Korea to Curb Its Textile Sales to U.S. : Freeze Disclosed on Eve of Crucial Vote on Protectionist Bill

South Korea has agreed to a virtual freeze on textile shipments to the United States, the Reagan Administration announced Monday as it prepared for a crucial vote in Congress on a sweeping protectionist bill that would cut all textile imports by 30%.

The United States now has “tougher comprehensive” agreements with the “Big Three” textile suppliers, Taiwan, Hong Kong and South Korea, U.S. Special Trade Representative Clayton K. Yeutter told a news conference. Each country has agreed to an annual growth rate of less than 1% in shipments to the United States.

“We have kept our pledge to negotiate aggressively on behalf of the domestic industry,” Yeutter said.

300,000 Jobs Lost

Congress, blaming imports for wiping out 300,000 jobs in the last five years, has approved legislation to cut imports of textiles and apparel by 30%. But President Reagan vetoed the bill, warning that it could ignite a global trade war against U.S. products. The House will vote Wednesday on whether to override his veto.

The issue has economic and political ramifications far beyond the textile business. Other domestic industries hurt by imports will be watching to see if they too should seek help from Congress. The Administration, meanwhile, fears that relations with various fast-growing nations could be jeopardized by new U.S. barriers against imports.

Vote ‘Too Close to Call’

The outcome of Wednesday’s vote is “probably too close to call at this point,” Yeutter said. Administration strategists hope that Monday’s announcement will help persuade some wavering members of Congress that the government is taking a tough posture on trade.

The vetoed textile bill “is not a sensible approach” and would be “a blatant act of confrontational protectionism,” Yeutter said. He called the U.S. textile business “already the most protected industry in the U.S.”

Rolling back imports is “not a sensible approach,” the special trade representative said, noting that American soybean and tobacco farmers would vociferously object to any rollback in their level of overseas sales.

The industry fired a verbal salvo back at Yeutter, accusing him of keeping American textile makers in the dark when talks with South Korea were under way.

“Clayton Yeutter and his fly-by-night negotiating team has once again taken the back-alley route . . . excluding industry representatives from trade negotiations and (excluding) U.S. job-saving provisions from the agreement,” said John N. Gregg, chairman of the Fiber, Fabric & Apparel Coalition for Trade, an industry and union group.

“Korea gets to export an additional 91 million square yards, and the U.S. gets to export 9,000 American jobs to Korea over the next four years,” Gregg said. “Apparently, the Administration trade negotiators care more about South Africa and South Korea than South Dakota and South Jersey.”

Pact With South Africa

The Administration recently approved a new textile agreement with South Africa, providing a 4% annual increase in exports to the United States. Yeutter defended the South Africa pact as “a very solid and tight agreement” because sales had been rising at a much faster rate.

The South Korean arrangement announced Monday allows exports to grow by 0.8% a year through 1989. By contrast, shipments from South Korea have risen an average of 8.6% a year since 1981.

Overall foreign textile sales to the United States grew 17% annually during the last five years. Yeutter has not announced a specific goal but has said he wants a much slower rate of growth.

The United States and 63 other nations have a general agreement on textile trading, called the Multi-Fiber Arrangement, which lists the products to be controlled in trade. However, the actual volume of exports is determined in direct agreements between the United States and each textile exporting nation.

Preventing ‘Import Surges’

Yeutter said that the agreements with South Korea, Hong Kong and Taiwan “demonstrate that the President’s strategy for preventing textile import surges is working.”

“These are the strongest actions taken by any Administration,” he said. “They will not eliminate competition--that is not and should not be our goal--but they will help preserve American jobs without exposing U.S. exporters to retaliation,” he said.

The textile bill, he said, would “raise consumer costs, hurt farmers, threaten the 5 million American jobs that depend upon exports and launch a dozen trade wars.”