Commerce Secretary Malcolm Baldrige yesterday raised the possibility of a presidential veto of a wide-ranging trade bill that he said "could end us up in some kind of trade war" and cost more jobs than it would save.
The bill, being rushed to clear Congress before the session is due to end this week, turned into a legislative Christmas tree as congressmen and senators added pet protectionist measures to two provisions the administration wants passed: an extension of duty-free imports for developing countries and free trade for Israel.
The House Rules Committee yesterday cleared the measure for floor action today. The Senate passed its version of the bill 10 days ago. Once the House acts, the two versions will have to go to a conference set for Wednesday and Thursday to resolve differences in time for final passage Friday, the last day of the session.
Talking with wire service reporters yesterday morning, Baldrige called "the worst parts" of the trade bill "bad, very bad.
"It could be the tinder that could provoke retaliation from a great many countries, not just one or two. It could end us up in some kind of trade war," he said, according to wire service accounts confirmed by Baldrige's office.
Asked if President Reagan might veto the measure, Baldrige replied, "It's a possibility.
"None of us wants to speak for the president before a decision, and there are some good parts of that bill, but there are some parts that really cause us trouble," Baldrige added.
The bill was steered through the Senate by U.S. Trade Representative William E. Brock, who used his privileges as a former senator to cut deals on the floor. He also played a key role in the House Ways and Means Committee's discussion on the bill last week.
Brock's aides acknowledged the measure contains protectionist provisions that "cause difficulties," but added that does not mean he plans to recommend that the president veto the bill. Brock said last week he expects the conference to remove some of the most objectionable parts of the bill.
There is tremendous pressure within the administration and outside it, however, to get a trade bill passed this year. Developing countries, including such major trading partners as Korea and Taiwan, are anxious to get the duty privileges in the Generalized System of Preferences extended, while Israel has been pressing hard for duty-free treatment.
Among the most objectionable parts of the legislation, Baldrige cited provisions that redefine subsidies and make it easier for farmers to bring unfair-trade cases on products made from their crops.
The redefinition of subsidies is aimed at Mexican cement, which is produced with the use of oil sold to domestic manufacturers at a lower price than it is sold internationally.
But according to the wire service reports, Baldrige said that kind of law could be used against the United States by other countries. If the Mexican cement is considered subsidized, fertilizers and fibers made from American natural gas also could be, he said.
A measure to help grape growers by letting them bring unfair-trade cases against wine imports also has been cited as protectionist.
Farm groups also are lining up against parts of the bill, fearful that other countries will retaliate against American agriculture exports. The European Community, for instance, said in its reaction to the wine measure that, "given the huge agricultural surpluses which the United States has," farm goods are prime candidates for retaliation. Apparently aiming at California legislators pushing the wine measure, the EC added that these could include citrus, almonds, raisins and walnuts as well as staples such as soybean oil and corn gluten feed.