Congress Split on Way to Deal With Huge Trade Deficit : Factions Disagree on Whether to Stress Talks or Protectionism

As the Senate Finance Committee opened hearings on a trade bill Tuesday, lawmakers displayed sharp disagreements over whether the federal government should respond to the nation’s gaping $170-billion trade deficit with tough protectionist measures.

At the same time, committee Chairman Lloyd Bentsen (D-Tex.) said there is greater chance for reaching agreement on a course of action this year because the White House has indicated a new willingness to support compromise trade legislation.

Bentsen outlined several moderate ideas for shaping a trade bill and stated that instead of adopting overtly protectionist measures, “the heart of the trade bill has to be authority for the new round of (multilateral) trade negotiations” with U.S. trading partners.

International trade talks are just beginning in Geneva, but congressional authority for the U.S. delegation to negotiate will expire this year. Bentsen said Congress must renew the negotiating authorization so progress can be made. Any tentative agreements would be subject to congressional approval.

Rather than dividing along partisan lines, the committee is split largely along regional lines in its approach to trade legislation.

Lawmakers from the industrial region near the Great Lakes and from the Midwest Farm Belt were most determined to approve a tough bill that would include import sanctions against countries that do not freely accept U.S. exports. They singled out Japan and other rising Asian industrial nations as targets for retaliation because of their protectionist barriers.

‘Stunning Lack of Balance’

“It is not the fault of the Japanese that we have massive budget deficits and a microscopic savings rate. It is not the fault of the Koreans if our kids watch ‘Miami Vice’ instead of studying math,” said Sen. John D. Rockefeller IV (D-W.Va.). “But if trade is not the whole problem, it is a serious problem. There is a stunning lack of balance in our trade relations with other countries, particularly Japan.”

And Sen. Donald W. Riegle Jr. (D-Mich.) called Japan “the No. 1 predatory trading nation in the world today.”

By contrast, politicians from the Northeast and the Pacific Northwest emphasized the potential dangers of an escalating trade war. They suggested avoiding strict sanctions while giving the President greater authority to act to remedy trade imbalances.

“Do we want to resist change or do we want to adapt to change?” asked Sen. Bill Bradley (D-N.J.). “I hope that we will try to adapt to change.”

Sen. Bob Packwood (R-Ore.) pointed out that at least 10,000 dealers and workers in his state are directly involved in importing cars from Asia. He said that if lawmakers approve any measure to limit imports, “in Oregon, we’re talking about losing jobs.”

Senate Majority Leader Robert C. Byrd (D-W.Va.) pressed that appeal Tuesday in a speech to an industry trade group. “We must think not in terms of protectionism but rather in terms of how we make our economy competitive again,” he said.

Byrd said he expects a Democratic “competitiveness” package focusing on better education for U.S. students, aid for dislocated workers and money for technology research, as well as trade law changes, to be ready by May 1.

Bentsen said he believes the White House will be receptive to a plan that does not feature strong protectionist measures.

Expects Cooperation

“The President, the secretary of the Treasury and the U.S. trade representative have each assured me that this year the Administration wants to work with the committee in framing legislation,” Bentsen said. Noting that President Reagan helped bottle up a House-passed trade bill in the Senate last year, Bentsen declared: “I hope and I believe that situation has changed.”

Former Trade Representative Robert Strauss, a major political figure in the Democratic Party, was the opening witness at the committee hearing. He accused the Reagan Administration of failing to devote enough attention to trade issues, compared to the Carter Administration, in which he served.

Strauss, saying that the Administration has devoted much more attention to defense issues than to international economic matters, called for a summit meeting between Japan and the United States to force high-level talks on key trade issues between the two nations.