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General Agreement On Tariffs and Trade (GATT)


The General Agreement on Tariffs and Trade (GATT) was
created in 1947, GATT is an agreement between many nations
governing international trade. GATT provides a place for
negotiating trade issues and a framework for guiding the
conduct of trade. Current GATT membership includes one
hundred and twenty three nations. One of the major beliefs
behind GATT is that more liberalized trade would help the
economies of participating nations grow(Banks35). Some
other principles of GATT are nondiscrimination, what is
meant by nondiscrimination is that no member of GATT can
discriminate against other nations or show favoritism or
give any special priviledges to any nations. This allows
all trading partners to be put on an equal basis. A second
principle, tariff protection, favors the use of tariffs as
a clear way to protect domestic industries, as opposed to
nontariff measures such as import quotas. A third and final
principle behind GATT is providing a stable basis for
trade. This is acheived by binding all participating
nations to agreed upon tariff levels by listing, in "tariff
scheduales" the negotiated tariffs for each country's
products(Banks 35).
There has been eight conferences, referred to as rounds or
cycles of GATT, each of these rounds resulted in new trade
agreements. The most recent round is referred to as the
Uruguay Round because it was launched at a conference in
Punte del Este, Uruguay in 1986. These negotiations
concluded with the signing by more than one hundred
countries of the Uruguay Round "Final Act" in Marrakesh,
Morocco in April 1994. The Uruguay Round Agreement has been
described as the largest, most comprhensive trade pact in
history (Congressional Digest).
The United States had a number of objectives in entering
into the Uruguay Round of trade negotiations. These
included broadening procedures relating to trade in
agricultural products, extending GATT rules to trade in
services never before covered by GATT, increasing
protection for patents, copyrights, and trademarks, and an
improved way for settling disputes among GATT participants.
Most of the objectives that the United States brought to
the Uruguay Round were achieved. GATT was expanded to
include services and new areas relating to the protection
of patends and foreign investment. The Uruguay Round also
cut tariffs worldwide by about one third; coverage for
agriculture, textiles, and clothing was increased. And a
new World Trade Organization was created to administer the
agreement, oversee dispute settlements, and review
countries' trade policies and practices(C.D.).
Nations signing the agreement must have it approved by
their governments before they can be subject to its terms.
In the U.S. Congress consideration for the agreement is
taking place under the "fast track" procedure, meaning that
the House and the Senate must vote up or down on the
legislation dealing with the agreement, with no opportunity
to introduce or consider amendments (Boyer-Watzman 821).
Opponents are concerned that the United States may lose
more than it gains. They fear that the World Trade
Organization poses a threat to U.S. sovereignty in that the
United States may be forced to lower its environmental,
health, and safety standards to conform to global rules. An
example of this is that a Geneva based trade panel ruled
that the U.S. government must halt its boycott of tuna
caught with fishing methods that kill large numbers of
dolphins (821). The reason that something like this can
happen is that nations involved in the GATT are subject to
challenges of this sort as illegal trade barriers. The
World Trade Organization could also undermine food safety
laws by forcing the United States to either accept food
with dangerous pesticide levels or pay a substantial fee
(821). They also argue that new taxes may be needed to
offset the loss in tariff revenue. Another concern is that
U.S. measures to prevent dumping or selling of a product in
a foreign market at a price lower than its fair market
value could be weakened. But what the opponents World Trade
Organization fail to realize is that if the Congress passes
the Uruguay Round the U.S. will have a much larger say in
environmental and food safety standards and the restriction
of dumping.
Members of Congress who support the agreement believe that
it will bring far reaching economic benefits to the United
States, including new employment opportunities and high
paying jobs associated with the increased production of
goods and services for export (Banks 35). Supporters also
feel that import growth resulting from the agreement will
keep prices low and broaden consumer choices. A specific
group of Americans that will benefit greatly from the
passage ot GATT in Congress are the farmers. The United
States is by far the most efficient farming country with
more prime cropland per capita than any other country in
the world. Last year U.S. farm exports totaled 42.6 billion
dollars which is lower than their 1981 peak. The main
reason for this has been the increase of of Europe's
heavily subsidized farmers (Banks 35). Using 1992 numbers,
every one hundred dollars of Europe's farm exports carried
an average twenty five dollar subsidy versus one dollar for
the United States ( Banks 35). If GATT was to pass the gap
wouldn't disappear but it would shrink significantly.
Another positive aspect of GATT is that it will open up
traditionally closed foreign markets. For example the U.S.
will import three percent of its peanuts and Japan will
import at least some of its rice and citrus products, Korea
will import some almonds, and so on with other countries.
As a positive look to the future for farmers penetrating
foreign markets a study shows that Asians eat on average 11
grams of protein a day compared to 52 for Japanese and 72
for Americans. As the Asian countries standard of living
increase the study says so will there protein intake (35).
With GATT in place, the likelihood is that an increasing
amount of it will be American grown.
GATT will cost the United States Treasury about fourteen
billion dollars over the next five years in revenues lost
because of reduced tariffs. Under budget rules, this tax
cut for consumers must be paid for with fourteen billion
dollars in increased revenues or decreased spending (Will
76). Republicans feel that the government already has too
much money so they are opposed to new taxes. And the
Democrats feel that the government could never have too
much money to work with so they oppose spending cuts.
GATT is not perfect but I feel that it would be devastating
to allow these different outlooks to impede a trade package
that may enlarge the U.S. GDP by a cumalative one trillion
dollars over the first ten years (76). GATT will increase
U.S. competitiveness in foreign markets and create a great
number of high paid, highly skilled jobs for Americans.
Because of these positive factors and the small speculative
risks I feel that the General Agreement on Tariffs and
Trade should be supported by all Americans with great
enthusiasm towards the economic future of our nation. 


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