President Bush has vetoed legislation imposing mandatory trade sanctions on nations that use chemical weapons or companies that aid development of poison gas and germ warfare, the White House announced last night.

The legislation, which was aimed partly at limiting the sale of chemical weapons technology to Iraq and other nations in the Middle East, was vetoed because it "would severely constrain presidential authority in carrying out foreign policy," Bush said in a written statement.

"The major flaw . . . is not the requirement of sanctions, but the rigid way in which they are imposed," Bush said of the bill's provisions requiring a minimum, one-year prohibition of U.S. trade with those companies that aid the spread of such weapons. He said taking such a unilateral step would "harm U.S. economic interests and provoke friendly countries who are essential to our efforts to resist Iraqi aggression."

Seventy-nine senators and 59 members of the House of Representatives had urged Bush not to veto the legislation, citing the need to demonstrate added U.S. resolve on the issue. The Defense Department had also supported the bill, which expanded the agency's authority to review exports of sensitive military technologies.

But the State Department urged the veto this week on grounds that "unilateral sanctions could alienate our friends and allies" or unfairly punish companies that have taken independent steps "to preclude further violations," according to a recent memorandum by Assistant Secretary of State Janet Mullins.

"U.S. industry is divided" on the bill, Mullins said in the memo, which was addressed to the director of the Office of Management and Budget, Richard G. Darman, and obtained by The Washington Post. "The U.S. Chamber of Commerce and various companies want the bill vetoed {while} the computer industry and other high-tech sectors want it signed."

Bush vetoed the bill by refusing to sign it. At the same time, he signed an executive order giving Secretary of State James A. Baker III broad authority to impose trade sanctions against foreigners who are found to "knowingly and materially contribute" to chemical and biological weapons proliferation, for as long as such activities continue.

Bush's order also authorizes economic and trade sanctions against countries that use or prepare to use chemical weapons. Unlike the congressional bill, however, Bush's order allows exemptions for military contracts and "significant foreign policy and national security reasons."

Sen. Claiborne Pell (D-R.I.), chairman of the Senate Foreign Relations Committee, and Sen. Jesse Helms (N.C.), the committee's senior Republican, drafted the legislation in response to Iraq's use of chemical weapons during its eight-year war with Iran and its campaign against members of the Kurdish ethnic minority within its borders.

U.S. intelligence officials said that much of Iraq's poison gas technology was obtained from Western firms. Virtually all trade between Iraq and other nations was halted under a U.N. resolution adopted shortly after Iraq's Aug. 2 invasion of Kuwait.