President Reagan yesterday received a package of new trade measures from his key economic advisers designed to dampen a brushfire of support for protectionist legislation.
The new proposals include creating a $300 million war chest to counter subsidized export financing by countries such as France and Japan, strengthening laws against unfair trade practices and getting negotiating authority from Congress for a new round of trade talks aimed at ending barriers to American exports.
If the president accepts the plan proposed by his Cabinet-level Economic Policy Council, it is likely to be presented in a major speech within the next two weeks, administration sources said.
U.S. Trade Representative Clayton Yeutter went to Capitol Hill yesterday afternoon and reportedly asked key Republican senators to hold off floor action on trade bills so the administration can move on its new policy.
It appeared unlikely, however, that the administration will succeed in blocking a bill to protect U.S. textile manufacturers from foreign competition. Hill sources said that bill, which has a majority of both houses of Congress as cosponsors, had developed a life of its own and even congressional opponents were having trouble mounting a counterattack.
Senate Majority Leader Robert J. Dole (R-Kan.) and Sen. John C. Danforth (R-Mo.), chairman of the Senate Finance Committee's trade subcommittee, both predicted quick passage for the textile bill, which Yeutter said the president is certain to veto.
Sponsors of similar legislation to protect the shoe industry, including Danforth and Rep. William Cohen (R-Maine), are trying to attach their measure to the textile bill to take advantage of its popular support.
Congressional trade experts say the administration has no chance of stopping passage of the bill to severely limit textile imports and believe the measure may have gathered enough support to pass over a presidential veto.
President Reagan took his first steps against the protectionist pressures from Congress Saturday when he announced he was initiating unfair trade investigations against Brazil, Japan and Korea. He also demanded quick action on two other cases in which Japan and the European Community were found to have violated international trade rules.
But Dole, Danforth and Sen. Lloyd Bentsen (D-Tex.), ranking minority member of the trade subcommittee, agreed those moves failed to go far enough to satisfy Congress.
It remained unclear last night, however, whether the actions Reagan now has under consideration will be enough to stop passage of any of the more than 300 other pieces of trade legislation presently before Congress.
An aide to one GOP senator who met with Yeutter called the latest plan "hodge podge stuff" and said the White House "is simply trying to distract Congress long enough to get its agenda across."
The key export financing proposal, pressed for months by Commerce Secretary Malcolm Baldrige, would be a major break with past administration trade policies. According to administration officials, it aims at countering subsidized export financing by America's trading partners with a $300 million increase in funds for the Export-Import Bank, which the White House twice in the past five years has tried to scuttle.
This money would be go for "mixed credits" of aid money and Export-Import Bank funds as subsidies to lower finance charges on overseas sales of American manufactured products. The administration consistently has opposed such a plan, but Baldrige said last week that the United States should adopt that policy solely to force other countries to stop subsidizing export financing.
Sources said the Economic Policy Council also recommended that the president strengthen existing trade laws so they can be used more aggressively against unfair trading practices by other nations.
One recommendation would set a two-year deadline on settling trade disputes, which can languish far longer in General Agreement on Tariffs and Trade committees.
The administration also reportedly is seeking authority for a new global round of trade talks to strengthen GATT in areas where this country feels its most competitive sectors, especially high-technology and service industries, are hampered by other countries' protectionist actions.
The new round, which had been Reagan's major trade initiative until now, has run into opposition from Democrats, who said the administration is unprepared for major trade negotiations. Third World nations fear they will be shut out of emerging high-technology and service fields.