Ambassador William E. Brock is a man in transition. He's been here the past week for the ministerial meeting of the industrial nations, a sort of last hurrah as U.S. trade representative. Congress and the FBI willing, Brock in a few weeks will become Labor secretary, "the first pro-trade secretary of Labor since George Shultz," as Brock likes to say.

Brock is moving from an arena in which free and more liberalized trade rules is the theme he has been selling for four years into a dialogue with the American trade union movement, which has become a rallying point for protectionism.

The ironic twist isn't lost on Brock. Reflecting on these and other issues in his suite at the Crillon Hotel, Brock suggested that labor is changing.

"I defy you to find a more responsible labor movement than ours in the world," he said. "The American labor movement has a free-enterprise instinct; it is patriotic, and is also demonstrating the ability to adapt. The labor contracts making wage concessions of the past four years have been very thoughtful, they've shown creative labor trends. They've been cranking in special labor-management funds for retraining, and it's important to recognize this and give credit."

Brock intends to give a high priority to "labor adjustment" programs that provide money for retraining and reeducating workers who lose jobs as a result of technological change or import competition. Such adjustment programs have always interested Brock as trade representative, but as Labor secretary, he will be in a better position to fight for the necessary funding.

As trade ambassador, Brock evolved a quadrilateral group, bringing together his counterparts from Canada, the Common Market and Japan. He'll apply the "trade quad" idea to his new field, calling together a number of labor ministers (possibly more than four) in periodic meetings to hammer away at common problems. As is now well known, Brock leaves his trade post with some reluctance, because the challenge of trying to bring some sense of order to world trade is unfinished and the threat of virulent protectionism threatens to swamp a still-tender world recovery.

For example, Europe, to some, still seems hopelessly bound up in archaic rules governing both business and labor. The problem in America is a seemingly intractable budget deficit that may account for two-thirds of the nation's trade deficit with Japan and is a serious burden for exporting industries. Meanwhile, although Japanese Prime Minister Nakasone this past week made a remarkable television appearance to say that Japan must become an importing nation, the world shrugs it off with a "show me" attitude. Brock fears that, despite Nakasone's good intentions, the entrenched Japanese bureaucracy may win out. He cites the "disappointing decision" to continue auto quotas, which he attributes to the Japanese trade ministry's unwillingness to let go of this element of control. That doesn't bode too well for the future, he said.

Sources report that when Nakasone abandoned his TV script and made an extemporaneous summary of Japan's new position, Japanese ministries began calling outsiders to assure them that what their prime minister was saying was not the arrangement that had been cleared.

Is the world economic outlook, then, wholly grim? Brock is asked.

"It may not be wholly grim," he says thoughtfully, "but we are at one of those points in history where we have to make a decision as to which way we go. . . . In 1930, the response with the Smoot-Hawley tariff act was to pull back into a completely defensive posture. I think it's going to be quite a test of our political system to see whether we can move the next quantum step forward, to open up the process, to really convince others that they have at least as much at stake as we do, and that their interests lie in trade liberalization.

"Everybody wants somebody else to liberalize, and so far, the United States has been leading the pack. . . . The newly industrialized countries, they just can't have it both ways. They are going to have to move more aggressively to open up. Each group is going to have to face a different problem. Japan's problem is very much an attitudinal one. And maybe that's the most difficult of all to deal with."

He believes that the American problem stems mostly from the deficits and the fact that the tax system was designed for the economy of 1913 rather than of 1985. "And the European system is the whole set of social actions taken by government that built in these rigidities for absolutely legitimate purposes a few years ago, but for purposes that don't relate to the real world today. And the group sitting there in absolute desperation, praying that we'll make the right decision, are the poorer developing countries that don't have any alternative at all."

But how does the world community get itself off the protectionist hook? Earlier in the day, Brock had delivered his appeal for a new multilateral trade round to the French Patronat, the blue-ribbon businessmen's lobby, only to hear the group's president, Yvon Gattaz, make plain that the French will not easily abandon protection of their textile industry.

Nor does the United States, as Brock admits, have clean hands on textiles. The existing Multi-Fiber Agreement (MFA), he said, "is a derogation of GATT General Agreement on Tariffs and Trade , and a derogation of the principle of free trade." Yet, because "people in the United States and elsewhere have gotten dependent" on MFA quotas, the system is likely to be extended when it expires this summer.

How, then, can the world untrack itself, and not go down the "wrong path" response of 1930?

"Well, that's the real world we live in," Brock said. "You're not going to change that sort of thing overnight. And if you tried, you would surely fail. It's a process of incremental steps. If we try to hurry it too much, to force it, all we're going to do is generate counterpressures that will stop whatever we're trying to accomplish."

He sees one ray of sunshine in that "technology is moving faster than governments' ability to control it. And that may be our single strongest asset: A country can't condemn itself to second-rate status by just refusing to allow the technologies to flow. No matter how hard they try to control it, the technology is moving faster than the ability to pass laws and regulations."