U.S. Congress Bows to WTO Mandate Our National Sovereignty is Violated
An extraordinary event occurred this week in Washington during the final
days of the 106th Congress, an event that did not receive comment in
either the media or the halls of Congress, save for my office. This event had
been termed "unthinkable" only a few months earlier. It occurred despite clear
constitutional prohibitions and at the expense of our precious national
sovereignty. For the first time in the history of our country, Congress voted to
change our domestic laws because an international body told us to do so. The
World Trade Organization (WTO) has begun to dictate American laws.
More specifically, Congress voted to change our tax laws relating to Foreign
Sales Corporations (FSCs), solely because the WTO appellate panel deemed that
our FSC tax rules constituted a "subsidy" - the EU contingent in the WTO had
brought a complaint to the panel. Our FSC rules simply allow U.S. corporations
to exempt a small portion of income earned abroad from taxes. No "subsidy" is
involved; no tax dollars are given to FSCs. Moreover, most EU countries do not
tax their corporations on any income earned abroad. Still, the appellate panel
agreed with the EU and gave the U.S an October 1st deadline to change
our tax laws.
I have opposed our membership in the WTO throughout my tenure in Congress. I
strongly support true free trade, which occurs in the absence of government
tariffs. The WTO, however, represents the worst form of government-managed
trade.
More importantly, however, our involvement in the WTO threatens national
sovereignty. The Constitution clearly vests the power to regulate trade solely
with Congress, and Congress cannot cede with mandates in areas such as
environmental protections, worker rights, and trade policy. Congress either
blindly or willfully chose to ignore this very serious constitutional conflict
when it voted in favor of WTO membership. However, a Congressional Research
Service report was quite clear about the consequences of our membership: "As a
member of the WTO, the United States does commit to act in accordance with the
rules of the multi-lateral body. It is legally obligated to insure that
national laws do not conflict with WTO rules," (emphasis added).
Earlier this year I sought to address this terrible threat to our
sovereignty by introducing a resolution withdrawing us from the WTO. I explained
my concerns in a brief to the House Ways and Means trade subcommittee, pointing
out the unconstitutionality of our involvement. I warned that the WTO could
begin dictating our environmental, labor, and tax laws. These arguments were met
with hostility and condescension. Subcommittee members stated that we need the
WTO to avoid "trade wars," and that the U.S. Congress would never change our
domestic laws to satisfy the WTO. "Unthinkable" was how one member put it.
Judging by this week's vote, the "unthinkable" has become reality.
We should never change our national laws at the behest of any international
organization. Congress simply has ceded its legislative authority to the WTO,
and it is shameful that this action likely will go unnoticed by the American
people. If we want to help American businesses, we should simply stop taxing
their foreign income. The FSC measure will not appease the Europeans; the EU
already has indicated that the changes are unsatisfactory to them. We stand on
the brink of a retaliatory trade war with the EU, even though we were told that
the WTO was needed to avoid such conflicts. So the WTO has given us the worst of
all worlds.
Rest assured that the WTO assault on American sovereignty will not end here.
What will happen when the Europeans object to another area of our tax laws? Will
we change the way we tax individuals also? Perhaps the Europeans will object to
our relatively liberal immigration laws, because they resent losing their
talented citizens to America. Whatever the issue, the threat remains the same.
Americans who care about sovereignty have every reason to be outraged.