The government's International Trade Commission (ITC) recommended yesterday against placing import quotas on flue-cured tobacco, a billion-dollar crop in the Southeast. It held that rising imports are not adversely affecting the federal price-support program.
The import quotas were sought by the Department of Agriculture and tobacco-grower groups. The ITC's 3-to-1 recommendation against them now goes to President Reagan, who can accept or reject the commission's findings.
Most speculation is that the administration, given its professed enthusiasm for free trade, will support the ITC -- a decision that will shift the debate over the tobacco program back to Congress.
Tobacco-state legislators and the USDA have promoted the idea of import quotas because of expanding and possibly unsalable stocks of low-quality leaf in the federal support pool, which carry the potential for millions of dollars in losses to the government.
The potential losses, which could hit $93 millon by USDA estimates and more by other independent calculations, have given free traders and critics of tobacco supports a new target and fresh hope that they can radically after the program on Capitol Hill.
They will try to do so when the Senate and House take up the 1981 farm bill after the August recess.
An amendment by Rep. Thomas E. Petri (R-Wis.) and Sen. Mark O. Harfield (R-Ore.) would wipe out tobacco supports.
Another approach was offered this week by Sen. Thomas F. Eagleton (D-Mo.), who proposed that nonfarmers be prohibited from holding tobacco acreage allotments and suggested a new support scheme for U.S. leaf that is sold overseas.
The question before the ITC, however, was whether the rising amount of imported flue-cured tobacco -- the principal ingredient of cigarettes -- is injuring the price support program. fifteen years ago, U.S. cigarettes contained about 11 percent foreign leaf; today, they contain about 30 percent.
Growers and the USDA urged that restricions be placed temporarily on the lower-priced imports, contending that this would allow the Commodity Credit Corp. (CCC) an opportunity to unload mounting stocks of domestic leaf that farmers have put on loan to the government. The import issue has generated political sparks in the Southeast, particularly in North Carolina, the major flue-cued tobacco state. The ITC investigation was requested by Jimmy Carter, as a favor to Gov. James B. Hunt Jr., two days before he left the White House in January.
The Reagan administration did not attempt to halt the ITC investigation, but then, in apparent contradiction of its allegiance to freetrade policies, sent the USDA to a commission hearing in June to formally request temporary import quotas.
During lengthy discussion before their final vote yesterday, the four ITC members indicated doubt about USDA's projections of injury to the price support program because of imports. Chairman Bill Alberger said that, with the exception of 1974, the support program had shown no losses in recent years -- at least not of sufficient degree to merit the import restrictions. Only Commissioner Catherine Bedell voted for the quotas.
The newest wrinkle in the congressional battle over the tobacco program surfaced Monday when Eagleton offered two amendments, one of which he believes will reduce farmers' production costs and help make their tabacco more competitive with imports that sell for about one-third less.
Eagleton would remove tobacco allotments form the control of non-farming corporations and non-farmers and turn them over to farmers who now lease them. In some cases, lease rates run as high as $1,000 per acre.
The Missouri senator said that his amendment would prevent doctors, lawyers and other non-farmers, as well as some of the country's major corporations, from owning the allotments which are, in effect, federal permits to grow tobacco issued when the program was set up in the 1930s.