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GATT [General Agreement on Tariffs and Trade]
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GATT [General Agreement on Tariffs and Trade]
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Records of the Council on Environmental Quality (Clinton Administration)
Kathleen McGinty's Files
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FOIA Number: 2012-0769-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council on Environmental Quality
Series/Staff Member:
Kathleen (Katie) McGinty
Subseries:
OA/ID Number:
2902
FolderID:
Folder Title:
GATT [General Agreement on Tariffs and Trade]
Stack:
Row:
Section:
Shelf:
Position:
S
61
6
3
3
MEMORANDUM
DATE:
TO:agj
FROM:lsf
SUBJECT: gatt and the environment
It is asserted that the Uruguay Round raises a number of
serious issues for the environment and fails to address
certain other problems. Given that it will be many years
before there is a follow-on GATT agreement, these
deficiencies represent problems and lost opportunities,
whose consequences will be of long duration. Various efforts
to approach our Trade Represenative having failed, the
National Wildlife Federation proposes an action based on
urgency driven in turn by the Decemberdeadlinee for
completion of the Uruguay Round. Specifically, they propose
to join other groups in the Congress who intend to seek
revocation of the Fast Track status accorded the Uruguay
Round in the 1988 Trade Act. The other groups refered to
above consist of agricultural and textile interests, which
fear that their interests would be harmed by the Uruguay
Round agreement for the sake of gains in other sectors. This
action begins tomorrow.
I am not sure it is likely that an effort to revoke fast
track status would succeed. But anyone joining such an
effort ought to consider the consequences. A complex package
of implementing legislation designed to bring the US into
compliance with a Trade Agreement would -- without a Fast
Track process -- be subject to the full panopoly of devices
available to Congress for delay, amendment and even
rejection. The resources of every lobbying group with a
stake in the outcome would be mobilized and given almost
indefinite room for maneuver. As a result there is an
excellent chance that without Fast Track, the US would not
come into compliance with the Uruguay Round. The
consequences of this for the international trading system,
and for many vital American concerns relating to that
system, would be incalculable.
No political leader who has regard for the stability of the
international order should lend himself to this kind of
scenario, unless he is convinced that the Uruguay Round is
leading to outcomes much worse than the consequences of its
failure. The argument that you should do this merely for
tactical purposes, in order to gain attention and a measure
of response from the Trade Negotiator, is faulty. And the
fault is greater in inverse proportion to the seriousness of
the problem. If the Uruguay Round does not profoundly
threaten the environment, it is reprehensible to declare
yourself in favor of placing the Round in grave jeopardy.
I am prepared in a subsequent memo to examine the specific
concerns raised by the Wildlife Federation, and to
demonstrate that in no way do these concerns come anywhere
near the threshold where one should consider attacking the
Uruguay Round. For now, however, it is possible to make the
following recommendations:
1. don't join this effort yourself.
2. do Wirth a favor by warning him off, unless he has
already mortgaged himself.
3. call Carla Hills and tell her that there are issues which
she has evidently not responded to which are capable of
threatening the success of the Round: propose a ventilation
of these issues at a meeting consisting of yourself, guests
from the Wildlife Foundation, and invited members of the
Senate.
4. suggest to Wildlife that it delay its planned attack on
Fast Track or condition it SO that the attack can be
abandoned, if a thorough discussion convinces them that it
is better to work with this process than against it.
5. Be prepared to examine some of these issues through
hearings at the JEC early in the next session.
Rick will have a copy of this memo and is automatically
invited to comment on my analysis to this point as well as
on the recommendations. If you like the recommendations, it
may be necessary to act today -- and that could well be
before I can do the point for point assessment promised
above.
MEMORANDUM
DATE:
TO:agj
FROM:1:
SUBJECT: Gatt and Trade II
There are specific and generalized complaints from the
environmental community. The specific complaints raised
regarding the Uruguay Round come under the GATT headings of
Agriculture, Natural Resource -Based Products, and Trade-
Related Intellectual Property.
