Reagan, Congress Nearing Clash Over Import Curbs
President Reagan seems certain to reject the U.S. shoe industry’s pleas for relief from a flood of foreign imports, officials say, setting the stage for a confrontation with Congress, which has been increasingly angered by the nation’s burgeoning trade deficit.
With California semiconductor producers, Pennsylvania steelmakers and Tennessee shoe companies all upset by foreign competitors’ tactics, members of Congress have responded with more than 150 bills they believe will help American industry.
But Reagan has said he is determined to pursue a strong free-trade policy, reflecting both his personal convictions and the need to avoid bruising the feelings of U.S. allies. “Basically, I don’t think that protectionism is the way to go,” he declared recently.
“The President’s views on free trade are well known,” White House spokesman Larry Speakes reiterated Monday in Santa Barbara, near where Reagan is vacationing.
This week, the President must decide whether to restrict the flow of foreign footwear--vinyl shoes from Taiwan, athletic shoes from South Korea and leather shoes from Brazil--that has resulted in imports’ capturing 76% of the U.S. shoe market.
Although Speakes emphasized that no final decision had been made, other Administration officials indicated that Reagan probably will reject a recommendation for footwear quotas by the independent International Trade Commission, as well as suggestions for tariffs by some of his advisers.
Reagan’s decision has ramifications far beyond the shoe industry itself, which has suffered the loss of 20,000 jobs in the last five years.
“Everybody, whether they are interested in shoes, or steel, or paper, or God knows what, will be watching the shoe decision as an augury of the attitude at the White House,” one Washington trade lobbyist said.
A refusal to curtail shoe imports probably will be combined with Administration promises to take stern action against unfair trade practices by other nations--but tough talk from the White House may be insufficient to deter action by Congress.
Blunt Warning in Tokyo
“The protectionist pot is about to boil over,” Senate Majority Leader Bob Dole (R-Kan.) said in a bluntly worded speech in Tokyo last week.
“In this highly charged atmosphere, Administration opposition would not be enough to forestall action for long, and even a presidential veto might be swept aside,” said Dole, who led a congressional delegation to urge Japan to open its markets to American products.
The Administration faces severe trade pressures on several fronts, with the trade deficit expected to hit $150 billion this year and thousands of manufacturing jobs disappearing each month.
Support is growing rapidly in Congress for a bill that would cut back imports of textiles and apparel from Asia. Administration trade officials are particularly fearful about the impact such a step might have on the blossoming political and economic friendship between the United States and China. In a previous textile dispute, the Chinese moved quickly to curtail their purchases of American farm products.
Reagan Holds ‘Trump Card’
The domestic makers of semiconductors, the vital “chips” used in computers, have filed a major trade case, requiring the U.S. government to negotiate with Japan for greater access to the Japanese market. The President has the power to retaliate against Japanese goods, “a trump card to give us leverage” to get more American semiconductors into Japan, California Rep. Ed Zschau (R-Los Altos) said.
Some influential House Republicans like Zschau, normally loyal supporters of Reagan, will be exerting strong pressure on the Administration to take a tough line with Japan over semiconductors.
Meanwhile, several key congressional Democrats are pushing a bill to impose a 25% surcharge on imports from countries that fail to trim hefty trade surpluses with the United States. Japan, South Korea and Taiwan are among the targets of the proposed legislation.
An import surcharge, Administration officials warn, could touch off a trade war and lead other nations to retaliate against American goods. Furthermore, they add, political relations could become poisoned.
Policy of Persuasion
The basic U.S. approach has been one of persuasion and intermittent pressure, attempting to reduce the trade deficit by encouraging foreign purchases of American products. Visiting American negotiators, for example, always urge the Japanese to buy more telecommunications and high-technology products, lumber, plywood, paper, beef and citrus.
The United States’ trade deficit with Japan last year was $37 billion, the biggest contributor to the overall gap of $123 billion between American exports and imports.
American products, ranging from computers to wheat, face a big competitive hurdle because of the strong dollar, which makes U.S. goods expensive for foreign buyers and imports relatively cheap for American consumers. The dollar has been weakening in recent months in relation to other currencies, but it has not yet declined enough to help American companies recapture lost markets. And, at the same time, U.S. manufacturing jobs have decreased, helping fuel the protectionist frustration in Congress.
Sluggish Economies
In addition to the strong dollar, American exports have been hampered by the sluggish economic conditions in the rest of the world, Lawrence Fox, international vice president for the National Assn. of Manufacturers, said.
The trade deficit could reach $150 billion this year, with little prospect of relief, according to Fox. “Someday, we will have to have a trade surplus to pay off this debt,” he said. “But what are you going to sell, and to whom, if your basic industries don’t prosper?”
