Last summer, while Congress had before it more than 100 separate pieces of trade legislation aimed at restricting imports ranging from ginger roots to steel, the international trading community quaked in its boots at the prospect of an overwhelmingly protectionist tide.
By the end of October, after Congress passed the Trade and Tariff Act of 1984, Sir Roy Denman of the European Community -- one of the chief worriers -- was able to say that Europeans feel "like the man who thought he was going to lose four limbs, but ended up losing only a few fingers."
U.S. Trade Representative William Brock, with the assistance of influential congressional leaders, succeeded in watering down some of the restrictive and objectionable proposals that had been floated on the Hill. Moreover, Congress renewed the system of special trading preferences given developing countries, and defeated an effort to "graduate" Taiwan, South Korea and Hong Kong as recipients of these benefits.
Also on the positive side, Brock gained authority to negotiate a free trade zone with Israel and for liberalized rules for trade with Canada and some other countries.
But the trade-offs for these improvements were costly. As antiprotectionists see it, the main undercurrent of the bill is a get-tough attitude designed to satisfy those legislators who believe that Japan -- and, to some extent, Europe and other nations -- follow unfair trade practices.
First of all, there was a concession to the so-called reciprocity principle supported by Sen. John C. Danforth (R-Mo.) -- this means other countries giving the same access to their markets as we give them. The new law requires annual reports on other nations' trade restrictions, and requires the administration to say how it plans to get rid of them.
"It puts all the onus on the other countries and will create all sorts of pressure here for retaliation," said former State Department trade official Leonard Weiss. "It says nothing about what we should be doing to get rid of our own restrictions."
The new law also contains authority for the president to set steel import quotas, language that Weiss says merely ratifies the administration's "approach toward cartelization." Just a few days ago, the president concluded "voluntary" deals with seven steel-exporting nations that will reduce their shipments by 30 percent, a pact that the administration admits will raise prices here.
Another knock on the bill from free-traders is that it departs from the historic American commitment to the principle of unconditional most-favored-nation treatment by prohibiting the extension to third countries of any of the benefits that may be negotiated under the bill with specific nations; for example, with Canada.
Under unconditional MFN rules, all other nations automatically get the concessions given in any bilateral agreement.
The interesting result of all these moves going in opposite directions is that the well-informed trade establishment in Washington -- lawyers, lobbyists, businessmen and academics -- finds it hard to decide whether the United States, on balance, is now more or less protectionist than it was before this legislation.
At a three-hour roundtable bull session sponsored by the Institute for International Economics, its director, C. Fred Bergsten, posed the question this way:
"What is the basic thrust of the bill -- is it 'largely guided by liberal trade principles?' "
At the end of the session, the answer was "yes," "no" and "maybe."
Administration and congressional staffers present argued that the bill is mostly a restatement of the past principles -- a "tool kit" enhancing existing authority rather than breaking new ground. Thus, at worst, they held that the bill is "neutral" and not protectionist, and that the trend of American trade policy will be determined by "real" events.
For example, if Japan continues to pile up huge trade surpluses, American policy may turn aggressively protectionist, even if the root cause of the imbalances can be traced to the U.S. budget deficit and high interest rates. Some protectionists talk wistfully of a new import surcharge, similar to one imposed during the Nixon administration.
A common complaint among the experts at the Bergsten institute was that, for all of its massive text, the new law contains authority to negotiate a new round of tariffs, but no specific authority to negotiate a new round of reductions in nontariff barriers (NTBs) -- something the president told the September joint annual meeting of the International Monetary Fund and World Bank that he urgently supported. Yet congressional sources who helped get the bill through agreed that such new authority was never seriously considered because the administration didn't seek it.
"We see it as a diluted protectionist bill," said Doreen Brown of the lobby group Consumers for World Trade.
Stephen L. Lande, vice president of Manchester Associates, a consulting firm, suggested that, regardless of the omission of sweeping new Doreen Brown, Consumers for World Trade authority in the new bill, the critical test would be whether the president restates his IMF/World Bank demands in the State of the Union address. If Reagan wants such authority, Congress will have to deal with it, Lande argued.
And the related political questions are whether Brock's Trade Office will be submerged into the Commerce Department, as Secretary Malcolm aldrige urges; or stay independent, as Brock wants. "And who will be the trade representative and the secretary of Commerce" in the next few years? Lande asked.
The existing authority for NTB negotiations runs until January 1988, which means, according to one high official who was present, that the administration will be able to try only for a piecemeal reduction in NTBs, rather than a new, sweeping agreement. "Brock might try for a package that would conclude one specific deal, with an agreement to start on a new one," the official said. The idea would be to have a more or less continuous negotiating procedure going on at the headquarters of the General Agreement on Tariffs and Trade in Geneva.
He said that the United States would continue to press for a new round of negotiations on NTBs as a high priority at the London summit next May, even if it "may not be considered a traditional round."
Alan Wolff, former deputy trade representative in the Carter administration, added that the bill had failed to address other hard questions, among them the huge trade deficit and the Third World debt problem, coordination of economic policies and how to deal with nonmarket economies such as China's.
Clearly, the new legislation has satisfied no one: All agree that it could have been a lot worse, but should have been a lot better to deal with the enormous trade-related problems of the world.
"At this point in time, the bill strikes me as being a political accident," said former undersecretary of State Julius Katz. "It started out as a collection of animals, and ended up being a camel."