The Making of A Mishmash

By Gordon Bock

Talk about spoiling the broth. Imagine trying to prepare dinner with 199 cooks watching every move. Something like that is happening on Capitol Hill, where a mammoth conference committee is trying to reconcile differences in the omnibus trade bills passed last year by the House and Senate. Under the direction of two Democratic leaders -- Representative Dan Rostenkowski of Illinois and Senator Lloyd Bentsen of Texas -- the 199 members of the committee, along with 300 or so staffers and 100 briefcase carriers sent over by the White House, have been meeting in 17 subgroups in an all-out effort to get a comprehensive piece of legislation on President Reagan's desk by April. The goal is to pass a bill that will bolster U.S. industry and reduce the trade deficit, which hit a record $171.2 billion in 1987. The danger is that the law will wind up as a potpourri of protectionist measures that serve special interests but hurt consumers and do nothing to boost the competitiveness of U.S. companies.

The mission is urgent because progress in bringing down the trade deficit has been painfully slow. After two months of sharp improvements in the trade gap, the Government reported last week that the deficit had edged up again, from $12.2 billion in December to $12.4 billion in January. On the bright side, the deficit with Japan shrank 17.5%. But the imbalance with other Asian countries, including South Korea and Taiwan, ballooned 18%.

The issue of what to do about trade has long pitted the White House against Congress. The Reagan Administration philosophically embraces free trade, but the President has been under pressure from Capitol Hill to protect U.S. business interests. Rather than give Congress an excuse to pass protectionist legislation, the White House has taken a fairly tough line, bringing 17 actions since 1985 against nations deemed to be engaging in unfair trade practices. The most dramatic censure came last year, when the Administration imposed $300 million worth of sanctions against Japanese products after deciding that Tokyo had reneged on parts of an agreement under which it would, among other things, import more U.S. computer chips.

The White House has angered Congress on several occasions by turning down pleas for import relief, most notably from the shoe industry. Many Democrats, and a few Republicans as well, are pushing for provisions in the trade bill that would force the Administration to retaliate automatically against unfair foreign traders. The President, though, has vowed to veto any bill that would take away his discretion on when to impose trade sanctions. The conflict has left the Democrats with a dilemma. Explains Rostenkowski: "We need a bill so tough that our trading partners can't ignore it, but so fair that the President wants to sign it."

Writing such a bill will be no easy task. Just keeping track of the provisions in the House and Senate versions of the bill (each of which weighs about five pounds and runs to more than 1,000 pages) is nearly impossible. "The hardest part is remembering what each member of Congress wants," says a member of Rostenkowski's committee staff, "and what priority he puts on each of his requests." Staffers have been working well into the night and coming in on weekends, their briefcases bulging. Bentsen's group is dubbed the "committee that never sleeps."

It is not yet certain which provisions will live or die, but the bill is beginning to look less protectionist than it did just a few weeks ago. One likely casualty is a controversial amendment proposed by Representative Richard Gephardt of Missouri to take action against countries that run chronic surpluses with the U.S. and engage in unfair trade practices. It would require the President to impose trade sanctions on those nations that would reduce the surpluses by 10% a year. Gephardt has made trade the central issue of his presidential campaign, but enthusiasm in Washington for his measure has almost disappeared since his dismal showing on Super Tuesday. The betting is that Gephardt's amendment will survive, but only in a severely watered-down form. Says a congressional staffer: "Gephardt and Rostenkowski talk on the phone, and it sounds like they are working on face-saving."

Despite the probable weakening of the Gephardt amendment, several other proposals in the trade bill, including some that are seemingly extraneous, rile the Administration and could invite a veto. One of them would force many companies to give at least 60 days' notice of impending plant closings. The White House opposes as excessively restrictive a section that would require a ban for up to five years on the importation of any products made by Toshiba, the Japanese electronics company, and Kongsberg Vaapenfabrikk, a Norwegian government-owned manufacturer of computers and weapons. They were found last year to have violated export-control agreements by selling the Soviets high- tech equipment used to build quiet submarine propellers.

Another proposal objectionable to the White House calls for the Government to keep more detailed records of foreign investment in the U.S. The Administration fears that foreign investors, who have helped prop up the economy through heavy buying of Treasury bills and other securities, might trim such purchases if they knew their names could be made public. Nobuhiko Sasaki, a deputy director at Japan's Ministry of International Trade and Industry, warns that congressional passage of the proposal would be "like putting a knife to your own neck."

Perhaps the most disturbing aspect of the trade bill is that many members of Congress are using it as a vehicle to promote their pet projects. Speaking last week at a committee hearing, Treasury Secretary James Baker praised Congress for being willing to compromise on sweeping issues such as what to do in response to unfair foreign trade practices. But Baker complained pointedly about the lack of "willingness to jettison amendments that sometimes are supported by only one member." In the same vein, Representative Robert Kastenmeier, a Wisconsin Democrat, castigated his colleagues: "A trade bill should be used to set trade policy, not provide some kind of discount Casbah for special interests."

Members of Congress have many motivations for championing causes that benefit only a few parties. Sometimes they may firmly believe in the worthiness of the proposals, or they may have been convinced by an effective lobbying campaign. Just as often, though, they may be out to please their constituents or those who have made major contributions to their campaigns. Both House and Senate versions of the trade bill are larded with proposals of questionable merit and purpose. A few examples:

-- A two-sentence provision would give $500,000 to the law firm of Bishop, Cook, Purcell & Reynolds for defending the National Corn Growers Association in a legal dispute with Canadian corn growers. The measure was sponsored by Representative Edward Madigan, the ranking minority member of the House Agriculture Committee. The Illinois Republican took up the corn growers' request for payment to the Washington-based law firm after the Agriculture - Department turned down an earlier plea to pick up the tab.

-- Senator Max Baucus, a Democrat from the sheep-raising state of Montana, at first introduced a measure to set quotas on imported lamb. The idea was watered down in committee negotiations, but a provision that survives calls for federal payments to lamb producers if they are damaged by imports.

-- A section of the trade bill known to Capitol Hill pundits as the "Timex provision" would lower the tariffs on imported watches and watch parts. The measure is sponsored by Representative Beryl Anthony, an Arkansas Democrat whose state has a Timex manufacturing plant. The company also assembles watches in foreign factories for import into the U.S.

-- A measure introduced by Representative Don Bonker, a Washington Democrat, would protect certain kinds of U.S. wood products by restricting competing imports. In particular, the measure subjects grooved or pegged plywood, used for wall paneling and in making furniture, to higher tariffs. Washington's lumber industry has been hit hard by a surge in imported wood products.

-- The Senate version of the trade bill contains a complex five-page proposal concerning patent protection for drugs that appears designed to benefit a single product. The provision would in effect enable Warner-Lambert, a pharmaceutical firm, to receive a five-year extension of the patent on Lopid, a cholesterol-reducing drug. The measure was introduced by Senator Dennis DeConcini, an Arizona Democrat who chairs the Subcommittee on Patents, Copyrights and Trademarks. Warner-Lambert reportedly hired a team of Washington lobbyists and lawyers to help DeConcini draft the proposal.

Most of these provisions, and many more like them, would provide a windfall for some but could damage consumers and taxpayers. Dealing with such matters, many of which do not belong in a trade bill at all, makes it almost impossible for Congress to achieve its proper mission: writing a coherent piece of legislation that treats both domestic and foreign businesses fairly. President Reagan could point to the current mishmash as one of the best arguments available to support his repeated requests to be given line-item veto powers.

With reporting by Jerome Cramer/Washington