Wine industry reflects pressures on NAFTA ON POLITICS



LOS ANGELES -- As President Clinton intensifies his personal effort to win congressional approval of the North American Free Trade Agreement (NAFTA), California's 52-member House delegation is a particularly critical contingent to his hopes. The White House expects to win the Nov. 17 vote in the Senate but is fighting an uphill battle in the House, where constituent interests are pulling congressmen in all directions.

House veteran Democrat Robert Matsui of Sacramento, the administration's point man for NAFTA in the state, acknowledges that only six of the 30 California Democrats in the House are on record supporting NAFTA now. But he predicts 13 will be aboard eventually, along with 16 or 17 of the state's House Republicans. To rally support in the state, the White House last month held a California Day in which leading business figures were brought to Washington to air their interests and concerns.

Illustrative of the pressure politics going on is the effort of California's critical wine industry to get an administration promise to adjust NAFTA's proposed tariff structure with Mexico on American wines. NAFTA provides that the American tariff on Mexican wine cooler and brandy imports will be eliminated at once, but that the 20 percent Mexican tariff on American wine coolers would only be phased out over six years and on American brandy over 10 years.

The wine industry is also complaining that a Mexico-Chile trade agreement last year will allow Chilean wine and brandy to enter Mexico duty-free in 1996, at which time American wine exporters will still be paying a 14 percent duty. By that time, the wine industry fears, Chile will have grabbed off a lion's share of the growing Mexican market. "Market share, you get it early or lose it," says Bobby Koch, spokesman for the Wine Institute, the industry's consortium of nearly 500 winegrowers in the state. "All we seek is a level playing field."

Although the Mexican government has stipulated that there can be no further changes in NAFTA beyond the side agreements on environmental and labor standards worked out earlier, Koch says the tariff questions can be resolved by an exchange of letters between Mexico and the United States accelerating tariff reductions. Mexico has indicated "it will deal with it later," Koch says, "but we say deal with it now."

At the urging of the institute, 10 then-undecided members of the California House delegation signed a letter last month to fellow Californian Mickey Kantor, the U.S. trade representative, calling for the adjustments. "The resolution of our concerns," the letter concluded, "will eliminate an important problem that currently prevents our support." That language pointedly did not promise the votes of the 10 signatories for NAFTA, and Matsui says in fact that one of them, Republican John T. Doolittle, has just come out against NAFTA.

If the institute could promise delivery of any of the other nine in favor of NAFTA, Matsui says, that would be one thing, but it can't. Phil Wente of Wente Brothers wineries in Livermore, whose business is nearly 40 percent in exports, says the Mexican-Chilean agreement was a "red flag" for California winegrowers who have "essentially been put on a back burner" in the matter of tariff reductions. With the institute's petitioning letter, he says, "we've at least gotten their attention." But Matsui suggests the institute is hurting itself by not throwing in with NAFTA now.

The wine industry, he says, will be worse off if NAFTA fails, and suggests that the institute is not serving its membership well by "playing games." He notes that the administration excluded wines when it considered so-called "sin taxes" to help pay for its health-care reform package, a much more significant benefit for the wine industry.

The pressure from the California winegrowers is being duplicated in other states on behalf of domestic growers of products like sugar and wheat with large real or potential markets in Mexico or Canada, the other prospective NAFTA partner. And as the administration labors to squeeze out a House majority, the pleas of special consideration are being heard, if not always answered, as the tug of war for votes goes down to the wire.

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