President Attacks Protectionist Trade Bill

President Reagan, fighting a protectionist tide in Congress, blamed “special interests” Thursday for a “destructionist” trade bill before the Senate that calls for automatic tariffs if foreign goods capture more than a specified share of the market.

“We might as well declare an open trade war as pass that monster,” Reagan told a sympathetic group of corporate executives and representatives of trade organizations.

As evidence that such retaliatory measures backfire, Reagan cited “the small step” the Administration recently took to protect the cedar shakes and shingles industry from Canadian imports. In response, the Toronto government imposed immediate restrictions on American-made books, computers and semiconductors.

Both Are of Irish Descent

The exchange rocked relations between the two countries, eroding much of the spirit of the “Shamrock Summit,” when Reagan celebrated the conservative leadership of Canadian Prime Minister Brian Mulroney. Both men are of Irish descent. Vice President George Bush traveled to Ottawa to soothe Mulroney’s temper, but was unable to head off the punitive sanctions on American goods.

Reagan called the Canadian response “an indication of the bitter trade war the House bill would provoke.” The Democratic-controlled House passed the bill by an overwhelming margin of 295 to 115. The vote blurred party lines as 59 Republicans endorsed the legislation.

Calling the proposed legislation “anti-trade,” Reagan said it would “hurt the nation and injure even those few it was originally designed to serve.” The President previously had vowed to veto the measure if it is approved by Congress.

Alternatives Sought

With the lopsided U.S. trade balance bound to be an issue in the fall congressional elections, Reagan and his GOP allies in the Senate are searching for alternative measures to assist ailing industries that would fall short of outright protectionism.

Reagan said he supports, instead, the setting aside of $300 million to combat unfair foreign subsidies, stronger protection for intellectual property rights and reform of anti-trust laws to make American business more competitive in world markets.

Strengthening intellectual property rights would combat the growing practice of foreign producers copying American products and often marketing them so cheaply that the American firms cannot compete. Record piracy would fall under this category. Taiwanese imitations of American computers would be another example.

‘There Is Common Ground’

“I want to stress that there is a great deal of common ground between the Administration and thoughtful members of the Congress,” Reagan said.

Reagan also said that he favors legislation to permit a new round of trade talks with the leading non-Communist countries. Such talks already have been informally scheduled for September.

Stressing his commitment to “fair” trade, Reagan said he is sensitive to charges that he lacks a coherent trade policy. “That one sort of touches my temperature control,” he said.

Targets Unfair Trading

While he considers himself a free-trader, Reagan said that he is “going after unfair trading practices more aggressively than any previous Administration.” He mentioned several unfair trade cases that have been brought against Japan, the European Economic Community, Korea, Taiwan and Brazil.

“The message to the world is clear,” Reagan said. “The United States stands for free trade--of course. But make no mistake--trade must also be fair.”