GATT's World Trade Oppression

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Double-speak Sales Job

WTO proponents have adopted a double-speak strategy to sell the global agreement to Americans, telling business groups on the one hand that the WTO will have enough "teeth" to protect U.S. copyrights and trademarks abroad while on the other hand claiming that the WTO would not be empowered to change the laws of nations or states. House Republican Research Committee staffer William Hawkins relates an example of this strategy that was employed by United State Trade Representative Mickey Kantor:

Kantor tries to have it both ways. He says in a letter to Sen. Jesse Helms, "Under the new system, when a panel rules in our favor, we will be able to count on approval for U.S. trade retaliation." But in the very next paragraph he says, "In the event that the U.S. loses a dispute ... Panel reports, whether adopted or not, would not have any binding force under U.S. law." Yet later, Kantor says that "the new dispute settlement procedures will prevent countries from blocking adverse panel reports." Does Kantor really believe that the WTO can never be turned against the U.S.?

The truth is that the WTO bureaucracy would have sufficient power to pressure nations to change their domestic laws. WTO was designed to eliminate a nation's option to ignore GATT dispute panel rulings, as the United States had done in an August 1991 case. That case involved a U.S.-Mexico trade dispute over an importation ban of tuna into the U.S. which had been caught in nets that endanger dolphins. The U.S. Marine Mammal Protection Act prohibits the domestic sale of fish caught in nets which are not "dolphin friendly," and Mexico complained that U.S. environmental regulations unfairly discriminated against their fishing industry. A GATT panel ruled against the United States, arguing that the U.S. government could not regulate how fish imported into its territory are caught. The United States promptly ignored the GATT Panel ruling, continuing its ban of tuna from Mexico.

Such disregard of a GATT panel ruling would be totally unacceptable under the new WTO. A similar ruling against the U.S. would leave the United States three deleterious options: overturn the offending law, pay tribute to the complaining nation(s) in the form of monetary compensation, or face retaliatory action from those nations. As Senator Jesse Helms (R-NC) argued on the Senate floor on July 13th, "The fact is, the United States will face serious consequences if we ignore a WTO decision. If we refuse to change our law, then we will face trade retaliation from the winning country. Retaliation is a nice word for a trade war. The only other alternative is to settle the case by paying the winner some kind of compensation -like money -- which comes from the taxpayers' pockets .... If we want to maintain U.S. laws that the WTO finds are illegal, will we face a trade war? How much money will the United States have to pay to settle a case to avoid a trade war? Are we prepared to pass those costs along to the American taxpayer?"

Beer War

Another case which demonstrates the danger to U.S. national sovereignty involved a GATT dispute panel decision issued in February 1992 following a challenge by Canada of U.S. federal and state laws on the taxation of beer. Among the laws which the panel ruled as illegitimate under the existing GATT provisions was a Minnesota law which offered lower tax rates on smaller brewers, the so-called "micro-brewers." Unlike laws in Wisconsin, New York, Michigan, Ohio, and Pennsylvania, which linked the tax breaks to local production, Minnesota's law merely offered a lower tax rate to smaller brewers regardless of where the beer was brewed. As Dan Bucks of the Multistate Tax Commission explained before the U.S. House Subcommittee on Trade in February of this year, "Minnesota offers favorable excise tax treatment for micro-brewery production that is conditioned only on the size of the brewery and is completely neutral with respect to the national origin or location of the brewery, its products or its inputs."

Although the United States was largely able to ignore the GATT panel findings under the current nonbinding system whereby international sanctions can only be imposed upon a nation with consensus, the new WTO provisions would allow for the imposition of sanctions by the complaining nation after a WTO Dispute Resolution Body ruling. Bucks concludes that an empowered WTO could create "tax benefits in states for foreign breweries that no U.S. brewery could obtain in the U.S. court system."

Senator Jesse Helms observed that under the WTO "dozens or perhaps hundreds of state laws could be attacked by foreign countries. As a matter of fact, the European Union issued a book entitled Report on United States Barriers to Trade and Investment. This report contains 111 pages of Federal and State laws that the EU claims are barriers and that the Europeans may challenge in the WTO."

