World worried U.S. may reject GATT, Malaysia says

World worried U.S. may reject GATT, Malaysia says

KUALA LUMPUR (Reuter): The world is growing worried the U.S. Congress may not ratify the General Agreement on Tariffs and Trade (GATT) pact, Malaysia said.

Speaking to reporters after talks with GATT Director-General Peter Sutherland, International Trade and Industry Minister Rafidah Aziz said Tuesday that GATT members had become alarmed at reports of opposition to the pact in Congress.

"He is very, very worried. We are very worried and our colleagues in GATT are worried," Rafidah said.

"We don't want to see the Uruguay Round used as a pawn or a bone of contention between the U.S. Congress and the president. This involves the whole world," she said.

Sutherland put the issue more delicately.

"To me it would be incomprehensible and inconceivable that Congress would not approve it," he told reporters.

"The U.S. has been such a driving force since World War Two for free trade that if Congress did not give support, it would be too startling to contemplate," he said.

Sutherland also said if major trading powers like the United States, Europe and Japan did not ratify the pact in the next few months, the new World Trade Organization (WTO) could not come into being as scheduled on Jan. 1.

The WTO will replace GATT once the Uruguay Round agreement is ratified by member countries and will police the new global trade rules.

Deadline

Congress has set August 15 as a deadline to ratify the pact on a "fast-track basis", meaning without amendments.

But some in Congress, notably the Republican whip in the House of Representatives, Newt Gingrich, who has been a key GATT supporter, have objected to powers given to the WTO, saying they will impinge on national sovereignty.

Gingrich according to news reports has described the WTO as an "economic United Nations" in which the United States "could be outvoted by Antigua, by Botswana or by Venezuela".

Republicans are also threatening to oppose tax increases to pay for GATT. Under the U.S. budget law, Congress has to find money to replace a projected $14 billion in lost revenues as a result of lower tariffs under GATT.

"It's not necessary for everybody to ratify the accord before the WTO comes into existence," Sutherland said.

"But it's safe to say that if major trade powers and a significant number of other countries have not signed, it would be difficult to bring it into existence," he said.

Sutherland said issues like the so-called "social clause" linking trade benefits to the rights of labor had not yet become part of the GATT process.

The United States and France have sponsored a proposal for a global minimum-wage policy, fiercely opposed by many developing countries.

He said the issue had not come up for debate in the preparatory committee for the WTO or at the GATT assembly.

"There has only been unilateral statements by individual countries," he said.

"Let me say my primary focus is to get the ratification of the existing agreement," he said.

Rafidah said GATT member nations should publicly express their concern over U.S. ratification of the pact.

"It's for everybody to tell the United States that we are all worried," she said. "We can't wait. We did seven years of negotiations."