Under the Senate's trade bill as it now stands, companies would be required to give 60 days' notice before closing plants, not 90 days, as stated in yesterday's editorial. (Published 7/14/87)
TRADE VOTES are hard ones for senators. Melancholy processions of labor-management delegations have been through every senator's office, desperate for protection from foreign competition, pleading that jobs are at stake. But each senator knows that the purpose of protection is to let domestic producers raise their prices. Each senator knows that every protectionist vote makes the American economy a little less efficient and a little less competitive. Those are the realities that the Senate has been trying to balance this month, as it works its way slowly through the trade bill.
Four votes have been critical:
First, the Senate threw out of the bill Sen. Lloyd Bentsen's attempt to protect the domestic oil producers. That was a real victory for good trade policy. Had the vote gone the other way, it would have been followed by concessions to all the other special interests lined up behind it.
Second, the Senate voted for mandatory protection to any American industry injured by imports even when the imports are fairly traded. That was a defeat for good trade policy, but, late last week, an interesting thing happened. The Senate had second thoughts. Sen. Bill Bradley proposed an amendment giving the president discretion to refuse protection in cases in which the burden would fall disproportionately on poor people. That's most cases, for protection is usually highly regressive. Sen. Phil Gramm then inserted a similar amendment allowing the president to refuse protection when the burden on farmers would be disproportionate. Farmers, as exporters, are common targets of retaliation. Between them, the Bradley and Gramm amendments give the president almost as much latitude as the original vote had denied him.
Third, the Senate voted to require companies to give 90 days' notice before closing plants. This provision is not specifically related to trade. It's an attempt to mitigate the impact of economic change generally. Unfortunately, it swings many people in business, and in the administration, into adamant opposition to the trade bill as a whole. But it's a humane and reasonable rule.
Fourth, the Senate wrote its own counterpart to the House bill's notoriously protectionist Gephardt amendment. The Senate language is a substantial improvement over Mr. Gephardt's, but it's still a bad idea. It denounces the foreign markets closed to American exports, but is silent on the American markets closed to foreigners. It would help Americans trying to sell more rice to Japan, but it would do nothing for Caribbean farmers trying to sell more sugar in the highly protected American market. Or for foreign producers of steel. Or textiles. Trade is a two-way street, and that's why it is better left to international negotiation rather than unilateral threats.
The Senate has now nearly finished work on the bill. As it stands, it has serious flaws -- provisions that should not be enacted. But, together with the bill that the House passed last spring, it provides the framework on which a House-Senate conference can build a sound trade law. The conference will be crucial.