Trade Bill Needs Major Surgery to Avoid Veto, White House Says

The Reagan Administration warned Friday that the still-unfinished omnibus trade package that began to take final form the previous night still needs major surgery before President Reagan will sign it.

House-Senate conferees, resolving some major differences between House and Senate versions of the trade bill, generally opted for less protectionist provisions than the more extreme sections of the two bills. But Administration officials who reviewed the conferees’ action the morning after found their effort wanting.

“The consensus was that they didn’t finish, that nobody knows exactly what they did, and whatever they did, nobody likes it,” said one official who asked not to be named. “A number of issues are still open, and there’s a lot of drafting to be done. It’s not a finished process yet.”

Finds It Objectionable

White House spokesman Marlin Fitzwater, briefing reporters traveling with Reagan to California for a 10-day vacation, said that the Administration still finds the bill objectionable enough to veto unless the conferees make further modifications.

Fitzwater singled out provisions of the bill that would restrict presidential discretion in responding to charges of unfair trade practices, punish Japan’s Toshiba Corp. for a subsidiary’s sale of militarily useful technology to the Soviets and require 60-day notices in advance of plant closings and layoffs.

“We still have grave reservations about several of the provisions, including plant closings, Toshiba, presidential authority and some of the mandatory retaliatory provisions,” Fitzwater said.

“If substantial changes aren’t made . . . “ he added, “the President’s senior advisers will recommend a veto.”

Earlier, U.S Trade Representative Clayton K. Yeutter said that Congress had “jettisoned a lot of undesirable things” from the trade bill. “The question is whether they jettisoned enough, and we need a couple of days to assess that.”

Divided Into 17 Panels

The House and Senate conferees on the bill had divided into 17 subcommittees, and two of the most important broke Thursday night for a 10-day Easter recess with their work unfinished.

Still in the balance is a complicated agricultural trade package and an effort by House Democrats to require foreigners to disclose their investments in U.S. companies and real estate.

Several sections of the bill that had been branded by the Administration as outright protectionism or as unacceptable challenges to presidential authority to conduct trade policy were softened or eliminated.

The amendment by Rep. Richard A. Gephardt (D-Mo.), targeting countries carrying trade surpluses with the United States for mandatory retaliation, was abandoned during Thursday night’s bargaining. Also dropped was a House proposal to strip the President of final authority to decide whether to grant protection to industries claiming injury from foreign competition.