One down, one to go. And a bigger one at that.
For all the huffing and puffing about the North American Free Trade Agreement, decisively approved by the House last night, there is another trade agreement on the table more far-reaching in its impact: the General Agreement on Tariffs and Trade, better known as GATT. NAFTA was vital to the economic growth of the U.S. and its immediate neighbors. GATT involves just about all of the economically significant world.
This is not to diminish the importance of last night's vote. Beyond being a much-needed political victory for President Clinton, the House's approval of the trade agreement with Mexico and Canada strengthens the economies and the negotiating clout of the three neighbors just at the right time.
Negotiations over liberalized world trading rules -- the so-called Uruguay round initiated in the Bush administration -- have dragged for a year or so. Effectively they face a deadline four weeks from today. That is the date the president's "fast track" authority to send Congress a pact it must vote up or down, but can't modify, will expire. Failure to meet that deadline would be a death sentence for GATT.
Though it has not become the household term NAFTA was in the past few months, GATT revolutionized world trade in the postwar years. It was the beginning of the end for the sort of trade barriers among nations that, at the very least, deepened the Great Depression of the '30s. Without U.S. approval of NAFTA, the GATT negotiations would almost certainly have collapsed.
That could have been a severe setback for a world slowly creeping out of recession. Now the European Community and others with troublesome proposals on the table know they are negotiating with an administration committed to free trade -- and able to flex the political muscle at home to deliver it.
Free-trading blocs are becoming the instrument of choice around the world. The EC is the largest and most successful thus far, but the developing nations of Latin America and of East Asia are forming their own. The greater clout of a North American zone strengthens U.S. bargaining power.
Closer to home, the NAFTA vote should go far to soothe the injured feelings in Mexico caused by some of the ignorant polemics from opponents of the agreement like Ross Perot. Despite our greater cultural affinity with Canada, Mexico is the more important neighbor. Continued democratization -- which still has a way to go -- and liberalization of its economy are greatly in the U.S. interest. A defeated NAFTA would have shoved Mexico back into its gringo-hating past, exacerbating the social and economic problems that poisoned relations between the two nations in the past. The House vote on NAFTA was a down payment on a new era.