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By Geoff Metcalf

September 1, 2002

Please forgive me….but I told you so!

Ten years ago I argued with Ambassador Myles Frechette, Warren Christopher's Special Assistant for NAFTA/GATT that the dispute resolution provisions of both NAFTA and GATT could and would bite the U.S. in the butt.

Now the New York Times reports "The World Trade Organization, the international arbiter in global trade disputes, ruled today that the European Union can impose $4 billion in penalties on the United States because an American tax break that promotes exports is illegal." It is not the first time the WTO has stuck it to the U.S. just the biggest.

The monster penalty will zap companies like "Boeing, General Electric and Caterpillar Inc. that have been heavy users of the tax break."

Back in 1992 I spent way too much time on my radio talk shows and in my columns bitching about the negative inevitabilities of NAFTA and The WTO. I was wrong to fixate on the issue but I was not wrong in my arguments.

Dr. Pat Choate was a wealth of information and support for my anti-WTO rants.

Pat sent me seven key points about the WTO that I have kept posted to my web page .

The analysis was, and is, significant because it includes documentation from the General Agreement on Tariffs and Trade that most of those who voted for it never read.

1. The WTO will have the same status as the UN, IMF, and World Bank.

2. Under WTO, Congress agrees to change US laws to meet WTO obligations.

3. The Congress must raise $43 Billion to pay for this Agreement

4. All WTO decisions will be made by the votes of the WTO Members.

One country, one vote, no veto. Article IX, paragraph one, (pg13) states that decisions "shall be taken by a majority of the votes cast, unless otherwise proved in this agreement or the Multilateral Trade Agreements...each Member of the WTO shall have one vote." In the WTO, Antigua's vote will have equal weight with that of the US. Developing nations will have 83 percent of the WTO votes.

5. The WTO will be the global Supreme Court of Trade Disputes.

6. Trade Agreements can be changed by a vote of the WTO Members.

7. Congress cannot "fix" the Agreement in the implementing legislation.

Article XVI, paragraph (pg.18) states, "No reservations may be made in respect to any provisions of this Agreement." Thus, Congress cannot fix any offending provision in this Agreement.

The dysfunctional gaggle of European leaders "have made it clear they will give the United States time to change its law and will not impose the penalties, which would be in the form of retaliatory tariffs on American exports, anytime soon."

However, notwithstanding the protestations to the contrary a decade ago, trade experts now say the EU will now have what amounts to a sword of Damocles to hold over the United States on a variety of hotly contested issues "ranging from steel tariffs to farm subsidies."

International trade analyst Gary Hufbauer said, "This gives the European Union a $4 billion club against us…..It can keep the club in the closet, but it will be a presence that surrounds all the negotiations at the World Trade Organization."

The Bush administration played down the significance of the WTO decision, predicting that the offending American law will soon be rewritten.


Oh, so when the WTO has us by the short hairs we fold? The threat to national sovereignty that Ross Perot, Pat Buchanan, Pat Choate, Ralph Nader, and Geoff Metcalf were ranting about in 1992 is real? You damnbetcha! It was in 1992. It is in 2002. And it will remain a clear and present danger unless or until we extricate ourselves from this one world, globalist, kumbaya fiction.

The European Commission's chief trade negotiator, Pascal Lamy made it clear that he would give the United States time to rewrite its laws before imposing any penalties. In other words if we change OUR laws to comply with what the WTO wants, they'll back off on their $4-Billion blackmail.

But he rattled the economic saber when he said; the verdict "makes the cost of noncompliance with the W.T.O. crystal clear."

Congress already passed one new version of the tax break in 2000, but Euro Nazis ruled in February that the law wasn't good enough because it still gave a selective tax break to exporters.

European officials are diffident to press their case partly because they want to avoid a trade war with the United States but also because new tariffs would raise prices for European consumers. In other words, there ARE consequences to action that cut both ways.

The bigger issue is whether European leaders will try to use their new authority to grind us over other contentious issues.

The big imported steel tariffs we imposed still have European honchos p.o.-ed bigtime. Despite the administration do over that diluted those tariffs by making hundreds of exceptions, EU suits are still threatening retaliatory tariffs on American products.

Christoph Feddersen, a trade lawyer in Brussels, synthesized the complexities when he said, "The W.T.O. is not just about the law. It is also about politics and diplomacy." And with 83% of the W.T.O. "anti-American" guess who wins any debate?

© 2002 Geoff Metcalf - All Rights Reserved

Geoff is a veteran media performer. He has had an eclectic professional background covering a wide spectrum of radio, television, magazine, and newspapers.  A former Green Beret and retired Army officer he is in great demand as a speaker. Metcalf has hosted his radio talk show on the ABC/Disney owned and operated KSFO and in worldwide syndication.