The Senate this week is deciding the fate of the biggest trade agreement in history.
At stake: whether to approve an expanded General Agreement on Tariffs and Trade, which sets the rules for world trade.
At 22,000 pages, few people can claim to have read the entire agreement. But much like the North American Free Trade Agreement last year, GATT has sparked a political firestorm over how it would help - or hurt - the USA.
Proponents like President Clinton, who convinced the House to approve GATT Tuesday, say it will boost economic growth. Critics like Ross Perot, furiously lobbying senators to reject it, say GATT will destroy U.S. jobs.
What's all the fuss about? Here's a look at some of the issues, and how the agreement might affect the USA:
Q: What is GATT?
A: It's a voluntary organization of 122 nations that have agreed to abide by a common set of trade rules. China, Algeria and the European Community have also joined as "contracting parties," but not full members.
First negotiated in 1947 and in effect since Jan. 1, 1948, the agreement since has been broadened through a series of supplementary deals, called rounds. The latest deal - the Uruguay Round after the South American nation where talks began in 1986 - is the most ambitious yet.
It would expand GATT rules to cover trade in agriculture and most services, slash international tariffs an average 38%, and replace GATT with a more powerful World Trade Organization to settle trade disputes.
The agreement was signed by world leaders last December, but must be ratified by Congress before the USA is subject to its rules.
Q: Why should I care?
A: GATT potentially is a big money maker. The U.S. economy already is relatively open to trade, thanks to low U.S. tariffs. But the economy has a lot to gain from a reduction in foreign tariffs, which would boost U.S. exports.
The Clinton administration says approval of the Uruguay Round could add up to $200 billion to U.S. output of goods and services annually by the year 2005, 10 years after the agreement goes into effect. It also could create up to 700,000 jobs during that period.
Among industries likely to benefit: computers, software, aerospace, heavy construction equipment, financial services and agriculture.
Q: So why is anyone opposed?
A: Some conservatives worry the proposed WTO would trample U.S. sovereignty. Under WTO's proposed rules, each country gets a single vote. Cuba, Zimbabwe and Nicaragua would arguably have the same clout as the USA, the world's largest and most powerful trading nation.
Some liberals, on the other hand, worry the WTO would have the power to override some U.S. consumer protection and environmental laws.
Unions don't like GATT because they worry freer trade would eliminate some jobs by making it easier for foreigners to compete here.
And some companies, especially U.S. textile makers, also fear increased foreign competition: GATT gradually would phase out strict quotas that protect them from low-cost Third World producers.
Q: Are those fears valid?
A: Some are, some aren't, experts say. Most legal experts say the WTO poses little threat to U.S. sovereignty. That's because the WTO wouldn't have direct enforcement powers. It couldn't impose fines or penalties.
Rather, the WTO would be a referee. If a member nation thought it had been treated unfairly by the United States, for example, it could ask a panel of WTO arbitrators to rule on the dispute.
If it won, and the United States refused to comply, the country then could ask the WTO for permission to retaliate. This might mean imposing sky-high tariffs on some U.S. products, or barring them completely. But the United States still could ignore the WTO ruling, and simply live with the retaliation.
Of course, defying the WTO probably wouldn't be in the USA's best interests. That would encourage other nations to do the same when rulings didn't go their way. As the world's biggest exporter, the United States has a vested interest in making trade rules work. Still, noncompliance would always be an option.
Q: What about jobs?
A: Worries about job losses may be more justified. While the Uruguay Round should add more jobs to the U.S. economy than it destroys, experts say, there's little question some U.S. workers could lose their jobs.
This is particularly true in the textile industry. Some experts say the industry may not be able to survive without the import quotas that limit foreign competition.
Also, as GATT critics point out, estimates of the Uruguay Round's future economic benefits are very speculative. In theory, lower tariffs should reduce the cost of doing business and help keep inflation low. Those benefits, in turn, should help spur the economy and job growth. But there's no ironclad guarantee that U.S. job gains would outweigh job losses.
Q: Couldn't other countries vote to change the rules in ways that would harm the United States?
A: Yes, although it wouldn't be too easy. Any major change in WTO rules would require a two-thirds majority vote of member nations, giving the United States a chance to organize an effort to stop proposals it didn't like.
Still, rules will be a little easier to change than at present, where all changes have to be approved by a consensus vote.
Q: Are there any advantages for the United States in scrapping the old voting system?
A: Yes. In fact, U.S. negotiators insisted on the changes.
The old system required consensus agreement before GATT could issue a ruling in a trade dispute. This allowed any country to derail any ruling it didn't like.
Under the new WTO, it would take a unanimous vote to block any ruling handed down by a dispute arbitration panel.
Conservative critics say this would prevent the United States from defending itself from unjust rulings.
But it's the United States that has the most to gain because it's usually on the winning side in GATT disputes, yet often sees those victories blocked by other countries.
France, for example, has repeatedly vetoed GATT rulings that would have opened its markets to U.S. farmers. Under the new rules, it won't be able to do that.
Q: Can the U.S. leave the WTO if it isn't working in our favor?
A: Yes. The original agreement allows any country to withdraw from the organization with six months' notice. That provision would also apply to the WTO.
In addition, the Clinton administration has agreed to create a panel of U.S. judges to review WTO rulings. If they decide the United States has been unfairly treated in at least three cases, Congress could start working on legislation to pull out.
Q: Will the Uruguay Round be approved by the Senate?
A: Probably, but the vote could be close due to federal budget rules.
Because the agreement lowers U.S. tariffs - on paper at least - it would cut federal revenue by about $40 billion over 10 years.
Budget rules require that any cuts in revenues be paid for with other tax increases or spending cuts.
The GATT legislation would cover the costs over the first five years - about $12 billion - with a combination of budget cuts and minor tax increases. But the following five years aren't paid for.
It's a technical point: Many economists say stronger economic growth spurred by increased trade actually would raise U.S. revenues. But budget rules don't take that into account. That means GATT supporters will have to come up with 60 votes in the Senate to waive the rules in order to pass the Uruguay Round.
Q: What happens if GATT fails?
A: At best, financial markets would take a tumble, and the United States, which has long preached the benefits of free trade, would look like a hypocrite in the eyes of the world. This could make it impossible to negotiate future trade deals.
At worst, the existing GATT structure could collapse, triggering a round of des
