A Year in the Life of the GATT Business Lobby

by Andrew Wheat

THE MOST POWERFUL U.S. business lobbies have banded together to avoid the near miss they endured when Congress narrowly approved the North American Free Trade Agreement in November 1993. Many of this united front's bizarre antics in pursuit of the multinational power grab known as the Uruguay Round of the General Agreement on Tariffs and Trade (GATT ) would be laughable but for the fact that the business lobbies involved are funneling millions of dollars into Washington - where money and power stride hand in hand.

 Since big business formed the Alliance for GATT Now in February 1994, this umbrella lobby has amassed a long - though questionable - corporate membership list, become a devoted Congressional pen pal, and has run up a seven-figure GATT lobby bill. While the Alliance declines to reveal the exact amount it is spending, Elizabeth Wright, the manager of federal government relations for Texas Instruments, the multinational that is spearheading the Alliance's efforts, describes it as "a multi-million dollar campaign."

For the multinationals, Uruguay Round lobbying amounts to an investment in a dream that has been eight years in the making. During this time, multinational trade advisory panels huddled in Geneva with trade representatives, drawing up their wish list for a new world order in which trade takes precedence over all other values. The final Uruguay Round GATT agreement and the World Trade Organization (WTO) it would establish represent the consummation of the global corporations' near- decade-long efforts.

Counting unhatched chickens

 The financial resources commanded by the founding members of the Alliance make it a serious force to be reckoned with. Yet the Alliance's support is not what it would lead the public to believe. Some of the businesses that it claims as members in circulars mailed to Congress disavow Alliance membership. Astute members of Congress may have wondered why, for example, their local utility is lobbying for GATT.

 Representatives of Washington D.C.'s Potomac Electric Power Company (PEPCO) were baffled when asked by Multinational Monitor about their Alliance membership. After much investigation, Beverly Perry of the utility's government relations office discovered how PEPCO found its way onto the Alliance list. Like many other companies whose officers are members of the powerful Business Roundtable, an organization comprised of leaders of the largest U.S. corporations, PEPCO became a member of the Alliance by default. Perry said the Alliance sent what she called "a negative option letter" to Roundtable members, saying it would list them as an Alliance member unless they specifically asked to be excluded from it. At PEPCO and many other companies, this negative option letter apparently got junk-mail treatment - making these unwitting companies de facto supporters of the GATT lobbyists.

 Given such tactics, it is not hard to see how the Alliance makes the leap from a membership list of 285 business groups and corporations (some of which don't know they are members) to the claim that it represents 200,000 businesses.

The impartial media's lobby

 Apart from utilities such as PEPCO, another group of alleged Alliance members that invites skepticism are media conglomerates. The Alliance claims as members such media giants as the Gannett Company (the largest U.S. newspaper chain), Times Mirror Company (whose papers include the Los Angeles Times, Baltimore Sun, and Newsday), and Capital Cities/ABC.

 It would not be surprising if media giants of this size have an interest in GATT's fate. But it would be unusual for them to advertise their bias by openly supporting an entity such as the Alliance. Indeed, spokespeople for Times Mirror and Gannett told Elizabeth Paukstis of Fairness and Accuracy in Reporting (FAIR) that, despite Alliance claims to the contrary, their companies are not Alliance members. A Capital Cities/ABC spokesperson told Multinational Monitor, "As far as I could determine, we are not a member [of the Alliance], though various groups we belong to are supporting it."

 Other media conglomerates and executives have also supported some of the Alliance's founding members, such as the Emergency Committee for American Trade. According to lobby records filed with the Clerk of the House of Representatives, the Committee accepted $548,000 in contributions in the first half of 1994. Most of this money came in $11,000 contributions listed in the names of corporate executives, including a couple of media moguls. One is Joseph L. Dionne, chairman and chief executive officer of McGraw-Hill, Inc., which owns Business Week, a host of trade publications and television stations in California, Colorado and Indiana. Another is Gerald M. Levin, president and chief operating officer of Time Warner Inc., which owns Time, Life, Fortune, Money, People, Health and many other publications. A spokesperson for Time Warner says the corporation foots the bill for the dues listed in Levin's name.

