World Trade Pact May Face Delay In US Congress
Lawmakers fret about sovereignty issue, taxes. TRILLION-DOLLAR DEAL
JUST a few months ago, Clinton administration officials were in Geneva, triumphantly wrapping up difficult global trade talks and reaching the most comprehensive commercial agreement in history.
The so-called Uruguay Round deal was trumpeted as a grand widening of world markets, especially in goods and services, aimed at creating more jobs.
But back in Washington, officials now face a tough battle in Congress to push the deal through so it can begin by Jan. 1, 1995.
Today, as the House Ways and Means Committee continues its review of the new accord, trade negotiators are concerned that their hard-won gains abroad will be lost at home if Capitol Hill fails to approve the legislation this year.
Opposition to passage of this package, which widens the General Agreement on Tariffs and Trade (GATT), is based on:
* Lawmakers' refusal to raise taxes to finance the accord.
* Worries over a sovereignty struggle between the Congress and GATT's establishment of a new World Trade Organization.
* Concern that the agreement will adversely affect constituents in a range of ways - from reduced farm subsidies to competition from cheap labor overseas.
What appears to be a procedural problem - the funding of GATT - may turn out to be the most prickly. At issue is how the United States government will make up revenue shortfalls - which the Congressional Budget Office puts at roughly $14 billion to $16 billion over the next five years - caused by GATT's mandated tariff reductions. Pay-as-you-go budget rules require Congress to make up the loss.
US Treasury Secretary Lloyd Bentsen says he's been fielding calls from concerned foreign-trade ministers about the holdup. Earlier this month he implored the nation's top corporate executives to push hard for GATT's passage and claimed that ``increased economic activity that [GATT] will generate will produce $3 in revenue for every dollar we lose by lowering our tariffs.''
US Trade Representative Mickey Kantor, who projects GATT will mean a trillion dollar gain for the US economy over the next decade, has asked for a waiver of the budget rules. To date, few lawmakers have responded to that call, fearing that it could set a dangerous precedent for the much more costly funding of health-care reforms.
Can the accord, initialed by 103 trade ministers in Morocco last month, be scuttled by lawmakers caught up in a domestic fiscal dispute?
``There's a lot of talk about holding the agreement over until next year,''
says Joe Cobb, former chief economist for the Senate Republican Policy Committee and a fellow at the Heritage Foundation. Mr. Cobb laments that it's easy to politicize the drawbacks of a trade pact, because the public rarely hears much debate about the benefits. ``The local voter doesn't see that by having uniform rules of law over global commercial practices, countries will not be able to impose quotas, raise tariffs, and discriminate against foreign competition,'' he says.
THE White House is not counting on a groundswell of public support for the accord. Administration officials are busy floating proposals to bridge the financing gap - from tax hikes to subsidy cuts - and have met strong bipartisan resistance. Senate Minority Leader Robert Dole (R) of Kansas and Senate Agriculture Committee Chairman Patrick Leahy (D) of Vermont are adamantly opposed to reductions in farm subsidies. Mr. Leahy has threatened to withhold the committee's support for the agreement.
Operating from the sidelines, presidential hopeful Jack Kemp recently chastised Republicans. ``The new World Trade Organization [borne by the agreement] is not a threat to sovereignty.... It will have absolutely no legislative, executive, or judicial authority. Ultimately, Republicans and conservatives who use the sovereignty issue to oppose GATT will be accused of failing to pass the largest international tax cut in history,'' Mr. Kemp says, because ``tariff cuts will expand trade and increase government revenue.''
The examination of GATT's drawbacks continues. John LaFalce (D) of New York, chairman of the House Committee on Small Business, says GATT ``poses some potential risks for our companies and workers.'' Among Mr. LaFalce's concerns are the low labor standards ``many of our trading partners have ... that could potentially put many Americans out of work.''
LaFalce, who plans to host a series of hearings on the agreement, says ``I look forward to a strong and vigorous debate on GATT.''
Cobb estimates that congressional opponents are banking on this eventuality: ``The longer you let it sit out there and dangle, the harder it is to pass.''