Special Trade Representative Robert S. Strauss yesterday initiated what he admits is a desperate last-minute effort to get Congress to pass special legislation to avert a trade war with Europe at the turn of the year. Such a trade war, he fears, would write "finis" to the multi-lateral trade negotiations (MTN).
In an extraordinary session in the office of House majority leader Tip O'Neill, attended by influential Republicans as well as Democrats Strauss begged the Congressmen to extend for six months the president's authority to waive countervailing duties on Common Market exports.
Primarily, this is an issue involving European agricultural exports such as canned hams, dairy products, and Danish butter cookies. These exports are highly subsidized, but the U.S. - which sells a much greater volume of agricultural products to Europe than it buys - has been waiving the countervailing duties that normally would be imposed.
The trouble is that this authority expires Jan. 3, and a Congress increasingly steeped in protectionist sentiment hasn't been anxious to renew the legislation.
Meanwhile, the multi-lateral trade negotiations (MTN) dealing with these issues on an over-all basis have been going on in Geneva - but it looks doubtful, despite a promised Dec. 15 deadline - that the MTN will be completed before Jan. 3.
In a speech in O'Neill's office, Strauss said "The Europeans don't understand it. They think it's firing a gun at the people we're negotiating with."
In a letter to Strauss from European Economic Community vice president Wilhelm Haferkamp, the Europeans had argued the deadline was a "time bomb." An American official noted that as the countervailing duties automatically were slapped on, the Europeans would retaliate by closing down some of the $6 billion in U.S. agricultural exports.
Strauss proposed at the O'Neill meeting that Congress pass a simple amendment, tacked onto some appropriate bill, that would let the countervailing waiver expire on schedule Jan. 3, unless the STR office notified Congress that "he has in hand a complete document winding up the Tokyo Round." In that case, the waiver would be extended to July 1.
Strauss explained that would give Congress additional time to examine the MTN, and to see if it looked like a fair treaty - especially the provisions that make certain that all unfair subsidies, especially those on agricultural products, are abandoned.
In an interview, Strauss made clear that such a provision also would increase his negotiating leverage with his European counterparts. He would be in a position to suggest that unless Europe improves trade and tariff offers the U.S. now considers inadequate, the waiver authority will expire for good in mid-year.
The amounts of affected European exports are relatively small in absolute terms - canned hams at $230 million are the biggest item. But for individual countries it is crucial. Thirty per cent of all Danish exports would be affected by countervailing duties.
The congressional reaction was not enthusiastic. O'Neill grumbled that he'd rather know what the administration is proposing to do about the sinking dollar and the growing trade deficit.
All present noted that protectionist sentiment is growing, and the legislative calendar is heavy. But in the end, they told Strauss if he can drup up bi-partisan and private sector support, they will help him. Present were Reps. Charles A. Vanik (D-Ohio), Al Ullman (D-Ore.), William Steiger (R-Wis.) and Charles Rose (D-N.C.).
Next Strauss will take his proposal to Sen. Russell Long (D-La.) and Abraham Ribicoff (D-Conn.). Strauss' lowkey evaluation: "It's very doubtful - only a 50-50 chance." But hose who know Strauss' standing on the Hill think he may pull it off.