[Congressional Record Volume 140, Number 76 (Thursday, June 16, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




THE PROPOSED TEXT FOR THE GENERAL AGREEMENT ON TARIFFS AND TRADE [GATT] 
                              NEGOTIATIONS

  Mr. THURMOND. Madam President, over 2 months ago, on April 15, 1994, 
representatives from 115 countries met in Marrakesh, Morocco, to 
formally sign the Uruguay round final text of the General Agreement on 
Trade and Tariffs [GATT]. The negotiations leading to this event have 
taken over 7 years and countless hours to complete. The text of the 
GATT agreement is over 22,000 pages and weighs 385 pounds. The GATT is 
an ambitious undertaking in its objectives: lowering tariffs on 
imported and exported goods, creating more trade opportunities for U.S. 
companies, protecting intellectual property rights, and opening foreign 
markets to more U.S. goods and services.
  Madam President, the GATT negotiations have focused on continuing the 
seven previous rounds of talks which were intended to reduce the 
barriers of international trade. The major areas of negotiation have 
concentrated on agricultural trade, textile trade, services, and trade 
related to foreign investment, as well as protection of intellectual 
property rights.
  The GATT agreement is supposed to help our economy by increasing our 
exports to foreign markets. When we increase our exports, companies 
hire more workers, payroll tax receipts rise, and, in general, help our 
businesses continue to grow and prosper. According to the Clinton 
administration, two important goals of the GATT is to help resolve 
trade disputes between countries and to reduce trade barriers in all 
markets.
  Madam President, those of us who were serving in the Senate during 
some of the previous GATT rounds have heard many of the same arguments 
that the Clinton administration is making in regard to this agreement. 
In fact, the claims regarding the Uruguay round are strikingly familiar 
to those made by the Carter administration at the close of the Tokyo 
round talks in the late 1970's. At that time, we were told that bold 
new steps, such as those incorporated into the Tokyo round, were needed 
to eliminate our trade deficit and to make America more competitive in 
the global marketplace. Yet, Madam President, the exact opposite 
happened. After implementation of the Tokyo round, the United States 
trade deficit grew from $14 billion in 1979 to over $115 billion for 
1993. Further, we saw a major decline in the steel, textile and 
apparel, and electronics industries. During this same time, these 
industries were struggling to survive due in part to the closed markets 
of other countries.
  Madam President, I am not asking that my colleagues rethink their 
philosophy on trade. However, we should be examining the agreement to 
see if all that is promised will be forthcoming. It seems to me that 
the benefits of this agreement appear to fall into the same vague and 
dubious category as previous rounds which failed to produce their 
lavishly predicted results. Not only are there problems with the trade 
components of this agreement, but there is also a problem with the 
establishment of a new international body, called the World Trade 
Organization [WTO]. The creation of the WTO causes me great concern.

  Some reports mention that this entity, which is included in a 14-page 
section of the GATT agreement, was treated as an afterthought to the 
negotiations. With something as important as the sovereignty of our 
Nation, I regret that our negotiators did not consider this issue in 
depth.
  The WTO is intended to be the arbitrator of trade disputes between 
signatory countries. The WTO has two main components: the Ministerial 
Conference and the General Council. The Ministerial Conference will 
meet every 2 years and receive decisions on matters covered by trade 
agreements. The General Council will govern the WTO on a daily basis. 
Also established under the General Council are several committees to 
review and make recommendations on more specific issues such as the 
balance of payments, dispute settlements, and specific sectors of 
trade.
  The Dispute Settlement Body, which is established under the General 
Council, will be the ultimate arbitrator of trade disputes. The 
decisions handed down by the WTO will be voted on by the member 
countries. Each country gets one vote and, except in some cases, a 
majority vote rules. While the WTO has been described as a United 
Nations of trade, the United States will not have veto power over WTO 
decisions. All decisions are final.
  The United States will have four choices of action if the WTO rules 
against our country. We can either: first, leave the WTO; second, pay 
tariff penalties to other countries; third, not enforce our domestic 
laws; or fourth, change our laws to comply with the WTO ruling. Most of 
the Federal, State, and local laws that would be contested have been 
enacted to protect the rights, safety, and health of our workers and 
the environment of our country. Why should the United States pay 
tariffs to other countries for implementing rational standards in these 
important areas?
  Madam President, I would like to read from the ``International Herald 
Tribune'' as written on April 26, 1994. It reads, ``It is true that the 
WTO means a loss of congressional sovereignty. But that will be no bad 
thing if it clips the wings of Capitol Hill's powerful 
protectionists.'' Let me also read from the European Commission 
background brief on the Uruguay round. It states, ``The agreement on 
the WTO also contains a binding clause which requires members to bring 
their national legislation in line with the agreements that are part of 
the WTO structure.'' Madam President, while creating an international 
bureaucracy this agreement is also restricting the ability of Congress 
to do its constitutional duty.
  Madam President, I ask unanimous consent that the full text of the 
articles from which I was quoting be printed in the Record at the 
conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. THURMOND. Madam President, one argument used to justify the WTO 
is that other countries would not impose harsh penalties against the 
United States since we have such a lucrative marketplace. However, I do 
not think any of us can really be sure how the developing nations of 
the world, which account for 83 percent of the WTO membership, will 
vote when a situation arises.
  Madam President, another concern I have regarding the GATT is the 
total cost of the agreement. According to news reports, the United 
States will lose an estimated $40 billion from tariffs over the next 
decade if this agreement is implemented. While some of the lost tariffs 
might be recouped from the increased trade that the United States is 
expected to experience, the pay-as-you-go provisions of our budgeting 
process require that money lost from tariff cuts must come from revenue 
increases or spending cuts. At this time, I would not be inclined to 
support a budget waiver to help pay for the GATT. With our National 
debt of over $4 trillion, we need to be fiscally responsible in our 
actions. I think that if this agreement is important enough to pass 
then we should not have to waive the budget act to enact it.
  Madam President, hopefully, some of these concerns can be addressed 
by the administration before the implementing legislation is presented 
to Congress. I look forward to working with the administration and my 
colleagues to get a fair trade agreement.

