President Cites Shrinking Import-Export Gap : Tough Trade Law Not Needed--Reagan

President Reagan, saying that America has “turned the corner” toward reduction of its mammoth trade deficit, took issue Saturday with congressional efforts to force him into tougher protective action.

In his weekly radio speech, Reagan said that Congress is trying to solve a problem that is correcting itself. He likened the situation to “closing the barn door when the horse is trying to get back in.”

“The last thing our economy needs now is congressional action that is behind the curve,” Reagan said.

Overseas sales of U.S. products have surged in the last few months, he said, as exports increased at a 14% annual rate--from the third quarter of last year to the first quarter of this year--and imports were dropping at a rate of nearly 5% annually.

No Veto Threat

But Reagan stopped short of threatening to veto the trade legislation now before Congress. Some saw this as a signal that a trade bill amendment passed Friday by the Senate--a softer one than the earlier House measure--could lead to legislation acceptable to the White House.

Japan Could Be Target

The House measure contains a retaliation amendment, sponsored by Rep. Richard A. Gephardt (D-Mo.), a presidential candidate. It would require the Administration to crack down on countries, such as Japan, that have achieved hefty trade surpluses with the United States in part by shutting American products out of their markets.

If such barriers cannot be removed through trade negotiations, the House measure would require the Administration to strike back with quotas or fees equal to the dollar value of the trade lost to the United States. If the other country persisted in unfair practices, the Administration would be required to reduce the trade surplus 10% a year by banning imports or canceling trade agreements.

The more moderate Senate version would require the President to identify countries that have a “consistent pattern of trade barriers” and to specify the major obstacles. The United States then would negotiate with the offending countries.

If the negotiations failed, retaliatory action would be required, but the President would be given wide discretion to determine what steps to take.

Bill in Conference

The question of a presidential veto appears to depend on what emerges from a House-Senate conference on the omnibus trade bill, and Reagan’s spokesman, Marlin Fitzwater, made it clear that the President has serious problems with other provisions of the Senate-passed measure.

Reagan, in his speech, cited steps taken by “many American companies” to restructure, reduce overhead and other costs and make significant improvements in quality. “Unlike the late 1970s, when our major corporations seemed to be lagging behind, today they are again pulling out in front,” he said.

“Lean, fast-moving and efficient American corporations are moving into the world market, and the latest figures suggest they are more than holding their own,” Reagan said.

In addition to increased competitiveness of American business, the President cited with approval “the positive adjustment that has occurred in the international exchange rates, the improvement of the economies of our trading partners and our ongoing efforts to pry open any foreign markets closed to American goods.

“Just at a time when we’re making great progress, Congress is seriously considering legislation that could set us back,” Reagan said. He added that if “Congress really wants to help solve the trade deficit, the single best thing it could do is cut the federal budget deficit.”

Denounces Spending Bill

The President also signed a $9.4-billion supplemental spending bill Saturday, but he denounced it, in a statement separate from his radio address, as “a prime example of how not to legislate on budgetary measures.”

The measure allocates funds for the Commodity Credit Corp., allowing farmers to apply for new loans, but it also includes $1.7 billion for domestic programs that Reagan did not want.

Reagan said the bill “presented a choice between many expensive, undesirable and unnecessary provisions on the one hand or a shutdown of important government programs on the other.”