 Even National Public Radio (NPR) made questionable judgments about trade coverage by harboring the pro-GATT lobby in its midst. Former congressional representatives and regular NPR political commentators Tom Downey and Vin Weber became honorary co-chairs of the Alliance for GATT Now in June. "It is not coincidence that the business coalition campaigning for GATT happened to choose Mr. Downey as their Democratic lobbyist and Mr. Weber as their Republican lobbyist," consumer advocate Ralph Nader complained in a June 27 letter to NPR President Delano Lewis. "Part of what the pro-GATT alliance was buying was the on-air Wednesday political pundit duo heard throughout Washington weekly."

 But Lewis, the former head of Chesapeake and Potomac Telephone Co., a descendent of bona- fide Alliance member AT& T, saw no conflict of interest in retaining the commentators. "It is our understanding that neither Mr. Downey nor Mr. Weber are paid for their co-chairmanship of GATT Now and that they were asked by the Clinton administration to work with a consortium of businesses seeking GATT legislative approval," Lewis responded in a reply letter. "I can assure you that in any future discussions relating to GATT, we will certainly point out their affiliation with the Alliance for GATT Now."

Producers masquerade as consumers

 Another founding member of the Alliance worthy of mention is Consumers for World Trade (CWT), a corporate front group funded not by consumers, but by multinational producers.

 In the first half of this year, CWT accepted $64,500 in contributions, according to Congressional lobby records. The sources of this patronage include Toyota Motor Sales, USA, Inc., Nissan North America, Inc., Honda North America, Exxon Corporation, Rockwell International, Boeing Company, Caterpillar, Inc., 3M, Procter & Gamble, The Limited and Cargill, Inc. With the exception of the Japanese-controlled firms and Rockwell, these corporations also contribute $11,000 a year to the Emergency Committee for American Trade.

 The highlight of CWT's annual fundraising drive, which this year marked the nadir of the pro- GATT lobby's consumer charade, is its award dinner. On June 21, Mickey Kantor presented CWT's 1994 consumer award to GATT Director-General Peter Sutherland. Like previous winners, such as Ronald Reagan and Mexico's lame duck president Carlos Salinas de Gortari, Sutherland distinguished himself among consumer advocates by forwarding the belief that government regulation of commerce is the greatest threat consumers face. "Governments should interfere in the conduct of trade as little as possible," Sutherland said in March.

 To draw attention to deregulation's questionable benefits for consumers, protesters outside Washington's Four Seasons Hotel, where the banquet was held, handed out special menus. Beneath each dish on the menu was a note indicating what additives and pesticides currently prohibited by U.S. law could be legalized if Congress cedes authority to the proposed World Trade Organization.

 The date of CWT's award ceremony coincided with the annual meeting of the Business Roundtable. Before the award dinner, about 20 Roundtable chief executive officers spent the day meeting with lawmakers on Capitol Hill and urging the rapid passage of the Uruguay Round implementing legislation.

Trade all-stars strike out

 The pro-GATT business lobby's message assumed its most bizarre form on July 21, when the Alliance sent members of Congress a pack of GATT all-star baseball cards. Leading the line-up of these trade all- stars is that seamless line of the three presidents who have lorded over the eight-year period in which the Uruguay Round has been negotiated. Each is photographed in a highly presidential, first-pitch pose above imaginative captions that read:

 While the Alliance's public relations gurus could not have foreseen the baseball strike that began three weeks after their publicity pitch, some of their GATT all-star selections suggest lapsed judgment.

 One GATT all-star pick is Agriculture Secretary Mike Espy, who recently agreed to resign his post. Espy became the subject of a federal investigation seeking to establish whether there is any connection between the Department's regulation of the poultry industry and gifts Espy and one of his girlfriends allegedly accepted from poultry tycoon Donald Tyson. Federal law prohibits U.S. Department of Agriculture employees from accepting gifts from the industries it is charged with regulating.

 Another all-star card of questionable taste features a beaming Vice President Al Gore, whose stated GATT accomplishment is flying to Morocco in April to sign the GATT accord. An unstated but arguably more crucial Gore contribution has been his willingness to selflessly push GATT, even though many of the very environmental policies he proposed in his book, Earth in the Balance, would be open to challenge as illegal barriers to trade under the World Trade Organization.