                              [Exhibit 1]

                           The Uruguay Round

       3. Sectoral Assessment of the Uruguay Round
       3.1 Agreement on the World Trade Organisation.--The 
     agreement to subsume Gatt into a new wider World Trade 
     Organisation is a token of the commitment of the EU and 
     organisation's other members to a multilateral trading 
     system. The aim behind the WTO is that members agree to 
     settle their trade disputes multilaterally through the WTO 
     instead of bilaterally or even, in the case of Section 301 of 
     the US Trade Act, unilaterally.
       The United States, which has taken unilateral action 
     against a number of its trading partners in recent years, was 
     reluctant throughout the Uruguay Round to accept the creation 
     of the WTO. But they agreed at the end on condition that the 
     (to them) confrontational name originally envisaged, the 
     ``Multilateral Trade Organisation'', or MTO, became the WTO.
       The WTO will create a single institutional framework 
     encompassing the Gatt, all agreements concluded under its 
     auspices and the complete results of the Uruguay Round, 
     including the agreements on trade in services (GATS) and in 
     intellectual property rights (TRIPs). Its structure will be 
     headed by a Ministerial Conference which must meet at least 
     once every two years. Its members have to accept the results 
     of the Uruguay Round in their entirety via what the WTO 
     agreement calls ``a single undertaking approach''.
       The agreement on the WTO also contains a binding clause 
     which requires members to bring their national legislation in 
     line with the agreements that are part of the WTO structure. 
     This further restricts the scope for unilateral action.
       The European Union is satisfied with the result of the 
     negotiations on the WTO. It creates the required 
     institutional framework for making sure that the reduction of 
     trade barriers can be translated into effective and permanent 
     access to markets.
       In addition, the European pharmaceuticals and chemicals 
     industry will receive patent protection for their inventions 
     in many developing countries that have refused such 
     protection thus far. European sound recordings, films, books 
     and computer programmes will now also be protected against 
     piracy.
       3.12. Dispute Settlement Agreement.--A fair and effective 
     procedure for settling disputes is at the heart of any 
     successful system of multilateral trade. The Uruguay Round 
     has succeeded in setting up an integrated dispute settlement 
     structure which can deal with cases arising between parties 
     to any Gatt or WTO agreement or sub-agreement.
       Procedures have been defined which are virtually automatic. 
     The decisions on the establishment, terms of reference and 
     composition of dispute panels will no longer depend on a 
     consensus agreement, which in the past has meant that any 
     Gatt member could veto the creation of a panel to investigate 
     its alleged breach of rules. The same automaticity will apply 
     to the adoption of the findings of the panel. Panels will be 
     expected to submit their findings within six months of being 
     set up.
       The new agreement includes an appeals procedure. The 
     findings of the appeals body must be made known within 60 
     days.
       One of the central provisions of the agreement is that 
     members shall not themselves make determination of 
     violations, or suspend concessions, but shall make use of the 
     new dispute settlement procedure. Furthermore, a binding 
     commitment to bring national legislation in conformity with 
     these rules has been agreed, so that the United States can 
     neither resort to nor even maintain arbitrary provisions of 
     the kind used to impose unilateral sanctions against its 
     trading partners.
       Finally, the mechanism of ``cross-retaliation'', allowing 
     under some conditions sanctions to be applied in the field of 
     merchandise trade for infringements of the services and/or 
     TRIPs agreement will permit an effective enforcement of the 
     pledge to liberalise trade in these two new areas.
       3.13. Agreement on civil aircraft.--Although taking place 
     simultaneously, negotiations on trade in civil aircraft were 
     not part of the Uruguay Round proper. But in view of the 
     central subsidy issue involved in the manufacture and sale of 
     civil aircraft, a link was established between these 
     negotiations held within the Gatt Civil Aircraft Committee 
     and the negotiations on the Uruguay Round Subsidy Agreement 
     (see 3.8 above).
       The negotiations on civil aircraft failed to reach an 
     agreement when the US rejected a compromise draft from the 
     Committee's chairman. The negotiations have been extended for 
     another year in the hope that the main protagonists, the EU 
     and the United States, can strike a deal. The chairman's 
     draft, which is largely acceptable to the EU, will form the 
     basis for the next phase of the negotiations. The Americans 
     objected to the granting of ``grandfather clauses'' to 
     protect old subsidies from Gatt action and to new provisions 
     covering indirect subsidies.
       Meanwhile, the civil aircraft sector is subject to the 
     general provisions on subsidies contained in the Uruguay 
     Round subsidy agreement. But, at the EU's insistence, the 
     sector is specifically exempted from the 5% threshold beyond 
     which certain subsidies are deemed to create ``serious 
     prejudice'' for competitors.
       This means that the special case of the civil aircraft 
     industry as being one where subsidies have to be dealt with 
     on a less stringent basis has been recognised.

