Gramm Joins Dole in Backing Trade Accord

With critical congressional votes looming, the world trade agreement won another key ally Monday when Sen. Phil Gramm (R-Tex.) declared his support for the pact, which would reduce tariffs and other barriers to trade among 124 nations.

As the agreement heads for a ratification vote in the House today and the Senate Thursday, Gramm told reporters that he will join Senate Minority Leader Bob Dole (R-Kan.) in supporting the pact on all votes in the Senate.

Gramm, a leader among conservative Senate Republicans and a likely presidential candidate, said that he decided to support the accord, which would create a World Trade Organization to succeed the General Agreement on Tariffs and Trade as the regime that governs global trade, despite what he sees as dangerous and extraneous provisions in the ratification bill.

Gramm’s support was hailed by the White House and other proponents of the pact as critical to shoring up support among Senate Republicans during this week’s lame-duck legislative session. Gramm’s decision was especially significant because he said that he would vote yes on the most critical issue: a waiver of the Senate’s budget rules, which require 60 votes.

Some advocates of the trade accord had feared that Gramm might declare his support for the agreement but vote against the budget waiver. And they feared that other conservative senators might follow that lead. Such a position could have provided some political cover, while possibly killing the agreement.

The budget waiver is necessary because the trade agreement calls for deep reductions in import tariffs, potentially reducing federal revenues by $30 billion to $40 billion over 10 years. Despite that, the Clinton Administration has not proposed any offsetting tax and revenue increases to finance those cuts, meaning that the budget deficit would be allowed to grow in violation of the budget rules.

One Administration official, told that Gramm had pledged to vote for the waiver, predicted that the move “would send a very strong signal” to other undecided members of Congress. Others added, however, that proponents of the global trade agreement were close to having the needed 60 votes in the Senate even before Dole and Gramm announced their support. Dole gave his endorsement in a White House ceremony last Wednesday.

Administration officials said that they believe they will easily achieve the 218 votes needed for passage in the House. Most observers had said that the Senate would provide the toughest test for the trade agreement because of the budget waiver rule. And as Clinton began phoning senators Monday afternoon to line up their support, some Administration officials remained worried that, under pressure from opponents, some senators might try to delay the vote until next year. Such a move, they argued, could kill the agreement.

“We can’t take anything for granted,” said one Administration aide.

Meanwhile, a bipartisan array of Washington notables from the last nine administrations crowded the East Room of the White House Monday to join Clinton in expressing support for the agreement. Among them were James A. Baker III, secretary of state in the George Bush Administration; James C. Miller III, director of the Office of Management and Budget under President Ronald Reagan; former Federal Reserve Board Chairman Paul A. Volcker; six members of the Clinton Cabinet and economists from both the private sector and government.

But the White House could not line up appearances from all the living former presidents, as it did last year before the vote for the North American Free Trade Agreement. Officials blamed logistics.

Three ex-presidents, Gerald R. Ford, Jimmy Carter and Bush, signed a joint letter of support that was read at the event. (White House officials said they did not want to bother Reagan, in light of his recent announcement that he is suffering from the early stages of Alzheimer’s disease.)

Former Secretary Baker, in an allusion to the dark predictions of Texas billionaire Ross Perot, said that during the debate over NAFTA, “the misguided and the misinformed predicted a vast sucking sound as American jobs went south.” Instead, he said, the pact between the United States, Mexico and Canada had brought only the “powerful wind of economic freedom.”

In his remarks, Clinton expanded on the theme, asserting that since NAFTA went into effect, U.S. auto exports to Mexico are up 500%, so now auto workers’ biggest complaint is excessive overtime. “That’s what, at home, we called a high-class problem.”

Miller, the former budget director, said that the world trade agreement’s merits were demonstrated by the fact that 11 former budget directors were willing to stand up for it. They “all came at things in a little different way . . . but they all think it’s extremely important,” Miller said.

Gramm, echoing the concerns of other conservative Republicans, said that he remains troubled by many provisions included in the world trade agreement and complained that Clinton “had made it hard even for a free trader like me to support this agreement.”

Gramm cited a provision that allows countries like Germany and Canada to continue or expand subsidies for targeted industries or special regions without violating the new rules included in the agreement. He warned that the provision “institutionalizes industrial policy” to the detriment of the United States.

The Administration countered, however, that the exemption also will benefit U.S. efforts to mount industrial policies. U.S. Trade Representative Mickey Kantor has warned that, without that clause, American industrial and research consortiums like Sematech in the computer industry or technology funding through the government’s agency for advanced research projects would be in violation of the trade accord.

Gramm also complained that Clinton had taken advantage of the “fast-track” legislative rules, which prohibit amendments to the bill once it is in Congress, so he could load the legislation up with pet projects. He noted that Clinton included a provision to reauthorize the so-called Super 301 law, a trade provision directly related to the new trade accord. And he complained that the Administration had failed to find enough spending cuts to offset the tariff reductions, thus allowing critics of the trade pact to argue that it will increase the budget deficit.

Overall, however, those concerns were not enough to outweigh the enormous benefits of free trade, Gramm said.

“Is it worth it, given these problems?” Gramm asked. “The answer is yes.”

Meanwhile, opponents, comprised of an unlikely coalition including conservative Republican Patrick J. Buchanan, consumer advocate Ralph Nader and Perot, continue to attack the accord by arguing that it will cost U.S. jobs and cede American sovereignty to an international elite. Buchanan has been particularly outspoken, appearing in a series of radio and television ads in which he urges Congress to vote against the deal.

But Clinton on Monday tried to counter arguments that the pact will cost U.S. workers their jobs and lead to a further erosion in middle-class incomes and the U.S. standard of living. He also recognized, however, that opposition to the agreement stems from the same sort of middle-class anxieties about the nation’s future that so damaged his party at the polls this month.

“That is a wrong argument,” Clinton said. “But that is really the undercurrent against this GATT.”

Times staff writer Melissa Healy also contributed to this story.

* DETAILS OF PACT: A primer on the basic elements of the new trade agreement. A5

More on GATT: A special package of articles on the trade treaty has been adapted for the TimesLink on-line service by the editors of the National Journal. Included are reports by the House Ways and Means Committee on the measure, where members of the Southern California delegation stand, what party leaders say and a look at the next foreign trade hurdles if it passes.

Details on Times electronic services, B4