Senate Defies Veto Threat, OKs Retaliatory Trade Bill

The Senate, defying a presidential veto threat, Tuesday passed massive omnibus trade legislation that requires retaliation for unfair foreign trade practices and aid to U.S. industries harmed by imports.

The final Senate vote, 71 to 27, is more than the two-thirds margin needed to override a veto. The bill was approved largely along party lines, despite a last-minute veto warning by President Reagan to GOP congressional leaders and after two top White House officials urged Republican senators to unite against the measure.

“This is a vote for a better economic future for the American people,” Senate Majority Leader Robert C. Byrd (D-W.Va.) said. “This Senate is standing up for American products. This Senate is standing up for the American people.”

The tactics employed earlier in the day by Reagan and his aides, faced with overwhelming Senate support for the legislation, seemed to be aimed at establishing a stronger negotiating position against congressional Democrats in hopes that the bill can be watered down in a later House-Senate conference.

Similar legislation, which Reagan has denounced as protectionist and has also threatened to veto, passed the House April 30. Administration officials for weeks have predicted that the best chance for trade legislation that the President can accept is in an essentially new bill to be pieced together from House and Senate conferees, most likely after Labor Day.

“He is not following a veto strategy. He’s following a negotiating strategy,” John C. Danforth (R-Mo.), a key supporter of the 1,100-page Senate package, said of Reagan.

Many Republicans in both houses oppose a provision unrelated to trade that would require companies with 100 or more workers to give 60 days’ notice of plant closings or substantial layoffs, a measure that reportedly is almost certain to draw a veto. The House version of the trade legislation does not contain such a requirement.

But the House legislation carries an equally controversial provision involving retaliation. Sponsored by Rep. Richard A. Gephardt (D-Mo.), the House measure would require countries to reduce their surpluses by 10% a year or face tariff or quota retaliation equal to the amount of U.S. import injury caused by their allegedly unfair trading practices.

Less Rigid Provision

The Senate’s retaliatory provision is far less rigid. Although it would impose higher tariffs or import quotas against foreign nations that refuse to end unfair trading practices, the Senate bill would set no numerical target for trade surplus reduction and would instead focus on expanded U.S. exports to those countries.

In addition, the Senate bill would:

--Provide funding to retrain workers in American industries hurt by imports.

--Limit presidential discretionary authority to provide relief to U.S. industries harmed by imports.

--Renew presidential authority to negotiate trade agreements until 1993.

--Repeal the windfall profits tax on oil.

--Prohibit Toshiba Corp. and a Norwegian firm from doing business in the United States for up to five years. This provision is intended to penalize the companies for selling sophisticated submarine technology to the Soviet Union.

A White House spokesman said that the Senate bill would create “sweeping procedural changes that would repress trade and investment,” would violate “our international obligations (and) trigger a downward spiral of retaliation,” would constrain “the discretion of this and future presidents to formulate international economic policy and conduct negotiations,” would disrupt financial and labor markets and add to the budget deficit.

“The Senate trade bill, similar to the House version, contains numerous provisions that are unacceptable. If either bill came to me in present form, I would have no choice except to veto it,” Reagan said in a statement issued late Tuesday.

Only hours before the vote, the President delivered his veto threat personally to GOP congressional leaders at a closed White House meeting. In addition, Treasury Secretary James A. Baker III and U.S. Trade Representative Clayton K. Yeutter met with the Senate Republican Caucus to again relay the veto warning and urge a unified stand against the bill.

In the end, however, 19 Republicans voted for the bill and 27--including California’s Pete Wilson--against it. No Democrat opposed the legislation.

Finance Committee Chairman Lloyd Bentsen of Texas, Danforth’s Democratic co-sponsor of much of the trade package, said the vote showed that the Administration’s strategy had failed. And Sen. Bob Packwood (R-Ore.) added that “every vote that was doubtful went against them.”

“The Administration is reasonably satisfied, and I think the President could live with what we have done,” Danforth told reporters, predicting that Reagan eventually will sign the bill into law. “I have always felt this is a bill that would be written substantially in conference.”

But Bentsen warned that the Yeutter-Baker veto threat “is a very dangerous game” that could “break apart the bipartisan cooperation on this bill in conference.”