         [From the International Herald Tribune, Apr. 26, 1994]

                 U.S. Mustn't Dawdle on the Trade Pact

                           (By Reginald Dale)

       Washington.--Now that the world's biggest-ever trade 
     agreement has been signed and sealed in Marrakresh, it is 
     time to get it through the U.S. Congress, and the sooner the 
     better.
       Already some dangerous ideas about the trade pact are afoot 
     on Capitol Hill. The longer the agreement remains unratified, 
     the more vulnerable it will be to protectionist pressures.
       Administration officials insist they will do everything 
     necessary to ratify the pact, the fruit of seven years of 
     arduous negotiations in the Uruguay Round. They say that 
     President Bill Clinton is fully committed to the cause.
       But it is not clear the administration has learned the 
     lessons of last year's near-fiasco over the North American 
     Free Trade Agreement, saved only by a bout of last-minute 
     political arm-wrestling by Mr. Clinton.
       The administration's biggest mistake over NAFTA was 
     complacency--underestimating the opposition and leaving its 
     drive to win approval far too late. As a result, last-minute 
     waverers squeezed a lot of promises out of Mr. Clinton that 
     he would have been better off not making.
       This time there is much less organized opposition, but that 
     could change as November's mid-term elections draw closer.
       Congress is by no means yet committed to the Uruguay Round 
     and its schedule is already overloaded. The committees 
     responsible for the trade pact also happen to have 
     jurisdiction over the two biggest pending items of domestic 
     legislation--health care and welfare reform.
       Some major misconceptions need to be nipped in the bud. One 
     is that it does not matter if the implementing legislation is 
     put off until next year.
       Yes, it does. Delay will increase the chances of the pact 
     being blown off course--perhaps by a major new trade dispute 
     with Japan, China or even Canada.
       Another mistaken impression is that the agreement can still 
     be changed. Many Republicans think they can tighten up lax 
     rules on subsidies, while some in both parties are demanding 
     greater scope for unilateral U.S. action.
       The House Republican whip, Newt Gingrich, even wants to cut 
     out the part of the agreement establishing the World Trade 
     Organization, which he regards as a sinister organ of world 
     government that will ride roughshod over American interests.
       But U.S. agreement to the World Trade Organization was an 
     integral part of the Uruguay Round compromise. There is no 
     way of reopening the negotiations now. Under the fast-track 
     procedure in force for the treaty, Congress must in any case 
     vote ``yes'' or ``no'' on the whole pact at once.
       It is true the WTO means a loss of congressional 
     sovereignty. But that will be no bad thing if it clips the 
     wings of Capitol Hill's powerful protectionists. It will 
     actually be good for the United States to be overruled by the 
     world organization when Washington tries to take politically 
     motivated action against other countries' exports.
       Where the debate enters the world of Alice in Wonderland is 
     when it gets to how to pay for it all.
       Under U.S. budgetary rules agreed in 1990, Congress must 
     find ways to offset the revenue lost from the Uruguay Round 
     tariff cuts, which could amount to nearly $14 billion over 
     five years or perhaps $40 billion over 10 years.
       With the elections approaching, nobody wants to propose new 
     taxes or spending cuts to bridge the gap. But nor does anyone 
     want to suggest a waiver from the rules and set a precedent 
     that opponents might exploit later on--the Democrats for 
     health care or the Republicans for cuts in the capital gains 
     tax.
       The whole thing is absurd. In the next five years the 
     government is likely to collect about $3 in revenue for every 
     $1 lost in tariffs, because of vastly increased trade.
       It is ridiculous to impose a budgetary penalty for freer 
     trade, which pays for itself many times over. Congress should 
     be brave enough to admit it has made a mistake and exempt 
     trade agreements from the rules.
       The main thing for Congress to remember is that agreements 
     to open up world trade are never perfect, but the United 
     States has always benefited from them.
       Mr. Clinton should remember that his decisive support for 
     NAFTA won top marks even from his critics as the high point 
     of his first year in office. It is time for a repeat 
     performance--preferably without the cliff-hanging finale.
  Mr. THURMOND. Madam President, I yield the floor.
  The PRESIDING OFFICER (Mrs. Murray). The Senator from Nevada [Mr. 
Reid].
  Mr. REID. Madam President, I wish to use the time of the opponents of 
the motion, and I ask unanimous consent that my statement appear as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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