U.S. Firm on Trade Talks for ‘86, Brock Says

The United States intends to proceed with a new round of international trade talks in 1986 even if France, Brazil and India maintain their objections, Labor Secretary William E. Brock III told the chief executives of the nation’s largest corporations Friday.

Protectionist pressures are the greatest they have been in 20 years, Brock, until recently the Reagan Administration’s special trade representative, told reporters after addressing the closed meeting of the Business Council here. And he warned that trade talks could be undertaken with only the Asian nations if the Europeans balk.

“We will be in negotiations with somebody in 1986,” Brock declared. Referring to France and other recalcitrant nations, he said: “If they block it, we’ve got to decide what we should go ahead with.”

The Overvalued Dollar

Sen. John C. Danforth (R-Mo.), also present for the meeting of 120 corporate leaders, criticized the Administration’s determined push for talks on trade liberalization and accused the White House of lacking a coherent policy to bring down the value of the U.S. dollar. The White House, he said, is ignoring how destructive the overvalued dollar has been for American manufacturers, and he blamed it for the record $123-billion U.S. trade deficit.

“There is no way to have a reasonable trade situation if the value of the dollar acts as a 25% to 50% tariff” on U.S. exports, said Danforth, a leading Senate spokesman on trade issues.

He charged that the Administration is “making a very big mistake” and noted that the White House could “get into a round of trade negotiations--but if the end is (that) we have the same policy as we have now, the result is that Congress will not implement it.”

Danforth advised the Administration to begin with talks aimed at bringing down the value of the dollar on international currency markets and then to get tougher with countries that engage in unfair trade practices.

Resistance to Continue

Brock, however, said that for now the Administration will continue to resist congressional efforts to retaliate against such nations as Japan, which is blamed for blocking imports of U.S. goods. He said there will be no major change in U.S. policy, and added: “I can’t imagine (the Administration) supporting any bill that violated our international commitments.”

But if the White House does not see progress soon in negotiations with Japan, the United States may use existing trade laws to limit imports of Japanese goods in those areas where the Japanese refuse to open their own markets, he warned.

Brock, responding to Danforth’s charge that the White House lacks a policy for bringing down the value of the dollar, argued that the $230-billion budget deficit must be cut before the dollar is likely to decline.

“The Senate action (in adopting a budget package early Friday) was a major step forward,” Brock said. “Now the House is in a tough position. They’ve got a nut, and they’ve got to crack it.”

At a news conference earlier, several of the chief executives attending the two-day meeting called for reduction of the deficit, but they also indirectly blamed the Administration for the rising trade and budget problems.

Mismatch of Policies

The fundamental cause for the trade deficit, said Edward G. Jefferson, chairman of the DuPont Corp., “is the mismatch between fiscal and monetary policy.”

Jefferson, who also heads a Business Council committee on trade, said the debt is nearing “a level that is unacceptable” and that government policy-makers have not paid enough attention to the importance of trade in maintaining a healthy U.S. economy.

The council forecast in a report that economic growth will weaken this year and may decline even further in 1986.

The report, echoing worries over the trade situation, said: “The major concerns are over the staying power of the economic expansion and negative impacts from a strong dollar and intense foreign competition on the goods-producing sectors of the U.S. economy. No improvement of consequence is expected on trade until 1986, and then only slowly.”