U.S. Trade Policy Enters a Crucial Phase : Commerce: White House sends GATT legislation to Congress and begins final negotiations over dispute with Japan.


Plunging into a crucial, and perhaps climactic, period in its effort to retool the nation's trade relations, the White House sent Congress legislation Tuesday to implement a new world trade accord and, hours later, began a final round of negotiations to calm a roiling dispute with Japan.

With much of its congressional program in tatters and the nation's trade deficit headed for record territory, the White House wants badly to demonstrate success in the trade arena--a center of economic activity considered crucial to maintaining the current pace of growth and job expansion--before the midterm elections and an Asian-Pacific economic conference in November.

Whether it can succeed, and just what constitutes success, is far from certain. Trade experts are doubtful that the negotiations with Japan will yield enough common ground to let the White House claim major progress in opening the Japanese auto market by more than a crack, and some allies of the White House on Capitol Hill believe in any case that a tough rebuke to Japan might be of greater benefit in the short term.

If no solution is found by Friday's deadline and the Administration imposes sanctions, Tokyo may respond by seeking resolution of its disputes with Washington in the multinational General Agreement on Tariffs and Trade.

That, in turn, would complicate the Administration's effort to win congressional approval next week of the new global trade treaty. The pact, negotiated in the so-called Uruguay Round of trade talks, would cut tariffs by an average of 40%; lengthen the reach of GATT's successor, the World Trade Organization, and, according to the White House, increase the size of the U.S. economy by $100 billion to $200 billion in coming years.

Arriving side by side, the dispute over Japan and the fight to win approval of the trade agreement in the House and Senate symbolize what U.S. Trade Representative Mickey Kantor said Tuesday is the Administration's attempt to use trade laws to pry open foreign markets.

"The Uruguay Round is very important from a trade standpoint," said Jeffrey Schott, a trade expert at the Institute for International Economics in Washington. And the Japan dispute, in which the White House could name Japan as a top violator of fair trade practices, carries particular political weight, he said.

The international trade agreement, which was completed last December in Geneva after more than seven years of negotiations, must be ratified by 123 signatories. Failure of the United States to lead that process, Schott and others have said, would risk its unraveling. So, too, they said, would a proposal raised by Senate Minority Leader Bob Dole (R-Kan.) to delay a vote until next year.

"It would cast a long shadow on U.S. trade policy, call into question the direction the United States is going in and put into doubt the very substantive achievements of the Uruguay Round negotiations," Schott said in an interview.

The Administration hopes that, with ratification by the major trading nations, the plan can go into effect Jan. 1.

By the Administration's estimate, California exports would get a $70-billion boost as a result of the agreement's tariff-reducing provisions around the world, with much of the increase occurring in such export-intensive industries as aerospace, entertainment and computer software.

Kantor, a Los Angeles lawyer before joining the Clinton Administration, has found himself in the midst of an unsettled dispute over whether the international agreement would subjugate U.S., state and local laws. Opponents of the agreement have repeatedly insisted that under the trade plan, the World Trade Organization could overrule safety and health standards issued by individual states if the standards were found to limit trade and block access to U.S. markets.

"Misinformation," Kantor said Tuesday of those claims. "No law or regulation--state, local or federal--is altered by any action whatsoever, either dispute resolution or others."

Even if the so-called sovereignty issue and efforts to delay the vote do not derail the agreement, it still faces questions being raised by Sen. Ernest F. Hollings (D-S.C.) about the threats more open trade rules might pose to the struggling U.S. textile industry and by others about how the Administration would cover the $12 billion that the pact would cost in lost tariff revenue.

In what one White House official conceded was a "serious hurdle," Hollings sent word that he would try to block final action on the pact by refusing to let it out of the Senate Commerce Committee, which he chairs.

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