A court challenge to NAFTA, filed on July 13 by the United Steelworkers of America and the Made in the U.S.A. Foundation, alleges that NAFTA is invalid because it is a treaty but was not approved by the constitutionally-required two-thirds vote of the Senate.
NAFTA was approved by a majority vote of both houses of the U.S. Congress as a package of enabling legislation enacting the provisions of the agreement. Under the U.S. Constitution, international agreements
classified as "treaties" must be approved by a two-thirds vote of the Senate. But the Constitution does not define what constitutes a treaty.
Former U.S. chief deputy NAFTA negotiator Chip Roh called the case "political grandstanding," and said that longstanding tradition supports the view that a trade agreement is not a treaty.
Steelworkers attorney Carl Frankel said that the courts, not the executive branch, should decide what a treaty is and predicted that, "Whenever the court draws that line, we're confident NAFTA will fall on the treaty side of it." The Steelworkers court pleadings note that the Mexican government considers NAFTA a treaty, and also cite other elements that make it similar to a treaty.
Christina Winters, "WAorkers Challenge NAFTA in Court Suit," JOURNAL OF COMMERCE, July 17, 1998; "Suit Calls NAFTA Invalid," YORK DAILY RECORD, July 14, 1998; William New, "Steelworkers File Constitutional Case Against NAFTA Approval Process," INSIDE U.S. TRADE, July 17, 1998; "Saying NAFTA is a Treaty, 2 Groups File Challenge," NEW YORK TIMES, July 14, 1998.
On July 1, the Mexican Association of Cattle Feeders (AMEG) and the National Cattlemen's Confederation (CNG) filed a formal request for an antidumping investigation of low-priced beef imports from the United States. The complaint goes to the Mexican Commerce Secretariat (Secofi), and will be accepted or rejected by Secofi within 30 days of filing.
Mexico is the second-largest market for U.S. beef exports, after Japan. Exports to Mexico in 1997 increased by 74 percent over 1996, to 146,000 metric tons worth $345 million. U.S. exporters claim that they are gaining market share in Mexico because of bad weather in Mexico, as well as limited access to credit for Mexican ranchers and the peso devaluation.
"Mexican Cattle Industry Files Antidumping Petition Against U.S.," AMERICAS TRADE, July 9, 1998.
All business facilitation measures to be achieved by the year 2000 were removed from the draft work program for FTAA negotiators. Business facilitation, also called Early Harvest by many of the negotiators,provides concrete measures to ease trade and investment early in the negotiation process for the Free Trade Area of the Americas. There is disagreement among the negotiators on what measures should be classified as business facilitation.
Brazil and some other countries oppose Early Harvest, expressing concern that early agreements couldremove important bargaining chips for the 7-year negotiating process. The United States wants Early Harvest, but is in a poor bargaining position because U.S. negotiators do not have "fast track" negotiating authority.
New OAS Trade Unit Director José Manuel Salazar pledged that he will make business facilitation a personal goal during his term. The Trade Negotiating committee for the FTAa has asked that the OASTrade Unit make recommendations for concrete steps that could be taken by 2000. The Trade Unit is also part of the Tripartite Committee providing logistical support for the negotiations, along with the Inter-American Development Bank and the U.N. Economic Commission on Latin America and the Caribbean.
William New, "Buenos Aires FTAA Work Program Shows Wide Gaps in Three Areas," INSIDE U.S. TRADE, July 3, 1998; Kevin G. Hall, "OAS Official Makes Business His Business in Free Trade," JOURNAL OF COMMERCE, July 16, 1998.
European Union agriculture and trade ministers in late June announced a complete overhaul of the EU banana trade regime, to bring it into compliance with World Trade Organization rulings. Acting on complaints by the United States and Latin American nations, the WTO dispute resolution process held that parts of the regime, such as trade import licensing agreements and the dividing up of quotas among the African, Caribbean and Pacific (ACP) states that are members of the Lomé Convention trade and aid pact, violate WTO trade rules.
The governments of the United States, Ecuador, Guatemala, Honduras, Mexico, and Panama, say the changes in the EU banana regime are not sufficient to comply with the WTO ruling, and have demanded that the EU agree to reconvening of the WTO dispute resolution panel. The U.S. government has threatened trade retaliation under WTO rules if the EU does not adopt a plan it finds acceptable.
The EU's new plan preserves existing tariff quotas, one of 2.2 million metric tons and the other of 353,000 tons, with a duty of $83 per ton for non-ACP bananas and duty-free entry for ACP bananas. More significantly, the new plan abolishes country-specific quotas, granting the ACP quota to the entire 71-nation bloc. That will allow the three multinationals that dominate the international banana market - Dole, Del Monte and Chiquita Brands - to move large, industrialized production into West African ACP member states, undercutting the small Caribbean producers who have relied on quota protection in the past.
One-third of the work force in the Windward Islands depends on banana production, which occupies 70 percent of the islands' land area. Large, industrialized plantations produce bananas more cheaply than small, family-owned farms in the islands. ''Take away the (Caribbean) banana industry and the economy collapses. There will be mass poverty. It's a simple equation,'' said Phil Bloomer of the British NGO Oxfam.
