Big Moment on Trade

The moment of decision is at hand on the omnibus trade bill. The 199 members of the HouseSenate conference committee moved from their 17 subcommittees to plenary discussion on Tuesday, struggling to fashion constructive legislation. Whether they will succeed remains in doubt.

There have been promising developments. Under the firm leadership of Sen. Lloyd Bentsen (D-Texas), chairman of the Senate Finance Committee, and Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, the most outrageous of the parochial special-interest provisions have been swept away.

A spirit of compromise also has been evident in the agreement between congressional leaders and the White House to enlarge presidential discretion to include action against foreign takeovers if they are perceived as damaging to national security. This was offered to head off proposals for the registration of foreign investments--a requirement that could slow the flow of foreign capital at a time when it is important, and that also would raise risks of higher interest rates.

There is also a growing recognition among conferees of the danger of the more lethal automatic mechanisms for retaliation. The most flagrant example was that contrived by Rep. Richard A. Gephardt (D-Mo.) for automatically punishing nations that run high surpluses in trade with the United States. As President Reagan has correctly pointed out, efforts of this sort are almost certainto do more harm than good.

But the new moderation that seems to have taken hold in the committee could crumble in the final hours of negotiations because of continued pressure from regions and industries most affected by foreign competition. It is politically easier for those who represent those interests to seek protection than to face the reality that a long-term solution depends on the adjustment of U.S. industries to world competition--an adjustment that will force many into new work and new ventures.

President Reagan, Treasury Secretary James A. Baker III and the President’s special trade representative, Clayton Yeutter, have given strong and effective leadership to asserting the cause of freer trade and its importance to the economic well-being of the nation. The repeated threat of a presidential veto has helped the leaders of Congress to bring under control some of the more extreme proposals. It is useful that the President has chosen these final days of negotiations to reaffirm his willingness to veto any narrowly drawn legislation.

There are clear objectives that the legislation must affirm. It must facilitate the new round of negotiations in Geneva on the General Agreement on Tariffs and Trade, including an extension of fast-track negotiating authority. It must preserve presidential discretion in trade negotiations, unfettered by proposals that would impose automatic retaliation. And it must avoid anything that would in any way erode the U.S.-Canada free-trade agreement that will come next on the congressional trade agenda. It is an agreement that demonstrates the extraordinary value of freeing trade.