THE UNITED STATES now runs a serious risk of sliding into an inadvertent trade war - one that nobody really wanted or intended. The Carter administration needs a clear strategy for meeting this danger. Last April, the U.S. Custom Court in New York ruled that it is illegal for a foreign country to rebate the manufacturing taxes on the products that it exports to the United States. That was the suit brought by the Zenith Radio Corp., which argued that the Japanese television sets shipped to this country re being illegally subsidized by those rebates. But the decision reaches far beyond television sets. Not only Japan but all for Western Europe as well use that kind of tax, and they rebate it on virtually everything that they export.
The U.S. Steel Corp. has been pressing a similar suit in the same court in its effort to cut off the flow of imported steel from Europe. It is now asking for a summary judgment, on grounds that the Zenith decision applies to its case as well. All this litigation is based on a 19th century statute that requires the United States to impose, automatically, a special tariff equal to the rebated taxes. That's the threat: that a court decision on television receivers could overthrow long-standing American trade policies and suddenly slam a heavy tariff down on a vast range of imports. It would mean immediate retaliation abroad against American goods - at a high cost in jobs.
President Carter's special trade representative, Robert S. Strauss, went to the unusual length last week of publicly denouncing U.S. Steel's demand for a fast decision. He called it irresponsible of U.S. Steel to try to make trade policy in the courts. "This decision could cause chaos in international trade," he said - accurately. But Mr. Strauss also knows that the chances of getting the decision reversed by higher courts are not so good. The case is on its way to the Supreme Court, with a final ruling perhaps next spring.
Mr. Strauss is trying to avoid going to Congress to get that obsolete statute changfd. Protectionsim is on the rise there. A new trade bill, he fears, would open "a Pandora's box." Maybe so. But there's a more promising alternative. The administration needs to seize its opportunity, while it still has a little time, to negotiate a general agreement on trade subsidies. It's necessary to change the American law on the rebates. But there are instances of foreign discrimination against American goods that also need changing. Most of them go back to the postwar years, when Japan and Europe were desperately poor. Now they are rich, and the volume of trade has grown vastly larger. The small inequities of the past have become more important. If the Carter administration can come to Congress with an international agreement strengthening outbound American trade, as well as inbound trade, the reception at the Capitol is likely to be a great deal less hostile.
Getting that kind of agreement from the other trading nations will be difficult. Selling it to Congress will be equally difficult. But it's right in principle, and it offers a real chance of heading off a deeply destructive chain reaction of new tariffs and barriers to world trade. A real chance, in trade policy as in other kinds of politics, is a hot better than no chance at all.