Senate Approves Sweeping Pact to Revise Global Trade Rules : GATT: Accord designed to open markets makes deep cuts in tariffs, quotas. The 76-24 bipartisan vote caps years of negotiations and political debate.

After seven years of negotiations and a year of political debate, an agreement that massively reorders the rules governing world trade was approved by the Senate on Thursday, making deep cuts in tariffs and quotas intended to bring more fairness to international commerce and a burst of growth to the world economy.

The bipartisan vote was 76 to 24.

The measure has been a centerpiece of President Clinton’s economic program. Administration officials said that it will open Europe, Japan and the emerging markets of developing nations to ever-more goods and services produced in American offices, factories and fields, creating new jobs in the process.

Senate approval of the accord--which was endorsed by the House on Tuesday and now goes to Clinton for his signature--brought to a close the tumultuous 103rd Congress. The President had called the lawmakers back to Washington for a rare post-election session to vote on the agreement.

The trade accord will vastly expand the reach of the General Agreement on Tariffs and Trade, created in 1947, beyond the traditional arena of manufacturing to cover agriculture and, to a lesser extent, financial services and such intellectual endeavors as the creation of pharmaceuticals and entertainment productions.

The “future prosperity of our nation” rests on the pact, said departing Senate Majority Leader George J. Mitchell (D-Me.), who cast his final votes in the Senate. “The agreement is a very good deal for America and a very great improvement on the current (trading) system,” Mitchell said.

Clinton, saluting the Senate in remarks at the White House Diplomatic Entrance, said that the vote “shows once again that our country is moving in the right direction, reaching out to the rest of the world and looking at the best interests of our own people.”

Approval of the agreement by the United States is expected to spur other nations to act, so that it can go into effect Jan. 1. So far, 36 of the 124 nations considered likely to take part have given formal approval to the plan, among them Germany, Britain, Mexico, Chile, Singapore, Malaysia and Thailand. Japan is expected to act on the measure as early as today.

“This is a decision that is going to have an impact around the world, a positive impact,” said Sen. Bob Dole (R-Kan.), who is all but certain to be Senate majority leader when the new Congress convenes in a month.

“Let’s face it,” Dole said. “We’re going to be the big beneficiary--the United States of America.”

But Sen. Ernest F. Hollings (D-S.C.), bitter in his opposition to the agreement, said after the vote: “This is the gravest mistake that the U.S. has ever made on economic policy.”

And Sen. Byron L. Dorgan (D-N.D.) argued that the pact would continue earlier trade practices and allow multinational companies to drive down U.S. wages by employing low-paid foreign laborers. “This is one more big drink from the same old bottle,” he said.

As wide as the impact of the agreement is likely to be, it lit few sparks on the floor of the Senate. For most of the 20 hours of debate, which began Wednesday, there were rarely more than half a dozen senators in the chamber at any moment and the visitors’ galleries were half empty.

The accord would cut tariffs by an average of 38%, eliminating them in such important sectors of the economy as steel, pharmaceuticals, paper and medical equipment. Republican and Democratic supporters alike predicted it will create 500,000 jobs in the United States as a result of increased commerce with other nations.

Similarly, there is general agreement that the $744 billion in tariffs that would be eliminated around the world, if the pact is fully implemented, will amount to the largest single tax cut ever enacted anywhere.

The 22,000 pages of the agreement spell out the minutiae of rules that make up the road map of international trade.

In the United States, tariffs--the taxes charged on imported goods--would be eliminated on such diverse products as refrigerators, sewing machines, small motorcycles and candles, creating new competition from foreign manufacturers suddenly given free access to free-spending American consumers.

But there would be winners, too, in the United States as lowered tariffs around the world open foreign markets for U.S. companies and, the Administration has argued, jobs for American workers.

Japan’s taxes on shampoo, sunscreens and razor blades would be thrown out, for example. The tariff on beef would be cut from 50% to 38.5%, on oranges from 40% to 32%, and on whiskey there would be a whopping reduction--from 24.5% to zero.

In Europe, the tax on imported beer, now 24%, would be eliminated. So, too, would be the 7% tariff on swine and beef livers. And makers of American potato chips would see the tariff on their products cut from 22% to 14.1%.

Overall, 40% of foreign products entering the United States will be sold duty-free, up from 10%. For other industrial countries, that figure will increase to 44% from the current 20%.

