Reagan Acts to Counter Trade Curbs : Orders Inquiry Into Practices in Japan, S. Korea and Brazil
President Reagan, vowing to get “a fair shake abroad” for U.S. products, Saturday announced unprecedented investigations of alleged unfair trade practices in Japan, South Korea and Brazil.
At issue is the inability of U.S. firms to sell tobacco in Japan, life and fire insurance in South Korea and computers and related products in Brazil. Those markets, virtually closed to American goods by the countries’ laws, involve total sales of more than $15 billion.
In his weekly radio address, Reagan also said he has ordered “acceleration” of current efforts to open Japanese markets to U.S. leather goods and to challenge Europe’s canned-fruit subsidies.
Fixes Dec. 1 Deadline
He set a Dec. 1 deadline for resolution of the latter two matters, saying he had called for a list of countermeasures the United States could take, if negotiations with Japan and the European Economic Community fail. But he added that such retaliation would come “only as a last resort.”
Adding that U.S. trading partners “should not doubt our determination” to secure fair trade, Reagan said: “American exporters and American workers deserve a fair shake abroad, and we intend to see they get it.”
Reagan’s announcement came as members of Congress returned to Washington angrily denouncing foreign trade practices and prepared to take up about 300 protectionist bills.
The President’s announcement, which had been expected, did not include any efforts to aid U.S. companies suffering from import competition. Rather, it focused on opening foreign markets to U.S. products, thus adhering to the Administration’s “free and fair trade” philosophy.
Far Sterner Steps
Reagan’s action was taken under Section 301 of the 1974 Trade Act--a provision that allows him to take far sterner steps, including immediate imposition of sanctions, which he refused to do. Such sanctions would be “capricious,” Clayton Yeutter, the U.S. trade representative, said at a White House news briefing after Reagan’s broadcast from the presidential retreat at Camp David, Md. “You just don’t treat trading partners that way.”
When asked why the Administration’s list did not include any of the battered heavy U.S. industries, such as steel, Yeutter said actions on their behalf could be initiated later, “depending on the flagrancies” of the competition. In addition, he said the industries may file their own unfair-trade actions.
Yeutter said politics played no part in the timing of Reagan’s announcement. He said the action had not been taken earlier because “we were just more tolerant of other nations’ unfair trade practices years back, and that level of tolerance is declining in somewhat indirect proportion to the size of the trade deficit.”
In the Democratic response to Reagan’s message, Rep. John P. Murtha (D-Pa.) protested that the President acted without “a sense of urgency.” Murtha, who represents an economically depressed steel area near Pittsburgh and chairs the House steel caucus, complained that “as we wait for further details and shifting of the President’s policies, we lose more American jobs, and more American companies are forced to close down.”
Murtha lambasted the Administration for failing to “get tough” with U.S. trading partners to prevent the loss of thousands of U.S. jobs each month and fight this year’s expected $150-billion trade deficit.
‘No Winners in a Trade War’
But Reagan, who recently refused to impose quotas on foreign shoe sales and has vowed to veto protectionist trade legislation, said he will continue to “resist protectionist measures” that would raise prices, lock out trade and ultimately take U.S. jobs.
“There are no winners in a trade war, only losers,” Reagan said.
Nevertheless, his action Saturday signifies an effort to seize back some of the initiative that Congress has taken on the volatile trade issue and could lead to more hostile trade relations with the nations involved if the Administration feels pressured enough by Congress to impose stronger measures.
Reagan is the first President to invoke provisions of the 1974 Trade Act that give a chief executive broad powers to begin investigations or actions against what he believes are unfair trade practices without waiting for formal complaints from industry, labor or the U.S. International Trade Commission.
Next week, Reagan’s order for investigations of trade barriers in Japan, South Korea and Brazil will be published in the Federal Register, followed by a 45-day period reserved for public comment. Then Yeutter will investigate the cases and negotiate with the three countries.
Retaliatory Action
If the disputes cannot be resolved through negotiation, Yeutter will recommend retaliatory action to the President. Reagan’s options are virtually unlimited, including quotas, tariffs and denials of licenses to the countries.
White House officials, outlining the three new cases, said Japan has used high tariffs, excise taxes and manufacturing barriers to freeze U.S. tobacco firms out of the $10-billion Japanese market. The officials said Korean law prohibits foreign firms from selling insurance in that nation’s $5-billion market and that a 1984 Brazilian law restricts imports for an eight-year period and gives Brazilian firms exclusive rights to market certain high-technology products.
As for the cases involving the European fruit market and the leather market in Japan, Yeutter said the matters will come to “a definitive conclusion” by Dec. 1, but he did not say what measures Reagan will take, in the absence of satisfactory agreements.
Yeutter said there is no guarantee of success for the U.S. position in any of the cases, calling some “very tough” to resolve.
