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Protectionism vs. Hands-Off Stand : Candidates Differ Sharply on Answers to Trade Woes

November 09, 1987|ROBERT A. ROSENBLATT | Times Staff Writer

WASHINGTON — A few days after the Oct. 19 stock market crash, House Minority Leader Robert H. Michel (R-Ill.) emerged from a hurried meeting with President Reagan and paused in the White House driveway to chat with reporters about how to reassure investors.

The bulls who hope for a market rebound "don't want any protectionism or any restraints on trade," Michel said.

If that's true, all the presidential candidates in both parties are self-proclaimed bulls, devoted to the ideal of increased trade between nations. But they differ drastically on the best way to get there.

Rep. Richard A. Gephardt (D-Mo.), who has made a tough trade stance the centerpiece of his campaign, is not backing away from a plan that could slap quotas on goods from Japan and West Germany if those countries do not dismantle trade barriers that keep out American products. In fact, Gephardt insists, the recent market plunge shows that he is right.

Rep. Jack Kemp (R-N. Y.), in sharp contrast, says the Gephardt plan could trigger a trade war and a worldwide economic slump.

Between these extremes, responses to a Times questionnaire demonstrate, the candidates offer several formulas for solving the trade problem. Democrats generally are more willing to give help to industries threatened by imports than the Republicans, who typically take a hands-off approach to trade.

Sen. Albert Gore Jr. (D-Tenn.) and Sen. Paul Simon (D-Ill.) both backed unsuccessful efforts in Congress to restrict textile imports. The Rev. Jesse Jackson wants to regulate multinational corporations as a way to protect workers' rights.

The most fervent free traders among the Democrats are Massachusetts Gov. Michael S. Dukakis and former Arizona Gov. Bruce Babbitt, although Dukakis says he would give temporary import relief to some companies as they modernized.

Among the Republicans, Vice President George Bush says U.S. allies should boost their economies to absorb more American goods. Kemp likewise blames a stagnant world economy for U.S. trade problems.

Focus on Budget Deficit

Senate Minority Leader Bob Dole of Kansas and former Secretary of State Alexander M. Haig Jr. argue that a lower budget deficit can strengthen the United States as a trading power. And former Delaware Gov. Pierre S. (Pete) du Pont IV wants to boost export earnings by selling Alaskan oil and natural gas and timber from federal lands to Japan.

The wave of fear and trembling in the financial markets gives the trade issue a new urgency just as a House-Senate conference is considering a massively detailed 1,200-page trade bill. By far the most controversy will focus on Gephardt's amendment, which is an integral part of the House bill.

"If standing up for American workers and insisting on prying open foreign markets is protectionism, then I want to be a protectionist," Gephardt said at a recent forum of Democratic candidates, where he insisted on talking about trade, although the official subject was social issues.

'Turning Up Volume'

His amendment would require the President to negotiate with countries that have big trade surpluses and unfair barriers against U.S. goods, then to take retaliatory action if the barriers do not come down. Gephardt said he is "turning up the volume" on the trade issue.

Because of his amendment, Gephardt said in a recent speech: "I'm confident that a tough new trade policy will become law--either when Reagan signs it, or when President Gephardt does."

In a direct counterattack, Dole organized his colleagues in a letter to Reagan asking the President to stand fast against protectionism. The 38 signatures gathered by Dole give Reagan a political ace, a guarantee that a veto of the trade bill would be sustained. The Gephardt amendment, Dole said, "is an irrational solution to America's trade problems, which would only compound them greatly."

The new President, whether Republican or Democrat, will inherit a huge trade deficit--the gap between imports and exports will be about $170 billion this year--and will be following an Administration with an unpredictable behavior pattern.

The general inclination has been to avoid any interference with imports. The Reagan Administration in early October reached an open border pact on virtually all goods with Canada, a free trade agreement between the United States and its biggest trading partner.

Appeals Rejected

And the White House rejected appeals for help from a variety of industries, including textiles, shoes and copper. But, responding to heavier political pressure, the Administration provided a respite from imports for the automobile and steel industries and pressured the Japanese into agreeing to keep semiconductor prices up as a sop to hard-pressed American producers.

The cries for help ebb and flow, depending on the general health of the U.S. economy and the specific ailments of individual industries. This leaves potential presidents with two issues: how to handle foreign competition generally and aggrieved industries in particular.

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