White House, Hill ready to negotiate over huge trade bill. Baker acts as Reagan's liaison as congressional conferees meet

Treasury Secretary James Baker III will be the point man in the administration's battle this fall over the pending trade bill. The White House made this decision last week when it began mapping its strategy for dealing with the legislation, which encompasses banking, energy, commerce, agriculture, and trade issues. Normally the United States Trade Representative, Clayton Yeutter, would have had the lead position. But Mr. Yeutter, in an interview, said that the scope of the legislation and size of the congressional conference trying to draft the final law mandated the unusual shift.

``It is such a legislative challenge,'' Mr. Yeutter says, ``that it is necessary to deal with it on a full-scale interagency basis. ... There has never been a conference like this in the history of the US Congress.''

Reaction on Capitol Hill to Mr. Baker's emergence as the leader of the trade fight was generally positive. ``He is a skilled negotiator,'' a congressional source says, ``and a pragmatic fellow.'' In addition, there is little doubt that when Baker makes a commitment, he has the backing of the White House.

Congress, however, is not exactly certain where Baker stands on the different parts of the legislation. This makes it more difficult to gauge ways to negotiate with him.

In its dealing with the conference, the White House strategy will be to find those portions of the trade legislation that it can quickly accept. The toughest sections will be held to the end, when the pressure to compromise will be the greatest. The bargaining is expected to go on for months.

The conference, made up of House and Senate lawmakers, will try to reconcile their differing versions of the trade bill when they reconvene after Labor day. Although the two bills are different, they both would take away some of President Reagan's discretionary powers over trade matters.

The House version includes the so-called Gephardt amendment, sponsored by Rep. Richard Gephardt (D) of Missouri.

This amendment mandates that the President take action against nations with large trade imbalances that display a pattern of unfair trade practices. The Senate has a toned down version.

The conferees must try to draft a bill that either is acceptable to the President or can survive a veto. The conference will be run by Rep. Dan Rostenkowski (D) of Illinois with Sen. Lloyd Bentsen (D) of Texas as vice-chairman. In its first meeting on Friday, 81 conferees were elected, including 44 from the Senate. But up to 150 conferees may be chosen from 20 committees.

``It's going to be a circus for the legislative leaders,'' Yeutter says.

The trade ambassador expects the legislative leaders will have the most difficult time handling some of the committee chairmen who feel they have more to gain politically by drafting a final bill that the President will veto.

Early reports indicated that the White House itself had some divisions. Yeutter conceded there were Cabinet officers who preferred a ``veto strategy,'' meaning they would not work with Congress toward trade legislation.

According to independent sources, Treasury Secretary Baker and Secretary of State George Shultz were in favor of this strategy, while the late Commerce Secretary Malcolm Baldrige and Yeutter wanted to work with Congress toward drafting acceptable legislation.

According to Yeutter, the White House strategy will be to try to let the leaders know early what parts of the legislation have the highest probability of a veto.

On Friday the Economic Policy Council (EPC), made up of those Cabinet members who deal with the economy, met to figure out what the ``potential backbreaker'' parts of the legislation would be.

To determine its own stand, the EPC plans to draft side-by-side comparisons of the House bill, the Senate bill, and its own desires.

Although the White House initially prepared its own version of a trade bill, running more than a thousand pages, it does not need new trade legislation. The only part of the trade bill that the President needs is ``fast-track negotiating authority'' for the trade negotiations to be held under the General Agreement on Tariffs and Trade (GATT).

Fast-track authority means that Congress will agree to a straight vote on the new GATT treaty without debate or the addition of amendments. This gives the President more flexibility and speeds up the process.

In addition, the White House would like some sections dealing with intellectual property rights, antitrust laws, the repeal of the windfall profits tax, and some tightening of the rules regarding foreign unfair trade practices.

``The question is, can we get rid of the troublesome or destructive language which will hurt the trade process,'' Yeutter says.

Full platter of trade issues for US

Aside from the trade legislation, the Reagan administration faces scores of other trade issues this fall. Among them are:

US-Canada free-trade talks. Negotiations to rewrite bilateral trade rules ``will be hotter than a pistol'' in September, says US Trade Ambassador Clayton Yeutter. Negotiators face an Oct. 5 deadline.

US-EC agricultural talks. On Jan. 1 the European Community will put into effect rules governing the processing of beef and hormones used in fattening cattle. If enacted, they could stop meat exports to Europe. ``This could be a brouhaha of major proportions,'' says Mr. Yeutter.

In addition, the US is unhappy with the subsidies given to Airbus Industries, the European airplane manufacturer, and it wants the EC to open up its telecommunications industry. Airbus will be discussed this week at a high-level meeting. There are no formal deadlines.

US-Japan trade. A new airport being built in Osaka could blossom into a larger trade dispute soon if US companies are not included in the construction. Bruce Smart, a Commerce Department official, will be in Japan this month for negotiations. If he is unable to make progress, the US may charge the Japanese with unfair trade practices.

Supercomputers. The US is unhappy with alleged ``dumping'' of supercomputers by the Japanese. This is under negotiation.

US-Mexico trade. When President Miguel de la Madrid Hurtado visits President Reagan this fall, the US will announce an agreement to try to identify trade problems and talk about them at the trade-minister level before they become confrontations. Yeutter says this has the potential to become a precedent for other bilateral disagreements.

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