its
currency convertible, will allow businesses to freely exchange yuan
for foreign currencies.  Zhou Zhengqing, vice governor of the central
bank, said the plan "lays a foundation" for the yuan eventually to
become a convertible currency.  He did not say when the government
would allow all banks to exchange yuan for foreign currencies.  But
China has promised GATT that its currency will be fully convertible
within five years.

In preparation for joining GATT, Chinese Agriculture Minister Liu
Jiang told China's 900 million farmers they must improve quality and
efficiency.  He said the more liberal tariff structure of GATT will
benefit some farmers and hurt others.  The improved access to
foreign markets will help producers of corn, soybeans, fruit, meat and
most fish products, he said.

Meanwhile, China is planning a cross-border free trade zone with
Russia.  Chinese officials said they hoped the zone between the
countries' two largest border cities will increase bilateral trade from
last year's record of $6 billion in the first 10 months.  The Xinhua
news agency reported: "Within the zone, both goods and currencies
will be allowed to circulate and be exchanged freely, and citizens of
both countries will be allowed to go in and out with a border pass."
Both governments must still approve the plan.

Sources: "China Tells 900 Million Farmers to Prepare for GATT,"
REUTER, January 5, 1994; "US Textile Row Should Not Hurt China's
GATT Effort," REUTER, January 6, 1994; "China, Russia Plan Free Trade
Zone on Border," UPI, January 4, 1994; "China Unifying Its Currency in
Step Toward GATT Role," NEW YORK TIMES, December 30, 1993.
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BALLADUR URGES EU ACTION ON UNFAIR TRADE

French Prime Minister Edouard Balladur is calling on the European
Union to stand together to protect against unfair foreign competition.
In a year-end interview with London's FINANCIAL TIMES newspaper,
Balladur said: "If we do not resolve these social, environmental and
monetary problems, we will perforce have major distortions of
competition and uprooting of companies" in western Europe.  Balladur
said the Uruguay Round conclusion showed Europeans that "we're
stronger together than if we were alone."  The FINANCIAL TIMES
named Balladur its Man of the Year.

Sources: Andrew Gowers and David Buchan, "EU Action Over 'Unfair'
Trade Urged by Balladur," FINANCIAL TIMES, December 31, 1993.
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GATT MAY EXACERBATE FOOD DISPUTES

GATT will lower barriers to global trade but will probably not put an
end to trade disputes, particularly with regard to food.  Under the
new GATT accord, the extent to which countries can block incoming
goods on the basis of adverse effects to animal, human and plant
health is limited.  Any attempts to block imports of foodstuffs must
be scientifically based and consistent with international standards.

Several years ago, the European Union banned the use of growth
hormones in beef production because of consumer concern.  Included
in the ban were imports of beef from the U.S. where the use of
growth hormones is widespread.  A group of Colorado beef farmers
has concluded that the new GATT will allow them to challenge
Europe's ban on imported beef as a nontariff barrier to trade.

The World Trade Organization (WTO), established to settle trade disputes
between GATT signatories, has set up a committee specifically for
settlement of sanitary and phytosanitary standard disputes.  Should
the Colorado farmers succeed in getting their dispute heard, the
committee will have to decide whether there is scientific justification
for the EU ban on growth hormones and if not, how they will
persuade consumers that the previous information on the safety of
growth hormones was inaccurate.

In addition, the recent extension of the EU ban on the use of Bovine
Growth Hormone could also be considered a nontariff barrier to trade
and thus subject to challenge under the GATT.

Sources:  David Richardson, "GATT Deal Adds Twist to Beef Hormone
Plot," FINANCIAL TIMES, January 5, 1994.
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ASEAN TRIES TO REVIVE FREE TRADE ZONE

The Association of Southeast Asian Nations (ASEAN) is again trying to
create a regional trade zone known as AFTA, the ASEAN Free Trade
Area.  ASEAN members -- Brunei, Indonesia, Malaysia, the
Philippines, Singapore and Thailand had originally hoped to enact
AFTA a year ago, with a goal of cutting tariffs on manufactured and
processed agricultural goods to a maximum 5 percent by 2008.  But
steep and complex tariff structures among the members has made the
process difficult.   Singapore, for example, has more than 9,200
different tariff categories, including a 200 percent duty on imported
cars.

