Putting Spin on GATT

A delay in approving the agreement next week could cost the high-tech industry millions in intellectual property infractions

hile failure this week to ratify the Uruguay Round pact under the General Agreement on Tariffs and Trade could cost U.S. industry billions of dollars in existing trade barriers, high-tech industry is mounting an aggressive campaign to tell lawmakers even more could be lost if no one finds a solution to intellectual property rights abuses in global markets.

A delay in GATT this year would mean that "trade-related intellectual property rights (TRIPs) would be postponed for an additional year," said Scott Chalfont of the American Electronics Association. Losses from piracy due to ineffective TRIPs has cost U.S. companies $15 to $17 billion in 1992, he said.

The software industry alone absorbs more than $12.8 billion in losses every year because of piracy, according to the Business Software Alliance.

"Agreements like the GATT and NAFTA are critical in the fight against piracy, and obviously we would like to see the GATT agreement approved by the over 116 signatory countries," said the BSA's Diane Smiroldo.

"What the GATT agreement would do is require all nations to protect intellectual property as a literary work, just as we do here in the United States," she said.

But ensuring global trading partners pass strong TRIP laws is only half the intellectual property battle. Megan Rainey of the Computer and Business Equipment Manufacturers Association said many of the worst TRIP offenders have strong laws on the books. The real problem is enforcement.

Existing domestic laws of signatories would be strengthened by the GATT agreement but, for the first time in trade history, a multilateral body - the World Trade Organization - would examine complaints of lax enforcement, and rally global pressure on offending countries.

Beyond the TRIP issue, Washington's high-tech establishment is urging Congress to pass the treaty by touting some of its more broadly publicized benefits.

The Information Technology Association of America, a trade association of more than 5,000 companies in the computer software and services industry, favors GATT and is telling legislators to vote for the treaty because it dramatically reduces tariffs on U.S. products worldwide, including computers, peripherals and parts.

"Once it is implemented fully, the Uruguay Round is expected to increase the U.S. gross domestic product by as much as $200 billion a year, and the new tax revenue generated from increased economic activity will more than offset the temporary revenue losses of the beginning," said the ITAA's Carol Cayo.

Similarly, the BSA is preparing to inundate Congress with the benefits GATT provides its constituents.

The GATT votes in the House and Senate, set for the week of Nov. 28, are expected to be close.

"The question is in the Senate," says Eric Thomas, spokesman for the Alliance for GATT Now. The Senate needs 60 votes to pass a budget waiver that will allow the country to absorb short-term losses from reduced tariff revenues.

"That is where our opponents will have their best opportunity to kill the GATT. We feel it will allow people to vote against GATT without going on record. It will go down to the wire...within a couple of votes either way," Thomas says.

Sen. Jesse Helms (R-N.C.), as the new Senate Foreign Relations Committee chairman, is anxious to play spoiler for the Clinton administration's foreign policy.

He argues that GATT surrenders sovereignty to WTO, although his office admits there are important constituents to be harmed by the treaty. "We are cognizant of the gains by some sectors of the economy," said a spokesman for Helms. "However, others definitely lose. According to the ITC, the textile, apparel and some of the agricultural sectors are going to lose."

Incoming Senate Majority Leader Bob Dole (R-Kan.) is also using the GATT vote to rattle his saber.

In recent public statements, Dole has tied his support to a reduction in the capital gains tax while simultaneously expressing a desire to limit U.S. trade policy exposure to the WTO's jurisdiction.

Ironically, Helms and Dole are finding themselves at odds with the

intellectual leadership of their own Party. Said Claude Barfield of the American Enterprise Institute, a conservative think tank: "Most economists here are very much in favor of GATT going through. I personally think that Dole is up to great mischief."

While Barfield buys into Dole's desire for a reduction in the capital gains tax, "the whole business of asking for a commission to review WTO decisions is a very bad idea and it is very irresponsible," he said.

"There is nothing wrong with the U.S. reviewing its position on any treaty. But the specific things that I understand he is pushing - like if the WTO decisions go against us three times, the U.S. might get out - is really hypocrisy. It is like saying that we will take our marbles and go home if things don't go our way," he said.

"I can't believe that the Republicans, particularly Gingrich, are so stupid as to put the rest of their agenda on hold. If they have to deal with the GATT in January, then they will have to put off their 'Contract with America,' " he says. "It is in their political interest to get GATT out of the way."

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