1. In the general field of Agriculture, it was agreed at
Punta del Este that one objective of the Round wold be to
"minimize the adverse effects that sanitary and
phytosanitary regulations and barriers can have on trade in
agriculture, tking into account the relevant international
agreements." This is a US objective. We have wanted uniform
and non-discriminatory food health regulations to prevent
them from being used as non-tariff barriers.
In May, the GATT secretariat began to circulate language
addressing this issue, as follows: " Recognizing that
contracting parties have the right to protect human, animal
or plant life or health, contracting parties shall seek to
minimize the negative effects on trade of Sanitary and
Phytosanitary (SPS) measures by ensuring that these are
applied only to the extent necessary to protect human,
animal or plant life or health, are consistent with existing
scientific evidence and are not applied in a manner that
creates unnecessary obstacles to trade."
Countries adhering to GATT would act to harmonize their
internal SPS regulations with the evolving international
standard. That standard would be based on the Codex
Alimentarius (Food Code) which is maintained by the Codex
Commission in Geneva. The Commission is funded by the Food
and Agricultural Organization and by the World Health
Organization. It is charged with working out standards for
food products in international use to protect the health
of consumers. It has 137 nations as members and is staffed
by government regulators, scientists, toxicologists,
technical experts and industry advisers. The US contingent
is drawn from the Food and Drug Administration, the EPA and
the USDA. Thousands of codes have already been worked out
through an elaborate consensual process based on the views
of technical experts. The US wants to make Codex standards
the basis for harmonization by all GATT members.
According to environmental groups an outcome of
harmonization would be for inferior international standards,
reflecting the interests of multinational food processors,
to take precedence over superior US standards. Further, the
environmental groups say that other GATT rules would force
the Federal Government to neutralize superior SPS standards
devised at state level.
2. In negotiations on Natural Resource-Based Products, the
Punte del Este Declaration said: "Negotiations shall aim to
achieve the fullest liberalization of trade in natural
resource-based products, including in their processed and
semi-processed forms. The negotiations hall aim to reduce or
eliminate tariff and non-tariff measures, incouding tariff
escalation. As US concern was the problem of state control
over the production and management of natural resources.
Such policies could (and did) include subsidies, tax
incentives, export restrictions (my emphasis added),
licensing practices, all with the effect of limiting access
to natural resources for the purpose of securing advantage
in commercial competition.
Environmental Groups complain that Uruquay Round agreements
in this area would have the effect of reversing export
restrictions that have been imposed by national or sub-
national governments, for environmental purposes: e.g. the
existing ban on the export of raw timber from the Pacific
Northwest.
3. In the area of Trade-Related Intellectual Property
(TRIM), the Punte del Este declaration declared in part: "
In order to reduce the distortions and impediments to
international trade, and taking into account the need to
promote effective and adequate protection of intellectual
property rights, and to ensure that measures and procedures
to enforce intellectual property rights do not themselves
become barriers to legitimate trade, the negotiations shall
aim to claify GATT provisions and elaborate as appropriate
new rules and disciplines."
Environmental Groups complain that this principle works to
the detriment of biodiversity, because it assures
continuation of the present system whereby discoveries of
new commerical uses for products derived from biota will
benefit only large corporations in wealthy nations: hence,
removing whatever motivation poorer nations might have to
conserve habitat where these biota are mainly found.
4. In a general sense, environmental groups argue that the
Uruguay Round had focused entirely on problems of
liberalizing international trade, with no consideration for
the effects that the GATT rules of the road may have on the
environment. They argue, as part of the case for taking GATT
off the fast track, that GATT should be required to pay
attention to this issue.
