A hotly contested House-Senate conference broke up in failure yesterday after five months of trying to agree on a bill giving the president authority to control strategic exports to Soviet bloc nations.
The conference foundered when House members refused to accept a Senate demand that would give the Pentagon authority to review sales of strategic goods and technology to close allies as well as other Western and nonaligned nations to prevent their diversion to the Eastern bloc.
Business interests had been pressing Congress for two years for a bill that would be less restrictive on their sales overseas, arguing that America's national security depends as much on a strong economy as on keeping military technology from the Soviets. The legislation, moreover, sparked ideological and turf battles within the Reagan administration that the White House seemed unable to control. The Defense and Commerce departments were at loggerheads over who should run export controls and how stiff they should be.
With no export control law presently on the books, the president now must depend on the International Emergency Economic Powers Act -- which some trade experts say is subject to court challenge -- to keep strategic goods from the Soviet military.
It remained unclear last night whether Congress would pass a simple extension of the Export Administration Act, which expired Sept. 30, or leave the issue dangling. The Commerce Department was reported to favor a simple extension.
Across the Capitol grounds, meanwhile, another group of conferees worked its way through a massive trade package containing some items that could draw a presidential veto for being too protectionist. Trading partners also have threatened retaliatory moves against U.S. farm exports if some provisions are not removed.
The weary conferees broke up late last night, still stuck on major issues. U.S. Trade Representative William E. Brock tried to strip some of the most highly protectionist measures from the legislation. Emerging from the meeting room, Brock said, "It's a very close call. We're within a gnat's eyelash of agreement or disaster."
Earlier, the conference killed a Senate provision that would have made it easier to bring unfair trade cases against countries such as China in which the sale price is set artificially by the government with no relation to the true cost of production.
Although the bill would have hit all nations with nonmarket economies that export to the United States -- including Poland, Bulgaria, Hungary and Romania -- its biggest impact would have been on China, affecting half of all its sales to the United States.
China reacted sharply with threats against U.S. farm purchases last year when the textile industry cited its nonmarket economy to bring an unfair trade complaint. The Chinese threat was strong enough to force the Reagan administration to give in to textile industry demands for overall relief from imports.
The conference also appeared ready to dilute a part of the bill designed to help California wine makers and grape growers fight imports. That bill drew strong threats from the European Community of retaliatory curbs on European purchases of American soybeans and corn gluten.
There had been a slim possibility yesterday that the Export Administration Act conference could reach a compromise that satisfied Sen. Jake Garn (R-Utah), who insisted on increasing the Pentagon role in export licensing, and House members who wanted to leave the job with the Commerce Department.
House sources said they would have softened language agreed to earlier in the week banning bank loans to the government of South Africa, which Garn wanted, in exchange for his allowing greater limits on the Pentagon's role by keeping multiple licenses for sales to Western countries out of Defense Department jurisdiction.
According to the House sources, however, Garn in the end refused to accept that deal.