Bill to Open Foreign Markets Clears Key Panel

A key House subcommittee Thursday approved an omnibus trade bill aimed more at opening foreign markets to U.S. goods than at protecting American manufacturers from foreign competition.

After two days of closed sessions on the bill--proposed by House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) and trade subcommittee Chairman Sam Gibbons (D-Fla.)--the subcommittee for the most part approved it without change. The bill had been deliberately drafted to attract enough bipartisan support to make it acceptable to President Reagan.

Rostenkowski and Gibbons, emerging from the unexpectedly harmonious session Thursday accompanied by a key Republican, Bill Frenzel of Minnesota, were quick to stress the bipartisan nature of their achievement.

Avoids ‘Protectionism’

“On a bipartisan basis, trade legislation is moving,” Rostenkowski said. “The product should be toughening our trade policy, but doing it in a manner that opens markets without that frightening word, ‘protectionism.’ ”

Frenzel added: “I’d give the subcommittee an A for progress, and I’ll vote for it in the full committee.”

There was no serious effort by committee Democrats to convert the bill into the largely protectionist model typified by last year’s trade bill, which the Republican-led Senate refused even to consider. But it must still face the full committee next week, where other Democrats anxious for more directly protectionist measures could still make a stand.

Rep. Richard A. Gephardt (D-Mo.), who has made tough trade action a centerpiece of his fledgling presidential campaign, deferred until the full committee meets a move to restore a specific attack on Japan, West Germany, South Korea and other countries with large trade surpluses.

Would Force Reductions

Gephardt has told the committee leadership that he is still working on an amendment to restore his proposal to identify the countries with which the United States carries the largest trade deficits and force them to reduce their surpluses by 10% a year or face sweeping 25% import fees for their products.

The chairmen’s bill does not include that punitive tariff, which would be illegal under U.S. international trade agreements, and instead substitutes a procedure for negotiating downward each country’s surplus to focus instead on unfair trade practices each surplus country may be indulging in.

This compromise proposal would require retaliatory action only after all those steps have been taken. Even then, the President could waive retaliation if harm to U.S. interests might result--harm that includes damage to a debtor country such as Brazil, which needs huge trade surpluses to service its $108-billion debt.

Gephardt’s Target Countries

Under the original Gephardt plan, retaliation against any surplus country would be virtually automatic. Based on 1986 trade records, target countries would include Japan, West Germany, Italy, South Korea, Brazil, Switzerland, Taiwan and Hong Kong.

Clayton K. Yeutter, President Reagan’s special trade representative, said the measure endorsed by the subcommittee was “a substantial improvement” over last year’s bill.

“While we welcome the many favorable changes, this is just the first step in a long process,” Yeutter said. “It should be no surprise that we still have major problems with some of the provisions,” he said, without citing specific objections.

Amendments to the bill adopted Thursday are primarily technical, aimed at clarifying details. In its present form, the measure is dedicated to sharpening existing procedures for identifying unfair trade practices abroad or providing temporary trade relief for industries suffering from import competition.

Bentsen Will Respond

Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), who has proposed a package that emphasizes expanding trade abroad more than reducing imports to the U.S. market, made it clear Thursday that he will respond to the House bill as soon as it passes. House Speaker Jim Wright (D-Tex.) has again called for final House action by early May.

Bentsen, speaking to reporters at a breakfast meeting, said he is in touch with Rostenkowski daily and plans to move his parallel bill in the Finance Committee as soon as the House version passes and is referred to the Senate.

The senator said he wants to get a bill compatible with the House version through his committee within three weeks so that “we can put legislation on the President’s desk by the August recess.”