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A Strong Flavor of Protectionism

March 29, 1987

Clayton K. Yeutter, the U.S. trade representative, is right in holding out for further moderating amendments to the trade legislation that will reach the House of Representatives floor in April. The bill voted out of the Ways and Means Committee is a vast improvement over the product of the House last year, but it has some elements likely to do more harm than good.

The risk of even more draconian measures remains. Rep. Richard A. Gephardt (D-Mo.) has served notice that he will try again to write in his mandatory measures for punishing nations, like Japan, with immense trade surpluses. Fortunately, there appears to be little appetite for meat that raw in the present political climate, and there is little likelihood that the inevitable presidential veto could be overridden.

Despite the new emphasis on export promotion, there remains a strong flavor of protectionism in some of the provisions, and that is not good. The President's authority to order import restrictions to protect American industries injured by foreign competition would be transferred to the U.S. trade representative. That could increase the reliance on this measure, increasing the likelihood of arbitrary protection of uncompetitive U.S. industries at the expense of consumers.

There is also a new definition of unfair trade practices that includes standards for workers overseas--including collective bargaining, a minimum age for working children and work standards. That could jeopardize the prospects for many developing nations to earn their way out of poverty through exports to the United States. The President's discretion on trade must be preserved.

The legislation seeks to make retaliation mandatory. That is a response to the failure of President Reagan to use all of the power already at his disposal to meet unfair challenges, particularly from Japan. The new sanctions, belatedly ordered in response to the failure of Japan to meet its commitments, may be a sign of more vigorous action by the President, and that in turn could cool congressional demands for automatic sanctions. Nevertheless, the medicine proposed by some in Congress can be worse than the disease that it is intended to cure. Flexibility is essential to improving the American position in international trade. The worst thing that this bill could do is to lull U.S. industry into more of the complacency that has historically marked both its export effort and its commitment to competitive productivity.

The single most important part of the legislation is the authority for the President to engage in the new Uruguay Round of talks under the General Agreement on Tariffs and Trade with the assurance of "fast track" congressional action. This means that Congress retains only the rightto accept or to reject trade agreements, not to amend them. This is the clearest signal that Washington can give the world that it is serious about the new GATT round.

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