Why GATT Is a Bad Deal for Middle America
The Tokyo round has done enough damage, but the Uruguay Round is even worse
A RECENT newspaper headline described the insecurity that Middle America feels about the economy: ``Rising Tide Doesn't Lift Clinton.'' But there is no rising tide.Skip to next paragraph
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The article states that 4.5 million jobs have been created since Clinton took office, but this is the weakest job creation ever in a recovery. One million manufacturing jobs were lost last year. And with a $150 billion trade deficit this year, another 3 million of these jobs will be lost.
President Clinton insists that the people don't know his record, and that he isn't getting credit for the economic achievements of his administration. But even as he pushes Congress to ratify the latest round of the General Agreement on Tariffs and Trade, or GATT, the Uruguay Round, he seems unaware of the record of the present GATT, the Tokyo Round. Under the present GATT:
* We have lost 3.2 million jobs and our nation has undergone the greatest outflow of wealth - $1.5 trillion - of any nation in history.
* The US has gone from the world's biggest creditor to its biggest debtor.
* Those with full-time jobs are now receiving 20 percent less take-home pay than they were 20 years ago.
The president says he needs this new GATT now because he wants to appear as a leader at a Pacific economic summit this month. How can anyone appear as a leader at an economic summit with a $150 billion hole in his pocket and a tin cup in his hand begging the Japanese to finance our debt?
America's security rests as a three-legged stool: our values, our military strength, and our economic strength. The first two legs are strong, but the third is fractured. The US willingly bore the cost of containing communism, but with the cold war over, the US should be moving to strengthen the economic leg.
Tremendous change has taken place since the latest round of GATT negotiations began during the Reagan administration: Three billion new workers have moved into the world's market economy, many of whom make 2 to 3 percent of the American wage. Capital can be transferred instantly by satellite. And today, for the cost of one United States worker, one can employ 50 Chinese, 27 Filipinos, 37 Indonesians.
Present free-trade policy in the US tells a company it can get rich by moving its production overseas or go broke by continuing to work its own people here at home. As Robert Reich, now labor secretary, wrote in his book ``The Work of Nations,'' there was no net gain in new jobs at Fortune 500 companies in the US from 1975 to 1990.
It should be realized that instead of the Adam Smith-David Ricardo open-market system, our competition follows Friedrich List, according to whom the wealth of a nation is measured not by what it can buy but by what it can produce. Their economies are not left to market forces. Their governments are determined to control domestic markets and use them to obtain world market share. Japan readily sells below cost in order to obtain market share. In 1989, the Japanese lost $3.2 billion in auto sales in the US but made this up with an $11.1 billion profit by sales at home.
GATT does nothing to open the markets of our competitors. Rather, the new GATT will strip America of important protections. We will lose provisions to keep the US market competitive and rules that protect the environment, workers' rights, and food safety.
Charges of violations will be adjudicated by a panel of three bureaucrats in Geneva with no conflict-of-interest restrictions. They will meet in secret and their findings can be blocked only with 100 percent approval of GATT members.
And if we do not change our laws to conform with this tribunal's ideas of free trade, we will be subject to sanctions. That means US manufacturing jobs will be fair game for foreign predators. US manufacturing, 26 percent of our work force 10 years ago and 16 percent today, will soon disappear. This loss will cause more instability in society. Costs will go up for unemployment, welfare, health care, and most assuredly, crime. We in the Congress shout, ``We are against crime, three strikes and you're out, build more prisons.'' But we wouldn't need more prisons if we stopped cutting inner-city jobs.
Since the North American Free Trade Agreement was passed, Nissan, Honda, General Motors, Ford, and Chrysler have all announced new facilities in Mexico. Last year, the US sold 17,000 cars to Mexico but imported 154,000 cars.
Service jobs cannot make up for this loss; they are inadequate to bring workers into the middle class. If you like the present GATT's joblessness, you will love the new one's elimination of the middle class.
Rather than engaging in this unilateral economic disarmament, we need to maintain and enforce the statutes that GATT would have us surrender. We need a statutory Economic Security Council that will protect our standard of living.
Middle Americans look to government for security, but the GATT-crazy government is out to lunch.