Senate weighing tit-for-tat law against trade barriers
That hammering you hear coming from Washington is the sound of trade barriers under construction.
Last week, with free-trade rhetoric from the Versailles economic summit still echoing in the distance, the Senate Finance Committee approved its much-discussed ''reciprocity'' trade restriction bill, and the Commerce Department slapped duties on a wide range of imported steel products. The moves are further evidence of how recession, the realities of foreign competition, and a coming congressional election have combined to loose swirling protectionist pressures on the US government.
Reagan administration officials often emphasize that the United States, because of its position as the world's most open market, must lead the way toward a more liberal international trading system. But actions taken over the past 14 months by both the White House and Capitol Hill have been sending foreign governments a different signal. Under congressional pressure, the administration negotiated quotas for Japanese automobiles; to avoid paying millions to domestic farmers, President Reagan set limits on imported sugar. Congress began consideration of a reciprocity bill, to retaliate against countries that close their markets to US goods.
Now the reciprocity legislation has been passed by committee and sent to the Senate floor to await a vote. Originally, the bill demanded retaliation, in the form of duties or quotas, against countries that sell goods here but deny ''substantially equivalent market access'' to US-made products. As a result of administration lobbying, the bill's language has been softened, and a section that would have given Congress the power to start investigations on fair-trade practices has been deleted.
Trade experts feel the bill's protectionist threat has been essentially defused. But they are concerned that an inflammatory amendment may be added on the Senate floor. The amendment, a version of the ''domestic content'' bill that has strong support in the House, would essentially ban the large-scale importation of automobiles by requiring that all cars sold in the US have a high percentage of domestically produced parts.
''That is a clear violation of GATT (General Agreement on Tariffs and Trade) rules,'' grumbles David Secrest, lobbyist for a Washington firm representing Toyota.
While administration officials were able to dampen down the reciprocity bill, they could not prevent the problem of steel imports from bursting into flame.
In January, following the quasi-judicial procedures approved by GATT, domestic steel producers filed suit with the Commerce Department, charging their European counterparts with shipping government-subsidized steel to the US. Shuttle diplomacy by Commerce Secretary Malcolm Baldrige failed to produce a negotiated limit on steel imports, and last week the Commerce Department slapped temporary steel duties on seven European Community countries found guilty of government subsidization.
The duties, equal to the amount of estimated subsidization, varied widely. Britain, found to be paying much of British Steel's costs, faces the heaviest duties: 40.362 percent on most steel products. France must post duties of from 20 to 30 percent. Other countries escaped relatively unscathed. West Germany's duties range from about 1 to 8.6 percent; Luxembourg faces penalties of 1.7 percent.
The duties will be made permanent if the International Trade Commission rules that US steelmakers have been injured by the subsidized imports - a decision due Oct. 8.
Secretary Baldrige says he is still ''cautiously optimistic'' that a settlement can be reached. ''The Europeans do want to settle these cases,'' he told a group of reporters in his office last week.
The EC now sees the United States means business, Baldrige claims - a realization that will prod them back to the bargaining table. Domestic steel producers will likewise be eager for a settlement, other analysts say, because they were hoping for stiffer duties.
If the Europeans react by limiting US soybean exports, then a trade clash could escalate, says Penelope Hartland-Thunberg, senior fellow at the Georgetown Center for Strategic and International Studies.