Former vice president Walter F. Mondale yesterday challenged President Reagan to pressure other Western leaders at the upcoming economic summit of industrial nations in Williamsburg to give up their "restrictive and Draconian" policies in trade with the United States.

Mondale was the first of four Democratic presidential candidates, along with top industrial labor leaders, who will address a two-day conference of industrial union delegates on the theme, "Rebuilding American Industry."

In his 45-minute speech to the gathering at the Starplex Armory, Mondale said the U.S. government should demand an equal footing in foreign trade and criticized the Reagan administration's unwillingness to stand up for American manufacturers with regard to exchange rates, credit and on other fronts.

Also yesterday, a House labor subcommittee, in conjunction with the conference, held a hearing on proposed legislation on "plant closing and reindustrialization," sponsored by Reps. William Clay (D-Mo.) and William Ford (D-Mich.).

Reindustrialization, though much discussed, has failed to catch fire politically. The gathering sponsored by the Industrial Union Department of the AFL-CIO, which represents 58 unions, is part of a concerted effort to make this theme an issue in the 1984 presidential race. "We want to define the issue and make people take a stand on it," said one Capitol Hill source.

Labor leaders are seeking a voice in far-reaching decisions, which, they complain, are now left to the judgment of business, particularly multinationals. The Ford-Clay bill, for example, would require advance notice of plant closings and other permanent job cutbacks; an investigation by the Labor Department into the reasons for the cutback and exploration of ways to avert it or mitigate its impact; income maintenance payments by businesses to affected employes, federal retraining assistance for displaced employes and possible federal assistance to save the business.

"These multinationals don't just leave the unemployed," William Bywater, president of the International Union of Electrical, Radio and Machine Workers, told the crowd. "They leave devastated communities."

He called on union members to focus their power in a way they have failed to do in the past. "The trouble is, 50 or 60 percent of our members vote the right way and the other dummies vote the wrong way. It's up to us to educate 'em." Describing the Reagan administration as a "captive" of the multinationals, he called on unionists to "throw that bum out of office!"

"It's a sad commentary on our society that if a corporation should close a 20-year-old plant it would get a big tax writeoff," said United Auto Workers official Marc Stepp, "while a worker employed in that plant for those 20 years could lose his job, his seniority, his pension and even his health and sanity."

A study of a group of Ford workers in New Jersey showed that two years after their plant shut down, half the workers still had no jobs, he said, and of those over age 40, 61 percent were still jobless.