No. More trade, like more domestic sales, creates more jobs. Sure, competition always displaces some workers and destroys some businesses. If a company in Arkansas figures out how to make widgets better or cheaper than a company in Iowa, the Iowans have to learn new tricks or go out of business. A foreign competitor can cause the same upset. Overall, though, trade builds many more jobs than it destroys.
No. The agreement cuts tariffs by about half. The United States, already one of the most open countries, will reduce its average tariff on a dollar of imports from 5.4 cents to just 3.5 cents. Many U.S. trading partners in Latin America and Asia go down a whole lot more – Venezuela from 50 cents on a dollar of imports to 31 cents, India from 71 cents all the way to 32 cents. So U.S. manufacturers gain far more than they give up. Farmers, software companies and filmmakers are all big winners, too.
The apparel and textile industries. The protective quotas that limit clothing imports must be phased out. Developing countries will expand their sales, and many U.S. garment-making jobs may disappear.
Ross Perot and right-wing Republicans like Pat Buchanan challenge the powers of the World Trade Organization, which will replace the existing General Agreement on Tariffs and Trade (GATT). GATT decisions about whether a country is unfairly hindering trade are purely advisory. WTO decisions will be binding, so countries found in violation must change their laws or suffer tariff retaliation against their exports.
Critics point out that each nation in the WTO will have one vote, giving countries like Surinam and Somalia the chance to gang up and overturn U.S. law. But there’s not much risk of that. GATT is a one-country, one-vote organization, yet the United States and Europe have dominated it. Their stature as the biggest importers will let them dominate the WTO, too. Any country can leave the WTO with six months’ notice. Last week Senate Republican leader Robert Dole won agreement that Congress can initiate U.S. withdrawal.
In theory, that’s true. But disputes will be judged under tight legal rules, and an internal WTO appeals board will review them. This binding procedure was actually demanded by the U.S. Congress, which felt that GATT’s nonbinding procedures allowed other countries to ignore the rules. Occasionally Congress may have to change U.S. laws to comply with WTO rulings or face retaliation against U.S. exports, just as it has under GATT. This isn’t a big deal. The U.S. has brought or been charged with only 33 GATT complaints in 46 years. It has won far more than it has lost – and has rarely changed its laws to satisfy GATT.
After a stormy debate, both houses of Congress are likely to endorse the pact.
Complaint: In 1991 Mexico complained about a U.S. ban on tuna caught by boats that also kill dolphins, calling it a violation of global trade rules. Resolution: A GATT panel of international legal experts ruled against the U.S. embargo. Washington then struck special dolphin-protection agreements with two tuna-fishing countries.
Complaint: The European Community protested a 1986 law imposing a fee on most imports. The fee ostensibly covered the cost of inspection by the U.S. Customs Service. Resolution: A GATT panel ruled against the fee, saying that it was not related to the true cost of inspections. Congress capped the fee in 1990, resolving the most serious objections.
Complaint: The European Union objected to U.S. fuelefficiency standards and the 1990 luxury tax on vehicles selling for more than $30,000. It said they were designed to target European imports while hardly affecting U.S.-made autos. Resolution: In September, GATT panels rejected both of the European claims.
