Gatt`s new avatar is a demon

  • 14/12/1994

Gatt`s new avatar is a demon WASHINGTON is in the grip of a GATT fever with the American Congress and the Clinton administration locked eyeball to eyeball over Congressional approval of the Uruguay round. So far, President Clinton and his crew have tried in vain to convince Congressmen that the multilateral trade agreement is the best thing that can happen to the country"s economy. But Congress, backed by environmentalists and a large section of disgruntled industrialists, has steadfastly blocked the legislation. In desperation, the US government has called for a rare "lame duck" session in December when the now Republican-dominated Congress, which had broken up for the mid-term polls, will reconvene expressly to vote on the trade bill.

When the Clinton government signed the Marrakesh Accord on April 15 this year and became a partner to GATT, little did it foresee the intensity of opposition the move would evoke on the home front. The treaty, which lays down the rules for international trade, was mooted 46 years ago, with the US posing as its chief author. The act of putting the official seal of approval on it, therefore, could hardly be described as a bolt from the blue. So why are the alarm bells ringing suddenly?

US sovereignty is being put at the stake, say GATT-baiters, refusing to agree with the new procedure for settling disputes in the World Trade Organisation (WTO), the latest incarnation of GATT, which is supposed to supersede the "old system" from January 1, 1995. Under the existing system, if a GATT panel finds a country guilty of violating international trade rules, the offender can simply block a decision in the council, which operates only on consensus. Under the new dispensation, however, a WTO dispute panel report will be automatically adopted within a specified time, unless all members of the council agree not to adopt it.

Therefore, any single country will find it difficult to block a WTO dispute panel decision. It can ignore the decision only at the cost of trade loss. "Every country maintains its right to say, `So what?". The only difference is that when you say, `So what?", you know that the other party has the ability to force you to consider having to pay compensation," explained an US official.

And this is precisely what the GATT-baiters find repugnant. They hold that the US will then be doomed to suffer the humiliation of having to change its domestic laws or pay compensation to countries when it does lose a dispute. "Developing nations are bound to dominate WTO voting for they will hold more than 80 per cent of the votes," complains Pat Choate, director of George Washington University"s Manufacturing Policy Project.
Nader natter Managing the front ranks of the anti-GATT brigade is Ralph Nader, the renowned "father" of the consumer movement in the US. Nader"s main grouse is against the "secretive, non-participatory" nature of the WTO system. "Decisions arising from such governance can pull down our higher living standards in key areas or impose trade fines and sanctions until such degradation is accepted," he warned while delivering a fiery speech before the Small Business Committee of Congress.

Nader is being solidly backed by consumer organisations like the Public Citizen. "All interpretations of the new agreement will be conducted by the Ministerial Council composed of some 123 nations, in which the United States has only one vote and no veto," broods Joan Claybrook, president of Public Citizen.

While Nader and the consumer organisations are worried about the fate of Uncle Sam left at the mercy of the developing nations, environmental groups are convinced that the WTO will ruin US environmental and health laws, known to be the most stringent in the world. "It"s (WTO"s) real goal is to homogenise the world"s law at the common denominators and to get rid of pesky environmental and other laws that protect resources, workers, consumers and public health," warned a full page advertisement put in by the Sierra Club in all the leading national dailies, which began with a banner headline screaming: Jeopardized by GATT -- 100 US Environmental Laws.

The environmentalists are furious about the "nontransparency" of the WTO. According to them, the manner in which the new system will work is blatantly undemocratic. It leaves the field wide open for any of the 123 member nations, many of which do not even possess a set of well-defined environmental laws, to challenge other countries" laws as barriers to free trade. Once a challenge is lodged, the WTO dispute panel will deliberate upon it in Geneva behind close doors. "The people of the countries whose laws are challenged won"t even have the right to appear before the WTO," says Brent Blackwelder, President of Friends of the Earth.

The activists are coming up with chilling predictions about the future, citing specific examples to prove their point. For instance, the US had tried to impose restrictions on tuna import by wielding its Marine Mammal Protection Act, as dolphins are killed in large numbers while the tuna is netted. Mexico challenged this under the old GATT regime in 1991 but the US was able to block the outcome. But some European countries have raised the issue again. "Now, under the WTO regime, the US will either have to comply by eliminating the law or be treated like an international outlaw like Iraq or Haiti," says the Sierra Club.

The "evil powers"
Environmentalists insist that the gigantic transnationals are the "evil powers" pulling the strings from behind the wings and the WTO is nothing but a tool that would be used by them to circumvent the "rule of democracy". To strengthen their argument, the greens refer to the anti-dumping provisions provided under the new pact. These require tougher and quicker actions to resolve disputes over the use of anti-dumping laws. This, they fear, would limit the ability of the US companies, particularly the steel sector, to impose penalties on foreign producers. "Its free trade for them but control and conformity for us," says a hand-out distributed by the environmentalist lobby.

