Official Says Textile Import Curbs Would Lead to Retaliation

American aircraft, telecommunications and supercomputer exports would come in for swift retaliation if textile import curbs being weighed by the House became law, a Reagan Administration official said today.

“I think the response of our trading partners would be immediate,” Deputy U.S. Trade Representative Michael B. Smith told the House ways and means trade subcommittee.

“The European Community has already told us officially that they would retaliate,” Smith said. “The Chinese, if past is prologue, would retaliate. I believe the Koreans would retaliate.”

Smith said aircraft, supercomputers and telecommunications equipment would be likely to bear the brunt of any European trade barriers put in place in retaliation for the curbs prescribed by the bill.

President Reagan, meantime, reiterated today his pledge to veto any protectionist measure passed by Congress, saying such a bill could cost millions of jobs.

‘Despair of the ‘30s’

“We will continue to oppose any legislation that threatens to plunge us back into the despair of the 1930s,” Reagan said at a ceremony in the White House Rose Garden.

“I renew my promise today,” he said. “Any protectionist legislation that comes across my desk is going to get a big fat V-E-T-O written right across it.

“I’m not going to let political grandstanding destroy millions of American jobs.”

Reagan vetoed legislation in 1985 that called for rollbacks in a surge of textile and apparel imports in the early 1980s. He said the measure would bring retaliation against U.S. exports, hurt consumers by raising prices and narrowing choices and actually cost more jobs than it would save.

An effort to override that veto failed in the House.

Would Set Import Quotas

The new measure being urged by the textile and apparel industries would establish import quotas for a wide array of products. The limits would differ from one item to another, but each would be confined to a maximum of 1% annual growth. Under the bill, tariff cuts would offset any harm to foreign manufacturers.

The industries say they are having a tough time competing with textiles and apparel produced in low-wage countries of Asia.

At the hearing, the Administration portrayed the textile and apparel industries as ones that have adjusted to intensified foreign competition, saying they are now in good condition and not in need of additional protection.

Smith said textile industry profits were up 67% in 1986. He added that production was up 10% in textiles and 3% in apparel last year, and exports rose 13% in textiles and 22% in apparel. He said domestic producers were operating at 95% of capacity.

Unable to Meet Demand

The major problem is that “domestic producers are simply unable to meet demand,” Smith said. “This is not the ailing industry we are led to believe it is.”

Under questioning from Rep. Ed Jenkins (D-Ga.), a longstanding House champion of the textile industry, Administration officials said they were unsure how many jobs were lost in the industry from 1980 through 1985. But they said that a figure of 142,000 cited by Jenkins sounded about right.

The officials added, however, that 22,000 new jobs have been created in the textile industry and that textile states, mainly in the South, have lower unemployment rates than that of the nation as a whole.