House Panel OKs Get-Tough Trade Package

Ignoring threats of a presidential veto, the House Ways and Means Committee approved get-tough trade legislation Thursday that would impose import quotas and other retaliatory measures against nations piling up huge trade surpluses with the United States through “unfair” practices.

The action, by voice vote, was taken after the Democratic-controlled committee rejected a less harsh Republican substitute on a straight party-line vote, 23 to 13.

Democrats hailed the bill as providing new weapons in the battle to reduce the mammoth U.S. trade deficit. But Administration officials and congressional Republicans complained that the legislation would violate international trade agreements and spark a costly trade war.

Protectionist Amendment

A multifaceted trade package, incorporating the Ways and Means Committee bill and lesser measures developed by four other committees, is scheduled for House action May 14.

Several Republicans said they turned against the Ways and Means Committee bill after the adoption Wednesday of a strongly protectionist amendment that changed the thrust of the legislation, putting more emphasis on limiting imports than on expanding exports.

Alan Holmer, chief counsel to U.S. Trade Representative Clayton Yeutter, said the most objectionable provisions would require mandatory actions against recalcitrant trade partners and would shift authority from the President to the trade representative when it comes to deciding on relief for U.S. industries hurt by foreign competition.

The amendment would hit Japan, West Germany and Taiwan with import quotas if they fail to reduce their huge trade surpluses with the United States by 10% in each of the next four years.

Under the Gephardt plan, U.S. officials would have up to four months to negotiate surplus-reduction agreements with the targeted countries, involving elimination of “unfair barriers,” increased imports from the United States and decreased exports to this country. If no agreement were reached, the President would be required to take various actions, including increased import duties, in an effort to achieve the surplus-reduction goals.

If that failed, the President would have to impose quotas on imports, either on selected goods or across the board. The President could waive the quotas if he determined that they would cause “substantial harm” to the economy, but Congress could vote to override the waiver.

The bill would change the law to make it mandatory, instead of discretionary, for the President to retaliate against countries that refused to eliminate unfair trading practices, such as subsidizing exports.

In another key provision opposed by Reagan, the President would be given authority to act against countries that violate such worker standards as collective bargaining rights, child labor laws and occupational safety and health requirements.