The environmentalists are not the only ones who have launched publicity campaigns against the WTO. Frontrunning research institutes like the Massachusetts Institute of Technology and the Lemelson Fellowships at Hampshire College have joined forces to fight the trade treaty and are flooding the print media with notices containing alarming messages on the fate that awaits the American patent system if the WTO is let loose on it. "The American standard of living is at risk," they announce. "In the name of global harmonisation, multinationals and foreign nations are lobbying the Congress to alter the patent system that made the US an economic superpower."

Faced with such persistent and organised opposition, the Clinton administration pooled in all its resources to defend the beleaguered treaty. Official notices, public announcements by government top brass and daily statements to the sympathetic press -- every medium was used to convey the message to American citizens: US sovereignty is not at stake, for nothing in the WTO requires a country to change its national laws. "Settlement of international disputes will work as it always has. Few countries, if any, are going to retaliate against the most powerful trading country in the world," contended Ira Shapiro, general counsel at the Office of the US Trade Representative.

The government representatives quoted the Statement of Administrative Action (SAA) that accompanies the impending legislation to defend their stand. In a section titled US Sovereignty, the SAA states: "The WTO will have no power to change US law. If there is a conflict between US law and any of the Uruguay Round agreements...the implementing bill makes clear that US law will take precedence."

According to proponents of GATT, the environmental laws are equally well protected. "We all have the right to set our own levels of protection for health, safety and environment," insisted a senior official of the Office of the US Trade Representative. According to the US administration, the agreement requires the use of international standards by the signatories, but at the same time, ensures that the general obligation to use international standards will not result in downward harmonisation.

The vigorous pro-GATT campaign that the government launched did succeed in mobilising support from certain quarters. A section of the industry gallantly rose to the occasion and began an advertising war with the detractors. Software companies like the Electronic Data System came up with giant notices which pleaded, "Let"s not let $200 billion (the amount that the government promises would be pumped into the US economy once the WTO comes into force) and global respect slip away."

The WTO forms the basis of US foreign policy, believes a group of veteran political strategists led by Ernest H Preeg. Preeg, an ex-foreign service officer who has specialised in economic affairs from the Centre For Strategic And International Studies in Washington, says in his book titled The American Challenge in World Trade, "Full American participation in international economy has become critical to US economic well-being and growth. To withdraw behind national or regionally delineated barriers would be at great economic cost and divisive to the political relations with other industrialised democracies."

Therefore, it was not surprising that fortified with this encouraging response, the Clinton Administration was confident that it will be able to push the legislation through the Congress. The president was also reportedly assured the support of a large chunk of Republicans on the "free trade" issue.

The first note of discord was struck when President Clinton asked Congress for a new negotiating authority under the special "fast track" rules that govern trade pacts. This requires the Senate to vote quickly and without amendments. The opposition protested vehemently, claiming that the government was covertly ushering in an authoritarian trade regime.

Then a bombshell exploded in late September. Senator Bob Dole of Kansas, the powerful Republican leader, made a public statement denouncing the treaty, saying that the approval should be delayed until next year because of "questions about its cost and its effect on American labour and environmental laws". The government was caught on the wrong foot. Desperate attempts were made by senior government troubleshooters to win Dole over. GATT protagonists again suffered a body blow when Senator Ernest Hollings of South Carolina, chairperson of the Senate Commerce Committee, decided in early October to exercise his right to hold the legislation in the committee for 45 days, past the October 7 deadline when Congress broke up for the mid-term elections.

Sounding the battle cry
While Hollings claimed that he had sounded the battle cry to protect national interest as "its economy was being badly hurt" by the proposed increase in exports, the US press insisted that his motives were purely political. Hollings" constituency, South Carolina, is a center of the textile industry which is liable to suffer heavy losses once the trade treaty comes into force, a treaty that would flood the market with cheaper fabric from the developing nations. "This is a craven and destructive bow to the demands of textile firms in his home state who fear competition from abroad," raged the New York Times. Dole, too, has been accused by GATT-friendly columnists of protecting the "special interests" he represents in the industry from the new, liberalised trade rules.

The government, meanwhile, devised a new strategy to win over the sullen business community to its side. It came up with a wide range of special "industry specific" provisions to help industries like steel, automobile, wheat, cement, cellular telephones and apparel fight the foreign competitors. In a proposal presented before Congress, it offered deals that included a $65 million reduction in government fees on a new cellular telephone technology; higher effective tariffs on wheat imports, and new labelling rules aimed at reducing Chinese apparel shipments.

But now with the Republicans scoring a major victory in the electoral sweepstakes, the issue has taken a new and more complicated turn. However, all is certainly not lost for President Clinton. The anti-GATT camp may cry itself hoarse about evil portents, but it is difficult to shrug off the promises that the WTO holds for the US economy. The government"s stand has been further strengthened by a study done by the Institute for International Economics, a private group, which declared that the new world trade treaty should reduce US annual tax deficit by almost $20 billion. Larry Chimerine, a leading US economist, points out, "It"s hard to find another programme which would generate $25 billion in GDP in a year."