Of EU banana imports, 21 percent have historically come from twelve ACP countries: Cote d'Ivoire, Cameroon, Surinam, Somalia, Jamaica, St Lucia, St Vincent and the Grenadines, Dominica, Belize, Cape Verde, Grenada and Madagascar, with an additional three percent coming from other ACP states. Some 76 percent of EU banana imports come from third countries, mainly Ecuador, Colombia, Costa Rica and Honduras.
"U.S. and Latin Countries Challenge EC Banana Report," INSIDE U.S. TRADE, July 24, 1998; Niccolo Sarno, "EU's Vow To Caribbean Banana Farmers Hard To Keep," INTERPRESS SERVICE, July 3, 1998; "U.S., EU Set to Clash Over Banana Regime With Threats of Retaliation," INSIDE U.S. TRADE, June 19, 1998; Niccolo Sarno, "Lome Convention's Days Are Numbered," INTERPRESS SERVICE, June 29, 1998.
The long-standing dispute over cross-border trucking between the United States and Mexico moved a step closer to resolution with the June signing of an 11-page agreement on harmonizing drug and alcohol testing procedures for truckers crossing the border. The U.S. Department of Transportation has blocked compliance with NAFTA provisions requiring opening of borders to cross-border long-distance trucking since 1995, citing concerns over safety and insurance and drug trafficking.
Despite recent progress, U.S. officials stressed the continuing disagreement over package deliveryservices. The United States wants Mexico to allow U.S. companies such as United Parcel Service and Federal Express to compete on an equal footing with Mexican companies, delivering packages throughout Mexico without restrictions on the size of packages or of delivery vehicles.
Mexico and the United States have agreed on several truck-safety measures, but Mexico has not yet deployed newly-trained inspectors to implement the Commercial Vehicle Safety Alliance. Mexico has also pledged to allow the 53-foot trailers, which are standard equipment in the United States and Canada.
Even when the trucking disputes are eventually resolved, border crossing may remain time-consuming and costly for many carriers. Although the United States and Canada have no conflicts over free passage of trucks, border inspection still slows the billion dollar a day traffic between the two countries. Canada and the United States are working to implement more computerized and automated inspection systems.
U.S.-Mexican border crossings face additional slowdowns as traffic backs up at ports, bridges, and railroad crossings, many of which are simply too small and too slow to handle the increased volume of cross-border traffic. U.S. drug detection efforts, including searches by trained dogs and drilling holes in truck trailers to look for hidden compartments, also slow traffic.
Scott Otteman, "Mexico Must Do More on Safety, Delivery to End NAFTA Truck Fight," AMERICASTRADE, July 9, 19998; Kevin G. Hall, "Mexico, U.S. Agree on Drug Testing for Truckers," JOURNAL OF COMMERCE, July 10, 1998; Anna Wilde Mathews, "NAFTA Reality Check: Trucks, Trains, Ships Face Costly Delays," WALL STREET JOURNAL, June 3, 1998; Mary Sutter & Kevin G. Hall, "Mexico Pledges to Legalize Big Trailers," JOURNAL OF COMMERCE, June 19, 1998; Suzanne Possehl, "Working Toward Seamlessness," JOURNAL OF COMMERCE, June 30, 1998; "Transport Minister Releases NAFTA Joint Statement of Accomplishments," CANADA NEWSWIRE, July 16, 1998.
Saying that Honduras has made progress in protecting intellectual property rights, U.S. Trade Representative Charlene Barshefsky announced on July 1 that the United States has restored duty-free access for Honduran products including watermelons, cucumbers, cigars and cigar products, restoring benefits revoked in March under Section 301 of U.S. trade law. "Among a number of recent actions in this area, the Honduran government temporarily shut down and collected fines from television stations which had pirated U.S. programming and videos," said Barshefsky.
The Mexican government also said it will launch a national campaign against copyright piracy in July, according to Mexican Undersecretary for International Trade Negotiations Jaime Zabludovsky. The campaign is expected to include increased personnel and funding for the Mexican
Industrial Property Institute and the Attorney General's Office. Office of the U.S. Trade Representative, "Trade Preferences for Honduras Restored," PRESS RELEASE, July 1, 1998; "U.S. Trade Representative Restores Trade Preferences to Honduras," AMERICASTRADE, July 9, 1998; Scott Otteman, "Mexico to Mount New Nationwide Anti-Piracy Campaign in July," INSIDE U.S. TRADE, July 10, 1998.
The General Motors workers' strike at the Flint, Michigan plant, which began on June 4, has effectively shut down GM manufacturing throughout most of the United States, Canada and Mexico. More than 80,000 workers, including 30,000 in Mexico, have been idled and the strike is estimated to cost GM $75 million a day. A shift in manufacturing jobs from the United States to Mexico underlies the Flint autoworkers' strike. A primary objective of the workers is to prevent outsourcing of parts to non-union plants.