Letter to the President

It was this threat to the sovereignty and autonomy of the states and localities in the United States which caused Michael Carpenter, Attorney General for the State of Maine, to send a letter on July 6th to President Clinton requesting a federal-state summit on the WTO. The letter, co-signed by 41 other state Attorneys General, expressed concern over the integrity of state laws under GATT and potential federal mandates that states change their laws.

Carpenter's concerns are well-founded. Article Seven of the Agreement on Technical Barriers to Trade outlines "Procedures for Assessment of Conformity by Local Government Bodies." This article would require nations like the United States to "formulate and implement positive measures and mechanisms in support of the observance of the provisions [of the agreement] by other than central government bodies." Translated from bureaucratese, that means the federal government would be required to browbeat states into complete conformity with GATT -- as the WTO interprets the agreement.

U.S. Trade Representative Mickey Kantor's response to Carpenter confirmed the worst. Kantor wrote that "we cannot guarantee that we will never urge a State to change laws that violate a Uruguay Round Agreement .... Workers and firms in every State will be counting on the new agreement to open foreign markets for them. Thus, we need to ensure that other governments follow our example and take their commitments seriously in the event we succeed in challenging their laws. The State and Federal Government may decide in a particular case not to change a law, but we should recall that the cost of any trade sanctions that may result from that decision won't be borne by either the State or Federal Government." Kantor's statement is a blatant admission that the federal government will accelerate its assault on states' rights, and his reference to the cost of sanctions resulting from a WTO decision in favor of a foreign country is a confirmation of the mighty form of executive power that would be wielded by the WTO.

Former HUD Secretary Jack Kemp also has pushed the Uruguay Round with deceptive double-talk. While stating in his June 1994 Jack Kemp Letter that "the World Trade Organization will have absolutely no legislative, executive or judicial authority," in the next paragraph Kemp boasted about how WTO's "arbitration process will force countries to the negotiating tables ... [and] subject agriculture to international trade rules for the first time...."

Kemp and other WTO proponents take an absurdly narrow view of national sovereignty. They seem to be implying that because six divisions of UN Blue Berets will not be dispatched to Wall Street or Silicon Valley to enforce WTO Dispute Resolution Body rulings the United States will retain its national sovereignty. But as lawyer and Washington Times columnist Bruce Fein explains, "Sovereignty is not maintained simply because a nation retains a choice between specific compliance with an international demand or an economic detriment .... Justice Joseph Story explained that sovereignty is the 'power to do everything in a state without accountability.'"

Vast Powers

The new WTO would have powerful legislative and judicial authority as well as a form of executive power. Article IX, Section Two of the WTO Agreement clearly states: "The Ministerial Conference and the General Council shall have the exclusive authority to adopt interpretations of this Agreement and of the Multilateral Trade Agreements." This is no small grant of legislative power, considering the fact that the Multilateral Trade Agreements encompass more than 26,000 pages. And note the word "exclusive" in the stated authority to adopt interpretations. No longer would the authority to interpret the lengthy and ambiguous trade agreement rest in the hands of the U.S. government. Pending congressional approval of the Uruguay Round, GATT would mean what the Ministerial Conference says it means. Using a one-nation, one-vote system in which the United States is only one out of more than 100 votes, the new unelected international bureaucracy would be dominated by Third World socialist satrapies.

WTO interpretive decisions would serve as the functional equivalent of legislation, and could be overturned only by Ministerial Conference-approved changes in the text of GATT Multilateral Agreement itself. Interpretations could be adopted under the WTO agreement by a three-fourths vote of the member nations of WTO. Changes to most provisions of the GATT agreement itself could be proposed by two-thirds of WTO's Ministerial Conference, and would be binding for all nations when two-thirds of the membership accepted them. Article X, Section Four reads, "Amendments to provisions of this Agreement or of the Multilateral Trade Agreements ... shall take effect for all Members upon acceptance by two-thirds of the Members." This is a powerful legislative authorization. If the United States disapproved of any of the changes adopted or interpretations approved, the only recourse it would have would be to exit GATT entirely, and face the threat of global economic sanctions.

