Crucial Trade Tests

Congress is making good progress on the omnibus trade legislation; it has stripped away many of the special-interest and protectionist provisions. But the crucial tests lie immediately ahead. They will come over proposals for safeguarding domestic American industry and handling unfair trade practices.

Much of the credit for the accomplishments made so far belong to Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, and Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee, who have given strong leadership to efforts to eliminate the excesses that were written into the House and Senate bills as they were passed last year. Leadership in this case is not easy, for the conference committee, seeking to reconcile the two bills, has 199 members and 17 subcommittees, and each bill is about 1,000 pages long.

The challenge now is to deal with the two fundamentals of effective trade legislation: (1) facilitating the new round of negotiations on the General Agreement on Tariffs and Trade with fast-track negotiating authority for the President, and (2) preserving a strong and free negotiating position for the United States by preserving broad presidential discretion on trade. Congress has been trying to limit presidential discretion with mandatory sanctions, prescribed retaliation and dozens of other proposals that appear to be innocent but that are counterproductive, if not crippling, to free trade.

President Reagan’s firm stand for the preservation of free trade has been justified by events. The most important encouraging sign is the increase in exports by manufacturers in this country. Adjustments in the value of the dollar have helped restore competitiveness for the American economy, but that new economic vitality could be handicapped by legislative action undermining the Canada-U.S. free-trade agreement, which is now also pending in Congress, and the new GATT negotiations.

Protectionist themes purveyed by Rep. Richard A. Gephardt (D-Mo.) and Sen. Bob Dole (R-Kan.) in the presidential primaries have not generated broad political support, and for good reason. Most Americans recognize the folly of discouraging trade or of retreating from the fierce competition of world markets. They recognize that the economic vitality of the United States depends on its success in world markets and that American success in those markets will become more likely as the markets themselves are made freer.