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Making Things Worse

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The anger of Congress over Japanese protectionism on construction contracts is understandable, but the resultant sanctions written into the budget bill are the wrong way to seek a solution to the problem.

Congress has barred Japan from bidding on any federal construction programs. Presumably the ban will last the life of the bill, which will expire Sept. 30. Earlier, Congress barred any foreign nation from bidding on U.S. airport construction unless the nation provided access to American contractors--a restriction clearly intended as retaliation for Japan’s refusal to give American companies significant contracts on the huge new Kansai Airport.

These congressional actions short-circuited extensive efforts within the Reagan Administration to break down more of the barriers that Japan has established to protect its own industries and other businesses. A special mission to Tokyo at the end of November, led by Commerce Secretary William Verity, was to be followed in January by formal proposals from an interagency working group that President Reagan could use when Japan’s new prime minister, Noboru Takeshita, comes to Washington on Jan. 13.

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The intention in the Administration was to initiate retaliation under Section 301 of the 1974 Trade Act. Fine-tuned and carefully balanced actions are permitted by that law to respond to unfair practices by a foreign nation. While Congress has accused the Reagan Administration of being too slow and too late, the Administration notes that it has initiated on its own authority more Section 301 actions than any other administration.

Congressional action of the sort written into the budget bill may look good on the newsletters that members send to constituents, but in fact it represents the use of a crude instrument that in itself invites retaliation. Section 301 is a far better instrument. In this case Congress has managed only to cut Japan off from the business of least importance to its contractors in the United States. Of the $2 billion in building contracts won in the United States by Japanese companies in recent years, only $120 million has been federally funded and therefore would have been barred by this legislation.

Impatience with the Japanese is growing inside and outside the Administration. But much could be lost, in terms of expanded U.S. exports to Japan and increased business for American service and building companies in Japan, if constructive negotiations are sabotaged. The exasperation of Congress has now led to an extreme measure that could make Reagan’s ability to negotiate with Takeshita next month more difficult.

Mandating trade retaliation through legislation invariably risks doing more harm than good. That is the basic defect of the trade bill amendment sponsored by Rep. Richard A. Gephardt (D-Mo.). Trade is a complex issue, and the negotiation of fairer and freer trade requires flexibility for the negotiators. Existing law provides effective, flexible tools for the President. Nothing more is needed.

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