US Congress Dims Future of GATT

THE showdown in Washington over the new world trade pact may look like a domestic squabble, but the outcome will have a broad international impact.

Fighting for congressional passage of new rules governing world commerce - the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) - the Clinton administration is up against protectionists, environmentalists, and labor activists who see the consensus reached among 123 nations as greatly compromising United States interests.

Their opposition threatens to derail the Jan. 1 start-up date of GATT's successor - the new World Trade Organization (WTO), which was set up to monitor a freer flow of trade and investment and arbitrate disputes between participating countries.

The prospect of the delay may discourage the scores of other signatories - including most of the industrialized world - that have not yet ratified the accord in their own legislatures. To date, less than a fifth of GATT's members have given their formal and final seal.

A senior White House official cautions that a holdup in the US will could trigger a negative trend worldwide: ``If [the other 122 GATT members] see us waiver, they might want to get out of commitments they have already made.''

Virtually all GATT members have their own home-grown GATT detractors who have sent some powerful messages to their governments.

Among the most effective: enraged French farmers who drove their tractors onto the congested streets of Paris to protest plans to lift government agricultural subsidies among GATT members. Their political pressure established a rejectionist French position that many European observers say held up the multilateral trade negotiations far beyond the scheduled date for completion.

But the farm-subsidy issue and a host of others have long been debated. Over the years, policymakers have often chosen to proceed with a deal that compromises national interests rather than wind up with no deal at all.

The pursuit of free trade has been around for almost 50 years. Founded in 1948 as part of the transatlantic postwar economic reconstruction effort, the GATT was rooted in a US-British agreement to lower US tariff barriers and reduce Britain's trade preference for Commonwealth countries. The two countries were also determined to draw other countries into this arrangement.

Since then, delegates from different countries have been thrashing through a series of negotiating rounds, producing a succession of accords. The US was the most aggressive initiator of these discussions; its goal was to engage as many countries in free trade as possible.

Today, the newest GATT agreement is the culmination of seven years of negotiations on the widest range of goods and services ever. To date, 123 countries representing 97 percent of world trade plan to participate in the WTO.

The new GATT rules will effect dramatic changes over the next decade:

* $744 billion in tariffs cuts.

* The reduction or elimination of lavish subsidies for goods ranging from airplanes to agriculture.

* A systematic crackdown on piracy of intellectual property, from motion pictures to computer software.

Widely recognized as the leading proponent of the accord, US support is essential for international acceptance of the new trade regime.

For President Clinton, it's a question of credibility. He defines timely passage of the GATT in terms of ``our global leadership.''

Clinton and his top economic advisers worry that a failure to pass GATT on Capitol Hill this year will weaken Washington's position in other multilateral contexts, including November's Asia Pacific Economic Cooperation in Indonesia, and December's gathering of North American, Caribbean and Latin leaders at the Summit of the Americas in Miami.

FOR GATT opponents, any delay means opportunity. Jacqueline Grapin, president of the Washington-based European Institute say: ``France is pushing hard [to move the accord through its parliament] because it realizes that if GATT is not ratified in the US, that's added momentum for agriculture groups and others who oppose it.'' The longer it takes for a formal US endorsement, the greater the opportunity for Europe's anti-GATT minority voice to be heard.

Some, such as European Parliamentarian James Goldsmith, who argues that the world economy will be dominated by low-cost labor and environmentally degrading urbanization, draw support from industrialized and developing economies alike.

Even a critic like Sen. Ernest Hollings, the South Carolina Democrat who is leading the anti-GATT charge in Washington, has international appeal. His defiant question - if ``GATT is so good,'' why is the US working for a better bilateral trade accord with Japan? - points to the inadequacies of the multilateral agreement.

GATT leaves sections of the world economy virtually untouched (services - including banking and insurance - are largely uncovered) and major countries (China and Russia, for example) are still excluded from the pact.