 Finally, Carla Hills, U.S. Trade Representative under George Bush, makes an embarrassing all- star choice. Now a partner at Richard Nixon's old law firm of Mudge, Rose, Guthrie, Alexander and Ferdon, Hills personifies the revolving door connecting the U.S. Trade Representative's office to multinational corporations and their stables of lawyers and lobbyists.

In a legal opinion prepared for R.J. Reynolds Tobacco Company and Philip Morris International, Inc. on May 3, 1994, Hills outlined a GATT-attack strategy targeting a Canadian Parliament proposal to impose black and white, generic packaging for all cigarettes sold in Canada [See Tobacco Puffery," Multinational Monitor, June 1994 ]. The intent of that proposal was to reduce smoking among children by erasing the slick images and logos on cigarette packages. Hills concluded that the measure would be GATT-illegal unless Canada could persuade a GATT dispute resolution panel that there was no alternative, less-trademark-restrictive way to reduce smoking among children.



Tied to the Whipping Post

WHAT WAS TO BE the final rush to pass GATT in the House failed, in part, because one of its most enthusiastic cheerleaders, the editorial board of the Washington Post, rooted a little too enthusiastically at a time when it should have been more concerned about revealing its own substantial stake in GATT's outcome.

 That stake is American Personal Communications (APC), 70 percent of which is owned by the Washington Post Co. A provision slipped into the GATT implementing legislation would sell APC and two other companies licenses to compete against cellular phone companies in three of the nation's largest metropolitan markets by providing a new generation of wireless telephone service.

Critics argued that tucked into the non-amendable, fast-track GATT implementing legislation is as much as $1.6 billion in gravy for APC, which received the Baltimore-Washington market, Omnipoint Communications Corp., which was granted the New York City license, and Cox Enterprises Inc., which received the Los Angeles concession. Together, the companies would pay the federal government between $400 million and $1 billion for these licenses, which have an estimated total market value of as much as $2 billion.

 The wireless phone deal was cut between representatives of the beneficiary companies and leaders of the House of Representatives and the White House, who were frantically searching for money to offset the $11.5 billion in foregone tariff revenue that GATT will cost the U.S. Treasury in its first five years. Post Publisher and Chief Executive Officer Donald Graham represented his company's interests in the bargaining and Alliance for GATT Now co-chair and NPR commentator Tom Downey lobbied on behalf of APC. House Energy and Commerce Chairman John Dingell, D-Michigan, inserted the deal into the GATT implementing legislation.

 Once copies of the implementing legislation, including the deal, hit the streets, jealous competitors of the three chosen companies denounced this handiwork as a sweetheart deal that ripped off the American taxpayer. On October 4, Pacific Telesis took out full-page ads in Washington papers - including the Post - slamming the Post for neglecting to mention "its own special interest" in this "billion-dollar loophole" in "two editorials urging quick passage of the trade pact." Pacific Telesis said it would gladly pay full market price for the licenses.

 In several mea culpa pieces belatedly printed in its pages, the Post admitted to serious lapses of omission on its editorial pages. But even in these pieces, the Post writers were quite generous to their own paper. "It was bad judgments and bad communication - and not intentional secrecy" that led the Post editorial board on September 29 to run yet another editorial that urged Congress to lose no time in passing GATT without disclosing the company's conflict of interest, Ombudsman Joann Byrd wrote on October 9.

Byrd graciously accepted Editorial Page Editor Meg Greenfield's vague explanation that the usual communication system had broken down. But Byrd noted in the same piece that the Post's business page reported that the APC deal was in the GATT implementing legislation just two days before the September 29 editorial ran. Instead of saying that "the usual communication system broke down," Byrd might have said that there is something particularly disturbing about her paper's editorial board churning out pro-GATT pieces when they don't even bother to read GATT articles located in another section of their own paper.

