Reagan Outlines Trade Deficit Plan : Threatens to Veto Bills That Would Restrict Imports

President Reagan, detailing his strategy for reducing the nation’s record trade deficit, threatened in the strongest terms yet Monday to veto legislation moving through Congress to restrict imports.

But Reagan’s warning failed to dampen Congress’ enthusiasm for protectionist legislation. Nor were key members of Congress impressed by Sunday’s announcement by the United States and four major trading partners that they would try to force down the value of the dollar, whose strength is one of the major causes of the trade deficit.

Package of Proposals

Reagan scarcely mentioned the concerted drive against the dollar. Instead, he offered a package of miscellaneous proposals, apparently designed to meet Congress’ vocal demand to protect the jobs of U.S. workers threatened by the flood of imports. The new policies included:

--A request to Congress for a $300-million fund to offer grants to countries that are prospective buyers of U.S. goods. This money would be used to combat trade tactics of France and other nations, which capture business by offering money in the form of grants to potential customers.

--A speed-up of investigations of South Korean, Brazilian and Japanese restrictions against imports of U.S. goods. Clayton K. Yeutter, special trade representative, told reporters at the White House that “a whole host” of additional unfair trade investigations involving various countries is being considered.

--A request to Congress for authority to join a new round of international negotiations to reduce trade barriers.

--Stronger laws to handle cases of goods “dumped “ here below production costs and a speed-up in the current lengthy process for handling these cases.

White House officials have warned of possible presidential vetoes of individual bills on import restrictions, but Monday’s speech marked the first time Reagan has personally issued an unequivocal threat to Congress that he would veto any protectionist legislation.

“I will strongly oppose and will veto measures that I believe will harm economic growth, cause loss of jobs and diminish international trade,” he said.

In a White House address to business leaders and members of his Export Advisory Council, the President said: “There are some, well-meaning in motive, who have proposed bills and programs that are purely protectionist in nature.”

However, he cautioned, these proposals would drive up prices and invite retaliation by U.S. trading partners, wiping out jobs in this country. “We would lose markets . . . we would lose jobs, and we would lose our prosperity,” he said.

The reaction in Congress was swift and divided largely along partisan lines. “Today the President sounded an uncertain trumpet on trade,” House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) said. “I believe the Congress wants to send a clear and certain message that the American people will not stand for unfair trade practices.”

‘One Eye Closed’

Similarly, House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) said: “The Reagan Administration still has one eye closed as it faces the mounting crisis in foreign trade.”

Rostenkowski, a co-sponsor of a Democratic bill that would impose a hefty 25% tariff on goods from nations that run a big trade surplus with the United States, charged that the Administration is “still way behind a Congress bent on strengthening our response to unfair trade.”

Sen. Lloyd Bentsen (D-Tex.), another co-sponsor of the tariff bill, added: “I want to see the substance and the follow-through . . . (and) make sure (Reagan’s) heart is really in it.”

But many key Republicans said Reagan’s speech should mollify congressional concerns about the trade issue.

“Your gut wants to do something, but your head comes back into gear and you realize you can’t get involved in protectionist legislation,” Sen. Alan K. Simpson (R-Wyo.) said. And Senate Majority Leader Bob Dole (R-Kan.) said the President’s remarks “should help cool the protectionist fires on Capitol Hill.”

‘Positive Signal’

In the House, Minority Leader Robert H. Michel (R-Ill.) said the speech sent “a very positive signal to those of us concerned with drafting legislative policy. We urged the President to move trade to the front burner, and it is clear that he has done so.”

But a more skeptical reaction came from Sen. John C. Danforth (R-Mo.), sponsor of a bill to retaliate against Japanese trade practices. “Although I welcome the recognition of the importance of the dollar and the promise of good, strong enforcement of existing laws, a speech does not constitute a policy,” Danforth said.

He added: “The key will be results, primarily a more favorably valued dollar and action in the form of dogged, day-in-and-day-out enforcement of American rights.”

The fastest-moving trade bill, a measure to reduce textile imports from Asia and Brazil by 35%, is being sponsored by majorities in the House and Senate, and easy passage in both chambers is expected. But Administration officials hope that the President’s strong free-trade stance will deny the bill’s advocates the two-thirds majority they need to override a presidential veto.

Different Version

White House officials and key senators worked behind the scenes Monday to devise a version of the bill that would be less restrictive of imports and, therefore, more palatable to the Administration.

That effort was made as a group of American clothing manufacturers criticized the proposed textile legislation during a hearing of the Senate Finance subcommittee on trade. The companies, whose business depends in part on foreign goods and labor, said they would be unfairly penalized by tougher import quotas and predicted that the measure might put thousands of Americans out of work.

Carl K. Davis, an attorney representing Nike, said his company imports jogging attire from Asian firms because domestic manufacturers have been “inflexible” in meeting his company’s purchase orders. Nike would like to do more business with U.S. manufacturers, he added, but “it’s not possible” because of their “obsolete” procedures and higher prices.

The Administration vigorously opposes the textile bill and the Democratic proposal for a 25% tariff, arguing that they would precipitate trade wars between the U.S. and foreign nations.

U.S. business “has never been afraid to compete,” Reagan said. “I also know that the American worker is as good and as productive as any in the world.”

Times Staff Writer Karen Tumulty in Washington contributed to this story.