House Vote Backs Trade Retaliation : Action Against ‘Excess’ Surplus Narrowly Passes

In a bitterly contested vote, the House Wednesday narrowly approved a tough amendment to the trade legislation mandating retaliation against Japan and other nations that refuse to cut their “excess and unwarranted” trade surpluses with the United States.

The 218-214 vote on an amendment by Rep. Richard A. Gephardt (D-Mo.) was taken just hours before Japanese Prime Minister Yasuhiro Nakasone arrived for two days of trade talks at the White House.

House Democrats hailed the vote as a major step toward curbing unfair trade practices by foreign competitors and toward restoring the competitiveness of beleaguered American industries.

However, other officials said that it merely makes the chances of enacting trade legislation in this session of Congress much slimmer.

Provisions Invite Veto

A trade bill being prepared in the Senate is not expected to include strong retaliatory provisions. Should such features be included in compromise legislation worked out by a House-Senate conference committee, the entire trade package would face an almost certain veto by President Reagan, Administration officials have warned.

Nevertheless, Gephardt, House Speaker Jim Wright (D-Tex.) and other supporters of the amendment stressed that tough action is needed to make a dent in the nation’s huge trade deficit.

They and backers of a more moderate trade measure pushed by House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) delivered opposing, impassioned pleas on the House floor before the crucial vote. And Reagan himself met with about 15 Republican House members to ask for their vote against the amendment.

‘Status Quo or Change’

In a lectern-pounding speech before a crowded chamber, Gephardt called the ballot “the most important vote you will cast on what you want the trade policy of this country to be: status quo or change.

” . . . It’s a new way, a tough way,” he said. “What we do is more important than what we say and that’s what the Gephardt amendment is all about. A new policy . . . to make America strong and good again.”

This won him a standing ovation from the Democratic side of the House. Republicans sat in silence. The vote was mostly partisan. Only 17 Republicans, most of them from the industrial Northeast and Midwest, backed the amendment. Fifty-five Democrats, led by Rostenkowski, voted against it.

Gephardt’s amendment, which was strongly supported by labor unions, would require major exporting nations that have large trade surpluses with the United States to “eliminate” any unfair trade practices and open their markets to U.S. goods. Those failing to comply would face tariffs or quotas aimed at reducing their surpluses by 10% a year for four years.

Besides Japan, nations that could be affected include West Germany, Taiwan, South Korea, Italy and Brazil.

House Vote Set Today

With the fight on the amendment settled, the trade bill is expected to pass the House today.

In threatening to veto any such measure, Reagan has contended that strong sanctions would improperly limit his flexibility in negotiating trade agreements, and that they inevitably would provoke retaliation against U.S. exports.

“The Gephardt amendment moves in precisely the wrong direction by closing our markets, rather than opening foreign markets,” Reagan told the Republican lawmakers he lobbied, according to White House spokesman Marlin Fitzwater.

“It would brand us as clear violators of international agreements, thus undermining our ability to negotiate new trade agreements, to broaden, rather than restrict world trade. And it would subject the United States to counter-retaliations which would curtail rather than expand U.S. exports.”

Rostenkowski More Moderate

Speaking out for his more moderate form of the bill, which did not include automatic sanctions, Rostenkowski warned that Gephardt’s proposal is “too Draconian to be effective,” the product mostly of frustration.

“The amendment goes beyond the (question of unfair trade practices) and arbitrarily demands a reduction in a country’s trade surplus, even if most of the surplus has been fairly earned,” Rostenkowski warned. “The U.S. has every right to demand a level playing field, but it is a sign of weakness when we demand to be given points before the game begins.”

Added Rep. Don Bonker (D-Wash.), referring to a likely presidential veto: “If the Gephardt amendment passes, the entire trade bill will be branded as protectionist.”

Gephardt, who has made the issue a key part of his fledging presidential campaign, insisted that his proposal is apolitical and the only way to open foreign markets to U.S. goods.

Sees Continuing Decline

“Pressure,” he said, is necessary to force Japan to change its policies impeding U.S. exports, and failure to impose trade retaliation would allow the nation to continue on an economic decline he said had been under way since 1973.

Despite the slim four-vote margin, Gephardt told reporters after the vote that “the House has said very clearly they want a change in trade policy.” But he also conceded that “I can’t remember an issue in a long time on which there has been so much indecision.”