Baldrige Calls for a Tougher Trade Stance

Amid mounting congressional sentiment for protectionist legislation, Commerce Secretary Malcolm Baldrige on Thursday advocated “more frequent and stronger use” of laws to combat unfair trade practices as Senate Majority Leader Bob Dole (R-Kan.) warned that “they had better hurry,” because U.S. trade policy “is in a shambles.”

Dole, in a speech prepared for delivery in New York to the Council on Foreign Relations, declared that too little has been done to reduce foreign trade barriers. He suggested that Congress may rein in the executive branch’s negotiating authority and take the lead on trade. He listed several options, including altering currency values and imposing tariffs.

“Congress thinks that American trade policy is in a shambles,” Dole said, “and Congress seems prepared to pick up the pieces.”

Believes It’s Time

Earlier, during a breakfast meeting with reporters, Baldrige acknowledged that Administration officials “have not tried to stir up the waters with a big stick.” But, he added, “There is a time to negotiate and a time to stop negotiation. I think the time has come to take some stronger steps.”

Baldrige suggested initiating several cases under Section 301 of the 1974 Trade Act, which outlines procedures under which the United States can retaliate against governments engaging in “unfair” trade practices.

“We would not have to have a whole string of them,” Baldrige said, adding that offending countries likely would sense the mood and dismantle “some of their most important trade barriers.”

In many of the 300 trade bills introduced in Congress, the apparent target countries are Japan, Taiwan, Korea and Brazil. Baldrige declined to specify any country or to say when the cases might be started, however. Those decisions will be made by President Reagan in a month or two, he said.

Sweeping Powers

Section 301 gives the President sweeping powers to declare a country in violation of fair-trade practices and then retaliate with measures that include imposing duties, denying licenses and proposing legislation. However, that power has never been used.

Asked why the Reagan Administration had eschewed this powerful tool, Baldrige said officials realized that it “is such a strong, powerful law” that it “should be used only very sparingly” lest it backfire and trigger increased protectionism abroad.

Now, however, the Administration apparently feels pressured to act, as angry members of Congress have seized upon the issue, complaining that foreign competition is taking thousands of jobs from Americans daily and fueling an expected $150-billion trade deficit this year.

Dole, in his speech, noted that “very little has been done” with the executive authority to retaliate on trade. He urged a “comprehensive” approach to deal with the trade deficit, and cited several options available to Congress, including:

- Altering exchange-rate policy to prevent extreme fluctuations in currency.

- A “temporary and generalized increase” in U.S. tariffs to reduce the budget deficit.

- Reviewing the system of trade preferences to eliminate countries not needing them.

- “Restructuring” the external debt of certain countries, particularly in South America.

Dole noted that, in recent meetings with officials in Japan, South Korea, Taiwan and Hong Kong, members of his delegation sought to convey the urgency of the trade problem. “The clock is ticking,” Dole said, “ticking for our trading partners throughout the world, who need to take some decisive action soon.”