[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           GATT: A FACT CHECK

  Mr. HOLLINGS. Mr. President, On Wednesday, October 5, Ambassador 
Mickey Kantor appeared before the Committee on Commerce, Science, and 
Transportation to testify on the Uruguay round of the General Agreement 
on Tariffs and Trade [GATT].
  I have been friends with Ambassador Kantor for over 20 years, and we 
continue to be good friends. But he and I draw different conclusions 
about our trade policy, and about the direction of our economy. 
Ambassador Kantor was very generous with his time on Wednesday, but due 
to the large number of Senators in attendance at the hearing, I did not 
have time to fully debate every point with him. Today, I would like to 
outline some of the differences of opinion I have with the Ambassador 
based on his testimony.
  First, sovereignty. Ambassador Kantor claims that our sovereignty is 
``more protected under the Uruguay round and this implementing 
legislation than it has been for 47 years.'' I wholeheartedly disagree 
with this assessment, and in fact I think it is a very dangerous and 
misleading assessment.
  Ambassador Kantor claims that our sovereignty is protected because 
section 102 of the implementing bill provides that no provision of the 
Uruguay round nor the application of it that is inconsistent with any 
law of the United States shall have effect. That is just palaver. The 
dispute resolution panels under the World Trade Organization [WTO], 
meeting in secrecy in Geneva, will not care one hoot about what section 
102 of our implementing bill says. A WTO panel can declare our Federal, 
State, and local laws inconsistent with the rules of GATT, and--unlike 
the current GATT regime--there will be two powerful incentives for the 
United States to change our laws. First, we will no longer be able to 
block a panel decision because under the new WTO rules there must be 
consensus to block a decision. And since the United States is always 
the good Boy Scout of the world, we know that there will be strong 
political pressure to fall in line with whatever the WTO says. Second, 
the new WTO rules will authorize cross-retaliation, so that, for 
example, if another country brings a successful challenge against a 
U.S. environmental regulation, that country can retaliate against U.S. 
intellectual property. We all know that the result will be a massive 
lobbying effort by the U.S. intellectual property industries to lobby 
the Congress to weaken environmental laws.

  The pressures to change our laws are great even under the current 
GATT rules, despite our current ability to block panel reports and 
despite the current unavailability of cross-retaliation under GATT 
rules. I happen to be chairman of the committee that authorized the 
Marine Mammal Protection Act [MMPA], and I am well aware that there 
were voices within the current administration arguing that the United 
States should amend the MMPA to conform to the two GATT panel decisions 
finding it GATT-illegal.
  In further defense of the WTO, Ambassador Kantor points out that the 
first sentence of article IX of the WTO rules says that the WTO will 
operate by consensus. He needs to read a little further, because the 
second sentence provides that, ``where a decision cannot be arrived at 
by consensus, the matter at issue shall be decided by voting.'' Here is 
where I have tremendous concern over the procedures of the WTO. The WTO 
will be a commercial United Nations, with each of the 117 nations 
having one vote. But unlike the United Nations, where the United States 
has veto power in the Security Council, the United States will have the 
same voting power as Cuba, or Sri Lanka, or Macau. In other words, 
Castro's vote cancels out our own vote. Furthermore, over half of these 
117 nations have voted against us three quarters of the time in the 
United Nations.
  Second, manufacturing jobs. Ambassador Kantor stated before our 
committee that the number of manufacturing jobs in the United States 
has increased over the last 11 months. This is a very clever way for 
him to put it because the truth of the matter is that we have fewer 
manufacturing jobs today than when President Clinton took office. In 
January 1993, we had 18,094,000 workers in manufacturing; the latest 
figures from the Bureau of Labor Statistics show 18,077,000 in 
manufacturing.
  More important is the long-term decline in manufacturing jobs. Since 
1960, our manufacturing sector has dropped from 26 percent of our work 
force to 16 percent. And when we passed the last round of the GATT, the 
Tokyo round in 1979, we were promised a great renaissance of American 
industry, but instead we have lost 3.2 million manufacturing jobs and 
have racked up a total trade deficit of $1.4 trillion.
  As President Clinton himself has said, ``most people's wages aren't 
going up because they're set in a competitive global economy.'' That's 
couching it in soft terms. Most working Americans have seen their wages 
decline by about 20 percent in real terms over the past 20 years. Worst 
of all, the gap between the rich and the poor in the United States is 
the widest documented since the Census Bureau started keeping these 
statistics following World War II. During the 1980's, the incomes of 
the richest 1 percent of Americans grew 63 percent, while the bottom 60 
percent of families experienced a decline in income. These are the 
devastating effects of deindustrialization.
  Third, the CAFE decision. If you picked up a newspaper in Europe last 
Saturday, you would have read that the United States lost the case 
before a GATT panel on our corporate average fuel economy [CAFE] 
standards for automobiles. However, the headlines in the United States 
read that we won. Why? Because the office of the U.S. Trade 
Representative did not release the decision to the public until it had 
done a snow job on the members of the press corps, who evidently didn't 
care to take time to read the opinion themselves.
  Our fuel efficiency standards, which save the Nation some 2.5 million 
barrels of oil each day and save consumers some $40 billion per year in 
gasoline costs, apply equally to U.S. and foreign car manufacturers. 
Nevertheless, the Europeans challenged our CAFE laws at the GATT, 
claiming that they discriminate against their less fuel-efficient cars. 
Despite what U.S.T.R. says, the GATT panel severely weakened our CAFE 
laws by finding that the method used to calculate penalties is 
discriminatory and therefore GATT-illegal. And while Ambassador Kantor 
downplayed the importance of adverse GATT decisions before the Commerce 
Committee by saying that the tuna-dolphin case would have cost us only 
$250,000, I would like to point out that fines against the United 
States for our CAFE law could run over $291 million, and we all know 
that Japanese manufacturers already have expressed their intentions to 
challenge under the WTO any future United States policies designed to 
increase CAFE standards.

