Yeutter Warns Panel of Veto on Trade Measure : Reagan Representative Says House Bill Limits President, Could Invite Retaliation on Exports

The Reagan Administration’s chief trade official--who earlier had complimented the House Ways and Means Committee for trying to put together a workable, bipartisan trade bill--has warned the committee leadership that he would recommend a presidential veto if the bill is not changed substantially.

That unexpectedly harsh view was set forth in a letter in which U.S. Trade Representative Clayton K. Yeutter told committee leaders that he objects particularly to certain provisions limiting presidential negotiating authority and mandating some retaliation against countries with large trade surpluses.

If the offending provisions “are not either eliminated or substantially improved, I would find it exceedingly difficult to recommend that the President sign any trade bill including them,” he wrote. The letter, sent to the committee Wednesday, was made public Friday along with a detailed explanation of Administration objections.

Tries to Balance Demands

The Ways and Means Committee has been attempting to draft a bill that would meet the Administration’s requirements for trade flexibility while satisfying many Democrats’ demands for measures to increase U.S. industries’ competitiveness.

The current version, which Committee Chairman Dan Rostenkowski (D-Ill.) said he hopes can be completed by next Wednesday, is a substantial modification of the package that passed the House last year but died in the Senate after it was denounced by the Administration as rabidly protectionist.

Congressional officials said it is too early to assess the impact of Yeutter’s letter on the chances of passing a trade bill this year. Committee leaders said that they are hopeful a final compromise can be reached that will attract enough support from congressional Republicans, even if the Administration still has objections.

Cites Administration Test

Yeutter, while reiterating in his letter his praise for the committee’s “constructive, bipartisan” approach, said that the current draft still does not meet the test the Administration put forward when announcing its own trade package earlier this year.

Specifically, Yeutter found fault with provisions that would:

--Transfer trade policy authority from Reagan to Yeutter’s office and make it easier for industries suffering from foreign imports to receive protection.

--Single out countries with large trade surpluses, require that their trade practices be examined for possible unfairness and mandate retaliation if there is unfairness.

--Expand existing Trade Adjustment Assistance programs to give all unemployed workers in an industry injured by trade an automatic entitlement to a new benefits and training program. The Administration’s own competitiveness package includes a proposal to combine all existing job training and assistance programs for displaced workers in a single program. Yeutter said the committee’s proposal simply “creates a new uncontrollable program” that would cost too much.

Yeutter said Reagan must be able to retain trade negotiating authority and flexibility to work with other countries on trade problems. Moreover, he said, the Administration will not accept protectionist measures that are likely to provoke retaliation from other countries against U.S. exports.

More Curbs Sought

While Yeutter pressed for a milder version of a trade bill, committee Democrats continue to push for the restoration of some parts of last year’s bill that would make the package even more objectionable to Yeutter.

Rep. J. J. Pickle (D-Tex.) wants to limit presidential discretion still further in cases of unfair trade practices, and Rep. Richard A. Gephardt (D-Mo.) has been circulating a version, backed by organized labor, that would be more punitive for countries that have large trade surpluses with the United States.

But Rostenkowski has told Gephardt that he will resist any move in that direction and he apparently has the votes to prevail. Gephardt, a declared presidential candidate, has hinted that he may delay his attempt until the bill goes to the House floor, rather than push his proposal in committee sessions.