As Europe and North America continue to integrate their markets,
members of ASEAN hope lowering barriers through a common
preferential tariff system will attract more investment and increase
trade among its members.  Currently, trade among ASEAN members
accounts for only 15 percent of the group's total transactions,
compared to the European Union where 66 percent of trade involves
transactions between members.

A recently revealed new plan for AFTA includes about 41,000
products on which tariffs would be gradually reduced.  But with
Southeast Asia beginning to feel the slowdown in global exports, the
European recession and Japan's economic problems, several ASEAN
members have implemented what some call protectionist measures.
Critics say AFTA still offers too many exclusions and is weakened by
the 15-year transition period.

Source: Kenneth L. Whiting, "ASEAN Again Tries With Free Trade
Area," AP, January 3, 1994.
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Recent Publications on International Trade
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For the following resources, contact the authors or organizations
listed.

"Environmental Degradation in Mexico," David Barkin, MONTHLY
REVIEW, July-August 1993. 18 pages. Monthly Review Press, 122
West 27th St., 10th floor, New York, NY 10001. (212) 691-2555. $5.
The author concludes NAFTA will complicate the growing problem of
protecting Mexico's environment because tightened budgets and a
transfer of economic control to the private sector will limit the
resources necessary for reversing existing environmental problems.

"Intellectual Property Rights in NAFTA: Implications for Health Care
and Industrial Policy in Ontario," ECUMENICAL COALITION FOR
ECONOMIC JUSTICE, 1993. 52 pages. 11 Madison Ave., Toronto,
Ontario, M5R 2S2. Canada. (416) 921-4615. Contact organization for
prices.

"The NAFTA Debate: What Was That All About?" Beth Burrows,
INSTITUTE FOR AGRICULTURE AND TRADE POLICY, December 2, 1993.
13 pages. $2.

"Opium War Redux," Stan Sesser, THE NEW YORKER, September 13
1993. 21 pages. New Yorker, P.O. 56433, Boulder, CO 80322.  (800)
825-2510. $2.95.
This article investigates the U.S. tobacco industry's government-
assisted entrance into the Chinese and other southeast Asian markets.

"The Great American Giveaway: The 'State-Eat-State' Civil War Over
Jobs," FEDERATION FOR INDUSTRIAL RETENTION AND RENEWAL, Vol.
5, No. 2, Winter 1993. 19 pages. 3411 W. Diversey, #10, Chicago, IL
60647. (312) 252-7676. Fax: (312) 278-5918. Free.

"Policy Alternatives on Environment - A State Report," CENTER FOR
POLICY ALTERNATIVES, Vol. 10, No. 3, December 1993. 21 pages.
1875 Connecticut Ave., NW, Suite 710, Washington, DC 20009-5728.
(202) 387-6030. Fax: (202) 986-2539. E-mail: cfpa@xxxxxxxxxxxx $10.
This report includes "NAFTA: Roadblock for 'Green' Procurement,
Recycling?"

"North American Free Trade Agreement: Assessment of Major Issues,"
GENERAL ACCOUNTING OFFICE, Volume I and II, September 1993.
168 pages combined. P.O. Box 6015, Gaithersburg, MD 20884-6015.
(202) 512-6000. Fax: (301) 258-4066. Free.
These studies assess NAFTA's provisions for goods, services and
financial services, its special provisions for agriculture, automotive
products, energy, and textiles and apparel, NAFTA's trade rules, its
impact on the environment, worker standards and safety and
immigration.

"Time for a Global New Deal," Terry Collingsworth, J. William Goold,
and Pharis F. Harvey, FOREIGN AFFAIRS, Vol. 73, No. 1,
January/February 1993. 6 pages. P.O. Box 420235, Palm Coast, FL
32142-0235. (800) 829-5539. $10.
The authors propose that nations negotiate a global New Deal that
protects the rights of all workers.
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Editors: Kai Mander and Chirag Mehta
The Institute for Agriculture and Trade Policy (IATP)
1313 Fifth Street SE, Suite #303, Minneapolis, MN 55414-1546 USA
Telephone:(612)379-5980 Fax:(612)379-5982
E-Mail:kmander@xxxxxxxxxxx
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