Conferees OK Trade Bill That Could Provoke Veto

House and Senate conferees Thursday night reached tentative agreement on most major provisions of an omnibus trade bill but the accord included several controversial elements that could provoke President Reagan’s veto.

The agreement, hammered out in a four-hour, closed-door meeting between House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) and Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), was informally approved by the key conference subcommittee.

“This must be a good product because nobody is happy with it,” Rostenkowski said after receiving the comments of other House conferees. “The Administration was disappointed with some of the language, but we think it’s good enough to be worthy of signature by the President.”

Noting that formal approval by the conferees would not take place until after next week’s Easter congressional recess, Rostenkowski added: “We hope we’ll have enough signatures on the report to take it to the floor a week or two after we get back and get it on the President’s desk.”

The Administration had no immediate reaction.

The House had passed its version of the trade bill last April and the Senate followed in July. A conference committee from the two houses has been working ever since on a compromise. Thursday’s tentative accord still left a host of issues, including some major ones, unresolved.

Absent from the compromise was the controversial Gephardt amendment, which would have targeted such countries as Japan, West Germany and Italy for retaliation if they did not reduce their trade surpluses with the United States.

The Administration had vehemently opposed the amendment, sponsored by Rep. Richard A. Gephardt (D-Mo.), who dropped out of the race for the Democratic presidential nomination Monday.

However, the compromise would force the Administration to retaliate against unfair trade practices by foreign competitors unless doing so would seriously damage the American economy.

The authority to retaliate would be transferred from the President to the U.S. trade representative--a change that the Administration had resisted--but the trade representative’s actions would be “subject to the specific direction of the President.”

President Given Authority

The accord would also reserve to the President the final authority over whether to protect specific U.S. industries beset by foreign competition.

The House-passed bill would have transferred that authority to the trade representative and both bills would have made it difficult for the Administration to deny relief to industries found to be harmed by international competition. The Administration had objected to those efforts to limit its discretion.

On the plus side for the Administration, Reagan would receive all the authority he sought to negotiate a new international trade agreement under the General Agreement on Tariffs and Trade. The President would also gain authority not only to negotiate a comprehensive trade agreement but also to proclaim tariff reductions and to reach new agreements on non-tariff barriers to trade.

At the same time, however, a separate conference subcommittee voted to impose tough trade sanctions on Toshiba Machine Co. and its huge Japanese corporate parent for selling technology of military value to the Soviet Union.

Parent Firm Also Affected

The compromise would ban all imports from Toshiba Machine Co. for two to five years and bar the huge parent corporation, Toshiba Corp., whose products include computers, consumer electronic goods and vacuum cleaners, from sales to the U.S. government--but not to other American buyers--for three years.

The Toshiba accord somewhat softened a tough Senate-passed provision that Administration officials had said Wednesday would provoke a veto. Reacting to the accord, White House spokesman Marlin Fitzwater said: “We’re not signaling a final veto.”

Administration officials, threatening a veto earlier this week if the Senate provision survived, argued that the bill would have a “chilling effect” on U.S.-Japanese relations and undermine multilateral efforts by Western governments to stem the flow of militarily valuable technology to the Eastern Bloc.

Toshiba Machine Co., along with a defunct Norwegian company, sold computer-run milling technology that is believed to have enabled the Soviet Union to make virtually noise-free submarine propellers.

Other conference subcommittees left still other contentious issues unresolved.

Extensive Disclosure

Prominent among those was a demand by House Democrats that foreign investors in U.S. companies and real estate be subject to extensive disclosure of their holdings. Treasury Secretary James A. Baker III had said that the bill would be vetoed if it included that language.

Late Thursday other conferees were still trying to soften a proposal by House Democrats to rewrite the rules governing foreign access to U.S. government procurement contracts. Administration officials feared that the House language would jeopardize the pending free-trade agreement with Canada.

The accord included one major non-trade matter. Bentsen, an oil-state senator, won repeal of the windfall profits tax imposed on the oil industry during the energy crisis of the early 1970s.

“This is a major victory for the energy industry and also a great victory for Texas,” Bentsen said.

“In the past, the House conferees have never agreed to the repeal of the windfall profits tax. Tonight, they did,” he said. “So that gets us much closer to taking this disincentive off the industry and encouraging drilling in Texas and in this country.”

A Department of Energy study, requested by Bentsen, concluded that the tax should be repealed to stimulate the domestic oil industry and save the $15 million it costs the federal government each year to administer the tax.