Profits, and some losses, will be greatest with some of the big-ticket items. With tariffs dropping, likely beneficiaries include makers of specialty steel products--high-quality items turned out by American labor from lower-quality steel made overseas.

Others expected to benefit are farmers sending their grains to Europe, where subsidies to farmers there would be cut, forcing them to raise prices closer to the U.S. level. With greater sales abroad--an increase of $8.5 billion by 2005, according to one study--U.S. farmers would receive less in U.S. government crop subsidies.

The agreement would bring high-tech industries into the trading regime, affecting such products as computers, software and semiconductors, all products barely envisaged when developed nations fashioned the international trading system to impose a new economic order in the wake of World War II.

Services, which account for about 60% of the U.S. economy, will be brought under the rules of the international trading community and made more open, contributing to a likely expansion of international operations in engineering, advertising and health care. But in the critical area of financial services, covering banking and insurance, only general principles have been set forth, and firm commitments to lower barriers still must be negotiated.

The U.S. garment industry is widely seen as likely to suffer because lowered tariffs and quotas will make it easier for foreign companies, some paying workers little more than $1 a day, to undercut the prices that U.S. clothing manufacturers must charge.

While the accord would increase copyright protections, the entertainment industry was disappointed that U.S. negotiators failed last year to get Europe to drop its barriers to foreign-made movies and television productions and thus will not get a boost from the agreement.

Critics argued that in agreeing to change the rules, the United States leaves itself open to the demands of an international bureaucracy running the new World Trade Organization, which will become the new regime governing world commerce, replacing the General Agreement on Tariffs and Trade--an organization that, confusingly, bears the same name as the agreement itself.

The World Trade Organization, critics said, would have too much authority to overturn U.S. laws protecting the environment and worker safety.

Under a plan worked out by Dole, a panel of U.S. appellate court judges could be asked to determine whether the international panel was ruling arbitrarily against the United States. If they found that the trade body was operating unfairly, Congress could vote to the withdraw the United States from the agreement.

The measure was approved by 35 Republicans and 41 Democrats, including California Sens. Barbara Boxer and Dianne Feinstein. Thirteen Democrats and 11 Republicans voted against it.

That final vote, however, was anticlimactic. The true test came earlier when 60 votes were needed to waive the Senate’s budget deficit rules. Sixty-eight senators voted for the waiver, while 32 were opposed.

That earlier step was necessary because budget law requires Congress either to cut spending or raise taxes to match revenue that will disappear under the agreement.

Overall, the trade plan would cut tariffs in the United States by $12 billion over the next five years and approximately $40 billion over 10 years--although the measure ultimately would produce, by the Administration’s count, three times as much in tax income as a result of greater economic activity.

Politically, the vote and the lobbying that preceded it created some of the strangest pairings in modern Washington, linking liberals and conservatives on both sides of the issue.

In the end, the economic interests of individual states, rather than ideology, dictated votes, with corn-state senators--Charles E. Grassley (R-Iowa) and Bob Kerrey (D-Neb.), for example, citing the agreement’s anticipated boost for agriculture exports and Robert F. Bennett, a Republican from Utah, where computer software has become a growth industry, cheering the accord’s challenge to the burgeoning business in pirated computer programs.

Who Belongs to the Trade Pact

The trade accord will affect all 124 members of the General Agreement on Tariffs and Trade. Here is a look at the member nations. Among the notable non-members: Russia and Saudi Arabia.

Consumer Impact

A consumer’s guide to U.S. tariff cuts under the trade pact. (A tariff is the tax palaced on imported goods to keep domestic products competitive.)

Rates Old New Refrigerators 2.9% 0% Dishwashers 3.6 2.4 Cassette recorders 3.9 0 Particleboard 6.0 0 500-700 cc motorcycles 3.7 0 Silk pantyhose 18.3 2.7 Sparkling wine* 30.9 19.8 Whole frozen chicken** 22 17.6 Garlic** 1.7 0.43

* per liter

** per kilogram

Source: Associated Press, Times staff

More on Pact: A special package of articles on the new world trade accord has been adapted for the TimesLink on-line service by the editors of the National Journal. Times on Demand has a reprint available by fax or mail of “After GATT,” a look at the basics of the trade package. Call 808-8463 and press *8630. Select option 1. Order No. 6021. $1.95. Details on Times electronic services, B4