At a deeper level, the environemtal groups, or some of them,
may harbor the view that it is not GATT or the Uruguay
Round, but the entire concept of Free Trade which may be
antithetical to the environment. One writer publishing in
The Ecologist last February, said: " While the development
of an international consensus around environmental standards
may be a desirable objective, there are several reasons to
suspect that the agenda of 'free trade' is to lower
environmental standards, while placing the standard setting
process in the hands of institutions that are less
accountable to the community and more amenable to corporate
influence and control."
I am ready in a third and hopefully final memo, to argue
that expressed concerns about harmonization are being
overdrawn; that national environmental controls on exports
are not at risk as represented; that the proper arena for
dealing with issues of North/South equity in the bio-
business world is not GATT but a separate Convention on
Biological Diversity; that it is legitimate to ask for GATT
to open a dialogue on trade and the environment, but not to
require that this dialogue be worked out between now and
December but on a realistic schedule; and that any view
which seeks to establish an inherent contradiction between
liberal trade and the environment is just old-time anti-
Capitalism coming from people who somehow have not noticed
how "well" the environment did under alternative
arrangements in the Soviet Union and Eastern Europe.
Again, this third memo may not be finished today.
MEMORANDUM
DATE:
TO:agj
FROM:lsf
SUBJECT: GATT and the Environment (3rd installment)
This memo will analyse each of the assertions made by the
National Wildlife Federation for real-world credibility:
that is -- how to judge whether the actual as opposed to the
theoretical problems ahead are so great as to warrant an
attack on the entire Uruguay Round, in the form of an effort
to remove its Fast Track status.
1. Does the process of harmonization of phytosanitary
standards involve a CREDIBLE risk that inferior
international standards for food would replace superior US
federal standards?
It seems to me that the first question is whether the
international standards are in fact inherently inferior. If
they are, then one would certainly not want to accept a
commitment that implied willingness to adopt them in
preference to our own. But, if international standards are
of comparable quality, and if the processes by which they
are derived are rational and reasonably transparant, then
the existance of such standards is enormously important not
only for producers of foodstuffs, but for consumers -- given
the enormous volume of international trade in foods.
The standards are those contained in the Codex (see earlier
memo). The Codex is the product of an elaborate
consultative process among experts. These experts are for
the most part national, rather than international in
orientation -- so the resulting product is not the creation
of UN civil servants but a melding of views world-wide. I
should add that representatives of the International
Organization of Consumer Unions also attend Codex meetings.
By straight bean count, the Codex has pesticide standards
that are equivalent to our own in 42% of the cases; MORE
stringent than ours in 42% of the cases; and less stringent
than ours in 16% of the cases. (Rick rightly points out that
the devil could be in that 16%, and I am trying to get more
information.)
The Codex is a UN document. It does not relate to the GATT,
nor does it have any binding power of its own. Our
government wants to create a link between Codex and the
GATT. Our proposal is for nations to harmonize standards on
the Codex, and in case of disagreement, for the GATT to rely
upon expertise and advice from three international
organizations: the Codex Commission; the International
Office of Epizootics, and the International Plant Protection
Convention. In case of dispute the GATT would ask the Codex
Commission to set up special panels to come to a view about
whose standards are more firmly based on
scientific evidence.
Under Article XX of the GATT, nations may generally have
full scope to establish unilateral measures "necessary to
protect human, animal or plant life or health," provided
that "such meaures are not applied in a manner which would
cosntitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions
prevail or a disguised restriction on international trade."
So our first defense in case of challenge is to show that
our standards apply equally to foreign and domestic-origin
products. Contrast this, for example, to the behavior of
governments that ban imports of US tobacco ostensibly for
health reasons, but actually as a measure of protection for
their domestic growers.
The Uruguay Round seeks to create a second standard, or to
be more exact, to buttress a standard already in place:
namely, that national measures must be scientifically
justified. If we are challenged in a case where our standard
differs from the Codex, the submission of the scientific
case for our standard is in itself fulfillment of a
requirement. A GATT panel would then consider advice in
which the merits of our defense would be weighed against the
merits of the case for the Codex standard.
