[Congressional Record Volume 141, Number 1 (Wednesday, January 4, 1995)]
[Extensions of Remarks]
[Page E2]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                                  GATT

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, January 4, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, December 14, 1994 into the Congressional Record.
                                  GATT

       Congress recently approved one of the most important--and 
     controversial--measures of 1994: the latest expansion of the 
     47-year old General Agreement on Tariffs and Trade [GATT]. It 
     is the most ambitious trade agreement in history.
       The agreement among 124 nations, negotiated over seven 
     years, will lower tariffs (import taxes) by one third, reduce 
     international subsidies for farm exports, strengthen 
     protections for patents and inventions, and take steps toward 
     regulating trade in services and investment. Congress held 
     dozens of hearings on the negotiations and passed numerous 
     measures to guide the Reagan, Bush, and Clinton 
     administrations in their pursuit of U.S. trade interests. 
     Last week both the House and the Senate passed GATT by 
     overwhelming margins. Dozens of Indiana manufacturers and 
     farm groups urged passage of GATT, while many other Hoosiers 
     expressed concern about protecting U.S. interests. The 
     intense debate on GATT focused on three main issues: the 
     impact of GATT on American jobs, on the budget deficit, and 
     on U.S. sovereignty.
                        Jobs and Economic Growth

       Many people have expressed concern about the impact of GATT 
     on U.S. jobs, yet the case for job growth under GATT is 
     strong. GATT commits 124 countries to reduce tariff taxes for 
     agriculture, services, and manufactured goods, with the 
     global savings totaling $744 billion over ten years. Since 
     the U.S. economy is already one of the fairest and most open 
     in the world, other countries will be reducing their tariffs 
     and restrictions much more than we will. The U.S. should be 
     the biggest winner under the expanded GATT, and the agreement 
     should give our economy a boost.
       Lower trade barriers and tariffs will save U.S. consumers 
     money and also create jobs through more exports and new 
     investment. The Council of Economic Advisors estimates that 
     within a decade GATT will boost U.S. economic output by $100-
     200 billion a year. GATT should directly benefit many Hoosier 
     workers. Indiana manufacturers will see a 33% reduction in 
     tariffs on their products. Distillers will benefit from lower 
     tariffs on U.S. spirits, and copyright protections will 
     outlaw counterfeit foreign products. According to the Indiana 
     Farm Bureau, Hoosier farmers can expect an additional $1.05 
     billion in income from GATT over ten years. Overall, GATT 
     could add $1,700 to the annual income of the average U.S. 
     family within a decade.


                            Budget Concerns

       Because the U.S. has agreed to reduce its tariffs by an 
     average of 1.6%, certain federal revenues will decrease. The 
     Congressional Budget Office estimates this loss will be $11.9 
     billion over the next five years. To offset it, the package 
     approved by Congress cuts spending in a number of programs, 
     charges fees for certain customs services and broadcast 
     licenses, and closes some tax loopholes.
       More importantly, GATT's impact on the economy--new jobs 
     and more exports--should create new federal income tax 
     revenue that greatly exceeds any reduction in tariff revenue. 
     GATT-related economic activity is estimated to reduce the 
     federal deficit by some $60 billion over the next ten years. 
     GATT is fiscally responsible.


                        World Trade Organization

       At the direction of Congress in 1988, U.S. negotiators 
     sought a stronger enforcement mechanism against unfair trade 
     practices. Under the new agreement, the World Trade 
     Organization [WTO] would replace the informal negotiating 
     group that has existed for almost fifty years. In the past, a 
     country with unfair trade practices could refuse to obey a 
     ruling and not lose benefits. Now, unfair traders have to 
     obey the rulings or face still consequences.
       The WTO would issue rulings on trade disputes concerning 
     goods, services, and intellectual property. For example, 
     Canada could file a complaint against Japan for unfairly 
     restricting Canadian wheat imports. If the WTO agreed with 
     Canada, and Japan refused to change its practices, Japan 
     would have to pay compensation or be subject to Canadian 
     trade penalties.


                              SOVEREIGNTY

       Many Hoosiers believe that any international trade council 
     should not infringe on U.S. sovereignty. I strongly agree, 
     and I worked hard to include strict safeguards in the package 
     to protect our sovereignty.
       First, GATT will continue to make nearly all decisions by 
     consensus--there has not been a vote in more than thirty 
     years. Second, the WTO cannot change any U.S. laws or 
     policies. Only Congress and the President can do that, and no 
     WTO ruling has any standing in U.S. courts. Third, we can 
     withdraw from the WTO at any time or pass legislation 
     overriding any part of GATT. With my support, Congress and 
     the President also agreed to create a special U.S. panel to 
     review WTO decisions. If this panel identifies three 
     unfavorable WTO rulings, any Member of Congress can demand an 
     immediate vote on withdrawing from the WTO. Finally, the 
     United States has the world's largest market and most 
     powerful economy. Other countries are not likely to impose 
     trade sanctions in WTO disputes for fear of getting into a 
     trade war with the U.S.


                       consequences of rejection

       Failure by the U.S. to ratify the agreement would have 
     meant an enormous missed opportunity and an abdication of our 
     international leadership. The U.S. dominated the 
     negotiations: how could other countries have confidence in us 
     if we failed to approve an agreement so beneficial to our 
     interests? Without this agreement, countries would erect new 
     trade barriers, and protectionism would rise. All of our 
     economies would suffer. Democratic reforms would slow, shaky 
     financial markets could boost interest rates, and world 
     stability--so closely tied to economic cooperation--could be 
     undermined.
       Of course, GATT is not perfect. As a trade agreement it 
     does not directly address important concerns such as child 
     labor or political freedom, but GATT does increase the 
     incentives for other countries to cooperate with us on these 
     issues. Overall compliance of other countries with GATT will 
     have to be closely monitored.


                               conclusion

       GATT should mean more secure, high-paying jobs for Hoosiers 
     and a better standard of living. The U.S. cannot afford to 
     pass up the economic benefits of GATT. The WTO should be a 
     strong advocate for U.S. interests while protecting our 
     sovereignty, and free and fair trade will continue to promote 
     peace and prosperity around the globe.
     

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