Nakasone Act to Help U.S. Exports : Trade Bill Setting Sanctions Wins Easily in House

WASHINGTON â€”  The House passed by a strong majority Thursday a tough trade package that mandates retaliation against many U.S. trading partners, ignoring Administration veto threats and objections that it could provoke a trade war.

Despite a late move by House GOP leaders to derail the bill, 44 Republicans supported it, which could give the majority just enough votes to override a presidential veto.

Only six Democrats opposed the measure, which in its final form was heavily backed by organized labor, industries suffering from foreign imports and a Democratic leadership scenting a potent issue for the 1988 presidential campaign.

Uncertain Future

The legislation, which passed 290 to 137, nevertheless faces an uncertain future.

The Senate Finance Committee is working on a separate trade bill that committee Chairman Lloyd Bentsen (D-Tex.) has said will not contain any provision resembling the House bill’s most controversial section, which mandates tough sanctions against exporting nations that have large trade surpluses with the United States.

That provision, pushed by Rep. Richard A. Gephardt (D-Mo.), was adopted Wednesday by only a four-vote margin, suggesting that it will not survive a Senate-House conference to negotiate a compromise.

Nevertheless, House Speaker Jim Wright (D-Tex.) implored members to use the bill to send a clear message to America’s trading partners that this nation no longer will tolerate unfair practices that restrict foreign markets to U.S. goods and undercut American industries.

� . . . Closing factories, an eroding industrial base, jobs lost overseas, a transfer of ownership of factories and farmland into the hands of foreigners� are the ills the bill takes steps to correct, he said.

He called the legislation “a product of the House at its best,� that he said would force foreigners to “treat American goods exactly as we treat their goods.�

The vote came as Japanese Prime Minister Yasuhiro Nakasone was conferring with President Reagan about trade conflicts between the two nations.

Reagan told Nakasone he would veto the measure if it reached the White House, and said that its narrow margin of approval ensured that the veto would be upheld.

The bill includes:

--A “Buy America� provision that bars the U.S. government from buying any products from countries that restrict their government’s purchases of American goods.

--Trade Adjustment Assistance benefits that would be available automatically to firms and workers once the government determines that an industry has been hurt by imports. Benefits now are granted at the President’s discretion. Benefits also would be improved by granting workers up to $4,000 each for retraining and providing temporary supplemental wages if they take a new job that pays less than their old one.

--Strengthened laws to protect U.S. trademarks, patents and copyrights.

Stiff Tariffs, Quotas

--The Gephardt amendment, which requires countries that export much more to the United States than they import from it to eliminate their trade barriers and cut their trade surpluses by 10% annually. Those failing to comply would face automatic stiff tariffs or quotas.

--More funding for export promotions and agriculture export subsidies.

--Provisions for the Treasury Department to negotiate a “competitive dollar exchange rate� against other major currencies and establish a Council on Industrial Competitiveness.

--A requirement that foreign investors holding at least 10% interest in any U.S. company, bank or farm worth more than $5 million file annual reports with the Commerce Department.

Japan, Taiwan, West Germany, South Korea, Italy and Brazil would be the countries most hard hit by the sanctions.

The Administration has vigorously opposed the punitive portions of the bill, charging that they would improperly restrict the President’s flexibility to negotiate trade solutions and invariably would provoke retaliation against U.S. products by other nations.

GOP Bill Defeated

Before the final vote, GOP leaders--including Minority Leader Robert H. Michel of Illinois--introduced a substitute bill that stripped away the most stringent features. After it was defeated, 268 to 156, the Republicans branded the tougher measure an ill-fated mistake.

The Gephardt amendment is “a lightning rod for a veto,� Michel said. “I want something that can be signed into law.�

“This bill is not going anywhere,� said Republican John J. Duncan of Tennessee. “We’re here to produce legislation, not just pass political documents.� But Gephardt asserted that without the tougher provisions, the trade reform bill would do little to defray the trade deficit or aid beleaguered industries.

He called his amendment “the stick in the closet� that will force other countries to buy U.S. products.

Despite the veto threat, “I believe the President of the United States wants to do something about this desperate problem,� Wright said. “This gives him the tools to let him do something.�

Republican Bill Frenzel of Minnesota, who opposed the bill, expressed hope that the tough House bill will not doom trade reform in this session of Congress. When the House and Senate negotiate on a final package, he said, “we might still be able to put it all together again.