The GATT Uruguay Round Agreements (URA), recently passed by Congress, is good news for the United States, New York State and Western New York. Held under the auspices of the General Agreement on Tariffs and Trade (GATT), the URA phases out quotas and cuts tariffs by about one-third on most products traded globally.

GATT, the international body that governs approximately 90% of world trade, is responsible for reducing international tariffs from an average of 40% in 1947 to 5% in 1990. This has permitted international trade to expand enormously, national incomes to substantially increase and international competition to flourish resulting in higher quality, lower priced goods.

During the phase-in period, the URA will eliminate many non-tariff barriers, expand intellectual property protection and improve the current dispute settlement mechanism. The impact will be extremely advantageous for the world and the United States. GATT economists believe that by the year 2002, the URA will result in annual world income gains of $235 billion and trade gains of $755 billion.

By the year 2004, the United States will likely gain approximately 500,000 new jobs and see an annual increase of $100 to $200 billion in gross domestic product, $150 billion in exports, and $1,700 in income per family

New York State Stands to Benefit

In 1993, the United States exported approximately $660 billion in goods and services, supporting about 10.5 million jobs. This is up 57% from 6.7 million in 1986. And the wages of non-farm workers directly supported by exports pay 18% higher than the average U.S. rate.

Last year New York State, the second largest exporter among all U.S. States, exported $40.7 billion worth of goods globally. This marked a 38% increase since 1987, the fourth largest increase in exports compared to all other states. New York State is the second most populous state in the nation and if viewed as a sovereign nation would rank as the world's tenth major economic power. The URA will benefit numerous New York industries, including producers and distributors of computer equipment, industrial & analytical instruments, machine tools, motor vehicle parts, paper & allied products, pharmaceuticals, printing & publishing, processed foods, telecommunications equipment, and much, much more.

Western New York to Win

Western New York's auto parts industry is a growing sector and the largest employer in the region. This industry will benefit under the URA.

Western New York has cited its medical product industry to be among the top most promising sectors in the region. As a result of the URA, major pharmaceutical export markets will reduce tariffs an average of 72%. Improved patent protection and better standard setting procedures will protect U.S. trade secrets and reduce unfair trade practices.

Western New York producers of medical equipment and pharmaceuticals will prosper -- creating more jobs in Western New York. This high-tech sector employs skilled workers and pays higher wages -- the type of industry to gain the most from the GATT agreement.

Our Sovereignty Is Not Compromised

In order to ensure that all trading members are playing from the same rule book, the URA will soon create the World Trade Organization (WTO). It will be more effective than the current system. For example, a new dispute-settlement mechanism will provide for a speedy remedy when foreign countries violate international rules and raise new trade barriers -- and does not allow decisions to be indefinitely blocked by violators.

Under the URA, no rule by a dispute-settlement panel can become a part of U.S. law without Congressional approval and Presidential signature. Should a panel find that a U.S. domestic law (Super 301 for example) is inconsistent with GATT principles, the United States may disregard a decision and take unilateral action suiting our national interests. In return, the complaining country will be allowed to take action and institute tariff penalties against the United States. This tactic puts the United States in no worse a position than existed prior to the URA.

One Country, One Vote Is Not a Hindrance

Substantive GATT decisions have normally been made by consensus -- 100% of GATT members in agreement. Should a consensus not be achieved (which has not happened since 1959), a set of improved voting procedures would be enacted. Thus, a substantive measure lacking U.S. support will require a two-thirds majority vote. If passed, still a second vote resulting in three-fourths majority would be required in order to compel the United States to accept the amendment. This scenario is very unlikely for two reasons:

  • The United States would almost certainly be able to generate enough support to prevent a gang-up;
  • The WTO would risk losing the world's strongest economy as a member -- thus creating uncertainty and instability in the world trading system.

The GATT Uruguay Round is worth five Nafta's -- and less than one year after implementation, Nafta has proven to be a winner. And the WTO improves the United States' ability to fight unfair global trade practices -- while not compromising our sovereignty.

This article appeared in Business First, December 4, 1994.
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella is a world-recognized author and speaker on global business, competitive strategies and the latest economic trends. He also is CEO of World Trade Center BN, chair of the Upstate New York District Export Council, and founder of The Manzella Report and Manzella Trade Communications Inc. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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