Reagan Seeks to Limit Machine Tool Imports
President Reagan moved Tuesday to limit imports of high-technology machine tools that have seized a dominant market share in an industry whose health the Administration says is vital to national security.
The White House--acting as the House began debate on a Democratic-sponsored trade bill opposed by Reagan as protectionist and political--announced that the President has ordered Commerce Secretary Malcolm Baldrige to negotiate five-year voluntary import quotas with Taiwan, West Germany, Japan and Switzerland. The quotas would be aimed at cutting machine tool imports from about 70% of the U.S. market to slightly more than 50%.
Baldrige, announcing the plan at the White House, said its timing had nothing directly to do with House debate on the trade bill, which is expected to pass on a largely party-line vote today or Thursday. “But I hope it helps.”
Action to limit machine tool imports on national security grounds has been considered for several years. Baldrige reported in early 1984 that the onslaught of machine tool imports would pose a threat to U.S. defense industries if it went unchecked.
The secretary updated that appraisal in a final report to the President in March, and Tuesday’s decision makes the judgment formal. But, to avoid immediate confrontation with the exporting countries, Reagan instead decided to hold off for six months on imposing unilateral import quotas and instead seek “voluntary restraint agreements” such as those that have limited Japanese car imports since 1981.
In Congress, meanwhile, a confident Democratic leadership launched its 450-page omnibus trade package, a massive compendium of the trade complaints of nine committees and many industries. Democratic election strategists such as California Rep. Tony Coelho (D-Merced) see the trade deficit as “a big issue” in the fall elections. He said there is fertile ground for voter discontent in textile-producing states in the South and agricultural states in the Midwest if Reagan, as expected, vetoes the bill.
The Administration has been denouncing the trade bill almost daily, warning of severe foreign retaliation against its import-shrinking features--including unilateral demands that foreign manufactures be produced according to U.S. wage-and-hour labor standards and that Japan, West Germany and Taiwan shrink exports to the United States by 10% a year or face punitive tariffs.
In House debate Tuesday, many Republicans opposing the bill were from agricultural states, warning specifically that it would invite trade-shrinking retaliation that would fall most heavily on farm exports.
The GOP leadership in the House plans to offer a substitute trade bill, closer to a bipartisan package developing in the Senate, from which the protectionist elements most offensive to the Administration have been removed.
