Dole links GATT vote to tax cut

November 21, 1994|By Mark Matthews | Mark Matthews,Washington Bureau of The Sun

WASHINGTON -- As the battle over a world trade treaty enters a decisive final week, the Senate's top Republican linked his own crucial support for the pact yesterday to a key concession by President Clinton on tax cuts.

Sen. Bob Dole of Kansas, who will lead the Republican majority next year, demanded that the White House drop its opposition to a capital gains tax reduction. He indicated that this would affect how he would vote on the 123-nation agreement to slash trade barriers worldwide.

With the General Agreement on Tariffs and Trade, or GATT, still short of the needed 60 votes for passage in the Senate, Mr. Dole's support is considered vital to winning over fence-sitting Republicans.

His new proposal for a tax trade-off, coming on top of objections to the pact he had raised previously, poses a major new obstacle for the president, whose party has repeatedly called a capital gains tax cut a break for the well-to-do.

White House Chief of Staff Leon E. Panetta, in a CNN interview yesterday, rejected the demand, saying that capital gains "does not have any relation" to the trade agreement.

Mr. Dole, speaking on ABC's "This Week with David Brinkley," advanced the trade-off as supporters and opponents of the trade treaty launched a costly final blitz of television, radio and print advertising, and speeches giving the trade battle the feel of a close political race.

Mr. Clinton, cutting short his Hawaii vacation by a half-day, returned to Washington yesterday to work on what will be a major test of his ability both to work with Republicans in Congress and to assert leadership in world affairs.

Members of Congress return to Washington at the end of this month for a lame duck session devoted solely to passage of GATT. The House vote, scheduled for Nov. 29, is expected to see overwhelming support for the accord, with the pivotal Senate vote scheduled for Dec. 1.

Without congressional approval for the participation of the United States, the world's largest trading country, GATT would be virtually dead.

In a radio address Saturday, Vice President Al Gore said the pact would pump $100 billion to $200 billion a year into the U.S. economy once it was fully implemented.

"GATT contains the biggest tax cut in history, a record $744 billion reduction in tariffs, which will lower prices for consumers around the globe and, most importantly, here at home," Mr. Gore said. "GATT will mean higher standards of living and less regulation for business."

Corporate supporters of the treaty planned a new series of nationwide TV, radio and print advertisements this week as part of a $1.5 million media campaign already under way.

Opponents, who include organized labor fearful of the export of jobs, the textile industry, consumer and environmental groups, and Ross Perot, have countered with their own media blitz, including one TV ad showing a row of pigs at a trough and bearing the slogan, "Take the fat out of GATT."

"Everybody is going to know more about GATT than they ever knew about NAFTA [the North American Free Trade Agreement]," said Pat Choate, an economist, author and adviser to Mr. Perot. "If you're not watching sports on Thanksgiving, you'll be learning about GATT."

Mr. Dole is the second powerful Republican to play hardball with the White House over the GATT vote. Last week, Sen. Jesse Helms of North Carolina, who will chair the Foreign Relations Committee, suggested that he would be less than cooperative on a range of foreign affairs issues unless Mr. Clinton agreed to delay the vote until next year.

Mr. Dole, concerned about losing support from conservatives as he weighs a presidential bid, has already seized on what critics say would be a loss of U.S. "sovereignty" to the World Trade Organization, which will police the accord.

He is seeking White House agreement on a series of steps that would allow the United States either to change or pull out of the accord if the WTO's decisions went against American interests. He referred to the WTO yesterday as "that awful organization."

Supporters of the pact insist that this country can withdraw from the pact with six months' notice in any event, and predict that the WTO's rulings will generally favor the United States.

Mr. Dole has also criticized a so-called "pioneer preference" provision in the package of tax and fee increases created to make up for the loss in U.S. revenues from tariff cuts.

One part of the package singled out by conservative opponents would give a tax break to the Washington Post Co., Cox Communications and a third group of companies for investing in new telecommunications technology. Supporters argue that under the previous Republican administration, such firms wouldn't have paid any taxes at all.

Mr. Dole said yesterday that he was close to agreement with the White House on the WTO, but then added the new, potentially more serious link between his vote and capital gains.

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