A rare lame duck session of Congress last week was debating the most significant U.S. trade treaty since World War II.
The issue was whether to expand the General Agreement on Tariffs and Trade (GATT) into a new World Trade Organization (WTO) that would have broad powers to reduce tariffs globally.
The House of Representatives approved GATT 288-146, a much wider margin than was expected.
NEXT STOP: THE SENATE
House approval was a good omen for approval in the Senate, where the vote is expected to be closer.
A simple majority of senators appears to favor GATT, but 60 votes are needed because the agreement would reduce U.S. tariff revenues. It thus requires a waiver of the Senate's budget rules.
U.S. Trade Rep. Mickey Kantor said the House vote gave GATT some needed momentum for the Senate. "We believe we will win. But we're not taking anything for granted."
Senate passage would not be possible had President Clinton not struck a deal with minority leader Robert Dole (R-Kan.), who is due to lead the Senate next year.
Opponents had complained the 124 nation WTO could override U.S. tariffs in a way that violated the nation's sovereignty and threatened its economic destiny.
Clinton and Dole agreed to support a bill next year that would create a commission of five retired federal appeals judges to review WTO decisions on trade disputes affecting the U.S.
If the judges determine WTO panels had exceeded their authority or acted arbitrarily three times within 5 years, any member of Congress could call for a vote to withdraw from WTO.
Dole called it the "three strikes and we're out" rule.
The GATT revision is a set of rules designed to guide trade practices, prevent trade wars and reduce trade barriers worldwide.
Member countries agree to maintain the same tariff level for any product. So if the lowest tariff on a particular product is 4%, the tariff on that product coming from any other member county must also be 4%.
The pact also lowers barriers to trade in computing, construction, engineering, and information services.
A DECISION
Congressmen had to decide whether the prospects of more U.S. exports if GATT were passed - backers claimed it would boost the U.S. economy $122 billion/year - outweighed the risks it would pose to certain U.S. industries, particularly agriculture and textiles. Either position was hard to quantify.
Clinton lobbied Congress hard for passage. He invited uncommitted congressmen to the White House and made numerous phone calls.
If Congress approves GATT it will prove two things.
Although the 103rd Congress had few important achievements, it can lay claim to two landmark trade laws: GATT and the North American Free Trade Agreement.
And it will prove that Clinton has the aptitude and the attitude he will need to work with the Republican controlled 104th Congress next year.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
