Newer Trade Pact More Appealing to Business

Less Limited GATT Would Give High Tech Export Boost to High Tech

Like sumo wrestlers bulking up for the main bout, Washington-based pressure groups, industry associations, trade unions, foreign lobbyists and consumer watchdogs are readying for a congressional battle over the updated General Agreement on Tariffs and Trade.

Top administration officials, including President Bill Clinton, have already stepped into the ring, arguing that the new GATT -- and the new international trade watchdog, the World Trade Organization, or WTO -- will boost the U.S. economy, and that industry officials should lobby Congress for its approval by the end of October.

The agreement "cuts taxes on our products overseas, so we can sell more there and create more jobs here in the United States. Consumers win, American workers win, and American business wins," according to a May 11 statement by Treasury Secretary Lloyd Bentsen. More specifically, high-tech companies would be winners, benefiting from the agreement's increased international protection for intellectual property rights, without which a company's critical secrets, software techniques or copyrights may be stolen. The newer GATT, signed April 15 by 117 countries, is less limited than its predecessor, and seeks to boost international commerce by lowering tariff and other government-imposed barriers to trade in cars, agricultural produce, high-tech items and other products.

Although U.S. officials have already bought off on the international GATT agreement, Congress must approve a matching agreement that will make the GATT's regulations part of U.S. law. While some groups are trying to derail the agreement, a variety of others are seeking to have Congress approve a version most favorable to their interests. For example, the Washington-based Electronic Industries Association supports the GATT, and wants Congress to ensure the agreement protects intellectual property, said Kevin Shannon, the association's expert on international trade.

The pro-WTO Alliance for GATT Now claims $200 billion would be added to the U.S. economy every year by the agreement. However, critics say it may only yield a miniscule gain of $7 billion over the next decade.

This debate reflects a controversy over how the government should make up the $14 billion revenue expected to be lost over the next five years because of tariff reductions demanded by the WTO. Solutions include raising taxes, cutting spending on other government programs or deferring costs until later years.

Although it represents but a fraction of the government's $1,500 billion annual budget, the revenue issue threatens existing programs favored by many in Congress, and provides an opportunity for opponents of the GATT agreement to slow its progress.

For example, a letter sent to Clinton from 55 representatives headed by Rep. Lane Evans, D-Ill., urged a postponement of congressional action on the agreement. "Available funds should go to health care, while [the agreement] may be considered in next year's budget.," said the April 28 letter.

The letter was endorsed by the Citizens Trade Alliance, a Washington-based coalition of environmental, consumer, agricultural, and public interest groups formed to derail the GATT agreement, said Jane Danowitz, the group's executive director. "There is no reason to rush to judgment" on an agreement that will have profound impact on the United States, she said.

For the alliance, the main concern with the agreement is that it will undermine U.S. laws intended to protect the environment and consumers, as well as textile workers and farmers facing cheap imports, she said.

Danowitz's position that the agreement will undercut U.S. sovereignty was echoed by the Washington-based U.S. Business and Industrial Council, a coalition of small and medium-sized component manufacturers which has established a task force called Save Our Sovereignty.

Once GATT's WTO is established, U.S. officials will be outvoted in debates by the many poor and technologically backward countries who make up the bulk of the WTO's membership, perhaps weakening U.S. "right-to-work" laws, council spokesman Bryan Little said May 12.

"Right-to-work" laws are opposed by U.S. unions, who say they restrict their membership.

Rep. Newt Gingrich, the influential Republican whip from Georgia, echoes the geopolitical fears. "Will we be ganged up on by [more numerous] resentful countries?" asked Gingrich spokesman Tony Blankley. This issue, plus the prospect that the WTO would be used by Clinton to bypass Congress on some critical trade-related issues, has kept Gingrich undecided on whether to support the agreement, he said.

To counter fears the WTO would damage U.S. sovereignty, the Washington-based American Bar Association sent a letter May 5 to Congress saying "the United States will benefit significantly [from the agreement] with no adverse impact on U.S. legal powers or sovereignty."

The sovereignty concern will soon wither, according to Bob McNeill, a spokesman for a pro-WTO group, The Emergency Committee for American Trade. The Washington-based group, whose members include large export-oriented firms selling finished products such as aircraft, wants Congress to approve a GATT agreement that matches the terms of the international charter "as faithfully as possible," he said.

In contrast, the Committee to Support U.S. Trade Laws, also based in Washington, wants Congress to approve an agreement that bolsters U.S. anti-dumping laws designed to prevent firms selling items below cost, according to Michael Maibach, director of government affairs for Intel Corp.

The firms in the committee are vulnerable to dumping by large-scale consortiums, who can cover the cost of dumping by subsidies from profit-making parts of the consortium, he said.

The coalition includes a variety of firms such as Intel and Motorola Inc. builders of specialized intermediate items -- semiconductors, steel, and machine-tools -- that are built into final products, Maibach said.

Maibach's argument is reflected by the Congressional GATT Task Force, headed by Rep. Norm Mineta, D-Calif., and Rep. Ralph Regula, R-Nev., who have introduced legislation designed to bolster anti-dumping laws.

Such concerns over dumping are not important to companies that assemble other companies' components into finished products, said an industry official. Such final-assembly companies can even benefit from dumping, in fact, since the market becomes flooded with low-cost components, he said.

But Sen. John Danforth, R-Mo., argues that the GATT allows foreign countries to create trade barriers to U.S. goods in reaction to the Clinton administration's technology-boosting spending plans.


Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Our databases track awards back to 2013. Read More

  • Navigating the trends and issues of 2016 Nick Wakeman

    In our latest WT Insider Report, we pull together our best advice, insights and reporting on the trends and issues that will shape the market in 2016 and beyond. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.