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WTO's Tentacles Tighten
July 25, 2001

On October 18, 1994, prefacing Congress' decision to trade American sovereignty for a WTO membership card, a Harvard Law professor testified before the Senate Commerce Committee. He cautioned, "With more than 120 member nations entitled to challenge American laws, and with the United States deprived of any veto power over the decisions of the dispute settlement bodies, our participation in the WTO makes very real the prospect of serious economic sanctions…against which we will not be in a position to retaliate lawfully." Neither chamber heeded his warning as both pledged allegiance to a global trade authority which required "each member [to] ensure the conformity of its laws, regulations, and administrative procedures….No reservations may be made."

This week, the professor's prophecy was fulfilled. A WTO panel in Geneva ruled that a U.S. law -- which extends domestic tax credits to American companies taxed overseas for foreign income -- amounts to an illegal export subsidy. Either we revamp our law, or face a $4 billion fine.

Those majoring in the minor will fixate on the credit -- its merits and minuses. But whatever Boeing or Microsoft stands to lose, the damage to the American republic will be greater. Clear the smoke over tax credits, and a larger issue remains: the ability of WTO magistrates to sweep aside American law and the docility of legislators watching foreign judges do their jobs.

When news of the WTO's decision reached Iowa Sen. Charles Grassley, the ranking Republican on the Senate Finance Committee, he managed to be "deeply disappointed and concerned" - for the few minutes before he conceded that we "ultimately must comply with our WTO obligations." Rep. Bill Thomas, the similarly compliant Republican chairman of the House Ways and Means Committee, managed a mushmild admonition to "accept the message of the WTO ruling."

That message: an obituary for the commerce clause of the U.S. Constitution, which gives Congress exclusive power "to lay and collect…duties" and to "regulate commerce with foreign nations..." But our lawmakers tolled no bell for liberty's demise. Having delegated their constitutional responsibility to Geneva in the naïve belief that we would influence other nations' laws while our own went unchallenged, Congress defends itself by justifying the global folly.

We will hear no more of this issue, because mutual assent will make it disappear. The WTO wins the round because we have neither recourse nor will to resist. In a country still capable of outrage, our Congress would have escorted the WTO bureaucrats down to Boston Harbor for a tea party. But as long as globalism remains au courant with Republicans and Democrats alike, disapproval aims instead at scruffy protestors outside international trade summits.

The Harvard seer was right -- but couldn't be farther left. Credit Lawrence Tribe for wisdom beyond his audience, but don't mistake him for a conservative. The uber-liberal couldn't be more comfortable with globalism and didn't oppose the WTO deal on substance. Yet Tribe was more honest than the rest. He acknowledged that courting globalism would require changes in our constitutional arrangement. Authority would change hands, and arbitration would belong to different powers. So it has. And so it will - until the U.S. Congress remembers its raison d'etre.

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