Watching Government Defending WTO

With Patrick Crow from Washington, D.C. Although conservatives are attacking U.S. membership in the year old World Trade Organization, WTO had many supporters at a House ways and means committee hearing. U.S. Trade Rep. Mickey Kantor insisted WTO does not infringe on U.S. sovereignty and will not weaken the ability of the U.S. to pass laws, enforce existing ones, or set environmental and health standards. "Should we ever decide that the WTO is not working in our interest, which is very unlikely

March 18, 1996

3 min read

With Patrick Crow from Washington, D.C.

Although conservatives are attacking U.S. membership in the year old World Trade Organization, WTO had many supporters at a House ways and means committee hearing.

U.S. Trade Rep. Mickey Kantor insisted WTO does not infringe on U.S. sovereignty and will not weaken the ability of the U.S. to pass laws, enforce existing ones, or set environmental and health standards.

"Should we ever decide that the WTO is not working in our interest, which is very unlikely to occur, we can simply leave the organization after a 6 month notice," Kantor said.

Dispute settlement

Clayton Yeutter, who was the Reagan administration's trade representative, said the WTO's provisions to settle disputes are a great improvement over the former General Agreement on Tariffs and Trade, which another witness described as "The General Agreement to Talk and Talk."

Yeutter said, "Some have suggested that these changes in dispute settlement constitute a surrender of our national sovereignty. This is just nonsense. The sovereignty argument is pointless, for every trade agreement we've signed in the past 200 years has in some way infringed on our sovereignty."

James Bacchus, a U.S. member of the WTO appellate body, warned, "Without the U.S., the WTO would weaken and wither away. It would become a commercial 'League of Nations' incapable of enforcing the rules of trade. The emerging rule of law in world trade would be replaced by a ruinous reign of commercial chaos, confusion, and collapse."

Joe Cobb, a fellow at the conservative Heritage Foundation, said some fear the WTO as a world police body with the power to impose its will on member governments.

He said, "The correct analogy is to compare it to 'the rules of a game.' It is designed to be a common script for all governments to follow in the treatment of business people and products from other countries. The central principal of the WTO is the equality of those rules."

First appeal

In the first appeal to WTO, Venezuela and Brazil charged that U.S. reformulated gasoline rules discriminated against imports. The U.S. lost that ruling, and is appealing (OGJ, Feb. 26, Newsletter).

U.S. Environmental Protection Agency rules require refiners to keep conventional gasolines as clean as those they produced or imported in 1990. Because EPA could not verify the baselines of foreign refiners, it assigned them a baseline that approximated the average quality of 1990 U.S. gasoline.

Venezuela and Brazil said that would unnecessarily limit their exports to the U.S. EPA then proposed to let them petition for their own baseline if they had supporting data, but Congress blocked that move (OGJ, Sept. 19, 1994, p. 25).

Jeffrey Schott, with the Institute of International Economics, said it was not surprising the U.S. lost before WTO "since the U.S. implicitly admitted the violation and attempted to negotiate a settlement with Venezuela (rejected by Congress). The U.S. has appealed the panel ruling but has an extremely weak case."

Cobb said if the U.S. loses the appeal and does not change its rules, WTO will authorize Venezuela and Brazil to set approximately equal discrimination against something U.S. businesses want to sell to them.

That would be a worrisome thing for U.S. oil companies seeking to do business in development of Venezuela's oil fields (OGJ, Feb. 12, p. 31).