On June 12, Alan F. Holmer, one of the Reagan administration's chief strategists on trade legislation, invited diplomats from 15 of the nation's major trading partners to a meeting at his office across 17th Street from the Executive Office Building.
He assured them that President Reagan remained committed to free trade and would not accept protectionist legislation. He also provided insight into the administration's plans for fighting parts of the trade bill now under consideration by the Senate, and listed the five "must go" provisions that the White House wants thrown out.
Holmer also agreed, in answer to questions, that a few well-placed threats of retaliation from foreign governments "would not be unhelpful" to the White House's efforts, diplomats who were present at the meeting reported.
Foreign governments, which have been keeping an exceptionally close watch on the congressional trade debate all year, did not need much encouragement to brandish the threat of retaliation and to suggest that protectionist legislation could lead to a trade war.
Within weeks of the meeting with Holmer, foreign officials unleashed a new barrage of threats that trade wars and retaliation against American overseas sales would result from Senate passage of legislation tightening U.S. laws against unfair trade practices. Canadian Ambassador Alan Gotlieb, for instance, told a Washington conference organized by the American Stock Exchange that passage of the Senate trade bill would provoke "countervailing wars, dumping wars, which may be more serious than Star Wars before we are finished." He was referring to the Reagan administration's Strategic Defense Initiative, known as Star Wars.
And last week Willy de Clercq, external affairs minister of the 12-nation Economic Community, said in London, "If Congress legislates in a way that is harmful to our interests, then we shall be obliged to respond in kind."
Diplomats from Canada, the EC delegation to Washington and its member countries were present at the June 12 briefing. Among other nations represented were Japan, South Korea, Canada, Singapore, China and Australia, according to diplomats who were present.
Holmer, who is the general counsel in the Office of the U.S. Trade Representative, spends 80 percent of his time dealing with the trade bill. Officials in the USTR office said the foreign diplomats were invited to a meeting at their request, in much the same way as business and farm groups are briefed on administration trade policies and its plans to work with Congress on trade legislation.
"It was an effort by the administration to allay some of the worst rumors" floating around the diplomatic community, including one "that the administration was selling out altogether" on the president's free trade principles, said one diplomat.
"The purpose of the meeting was not to gin those guys up to lobby on the hill or to get them to say, 'We are going to retaliate,' " said a USTR official. Another official indicated that the USTR doesn't view foreign diplomats as the most effective trade lobbyists.
He acknowledged, however, that Holmer "is not shy in pointing out" to the diplomats "provisions that their countries would probably find objectionable. It's easy enough for them to draw their own conclusions."
Even without administration encouragement, foreign interest in the trade bill is running high, with the economic well-being of many nations depending on continued open access to the United States for their products. Latin and Caribbean members of the Organization of American States, for instance, held a special meeting here on the trade bill last month, and were encouraged by the similarity between their views and those of the Reagan administration on free trade. They asked Congress "to refrain from enacting any measures that would further increase restrictions on trade in the U.S. market."
"This concern is understandable," said U.S. Trade Representative Clayton K. Yeutter. He said his office has received at least six formal diplomatic notes on the trade bill from foreign governments and another one is expected from a large group of trade ministers.
The EC delegation here has organized an informal working group with its member nations that has held 10 meetings analyzing the trade bill. The group has developed a position paper that has been used by the ambassadors of the European nations in their meetings with administration officials and lawmakers. In addition, the European diplomats have divided up the responsibility of contacting senators' staff members who specialize in the trade issue.
Ambassadors from the five countries that make up the Association of Southeast Asian Nations (ASEAN) also have focused on trade issues, meeting with top administration officials and influential lawmakers to emphasize their concerns that import restrictions from the United States could devastate their fast-growing economies.
In addition, each of the countries has individual concerns about parts of the 1,000-page Senate bill that may not be on the front burner of the trade debate. Thai Ambassador Arsa Sarasin, for instance, has been trying to get a provision out of the bill that would hurt Thailand's steel industry, which fabricates pipes for the U.S. markets from steel sheets made elsewhere.
Lobbying efforts by South Korean Ambassador Kyung-Won Kim against Senate moves to tie trade privileges to a peaceful transition to Democratic rule in his country received a major assist from events in Seoul, where the ruling party agreed to major political reforms under pressure of large street demonstrations. As a result, Sens. Edward M. Kennedy (D-Mass.) and Barbara Mikulski (D-Md.) are not likely to press their amendment to a vote.
Kim said he notified the senators in advance last week "that the government party was going to announce a package of reforms" and asked them to hold back their measure, which they did. The news of the reforms came Monday, the day before the Senate resumed its consideration of trade legislation.
China, which rarely gets actively involved in legislative issues here, has begun lobbying on the trade bill, with its diplomats opposing changes in laws that they fear could hurt their sales in the United States.
Capitol Hill lawmakers are used to the foreign lobbying efforts. "It shows that foreign countries have noticed that Congress is serious on trade," said Sen. Max Baucus (D-Mont.), a member of the Finance Committee who has been active on the bill.