Asia, Brazil Textile Import Cut of 35% Voted by Panel

A House trade subcommittee, defying President Reagan, voted Thursday to slash textile imports from Asia and Brazil by 35% in an effort to save jobs for American mill workers.

Approval of the textile bill in a closed meeting was a key step toward a confrontation between Congress and the Reagan Administration, which fears that the legislation could provoke retaliation against American goods and generate serious foreign policy problems.

Textile imports from 12 nations would be restricted if the bill becomes law, with the largest impact on Brazil, China, Thailand, South Korea and Taiwan.

But the Administration believes that textile producers in those nations would counterattack by cutting back purchases of American aircraft, wheat, corn and tobacco. Clayton Yeutter, special trade representative, “feels almost sure the President would veto” the bill, a spokesman for Yeutter said.

“It would not only cost American consumers a great deal of money--and likely cost many American workers their jobs--but could be the first dangerous step toward a breakdown of trading systems that all of us would live to regret,” the spokesman, Roger Bolton, said in an interview.

However, House Democrats, confident that trade offers a winning political issue, are determined to push for passage.

“There is no question in my mind that the bill will sail through the House, and I think we could override a veto,” said House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.). Although 60 senators also have sponsored the textile measure, the Administration hopes it can persuade enough members of the Republican majority there to support the President if he vetoes the bill.

“I think they’ll get their two-thirds majority (to override in the House), but a nervous majority,” Rep. Bill Frenzel (R-Minn.), an opponent of the bill, conceded after the private meeting of the House Ways and Means trade subcommittee. Despite the opposition of Chairman Dan Rostenkowski (D-Ill.), the full committee is expected to approve the measure next week.

Democratic Caucus Vote

Before Thursday’s subcommittee action, the House Democratic Caucus endorsed a resolution calling for comprehensive trade legislation this year, including strong steps to punish other countries for unfair trade practices.

“The goal here is to try to get markets abroad to be open as we’ve tried to keep the American market open since World War II,” Rep. Richard A. Gephardt (D-Mo.), chairman of the caucus, said.

Protection for the textile industry is essential, Gephardt said, because of a “flood of imports into the United States which is devastating that industry in a very short period of time.” Imported products have captured about 7% of the U.S. market for textiles and 21% of the market for apparel. And despite a complex network of textile agreements between the United States and other nations, imports have continued to rise.

Under the bill, no country could increase its shipments of goods to the United States by more than 6% a year. A complex system of regulations would be enacted to control imports from 12 nations, including China, Brazil, Taiwan, South Korea, Thailand, Hong Kong and Japan.

Loss by Country

Although the overall cutback on textile imports would be about 35%, Brazil would lose 89% of its market here, while Thailand would suffer a 70% restriction and China would lose 60% of its sales to the United States. Losses for Taiwan and South Korea would total 33% each.

The Administration is particularly worried about the potential impact of the textile bill on the blossoming political and economic relationship between the U.S. and China. During a previous dispute over textiles, China briefly suspended purchases of American grain.

Thailand, a staunch political ally of the United States in Asian politics, has voiced concern about curbs on its ability to sell goods here. Restrictions on Thai products “would deal a serious blow not only to the political stability and security of this nation but would . . . also undermine the stability of this region, to the detriment of both our countries’ long-term security interests,” the Embassy of Thailand said in a recent statement.

Brazil Needs Trade

In addition, Brazil, which has a heavy debt burden--including billions in loans from American banks--vitally needs export earnings to help make its interest payments.

Thus, the Administration is trying to balance these delicate foreign policy issues with the political pressures from Congress to take steps to protect jobs at home. The response so far has been to resist protectionist steps, while insisting that the Administration will work vigorously to open foreign markets.

But Congress seems loath to wait, and there are more than 200 trade bills in circulation on Capitol Hill. The demand for action on trade “hasn’t been this hot” in 25 years, O’Neill said Thursday.

Times Staff Writers Karen Tumulty and Kristen Hedlund contributed to this story.