 The Post subsidiary vigorously defended its position in the controversy. It pointed out that all competitors were on equal footing in 1992 when the Federal Communications Commission (FCC) decided to offer companies that could demonstrate that they have pioneered communications technology a preference over all other license applicants. The APC technology, the company claims, will greatly expand the kind of data that can be transmitted over wireless phones, while costing about half the price of cellular phones. Anne Phillips, APC vice president of external affairs, says the company spent about $30 million developing the technology that the FCC later recognized for preferential treatment.

In 1993, Congress woke up to the considerable value of these broadband licenses and ordered the FCC to auction them off. After the FCC was required to sell licenses to non-pioneer companies at their market value, the pioneers' competitors, led by the Baby Bells, complained that preserving free licenses for pioneers would give them an excessively unfair advantage. On August 9 the FCC decided to charge the pioneers about 90 percent of the market value of the licenses, which it had once promised to award them for free.

 Outraged by what it characterizes as a breach of contract, the APC sued. The settlement struck by the pioneers, Dingell and the White House requires the companies to pay $400 million or 85 percent of the average price paid in coming auctions, whichever is more. But PacTel Vice President Ronald Stowe charged that the pioneers could end up with a 30 percent discount because their price will be based on an average that excludes the values of the markets granted to the pioneers, which are among the nation's largest.

In an October 4 letter to congressional colleagues, Dingell described this settlement as "a good deal for the taxpayers." Dingell said the FCC lacked explicit legal authority to demand payment for a license, and the deal was a prudent way to avoid an expensive court battle. In its own promotional materials, the APC trumpeted the fact that: "Without revenue generated by the ęPioneer Preference,' passing GATT would be impossible." But given that the licenses are worth as much as $2 billion, pioneer competitors and other critics countered that the pioneers struck a good deal at the expense of taxpayers.

 PacTel's scathing ads found a particularly receptive audience among conservative pundits and politicians. GATT opponents such as Patrick Buchanan and Ross Perot hit the talk shows, portraying the Post deal as the tip of an iceberg and suggesting that the untouchable GATT implementing legislation was an irresistible pork skewer for Clinton and Dingell and friends. Rep. Dana Rohrabacher, R-California, told reporters he was ashamed that he voted for fast-track authority in 1992, now that the Clinton administration was trying to ram the lengthy, complicated GATT legislation through the House in a fraction of the fast-track-allotted 45 days. Once Senator Ernest Hollings, D-South Carolina, engineered a delay of the GATT vote in the Senate, House Minority Leader Newt Gingrich, R-Georgia, took advantage of the opportunity that the Post provided him to rally his troops to postpone the House GATT vote beyond the November elections.

- A.W.



Kantor's Heritage

BEFORE THE ADVENT OF the New Democrat agenda (which is increasingly difficult to distinguish from the traditional big business agenda), one could expect a lively assault on the top economic policies of a Democratic president from the conservative think tanks in Washington. No more. In fact, the Heritage Foundation's pronouncements on GATT are interchangeable with those of the Clinton administration and its appointed corporate advisory groups.

Heritage Senior Fellow Joe Cobb, former chief economist for the Senate Republican Policy Committee and Minority Staff Director for the Joint Economic Committee of Congress, is credited with writing a GATT position paper, "A Guide to the New GATT Agreement." Cobb's paper is so strongly pro-GATT that one might conclude it was written by the same multinational corporations that helped draft the GATT agreement. Much of it was.

 A comparison of Cobb's May 5, 1994, paper to a Jan. 15, 1994, report by the Advisory Committee for Trade Policy and Negotiations (an official, federal government-formed committee made up of multinational corporate representatives), reveals that Cobb borrowed entire paragraphs and pages of the earlier report. In so doing, Cobb, who did not return Multinational Monitor calls, often failed to use quotation marks or footnotes to identify material that he lifted, often word for word, from the Advisory Committee's "Report to the President and Congress and the United States Trade Representative Concerning the Uruguay Round of Negotiations on The General Agreement on Tariffs and Trade."

 U.S. Trade Representative Mickey Kantor was so impressed with Cobb's scholarship that he quoted it approvingly in an April 28 letter to members of Congress. Kantor apparently was privy to the sneak preview of the May 5 Heritage paper, which Cobb sent Republicans - and perhaps a few highly placed New Democrats - on April 13.