Shultz Calls ‘Protectionist’ Trade Bill Not Worth Saving

Times Staff Writer

Secretary of State George P. Shultz, in a sharp break with the White House, said Friday that the 1,000-page trade bill passed by Congress is so “protectionist” that President Reagan should abandon any attempt to salvage part of it after his expected veto.

In a speech to a luncheon honoring the nation’s career diplomats, Shultz said the legislation was designed to pander “to what many people think are protectionist instincts around our country.”

Reagan has said he will veto the bill because it contains a section requiring companies with more than 100 employees to give their workers 60 days’ notice of plant closings or substantial layoffs. He also objects to several other issues. But he has said he is prepared to sign a trade bill if those provisions are removed in a compromise with Congress.


Plea of Yeutter

“We need a trade bill this year,” Clayton K. Yeutter, the U.S. trade representative, said last week after Senate passage of the measure. “There are a lot of good things in that legislation, so if a couple of necessary corrections are made and the bill comes back, I’m really quite confident the President would sign it.”

White House spokesman Marlin Fitzwater said this week that Reagan will veto the bill in its present form but “wants to get another trade bill passed” that does not contain the plant-closing measure, a provision long sought by organized labor and vehemently opposed by business groups.

But Shultz said the measure is so objectionable in its intent that it should be rejected even if the employee notice provisions are removed. The bill would mandate tougher U.S. action against allegedly unfair trade practices by other nations--sanctions that many conservatives contend would provoke retaliation from U.S. trading partners.

Shultz said he hopes the controversy over plant closings and other issues would generate enough opposition in the Senate to sustain Reagan’s veto. The House is expected to override the veto.

Protecting ‘Our Markets’

“We have seen over the past, say, 10 years, a gradual increase in protection of our markets,” Shultz said. “And we have a trade bill now that will shortly be before the President that, aside from various provisions that are objected to and which, I hope, will help sustain the veto . . . is a clear protectionist trade bill.”

In a sardonic reference to the deflated presidential campaign of Rep. Richard A. Gephardt (D-Mo.), Shultz said: “I was interested to see what happened to the candidate for President in the primaries who made protection his shining light. He didn’t get very far.”

Nevertheless, White House political strategists have made it clear that they believe the public is increasingly concerned about foreign penetration of the U.S. economy. These strategists say it would be a political blunder for the Republican Administration to allow the Democrats to monopolize the trade issue this election year.

Shultz described the measure as “one of those 1,000-page monstrosities (that) you hardly dare say what is in it and not in it.”

‘Putting on Quotas’

However, he said: “The central feature . . . will be an engine of raising tariffs and putting on quotas.”

U.S. trading partners, especially Japan and West Germany, have said the bill will restrict their access to the U.S. market and could touch off a bitter trade war.

Shultz said the United States can compete effectively under existing laws so it could be a net loser in a new round of protectionism.

“We are the biggest exporter in the world,” he said. “Our exports, right now, are in a very strong upward thrust. All of the moonshine about how we’re flat on our backs, and not able to do anything, is shown to be just that.”