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).
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. 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.