The congressional push for protectionist trade legislation has been slowed but not stopped by President Reagan's veto of a bill to protect the textile, copper, and shoe industries. When Congress returns next year, trade is expected to be a hot topic for two major reasons: The US trade situation continues to be grim, and 1986 is an election year.
The combination could spell renewed pressure for protectionist legislation to help United States industries ravaged by international competition. Next year Congress is also likely to draft legislation revamping US trade laws to make them more effective in their overall impact.
The supporters of industry-specific protection bills are expected to try again. ``We still intend to press for meaningful restrictions on the flood of imports that is devastating the American shoe and textile industries,'' said Sen. George J. Mitchell (D) of Maine, after the presidential veto late Tuesday evening.
Supporters of the textile bill moved Tuesday to allow a vote on a veto override as late as August.
The President waited to veto the bill until the House had cleared a tax-overhaul plan he supported. That way his veto would not damage support for the tax bill.
Administration officials were predicting renewed congressional pressure for protection, even before the President delivered his long-promised veto of the textile and shoe bill.
``I think the question of protectionism will be right back with us again early next year or if not early next year at least by next spring,'' Treasury Secretary James A. Baker III said in an interview earlier this month.
One reason protectionist fires could be rekindled is that early next year the Commerce Department will release final trade figures for 1985. The US merchandise trade deficit for this year is expected to be a record $150 billion, up from $123.3 billion in 1984.
Eventually, the decline in the value of the US dollar will help curb imports and make it easier for US firms to sell goods overseas, thus closing the trade deficit. But the dollar's decline takes from 12 to 18 months to be felt, according to many economists.
Still, ``We will be improving throughout 1986 as far as the trade deficit is concerned,'' says Kathleen Cooper, president of the National Association of Business Economists.
Even with some improvement in the trade deficit, the US still will be buying more abroad than it sells and going into debt to cover the gap between the money it spends on imports and the money it earns on exports.
At the moment US debts are rising at the rate of $10 billion a month. By spending 50 percent more abroad than it is earning, the US is accumulating foreign debt faster than any major developed country ever has before, according to a new study by Stephen Marris of the Institute for International Economics.
If present trends continue, the US, which now owes other nations $30 billion, could be $1 trillion in debt by 1990, Mr. Marris's study says.
``From being the world's largest net creditor nation in 1982, [the US] would be the world's largest debtor nation by 1986, and by 1990 its external debt, at over a trillion dollars, would substantially exceed the total debt of the developing countries,'' Marris said.
And like other debtor nations, the US eventually will have to trim its spending, to come up with the money to pay the interest on those debts. Thus, some US citizens will probably have to curb extravagant life styles.
Of course, there is a limit to how much debt the US can run up. Eventually foreign investors will tire of holding ever more dollars. When this happens, ``a crunch will develop in US financial markets and the economy will be headed for trouble,'' as interest rates rise while the dollar continues to fall, Marris contends.
Long before any potential credit crunch occurs, Congress will be turning its attention to trade legislation.
House Ways and Means Committee chairman Dan Rostenkowski says that now that his committee has finished with tax reform it will begin work on trade when Congress reconvenes in 1986.
Separate proposals for omnibus trade bills already have been advanced by House Republicans, House Democrats, Senate Democrats, and a bipartisan group of senators. Senate majority leader Robert Dole (R) of Kansas, a backer of the bipartisan Senate plan, said he would be willing ``to set aside some time right now for action on the floor early next year.''
The vetoed shoe bill would have limited shoe imports to 60 percent of the US market. It also would have cut textile and apparel imports from Taiwan, South Korea, and Hong Kong by 30 percent. The bill cleared both houses of Congress with fewer votes than needed for a veto override.