TRADE WEEK IN REVIEW 1-28-94

[Kai Mander <kmander@xxxxxxxxxxx>]

TRADE WEEK, Volume 3 Number 4
Friday, January 28, 1994
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Headlines:
U.S., JAPAN MAKE LITTLE PROGRESS IN MARKET ACCESS TALKS
GATT EXPECTED TO COST U.S. $11 BILLION
GATT ENVIRO WORKING GROUP GAINS SUPPORT
GATT PANEL WILL INVESTIGATE U.S. TOBACCO LAW
TRADE GROWTH SLOWED IN 1993
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GATT News Summary
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U.S., JAPAN MAKE LITTLE PROGRESS IN MARKET ACCESS TALKS

U.S. and Japanese officials remain "miles apart" in talks centered on
improving market access provisions for several key products under
the General Agreement on Tariffs and Trade.  The United States is
pressing Japan to follow-through on GATT market access
commitments made last July during the Tokyo Summit of Quad
countries -- the U.S., Japan, Canada and the EU.  But Japan remains
reluctant to make tariff cuts beyond what negotiators recently
agreed to under the Uruguay Round of GATT talks on December 15,
1993, or to set numerical targets for imported U.S. goods.  Discussions
over the past few weeks have centered on tariff reductions for wood
products, chemicals, leather, footwear, copper items and white
spirits, as well as improved market access for autos and auto parts
(by setting numerical targets), insurance and government
procurement of medical and telecommunications equipment.

USTR Mickey Kantor may fly to Japan in hopes of moving ahead on
the proposals before President Bill Clinton and Prime Minister
Morihiro Hosokawa meet in Washington for a summit February 11.
"We fully expect and insist that we reach agreements in autos, auto
parts, insurance, telecommunications and medical equipment," Kantor
said.  Otherwise, he warned, "We would look to appropriate methods
we might have to open those markets if we felt at that point that the
framework agreement was not going to result in opening these
markets."  The U.S. is considering reviving the Super 301 trade policy
through an executive order, under which it can impose trade
sanctions.  However a Japanese trade official said "Hosokawa will tell
Clinton that (numerical targets) are impossible so he can't promise
them."  GATT participants have until February 15 to work out the
details of draft market access schedule and until March 31 to
complete the final schedules.

Sources: George Graham, Michiyo Nakamoto, "Friction Over Talks on
Japan Market Access," FINANCIAL TIMES, January 27, 1994;
"Japanese Officials Say Hosokawa Won't Give Into Trade Demands,"
INVESTOR'S BUSINESS DAILY, January 27, 1994; "U.S. Presses on
GATT Market Access, But Japan Says Deal is Final," INSIDE THE
WHITE HOUSE, January 13, 1994; Thomas L. Friedman, "U.S.
Pondering Its Options as Japan Trade Talks Falter," NEW YORK TIMES,
January 26, 1994; Bob Davis, "U.S. and Japan Are at Impasse in Trade
Talks," WALL STREET JOURNAL, January 26, 1994; "Kantor Says
Japanese Negotiators Not Faithful to Framework Deal," INSIDE U.S.
TRADE, January 14, 1994; Mark Magnier, "Kantor May Go to Japan in
Attempt to Break Impasse," JOURNAL OF COMMERCE, January 20,
1994.
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GATT EXPECTED TO COST U.S. $11 BILLION

U.S. Trade Representative Mickey Kantor told the House Ways and
Means Committee Wednesday that the GATT Uruguay Round accord
is expected to cost the United States $11 billion during the first five
years as a result of lost tariff revenues.  Kantor stressed that most
costs incurred would be eventually offset by other revenue gains
resulting from freer global trade.  But, under U.S. "pay-as-you-go"
budget rules, all lost revenues must be immediately offset.  "We
want to work with (the Congress) to decide what to do (about lost
revenues)," Kantor said.

The administration has hinted that it may be willing to raise taxes to
pay for the GATT accord, but Republican opposition to the idea has
been strong.  Representative Jim McCrery (R-LA) suggested
Congressional action to change the pay-as you-go budget rules so
that the costs of the agreement won't need to be recouped
immediately.  Kantor said OMB Director Leon Panetta would likely
consider changing the rule.  "I know Director Panetta is looking for
ways we can pay for this without" taxes, Kantor said.  Subcommittee
hearings on the pact are scheduled to begin next week.

Source:s "Kantor: Administration Looking For Ways to Pay for GATT,"
SPARKS & CO., January 28, 1994; "Looking for Way to Pay for GATT-
Trade Rep Kantor," REUTER, January 26, 1994; Peter Behr,
"Administration Must Now Find Funds for GATT; Pact's Affect on
Tariffs Could Delay Its Congressional Approval," WASHINGTON POST,
January 27, 1994.
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GATT ENVIRO WORKING GROUP GAINS SUPPORT

The Committee on Trade and the  Environment, a proposed GATT
working group, gained wide support from global trade members
during their annual meeting in Geneva yesterday.  GATT members
are scheduled to meet in Marrakesh, Morocco April 15 to sign the
Uruguay Round accord and are now also expected to approve a GATT
work program on trade and the environment.  Details of the program
will need to be worked out over the next few months, but members
of the current working group have reportedly paved the way for
progress in three areas linking trade and the environment: trade
provisions of international environmental agreements, transparency
of national environmental regulations, and the trade effects of
packaging and labeling aimed at protecting the environment.
Environmental groups are also pushing the working group to include
on its agenda "eco-dumping" provisions to address alleged gains
achieved by countries which produce goods under weak
environmental standards.

