Free Trade Is Thorny Issue in U.S. Policy

By Cerami, Charles A.; Hallow, Ralph Z. et al. | Insight on the News, November 7, 1994 | Go to article overview

Free Trade Is Thorny Issue in U.S. Policy


Cerami, Charles A., Hallow, Ralph Z., Sands, David R., Insight on the News


When the international trade talks known as the Uruguay Round finally were concluded in April, most of the world breathed a sigh of relief. After eight often-acrimonious years of hashing out new rules for everything from agriculture to services, it appeared that a new era of open trade was about to begin. But that was before Congress, after bitter debate, was unable to approve the agreement and delayed a vote until the end of November.

The debate about the new trade deal, the General Agreement on Tariffs and Trade, or GATT, reflects the lingering uncertainty about what it will bring. Supporters and detractors alike -- from special-interest groups to congressional leaders to the public -- are viewing the pact with at least some hesitation. Sen. Bob Dole's words soon before Congress adjourned are instructive: "I am certain that every office has been like mine," he said. "I have had more calls on GATT than I ever had on NAFTA.... People say they do not have enough information ... they do not understand it. I favor free trade and opening of foreign markets, but people have a right to know what else is in this agreement, how the World Trade Organization will function, what authority it will have to tell the United States what to do, how it will benefit them in the long run."

Feelings run strong on both sides. Sen. Daniel Patrick Moynihan, among others, argues that the deal is the greatest opportunity the United States has ever had to sell its agricultural products and create broader trading opportunities around the world. But others say it is the greatest surrender of sovereignty the United States has ever been asked to make. Both sides, to some degree, are correct. And since the talks were launched under Reagan, moved forward under Bush and concluded during Clinton's administration, there's no easy partisan answer.

Clearly, if a valid system is to be set up, any rule breakers have to be penalized. And while few would argue seriously that the United States should be above international trade law, concerns remain about the nature of the World Trade Organization, the governing body created under GATT that would arbitrate international trade disputes.

Those who object to the WTO raise a number of key points:

* Most of the other WTO members are countries that habitually vote against the United States in the United Nations, so Washington risks being outvoted on controversial issues.

* Each nation has one vote. That sounds democratic, but on a per-capita basis, it means that a citizen of the smallest country has far more clout than an American. (This is very different from the United Nations, in which the United States may be outvoted in the General Assembly but can veto any important decision in the Security Council.)

* The WTO director general would be inclined to side with the anti-U.S. forces, since he would be reliant on them for support. He also would be likely, when selecting people for dispute-settlement panels, to make choices that please the majority.

* U.S. attempts to bar the entry of products that don't meet health, sanitation or environmental standards could be overruled by the WTO. Legal experts who have studied the agreement say the organization actually could order Washington to repeal federal or state laws that impede such imports.

Perhaps the biggest concern involves sovereignty. While most economists and policymakers favor free trade, some express concern that the United States will have to submit to tough new WTO rules. And while the United States could not be forced to submit to decisions with which it disagreed, refusing to play by the new rules would be counterproductive, damaging the free-trade system itself.

The advantages of being part of the GATT system are well-documented; the opening of world trade has been the linchpin of global economic growth throughout the postwar period. Most economists agree that America can best address its trade imbalances, create more jobs and keep the dollar stable by being part of a free-trade system.

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