NAFTA DISPUTE SETTLEMENT RULES COME UNDER FIRE

NAFTA DISPUTE SETTLEMENT RULES COME UNDER FIRE

Senate Majority Leader Bob Dole and about 10 other senators are sending a letter to President Clinton attacking the dispute settlement rules of the North American Free Trade Agreement as an unacceptable ceding of U.S. sovereignty.

At minimum, the senators are demanding that this provision be left out of current talks to extend the Nafta to Chile, a direct challenge to Mr. Clinton, whose aides have said that it must be part of the agreement.The letter, to be delivered next week, is an early indication that such sovereignty concerns about trade agreements may become an issue in the jockeying among Republican presidential candidates for the support of the party's right wing.

Already, conservative candidate Patrick Buchanan has used his limited moments of national television exposure to raise the issue, promising last week to repeal the Nafta if he is elected.

While the letter from Mr. Dole clearly puts him at odds with Mr. Clinton over this particular dimension of reaching new trade agreements, the story behind how he came to sign the letter indicates a much more fundamental gulf.

The Kansas Republican, it seems, was unwilling at first to sign the letter

because he opposes the negotiation of any new trade agreements on any terms - at least until after January 1996, according to sources familiar with the process of drafting the letter.

He agreed to sign only after the addition of a line that basically says that the position of the senators on dispute settlement doesn't necessarily mean that they support new trade agreements at this time.

It has been reported for months that Mr. Dole might not support new trade negotiations, including current talks with Chile, because of concerns that any agreements reached would help Mr. Clinton in his 1996 re-election campaign. His conditions for signing the new letter are the clearest sign yet that hopes of completing the Chile negotiations by early next year may be the victim of early electioneering.

The immediate issue in the letter is Chapter 19, the section of the Nafta that calls for international arbitration when two countries have a dispute about how one has administered its anti-subsidy or anti-dumping laws. Under anti-dumping law, if an imported good is sold in the U.S. market for less than the home market and that discounting is found to have hurt U.S. competitors, then a penalty duty is established that can raise the cost of imports or in some cases make them prohibitively expensive.

Under the Nafta, a country that loses a dumping or subsidy case can appeal to an independent panel of trade experts from the two nations involved. That panel is supposed to rule on whether trade authorities properly followed their own rules. Canada insisted on the procedure when they signed a free-trade pact with the United States in 1988 out of fear that U.S. authorities would seek to undermine the agreement's free-trade rules by unfairly concocting penalty duties.

Lumber and pork producers, among others, have seen their duties against Canada overturned in this way, and they have led a campaign to eliminate Chapter 19 from the Nafta. Although few U.S. companies fear an onslaught of imports from Chile, the first step toward eliminating Chapter 19 would be leaving it out of the current talks.