October 5, 1994
Is the GATT Good?
Last year the North American Free Trade agreement, or Nafta, went from being a boring little back-page item to the center of political debate. This year another seemingly-tedious question is about to become interesting for a while. The question is whether the U.S. should accept new rules for GATT, the General Agreement on Tariffs and Trade.
The first battle over GATT has already been fought -- and won by the new treaty's supporters. An extraordinary alliance of right- and left-wing figures, led by Ralph Nader but ranging from Pat Buchanan to the singer Lou Reed, of Velvet Underground fame, urged President Clinton and the Congress to wait until next year before considering the complex new GATT rules. But the Clinton administration, which is determined to pass the treaty soon, has arranged for Congressional votes this year.
The debate thus shifts to the merits of the treaty, with an unusual twist. Many GATT supporters essentially argue that the details of this agreement don't matter. Expanding GATT in the past has made the world rich, they say. Therefore this further expansion must be good.
The opponents do talk about details, especially two points. One is a new limitation on the power of the United States, or any country, to set trade policy by itself -- through anti-dumping actions or retaliatory tariffs. Under the new GATT rules many of these decisions -- and others, which could affect U.S. environmental and labor laws -- would be made by a new tribunal called the World Trade Organization. Many of its policies would be set under a one-country/one-vote system, in which Malaysia and Singapore, for instance, could always outvote the United States. This system creates an obvious dilemma, for if its rulings have teeth the big countries won't stand for them -- and if they lack teeth the whole system will be a fraud.
The other objection is that an agreement presented as a way to clean up the world trading system is actually a huge grabbag of special deals and local exceptions that will create windfalls for some companies and countries and hardship for others. Yet under the rules for approving GATT, Congress must vote Yes or No on the whole package without making a single change.
Most people expect that Congress will finally vote Yes -- and that a year from now GATT, like Nafta before it, will have returned to its normal eye-glazing state. Yet its moment in the limelight will have been useful in drawing attention to the economic dimension of national security, a subject destined to concern us more and more.
Copyright © 1995, by James Fallows. All Rights Reserved.