Senate Would Curb Reagan Rejection of Tariffs, Quotas

The Senate voted 55 to 41 Tuesday night to strip the President of his discretion to refuse to grant trade protection to industries hurt by foreign imports, no matter what the cost to other industries and consumers.

Proponents and opponents of the discretion-limiting measure warned that it was the most important remaining question in the massive trade bill, and Vice President George Bush was on hand to cast a deciding vote if necessary.

Top Reagan Administration trade officials had warned that the President would almost certainly veto the trade package if its final version contained the Senate Finance Committee’s proposal to delete his ability to weigh the economic impact of protecting an industry against the damage that protection might cause the rest of the economy.

National Security Danger

In the version that went to the Senate floor from the Finance Committee and prevailed Tuesday night, the President could refuse to grant temporary quota or tariff protection to a failing industry hurt by imports for only two reasons: if there were danger to the national security or if another industry dependent on the injured industry’s product were likely to suffer even more economic damage.

As in present law, the International Trade Commission, the quasi-judicial body that decides whether a failing industry is being injured by foreign imports, would be forbidden to consider economic effects outside the industry itself. Under present law, it is the President who considers those larger effects. In the committee bill, he would no longer have that power.

The vote, Sen. Lloyd Bentsen (D-Tex.) said, “helps get trade relief removed from the Congress and the President” by setting up a system under which failing industries are virtually assured of some kind of temporary protection for up to 10 years.

Sen. John C. Danforth (R-Mo.), his chief ally on the issue, added: “The question was whether we would have a system capable of handling the problem of trade-injured industries, or just a congressional grab-bag” to protect those industries, such as textiles or steel, with the heaviest political clout.

The vote was on a move, spearheaded by Bob Packwood (R-Ore.), the ranking minority member of the Finance Committee, to restore presidential discretion to the trade bill. Stripping the President of his discretion to judge the economic impact of protection, Packwood said during floor debate, would damage consumer interests, raise prices and eventually hurt industries more capable of competing abroad by protecting the markets of uncompetitive failing industries.

Packwood cited two controversial temporary protection cases from the last few years. In one, Reagan rejected a trade commission recommendation that the dying U.S. shoe industry be protected from low-priced imports from Brazil and the Far East by imposing quotas on them. His argument: Inevitable price increases would hurt more people than protection would help.

In the other case, Reagan approved tariff increases on Canadian shingles and shakes--an action that not only raised the price of construction materials but provoked Canadian tariff retaliation against some high-tech products in which U.S. industries are competitive abroad.

Sees Risk to Best Industries

“What this bill does,” Packwood said, “is say we should put at risk our best, most competitive industries in order to protect others that cannot do well.”

Bentsen argued that he, Danforth and other Finance Committee members who had been trying to forge a new system for protecting weak industries had, for the first time, imposed on those industries a duty to present the trade commission with a specific program for regaining competitiveness during the period it is protected from foreign imports.