The General Agreement on Tariffs and Trade (GATT)

[Editor's note: This section was originally in chapter 9.]

The General Agreement on Tariffs and Trade (GATT) came into existence in 1947 as the overseer of the multilateral trading system. It was an instrument of the United Nations. During the 1940's and 1950's the Congress and the country was not ready to have their economic authority transferred to international control. In 1958, Sen. George Malone of Nevada said:

"The global theory of free trade is siphoning off America's wealth and bringing her economy to the level of others. The theory is displacing American workers who otherwise would be employed."

"GATT 1994" was a document consisting of 22,000 pages of information, tariff schedules, rules and regulations; and 650 pages of enabling legislation. Based on its size, how many of our legislators do you think read every word of this trade agreement; and based on its complexity, if it was read, was it understood?

It is the only international agreement which sets the global rules for world trade, and provides for the mediation of disputes, which is argued by many to be the best way to open up foreign markets to U.S. exports, because protectionist countries, as well as the U.S. would have to lower their tariffs (producing a loss in revenue), to create an even playing field. However, critics familiar with its contents say that it will succeed in seriously damaging our national sovereignty and independence. Proponents disagree, saying that any country can withdraw from membership after giving a six month notice. As one of the 146 member nations, the United States would only have one vote, yet it would have to pay nearly 25% of the cost. The GATT agreement would have the power to force Congress to change laws by declaring them to be "protectionist" (WTO Charter, Article 16, Section 4), and if we don't comply, we would be subject to trade sanctions.

Even though, during the midterm elections of November, 1994, the country overwhelmingly voted to change the course our country has taken, GATT was still brought to a vote during the lame duck session of the 103rd Congress and passed, rather than waiting for the Republican-majority Congress that was elected. Some opponents believe that if the vote had been postponed it may never have been ratified, at least in its present form. But that was unlikely, since its passage was a bipartisan effort spearheaded by a group of key Republicans lead by Majority leader Sen. Bob Dole of Kansas and Speaker of the House Rep. Newt Gingrich of Georgia (a member of the CFR), and conservative think-tanks like the Heritage Foundation and the American Enterprise Institute.

On January 1, 1995 the World Trade Organization (WTO), the descendant of the proposed International Trade Organization (1948) and Organization for Trade Cooperation (1954), replaced GATT [and included the provisions of] "GATT 1994." [see WTO and follow links to GATT documents]

Financier, Sir James Goldsmith, a member of the European Parliament, said in his testimony before Congress, that GATT would "cause a global social upheaval the likes of which Karl Marx never envisioned." The October 24, 1994 issue of Barron's, indicated that the WTO is a de facto world government. William Holder, deputy general counsel of the U.N.'s International Monetary Fund, said that the WTO is a de jure (by law) world government. In actuality, this legislation is a Treaty, and as such, should have required approval by two-thirds of the Senate; instead, it was considered a Trade Agreement, which only required a majority vote.

The North American Free Trade Agreement (NAFTA)

The economy of the United States, which has been allowed to erode for years, began to experience what may have been the beginning of the final assault, when the North American Free Trade Agreement (NAFTA) was adopted in 1994. This two-volume document, nearly 1,100 pages in length, which incorporates most of the provisions of the 1988 Canadian Free Trade Agreement (CFTA), makes the United States, Canada, and Mexico unequal partners in trade. On December 31, 1988, President Ronald Reagan signed Executive Order #12662 which said, that regardless of the constitutionality of decisions made by the bi-national committees of the CFTA, the United States had to accept it.

When NAFTA was approved by Congress, more of our national sovereignty was given up to Mexico. Since Mexican workers do not have minimum wage protection and do not have the right to bargain collectively, the agreement has made Mexico fertile territory for American companies to relocate, thus creating a huge loss of American jobs, and the exploitation of the Mexican workforce. That is only part of the inequities that are contained in this agreement.

Since the inception of NAFTA (January 1, 1994) some of the initial results were that net exports to Mexico had fallen by nearly $500 million, our trade surplus with Mexico had been cut in half, more than 230 companies had moved to Mexico, and there had been a tremendous increase in America's investment in Mexico. Mattel, the toy manufacturing giant, said that NAFTA would create more American jobs, yet the Public Citizen's Global Trade Watch reported that they laid off 520 workers at their Medina, New York facility. The report further stated that "As of mid-August 1995, the Department of Labor had certified 38,148 workers as having lost their jobs to NAFTA." Months later, the Clinton Administration reported that 127,000 jobs were created by NAFTA (as of 2001, according to Raul Hinojosa-Ojeda, research director of the North American Integration & Development Center at University of California at Los Angeles, only about 100,000 new jobs have been added), but what they didn't reveal, was that a report by the Joint Economic Committee of Congress indicated that the nation had lost 137,000 jobs (this total had risen to 316,000 by 2001).

During the first nine months of 1994, our trade surplus with Mexico shrunk by 27 percent. This report further said that this was "only the tip of the job displacement iceberg." According to Rep. Marcy Kaptur (D-OH), NAFTA promoters said that 60,000 American manufactured cars would be exported to Mexico in 1994, but only 28,000 were. Not only that, we ended up importing 278,000 cars from Mexico.

The highly skilled, well-paying positions have gone to Mexico, while low-paying, low-skilled jobs have been created in the United States. This stems from the fact that the raw materials and parts are exported to Mexico, assembled, then imported back into the country at a far greater value. Rep. Peter DeFazio (D-OR) said: "There's also a conspiracy of silence on the part of the Republican leadership in Congress who provided the votes needed to pass this turkey."

In 1848, Karl Marx said: "Free trade breaks up old nationalities ... in a word, the free trade system hastens social revolution." Henry Kissinger said that NAFTA represented "the most creative step toward a New World Order."