  Fourth, effect of delaying GATT. I am flabbergasted to hear 
Ambassador Kantor report that the Department of the Treasury claims 
that delaying implementation of GATT in the Congress will cost us $70 
billion in economic growth. How can that be when no other major 
industrialized country in the world has ratified GATT? How can this be 
when the World Bank's estimate of GATT's increase to U.S. GNP is $160 
billion over 10 years? Does Secretary Bentsen really believe that we 
will lose $70 billion of that $160 billion in the next few months--
months in which no country is even obligated to implement the Uruguay 
round? And let me remind Ambassador Kantor and Secretary Bentsen that 
the $160 billion figure has been termed overly optimistic by most 
economists--even the pro-GATT economists. The Institute for 
International Economics has estimated the gains of GATT to be $42 
billion over 10 years, while the Economic Policy Institute projects a 
lower gain of $7 billion over 10 years. The wizards at Treasury somehow 
get a 70 billion dollar loss out of this before any major country 
ratifies GATT--and, of course, it is all the fault of Congress because 
we have decided to take the time guaranteed to the congressional 
committees under fast track to examine the 641 pages of the 
implementing bill and the 455 pages of the statement of administrative 
action. Instead of fast track, the administration wants instant track.
  Fifth, the stock market. Before our committee, Ambassador Kantor 
attributed Tuesday's drop in the stock market to rumors that the House 
would delay a vote on the GATT. This interpretation was contrary to 
every news analysis I heard, each of which attributed the drop to 
inflation. Furthermore, I would like to point out that the day I 
announced that the Committee on Commerce would hold the GATT 
implementing bill for its full 45 days, the stock market rose 14 
points. And the market dropped precipitously last month upon release of 
figures from the Department of Commerce indicating that the United 
States is racking up its largest yearly trade deficit ever.
  So I could well draw conclusions opposite of those of Ambassador 
Kantor on what is important to Wall Street. Perhaps the more important 
point is that by engaging in this sort of debate, we only encourage 
Wall Street to act on the rumor of the day. Our debate about GATT 
should be about the long-term economic interests of this country and 
not about unfounded temporary jitters of Wall Street.
  Sixth, GATT as a ``tax cut.'' The administration has characterized 
the GATT as a $36 billion ``tax cut'' for Americans. Before our 
committee, Ambassador Kantor agreed that we would be more accurate in 
describing tariff cuts as decreases in costs to the consumer. The 
problem with this analysis is that it assumes that the savings will 
indeed be passed on to the consumer. My office is filled with clothes 
whose prices prove the consumer rarely gets the savings. Instead, the 
retailer gets to pocket the mark-up. For example, I have two identical 
women's jackets, one made in the United States where labor costs are 
around $8 per hour, and the other made in El Salvador where the labor 
costs are around 60 cents an hour. Yet both jackets cost $108. The 
retailers are pocketing the difference, sticking it to the consumer, 
and putting the consumer out of a job all at the same time.
  Seventh, textile exports. Ambassador Kantor may be correct in saying 
that textile and apparel exports have increased 7.58 percent for 1993 
and 1994, while imports have increased 4.45 percent. This is only half 
of the math problem, though. Since imports are at $36.07 billion while 
exports are at $10.3 billion, the truth is that imports are up $1.6 
billion while exports are up $781 million.
  A close analysis of apparel exports shows what is really going on in 
the global market. In 1993, the United States exported $4.9 billion of 
apparel. Of that, $143 million was simply reexports of foreign apparel. 
Of the remaining $4.8 billion, $3.1 billion consisted of exports of cut 
parts. In other words, the fabric was cut here and sent to low-wage 
countries to be sewn. Of the $1.7 billion of exports of finished 
apparel, over 95 percent went to Canada, Europe, and Japan. Only a 
paltry amount of $77 million went to the rest of the world.
  Eighth, the future of trade policy. Ambassador Kantor said on 
Wednesday, ``The definition of insanity is doing the same thing over 
and over again and expecting a different result.'' But that is exactly 
what we will be doing if we pass the Uruguay round. As Sir James 
Goldsmith testified immediately following the Ambassador, the WTO will 
continue the current policy and take it from a trot to a gallop. It 
will intensify the deindustrialization of the United States by making 
it even easier for U.S. manufacturers to move off-shore. And it will 
not open new markets for the United States to the extent claimed by the 
administration because the GATT is structured on an Anglo-American free 
market system while there is a whole other world out there operating 
under a different economic system. The GATT will knock down United 
States tariffs and subsidies, while leaving intact the structural, 
nontariff barriers favored by Japan and other competitors. Case in 
point: If the GATT is so great, why do we need a new bilateral trade 
agreement with Japan? It is time to abandon our current high-minded, 
self-sacrificial free trade policy and unabashedly rebuild the 
industrial strength of this Nation.

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