Dispute Panel Incites Domestic Brouhaha: The World Trade Organization Is Up and Running, but Is That Good for the United States?
Crabtree, Susan, Insight on the News
The World Trade Organization is up and running, but is that good for the United States?
For more than 50 years, the General Agreement on Tariffs and Trade, or GATT, sought to alleviate economic tensions among sparring countries. Since the fall of communism, however, more countries have entered the global marketplace and world trade has intensified. Even before that, GATT members had been attempting to modernize the international trade pact during the drawn-out debate known as the Uruguay Round, begun in 1986 and ratified in 1994.
While defenders and critics of the Uruguay Round can point to good and bad aspects of the revised pact, almost everyone agrees that the most significant development to come out of the protracted discussions was the World Trade Organization, or WTO. The 120-member body has strengthened the forum for multilateral trade negotiations and fortified the framework for their implementation, prompting some trade experts to herald it as the harbinger "golden age" -- the period between 1950 and 1970 when export levels experienced unprecedented growth.
Despite these auspicious projections, the WTO experienced a tumultuous year after it officially opened on Jan. 1, 1995. Controversy continues to surround its dispute-settlement panel, composed of international delegates whose decisions cannot be blocked but only appealed by the countries involved.
The domestic debate over the process has been ongoing. During the 1994 GATT talks, a bipartisan group of U.S. legislators, economists and commentators claimed the WTO's dispute-resolution panel would hold too much authority -- that its binding decisions would undermine U.S. sovereignty by placing American economic interests at the whims of foreign judges. This election year the stakes are particularly high as protectionists and free traders square off once more.
The WTO has been troubled from the start. The United States, the European Union and Japan splintered over which country's candidate would lead the organization and replace Ireland's Peter Sutherland, GATT's outgoing director general. After a 10-month search, former Italian Trade Minister Renato Rugierro garnered the most votes, but not before Mexico's economy crashed and the United States relinquished its support for former Mexican President Carlos Salinas de Gortari. It had hoped that a Latin American would lend more weight to U.S. interests.
Last year's bitter import-automobile battle between the United States an Japan further undermined reputation here. After talks broke down between the two countries in May, President Clinton threatened to impose hefty sanctions on Japanese luxury cars, arguing that the Japanese automobile and auto-parts markets shut out American companies. Japan maintained that Clinton's sanctions circumvented the WTO and the very procedures the United States had helped to create. An 11th-hour settlement spared WTO intervention, a relief to Americans who predicted that the organization would rule against the United States.
Republican presidential candidate Pat Buchanan believes that Clinton's further efforts to open markets will meet similar failure. If elected, Buchanan would work to withdraw U.S. participation in the WTO, a pledge he has repeated during his campaign tours of Iowa and New Hampshire. "It is time that we have a bully president that will stand up in defense of American workers," Buchanan Campaign Manager Terry Jeffrey tells Insight. Quoting Buchanan, Jeffrey says, "If we didn't go to the defense of our workers, we'd all be speaking Russian now."
Protectionist brushfires have broken out in other political camps as well. Ross Perot and Ralph Nader have raised the plight of the American worker in their attacks on the presidential front-runners. In response to the barrage of protectionist hostility, Clinton and Senate Majority Leader Bob Dole have adopted a "get tough" stance on trade issues.
During the first week of the new year, for example, U. …