I am told by CRS ( but am trying to establish from the
negotiator's office ) that arrangement is NOT a form of
arbitration. If so, we are NOT stipulating that we will be
bound by the determinations of a GATT panel. It is true that
the GATT process allows an aggrieved party to take counter-
measures against the trade of a nation which is out of
compliance and which refuses to change its policies.
Nevertheless, the force that moves us to comply is instead,
our overall interest in seeing this system work. If nations
by and large ignore such rulings, the system fails. And the
judgement here is that we have much to lose if it does fail.
But the bottom line is that Federal Standards apply until
the Federal government changes them.
2. Does the GATT require the Federal Govt to suppress state
standards at variance with CODEX?
The issue of the implications of GATT for federally
organized governments has been discussed since the inception
of the GATT. Remember that this problem applies not just to
the US but to the Canadians, the Australians, the
Brazilians, the USSR, the Germans and all other governments
with a federative rather than a unitary structure. Even the
Japanese government says it cannot overturn standards
established by its prefectures.
In the GATT language there is a provision (para 12, Art.
XXIV) which says that: "Each contracting party shall take
such reasonable measures as may be available to it to ensure
observance of the provisions of this Agreement by the
regional and local governments and authorities within its
territory." This provision has been interpreted to mean that
a central government "is not in breach of its international
obligations when a subdivision violates GATT as long as the
central government does everything within its power to
ensure local observance of GATT." But the question of what
is in the power of a federal authority opens up to many
interpretations.
In a letter of Aug 27 to Sen. Wilson, the USTR sets out the
official US position: "With regard to incrusion on states'
rights, the GATT agreement will not be a vehicle to achieve
national uniformity in the area of S&P measures. The
Administration supports a narrowly tailored approach to
national uniformity in pesticide tolerance standars, but new
legislation, not a GATT agreement, is the appropriate
vehicle for achieving that goal. This having been said, the
letter points out that state standards must be bound by the
same discipline as Federal standards: namely they must be
nondiscriminatory and scientifically based.
3. Would the Uruguay Round force nations or subnational
governments to abandon retrains on the exports of certain
products, even when these are imposed for environmental
reasons?
To begin with, it is important to repeat that the GATT does
not have the power to automatically shape the laws of the
United States. If we choose not to comply with a GATT
ruling, they can allow compensation to the aggrieved party
in various forms, but US law stands until it is changed by
duly constituted US authority.
In the event that we or any other country impose an export
restraint that is even-handed, there is a virtually perfect
defense against challenge through the GATT. For example, if
logs may neither be cut for domestic purchases nor for
export, then the principle of equal treatment -- basic to
GATT -- has been respected. If on the other hand, a country
for "environmental reasons" prohibits the exports of a
commodity, while allowing that same commodity to be used for
domestic purposes, it is clearly open to challenge in the
GATT.
Conclusions:
The very same environmental groups that want to see the
United States bind itself to the provisions of an
international convention on the greenhouse gases, object to
the United States' intention to create more effective
international standards on food. You cannot have it both
ways. If the international process is not good enough for us
to commit to in the case of foodstuffs, it is certainly not
good enough for us to commit to in matters that
fundamentally influence our economic and social life (
greenhouse gases).
The claim that the United States should not commit itself to
any process that might in the end over-ride US laws or
standards bearing on the environment is the same as the
argument that kept us from ratiying the Human Rights
Convention for forty years.
The specific concerns raised by the environmental groups are
vastly over-stated and the remedy they propose is
grotesquely out of proportion to any concrete risk we might
face.
Finally, were you to join this effort for environmental
purposes you mig ht well find yourself married to it
politically because of agriculture and textile interests.
Long after the environmental groups fall away from this
project, you would be lashed to the oars. I think you have
paid enough dues to agricultural and textile concerns in
other ways.