Although WTO proponents in this country have touted the three-fourths and two-thirds requirements as "safeguards" for the United States, congressional researcher William Hawkins explained in the July 1st Human Events that votes in global bodies have not traditionally favored the United States: "Two-thirds of the prospective WTO membership (83 states) voted against the U.S. in the U.N. General Assembly on at least half the votes taken during 1993. Seventy-four GATT members voted two-thirds of the time or more against the U.S. in 1993; 52 GATT members voted three-fourths of the time against the U.S. in the U.N. in 1993."

The judicial power of the World Trade Organization would be formidable. Cases of violations of the 26,000 pages of Uruguay Round provisions, as interpreted by the WTO Ministerial Conference, would be adjudicated by the Dispute Settlement Body (DSB). Article Two of the "Understanding on Rules and Procedures Governing the Settlement of Disputes" states that "the DSB shall have the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorize suspension of concessions and other obligations under the covered agreements."

All DSB panel deliberations would be kept secret from the public, as would any sources of information given to DSB panelists. Even the authorship of DSB written decisions would be kept anonymous under provisions of Article 14. The rulings of these secret panels, if upheld by the standing DSB Appellate Body, would be binding upon all nations.

If a panel decided that a nation had violated a provision of GATT, then it could rule that the transgressing nation must remove the offending domestic law or pay a monetary penalty to the victorious nation. If compensation were not forthcoming or the violation not corrected, then the DSB could authorize the complaining nation or group of nations to impose sanctions against the losing party to the dispute. There would be no appeals from the Appellate Body of the DSB on the national level, effectively making the WTO a supreme court of world trade.

Social Agenda

Article XI, Section Two of the WTO agreement lays out the double-standard which GATT imposes on the United States and the West: "The least-developed countries recognized as such by the United Nations will only be required to undertake commitments and concessions to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities." In other words, Third World nations that dominate the voting in the Ministerial Conference -- the official interpreters of the agreement -- would have one set of rules for their nations, and another set to apply to the United States and the West. The preamble for the GATT "Agreement on Agriculture" also stipulates a double-standard, issuing goals for "having regard to non-trade concerns, including food security and the need to protect the environment; having regard to the agreement that special and differential treatment for developing countries is an integral element of the negotiations .... "One example of this double-standard within the text of the main body of the "Agriculture Agreement" is the provision which would allow "developing nations" to maintain twice the level of agricultural support programs as the United States and other Western nations.

The first sentence of the preamble of the "Agreement Establishing the World Trade Organization" lays out an ambitious social agenda considering that GATT's proponents are supposedly selling the Uruguay Round as a mere trade liberalization agreement. The agreement suggests regulating international trade as a mechanism for "raising standards of living, ensuring full employment ... while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development...." So instead of promoting trade liberalization, the WTO's first self-described mission would be to regulate global trade to promote jobs for everyone in the world, help the poor, and save the environment.

The Multilateral Agreements contain hundreds of references to non-trade issues, including the creation of a standing committee under the WTO to meddle in environmental issues -- the Committee on Trade and the Environment. But this committee is merely the tip of the iceberg, because environmental activists are mobilizing to "green GATT." The Clinton Administration has already all but promised to help get an environmental round of GATT negotiations started.

Conservatives must realize that the best means of avoiding adoption of an upcoming green round of GATT later is to kill the WTO now. If GATT is adopted this fall, the coming green round would have the unified support of the green left, organized labor, the office of the President, and the majority of the Democratic leadership in Congress. Currently the number of liberal environmentalists and Democratic protectionists who have come out in opposition to the WTO, if combined with the unified votes of conservative congressmen, is enough to kill GATT in Congress this fall. All who love American independence should urge them to do just that.


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