Foes of Trade Bill Rally Forces on Eve of Senate Debate

Top Reagan Administration officials, backed by a cross-section of industries that depend on exports to prosper, went on the offensive Wednesday in an effort to persuade the Senate to moderate a massive trade bill that they fear will provoke global retaliation against U.S. products.

Many proposals in the bill “pose grave dangers to our economic health and national security,” the officials warned in a letter to the Senate majority and minority leadership on the eve of floor debate on the measure. The letter, drafted by U.S. Trade Representative Clayton K. Yeutter, was signed by him and 13 other top officials and Cabinet members.

The 1,000-page bill is “obsolete” and “a response to an economic situation that prevailed two or three years ago,” Yeutter told reporters. He pointed out that in “real,” or volume, terms the nation’s trade deficit bottomed out midway through 1986 and has been steadily improving ever since.

‘Locking Barn Door’

“Many provisions under consideration would now be not only unhelpful, but positively harmful,” Yeutter said.

Enacting such legislation, added M. Alan Woods, Yeutter’s deputy and chief lobbyist during the coming Senate debate, “is sort of like locking the barn door when the horse is trying to get back in.”

The bill is the product of the Senate Finance Committee and eight other panels claiming jurisdiction on behalf of various interests, regions and economic sectors seeking various forms of advantage from national trade policy. In many ways it is similar to a House-passed measure that contains many provisions that most economists agree are openly protectionist.

Yeutter said the Administration will try to salvage acceptable legislation from a House-Senate conference, which will reconcile differences between the two versions later this summer. For now, the Administration will try to strip the Senate bill of its most offensive amendments and to eliminate requirements for retaliation and other forms of protectionism.

Many of these provisions are already in the bill passed by the House last month. If they are not eliminated in the Senate, the chance of crafting an acceptable bill in a House-Senate conference would decline sharply.

Yeutter has already put the chances of salvaging trade legislation that President Reagan will be able to sign at “less than 50-50,” and he repeated the threat that Reagan will veto a protectionist bill.

A coalition of about 70 manufacturing and service industries, retailers and agricultural and consumer groups endorsed the Administration position on the bill at a news conference Wednesday, denouncing portions of it as protectionist and warning that it would restrict trade, not expand it.

The arguments of the Pro Trade Group followed a path already taken by Yeutter in several speeches and by the Administration in its letter to the Senate leadership. They focused primarily on a provision that would strip the President of his discretionary authority to refuse tariff or import-quota protection recommended by the International Trade Commission for industries injured by foreign competition.

At present, the President can reject an ITC recommendation of five-year protection for an “injured” industry on the grounds that it would harm other aspects of the nation’s economy.

“Retaliation is inevitable if this provision is enacted,” said Richard W. Roberts, president of the National Foreign Trade Council of New York. “What we will have is a shifting of pain from one sector of the economy to another.”

In a related development, former ITC Chairman Paula Stern said Wednesday that the proposal to make ITC protection mandatory in all injury cases would be even more damaging to international trade than a controversial House provision sponsored by presidential hopeful Richard A. Gephardt (D-Mo.) that would target Japan, West Germany and other trade-surplus countries for special retaliatory punishment of their “unfair” trading practices.