Give GATT a Green Light
World is watching US Congress for sign of Washington's commitment to global free trade or its preference for regional blocs
BURNT out by health care, distracted by Haiti, and worried about next year's election, Congress is in danger of losing interest in passing the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), one of the most beneficial trade agreements the United States has ever negotiated. Failure to pass this agreement before Congress's expected adjournment Oct. 7 could be a serious blow - not just to US world leadership, but to American businesses, workers, and consumers.
Postponing action on the Uruguay Round gives its opponents a chance to mobilize. Such a postponement would be an expensive blunder. For make no mistake, the Uruguay Round agreement is good for the US.
The US has once again regained its place as the world's largest exporter, and US exports now count for a postwar high of 11.6 percent of gross domestic product. Roughly 10 million American jobs (and 1 in 6 manufacturing jobs) are related to exports, and these jobs pay wages 12 percent to 17 percent above average.
The US economy increasingly is export-driven, and the president's Council of Economic Advisers has predicted that when fully in force, the agreement will add an additional $100 billion to $200 billion a year in output and income to the US economy. We cannot afford to forgo this growth and reinforcement of our international position.
A recent report on the pact by the Committee for Economic Development, a public-policy research organization in Washington, D.C., argues that international agreements such as the Uruguay Round have economic effects similar to those of technological advances. By opening markets and enabling us to deploy our resources more efficiently, these agreements, like technology gains, result in more output from available supplies of labor, capital, and materials.
The Uruguay Round accord will advance the ability of the US to trade in a number of significant ways:
* Access to new markets: The treaty reduces global tariffs by more than one-third. If it is enacted, American exporters will enjoy cheaper entry into major foreign markets on products ranging from fish to advanced manufactured goods. Tariff cuts of more than 50 percent have been made by our major trading partners on semiconductors, computers, and other key electronics industries in which the US has a strong competitive position.
The agricultural part of the agreement will open new opportunities for US farmers. And the once heavily protected textile trade will be subject to the same rules as other economic sectors, thus opening new markets for US textile and specialty-apparel exporters and bringing lower prices to American consumers.
* A boon to the service sector: The US is the world's leading exporter of commercial services. Our exports of educational services exceed those of corn, and our exports of financial services those of wheat. The General Agreement on Trade in Services (recognized for the first time in this pact) would begin to allow US service companies to operate abroad on the same basis as host-country companies.
* Intellectual property rights: American software, films, music, and medical and biological advances are preeminent. Thousands of jobs depend on our ability to sell these products abroad, and royalties from patents, copyrights, and trademarks are growing sources of financing for research and development efforts. The Uruguay Round provides much needed new protection for intellectual property rights, as well as enforcement procedures with teeth against intellectual piracy.
* Raising global investment: The treaty would stop countries from imposing local-content and trade-balancing requirements. These requirements are often imposed on companies seeking to invest abroad, and they are a burdensome, distorting drag on export growth.
* Playing by the rules: The much-maligned World Trade organization (WTO) will administer GATT and serve as a formal dispute-settling body. Critics of the treaty worry that the US will be compelled to accept the WTO's judgments. Interestingly, the US has pushed for the WTO, partly in response to European obstruction of several GATT panel reports during the 1980s. The US has been the most frequent petitioning party in GATT, but its petitions also have frequently been stonewalled by other governments blocking GATT recommendations. Even if the US lost a dispute, the WTO could authorize retaliation, but it could not compel changes in US law.
Opponents of the agreement also have argued that WTO membership will result in a loss of US sovereignty on trade issues. They argue that we will have to forswear use of laws such as Section 301 and Super 301, which provide redress against unfair trade practices, and that we will be subject to the regulatory whims of a new international bureaucracy.
The reality is quite different. WTO decisions cannot and will not change US law or otherwise affect the sovereign right of the US to adopt and apply its own laws and regulations. We will still be able to use Section 301 and Super 301 to enforce our rights abroad and to eliminate unfair trade actions.
The world will be watching the progress of the Uruguay Round legislation in Congress. The passage of the North American Free Trade Agreement has raised questions around the world about the commitment of the US to multilateral markets. Questions remain as to whether America may be turning away from free global trade in favor of a more parochial regional approach.
The Uruguay Round legislation is a test of our seriousness and purpose in fulfilling our leadership role. It should be enacted immediately. The Opinion/Essay Page welcomes manuscripts. Authors of articles we accept will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.