EC WARNS CONGRESS ON NEW TRADE BILL
The European Community (EC) has
warned the U.S. House of Representatives that tough trade
legislation it is considering could prompt retaliation by U.S.
trading partners.
    The warning was sent in a letter from Sir Roy Denman, head
of the EC delegation in Washington, to Dan Rostenkowski,
chairman of the House Ways and Means Committee.
    A copy of the letter was made available to Reuters.
    Denman told Rostenkowski, an Illinois Democrat, he backed
aspects of the bill, such as one backing new talks under the
GATT and one excluding protection for the textile industry.
    But Denman disagreed with other provisions which would
require President Reagan to take retaliatory trade action
against nations with large trade surpluses with the U.S. and
would set new standards for judging unfair foreign trade
practices.
    Denman told Rostenkowski that GATT regulations prohibit
member nations from taking unilateral retaliatory action in
trade disputes unless the action is GATT-approved.
    He said "If the Congress makes retaliatory action mandatory,
then the United States would be in violation of its
international legal obligations and on a collision course with
its major trading partners."
    Denman added that a president should have flexibility in
enforcing trade laws, saying "in the last resort, any
administration must take its decision in light of the overall
national interest."
    Otherwise, he said, "the risk would be counter-reaction by
trading partners of the United States, i.e., retaliation or
enactment of mirror image legislation to be employed against
imports from the United States."
    Denman also said Congress could prompt retaliation if it
reduced the threshhold of unfair trade by making it easier for
firms to file unfair trade practice claims.
    Retaliation could also be prompted by relaxing standards
for findings that imports were injuring U.S. firms.
    "Changes in these standards must be agreed upon
multilaterally. They cannot be imposed by the United States
alone on the world trading system," he said.
    House leaders have rejected a plan by textile-state
legislators to add to the trade bill a provision to curb
imports of cloth and clothing, similar to a measure passed two
years ago but vetoed by President Reagan.
    There was concern by the leaders that Reagan would veto the
entire trade bill because of the textile amendment.
   
 Reuter
