NEWS ANALYSIS : First WTO Ruling Provides Grist for Opponents Citing Threat to U.S. Law

When the United States became a founding member of the newly formed World Trade Organization, activists such as Janet Hathaway warned that it was issuing a death warrant for tough U.S. environmental laws.

Now those warnings have gained credibility with the WTO’s first ruling, announced Wednesday, upholding claims by Venezuela and Brazil that an Environmental Protection Agency regulation on oil imports discriminates against foreign refineries.

Hathaway was joined Thursday by other consumer advocates--and GOP presidential candidate and former television commentator Patrick J. Buchanan--in denouncing the WTO ruling. They urged the Clinton administration to appeal the verdict and begin taking steps to revise the WTO or pull out of the trade agreement.

“This is a major blow to the ability of the United States to protect public health,” said Hathaway, senior attorney for the Natural Resources Defense Council.

The political reverberations of the ruling could be significant, given the concerns being raised in Congress and on the campaign trail that trade agreements such as the WTO and North American Free Trade Agreement represent an attack on U.S. sovereignty and a threat to U.S. health, safety and labor laws.

At the time of its ratification by Congress, President Clinton and Senate Majority Leader Bob Dole (R-Kan.) touted the World Trade Organization as a powerful vehicle for lowering trade barriers and opening up new markets overseas. But in recent months, Dole, the leading GOP presidential contender, has backed off from his pro-trade stance.

U.S. Trade Representative Mickey Kantor said Thursday that he planned to appeal the WTO decision after consulting with others in the Clinton administration and Congress. He also said the U.S. government has the “discretion” to decide how or whether a WTO ruling would be implemented.

“WTO panel reports have no force under U.S. law,” he said.

But WTO supporters argue the U.S. government would abdicate its leadership role in the trade community and undermine the fledgling global trade group if it refuses to abide by the very rules it so vigorously promoted.

“If we were to defy the structure, that would be hypocritical and very bad,” said Jeffrey Frankel, professor of economics at UC Berkeley. “It would undermine the credibility of everything both the Republicans and Democrats supported and worked for eight years to achieve.”

The United States--caught between its belief in the benefits of free trade and concerns for public safety and the environment--has long been accused of trade hypocrisy. Although the U.S. government has vigorously promoted trade liberalization in recent years, it has also balked on several occasions when the General Agreement on Tariffs and Trade, the WTO predecessor, ruled against it.

As an arbiter of disputes, the WTO’s job is to determine whether a country’s regulations or practices discriminate against foreign companies.

The WTO’s dispute resolution process was designed to make it tougher for countries to duck unpopular decisions. Under the agreement, the WTO has 18 months to rule on a complaint and handle all appeals. Governments can comply with the ruling or negotiate a settlement with the aggrieved party. A ruling can only be overturned if there is a consensus of WTO members.

The refinery verdict is the latest chapter in a lengthy battle by Venezuela to overturn a U.S. regulation establishing standards for the level of contaminants that could be contained in imported gasoline.

Under the Clean Air Act, the EPA established a baseline for determining the acceptable amount of contaminants. A separate requirement was set up for those countries, such as Venezuela, whose firms had not historically kept the records necessary to meet the standards.

Venezuela unsuccessfully fought this regulation in Congress and in U.S. District Court in Washington before taking its complaint to the WTO, where a panel determined that the EPA gasoline standard treated foreign companies differently and was therefore discriminatory.