Details will also need to be worked out for GATT Article 8.2(c), the
Agreement on Subsidies and Countervailing Measures, under which
"assistance to promote adaptation of existing facilities to new
environmental requirements imposed by law" is permitted.  U.S.
manufactures say they will push for an investment tax credit for
environmental improvements, but are wary of a provision originally
proposed by Mexico, and supported by developing countries, to
provide a direct subsidy to industries for making environmental
improvements.  U.S. industry sources worry that a direct subsidy
would give companies in the developing world a competitive
advantage.  Environmental groups are also hesitant to endorse the
proposal because they say it undermines the "polluter pays"
principle by forcing the private sector, rather than industry, to pay
for the environmental updates through subsidies.

Sources: Frances Williams, "GATT Support on Environmental Links,"
FINANCIAL TIMES, January 27, 1994; Paula L. Green, "Green Light
Seen for GATT Environment Panel," JOURNAL OF COMMERCE, January
18, 1994; "GATT Environmental Subsidy Provision Angers U.S.
Manufacturers," INSIDE THE WHITE HOUSE, January 13, 1994.
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GATT PANEL WILL INVESTIGATE U.S. TOBACCO LAW

A GATT working panel will be established to resolve a dispute over
the U.S. tobacco law which limits the amount of imported tobacco U.S.
cigarette producers can use in their products.  President Clinton
passed the law last August as part of the Budget Reconcilliation Act
mandating that 75 percent of all tobacco used in U.S. cigarette
production is supplied by U.S. growers.  Ten tobacco exporting
countries, including Brazil, Chile, Colombia, El Salvador, Guatemala,
Thailand, Canada and Zimbabwe, lodged a complaint over the law last
December.  Contracting GATT members decided a working panel
would be the quickest way to resolve the dispute.  Panel members
have not been announced, nor has the date for the first panel
meeting, although UPI news service anticipates the investigation will
not begin until after GATT members sign the Uruguay Round accord
in April.

Sources: "GATT Panel to Discuss U.S. Tobacco Protectionism," UPI,
January 26, 1994; "GATT Sets Up Dispute Panel on U.S. Tobacco Law,"
REUTER, January 25, 1994; "USDA Report Warns Tobacco Measure
Will Export U.S. Jobs," INSIDE U.S. TRADE, January 14, 1994.
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Other Trade News
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TRADE GROWTH SLOWED IN 1993

World trade growth slowed to less than 3 percent in 1993 from 4
percent in 1992 largely due to a decline in trade across Western
European borders, which account for 47 percent of global trade
activity.  Staff GATT economists said strong growth in North America
and Asia, including China, offset the European trade decline.
Although the trade figure was significantly lower than the 4.5
percent growth predicted earlier by economists, the GATT staff said
signs of 1993 fourth quarter growth in Western Europe "are  grounds
for optimism regarding a recovery in 1994."

Sources: Stephanie Nebehay, "Trade Up by Mere Three Percent in
1993, GATT Says," REUTER, January 25, 1994; "Global Trade Pace
Eases," WALL STREET JOURNAL, January 26, 1994.
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Recent Publications on International Trade
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For copies of the following, contact the authors or organizations
listed.

"European Jobs - Is GATT the Answer?" Tim Lang and Colin Hines,
GATT PROJECT, 1994. 8 pages. 3rd Floor, 5-11 Worship St., London
EC2A 2BH. (44-71) 628-2442. Fax: (44-71) 628-9329. $3.

"The Political Arithmetic of the NAFTA Vote," Lawrence Mishel and
Ruy A. Teixeira, ECONOMIC POLICY INSTITUTE, December 9, 1993. 20
pages. 1730 Rhode Island Ave., NW, Suite 200, Washington, DC
20036. (202) 775-8810. Fax: (202) 775-0819. $5.

"Cities Trade and Ecological Deficits," William E. Rees and Mathis
Wackernagel, PEOPLE-CENTERED DEVELOPMENT FORUM, November
10, 1993. 1 page. Institute for Agriculture and Trade Policy. $3.50.
This issue of People-Centered Development Forum contains several
new articles from authors including Vandana Shiva, Herman Daly,
and Walden Bello.

"Intellectual Property Rights in NAFTA: Implications for Health Care
and Industrial Policy in Ontario," ECUMENICAL COALITION FOR
ECONOMIC JUSTICE, October 1993. 50 pages. 11 Madison Ave.,
Toronto, Ontario M5R 2S2, Canada. (416) 921-4615. Fax: (416) 924-
5356. $6.

"The Uruguay Round of GATT Jeopardizes Food Safety and Other
Health, Safety, and Environmental Standards," Patti Goldman, PUBLIC
CITIZEN, January 1994. 14 pages. 215 Pennsylvania Ave., SE,
Washington, DC 20003. (202) 546-4996. Fax: (202) 547-7392. $2.

"Final Agriculture Text of the Uruguay Round of the General
Agreement on Tariffs and Trade," Mark Ritchie, INSTITUTE FOR
AGRICULTURE AND TRADE POLICY, January 1994. 6 pages. $2.

"Balancing: Policies for Just and Sustainable Trade," Kristin Dawkins,
INSTITUTE FOR AGRICULTURE AND TRADE POLICY, January 1994. 16
pages. $5.
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Editors: Gigi DiGiacomo, Hannah Holm 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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