GM and its affiliates are Mexico's largest private employer, with 83,000 full-time workers. GM de Mexico operates three car and truck assembly plants. GM's Delphi Automotive Systems has 53 parts plants. GM jobs in the United States have been cut by 38,000 workers to 224,000 between 1993 and 1998.
Auto manufacturers' shift of operations to Mexico, has resulted in a total of $7.7 billion in new auto and parts factories built there during the past four years and another $8 billion projected by 2000. The U.S. trade deficit with Mexico in the auto and auto-parts sector increased from $3.6 billion in 1993 to $7.4 billion in 1997. The Volkswagen Beetle is made exclusively in Mexico, as are many Ford pickups and Nissan wagons.
Workers' struggle for an independent union in the Han Young plant in Tijuana, Mexico typifies the difficulties faced by workers in Mexico. (See "NAFTA Labor Charges in U.S., Mexico," NAFTA & INTERAMERICAN TRADE MONITOR, May 29, 1998 and "Han Young Update," NAFTA & INTERAMERICAN TRADE MONITOR, March 6, 1998.) Han Young produces truck chassis for Hyundai. Han Young workers voted twice for an independent union, but have been blocked first bygovernment refusal to recognize their union and then by the company's refusal to negotiate.
Auto workers in Canada are fighting to organize Magna International, one of the world's largest auto-parts suppliers, which is now moving into production of complete vehicles. Magna has 49,000 workers in 155 plants around the world, with more than 50 plants in Canada and about 30 in the United States.
The Canadian Auto Workers representation of workers in the auto-parts industry has fallen from 80 percent some 20 years ago to about 50 percent today, a drop attributed by CAW officials to Magna's growth. Only one Canadian Magna plant is unionized, and workers there voted in April to decertify the CAW. Wayne Gates, CAW local president at the St. Catharines, Ontario plant, said that the company laid off 10 of 50 workers before the vote and that company postings and letters implied that the plant would have more work without a union.
In the United States, only three Magna plants are unionized. CAW union officials say many non-unionized Magna workers make less than half of what UAW workers make in the United States.
Angelo B. Henderson, "GM's Idled Workers Support the Strikers in Flint," WALL STREET JOURNAL, July 13, 1998; Robert L. Simison and Gregory L. White, "GM's Strategy in Mexico May Skew Jobs Numbers," WALL STREET JOURNAL, July 13, 1998; Mark Heinzl, "Canadian Auto Workers Target
Outsourcing Trend," WALL STREET JOURNAL, July 20, 1998; Joel Millman, "Mexico is Becoming Auto-Making Hot Spot," WALL STREET JOURNAL, June 23, 1998; Joel Millman, "Effects of the GM Strike Begin Crossing the Border Into Mexico," WALL STREET JOURNAL, June 24, 1998; Kevin G. Hall, "GM Strike Likely to Stall US-Mexican Supply Chain," June 26, 1998.
Tyranny of the Bottom Line: why corporations make good people do bad things, Ralph Estes. San Francisco: Berrett-Koehler Publishers, 1996. 296 pp. $27.95. Examines the implications of a corporate purpose focused solely on profit, including numerous examples of corporate abuses of customers and employees, and concludes with a recommendation for legal requirement of extensive public disclosure of information by corporations. Order from Berrett-Koehler Publishers, 155 Montgomery Street, San Francisco, CA 94104; phone 800/929-2929.
Han Young Report. April 28, 1998. The first report on freedom of association issues and union organizing at the Han Young plant in Tijuana has been issued by the U.S. National Administrative Office, set up under NAFTA to hear complaints about non-enforcement of labor laws. To order, contact U.S. NAO, Department of Labor - OSHA, 200 Constitution Avenue NW, Room C-4327, Washington, DC, (202) 501-6653. A second report on failure to enforce health and safety regulations at the plant is due out this summer.
Hungry for Profit: Agriculture, Food, and Ecology, edited by Fred Magdoff, John Bellamy Foster and Frederick H. Buttel. Special issue of Monthly Review, July/August 1998. 160 pp. $10 each, discounts on quantity orders. Order from MONTHLY REVIEW, 122 West 27th St. New York, NY 10001. Telephone 212/691-2555; fax 212/727-3676; email mreview@igc.apc.org. Explores the historical roots of mature capitalist agriculture and structural transformations that are underway, along with effects of these developments on farmers and the environment, the various groups formed to try to resist these changes, alternative pathways attempted in developing countries, and an understanding of the perpetuation of hunger in the midst of plenty.
Commercial Trucking: Safety Concerns About Mexican Trucks Remain Even as Inspection Activity Increases. General Accounting Office report to Congressional Recipients: April, 1997. 27 pp. First copy free. Order from U.S. General Accounting Office, P.O. Box 6015, Gaithersburg, MD 20884-6015; telephone 202/512-6000; fax 301/258-4066. For internet access, send e-mail with "info" in the body to info@www.gao.gov. $2.
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