Trade Package Meeting, November 4, 1985

Transcription (Scripto)

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Extent (Dublin Core)

9 Pages

File Name (Dublin Core)

lead_389_015_all

Title (Dublin Core)

Trade Package Meeting, November 4, 1985

Date (Dublin Core)

1985-11-04

Date Created (Dublin Core)

1985-11-04

Congress (Dublin Core)

99th (1985-1987)

Topics (Dublin Core)

See all items with this value Foreign trade regulation--United States

Policy Area (Curation)

Foreign Trade and International Finance

Creator (Dublin Core)

Dole, Robert J., 1923-2021

Record Type (Dublin Core)

notes (documents)

Rights (Dublin Core)

http://rightsstatements.org/vocab/CNE/1.0/

Language (Dublin Core)

eng

Collection Finding Aid (Dublin Core)

https://dolearchivecollections.ku.edu/index.php?p=collections/findingaid&id=26&q=

Physical Location (Dublin Core)

Collection 007. Box 389, Folder 15

Institution (Dublin Core)

Robert J. Dole Institute of Politics, University of Kansas, Lawrence, KS

Archival Collection (Dublin Core)

Robert J. Dole Republican Leadership Collection, 1985-1996

Full Text (Extract Text)

BOB DOLE
KANSAS

United States Senate
OFFICE OF MAJORITY LEADER
S-230 THE CAPITOL

(checked) Danforth (checked)
(checked) Packwood (checked)
(checked) Dole (checked)
(checked) Roth (checked)
(checked) Specter (checked)
(checked) Domenici (checked)
(checked) Garn (checked)
(checked) Chafee (checked)
(checked) Grassley (checked)
(checked) Heinz (checked)

(arrow) trade mtg S-230

(page 2)
Danforth,
Chafee, (checked)
Grassley, (checked)
Dole
Heinz,
Garn
Packwood
Roth

8955
steve

(page 3)
BOB PACKWOOD, OREGON, CHAIRMAN
BOB DOLE, KANSAS
WILLIAM V. ROTH, JR., DELAWARE
JOHN C. DANFORTH, MISSOURI
JOHN H. CHAFEE, RHODE ISLAND
JOHN HEINZ, PENNSYLVANIA
MALCOLM WALLOP, WYOMING
DAVID DURENBERGER, MINNESOTA
WILLIAM L. ARMSTRONG, COLORADO
STEVEN D. SYMMS, IDAHO
CHARLES E. GRASSLEY, IOWA
RUSSELL B. LONG, LOUISIANA
LLOYD BENTSEN, TEXAS
SPARK M. MATSUNAGA, HAWAII
DANIEL PATRICK MOYNIHAN, NEW YORK
MAX BAUCUS, MONTANA
DAVID L. BOREN, OKLAHOMA
BILL BRADLEY, NEW JERSEY
GEORGE J. MITCHELL, MAINE
DAVID PRYOR, ARKANSAS
WILLIAM DIEFENDERFER, CHIEF OF STAFF
MICHAEL STERN, MINORITY STAFF DIRECTOR

United States Senate
COMMITTEE ON FINANCE
WASHINGTON, DC 20510

NOVEMBER 4, 1985

MEMO
TO: SENATORS DOLE (checked), PACKWOOD, ROTH, DANFORTH, CHAFEE, HEINZ, GRASSLEY, AND GARN
FROM: SENATE TRADE INITIATIVE STAFF (LEN SANTOS x4-6933)

The attached memorandum describes the trade issues for discussion at the Monday, November 4, 1985 meeting at 3:00 p.m. in Senator Dole's office (S-230).

(page 4)
Len Santos
November 4, 1985

November 4, 1985
Meeting of Members
Senate Trade Initiative

ISSUES FOR DISCUSSION
As a result of meetings among staff representing the Senate Finance and Banking Committees (Majority) and Senators Dole, Danforth, Roth, Chafee, Heinz and Grassley, the following issues have been gleaned from the many legislative proposals contained in the trade initiative for discussion among Members:
1. Should President's discretion in granting "escape clause" relief be limited?
Section 201 (the "escape clause") of the Trade Act of 1974 permits the President to grant import relief to an industry which the International Trade Commission (ITC) finds is seriously injured, or threatened with serious injury, by imports -- regardless of whether the imports are fairly traded. Current law does not require that an industry receiving import relief adjust to competition.
Staff agree that section 201 should be amended to require that an industry receiving import relief must undertake measures to adjust to competition. However, staff disagree on whether the President's discretion in granting import relief should be limited. Proponents of limiting the

(page 5)
2

President's discretion would (underlined) require (end underline) that the President grant the import relief recommended by the ITC or substantially equivalent relief (underlined) if an adjustment plan has been agreed to by the affected industry. (end underline) In this scheme, the President would be permitted to reject the ITC's recommendation if a majority of both Houses of Congress voted in support of his decision. Proponents of limiting Presidential discretion argue that --
- The present statute permits the President to turn down legitimate cases for import relief, and has, therefore, lost its credibility.
- If industries are prepared and required to undertake necessary adjustment measures, the President should be obliged to grant the requisite relief.
- The limitations proposed limit, but do not eliminate, Presidential discretion.
Opponents of limiting Presidential discretion argue that --
- The proposed limits on Presidential discretion are tantamount to elimination of his discretion, since getting a majority of Congress to support the President's rejection of an ITC recommendation for relief will be difficult.

(page 6)
3

- Not all industries injured by fairly traded imports should get relief, and the President should be permitted to make that judgment on a case by case basis.
- Severely limiting Presidential discretion based on the industry's commitment to an adjustment plan places undue reliance on the merits of adjustment plans and industrial planning.
2. Should the President be required to retaliate against all unfair trade practices?
Section 301 of the Trade Act of 1974 requires the President to take whatever action he deems feasible to respond to foreign unfair trade practices, to the extent he deems a response to be appropriate. Thus, the President currently has the option of not responding to unfair trade practices, presumably because he deems a response inappropriate. Most of the staff favors amending section 301 to mandate Presidential retaliation against all unfair trade practices (following a period of negotiation). Some staff oppose mandatory retaliation, at least unless the unfair trade practice complained of is a violation of a trade agreement or other international obligation. Proponents of mandatory retaliation against all unfair trade practices argue that --

(page 7)
4

- Where a practice is unfair, the Administration should not be permitted to tolerate it.
- Mandatory retaliation enhances U.S. leverage in removing the practices.
- Many practices in the services and investment area should be addressed, but are outside the coverage of international agreements.
Opponents of mandatory retaliation in all cases argue that --
- Particularly when U.S. standards of unfairness are not internationally accepted, retaliation should be left for the President's discretion.
- Mandatory retaliation in these cases increases the likelihood of counter retaliation, and/or use of a similarly unilateral approach by other countries.
3. Should the United States seek to defuse the LDC debt "bomb" by promoting a swap of LDC debt between the World Bank and the commercial bank creditors?
The accumulated commercial debt of less developed countries (LDC), mostly in Latin America, has proved a major obstacle to U.S. exports, threatens U.S. banks and endangers

(page 8)
5

the stability of debtor countries which are of political and strategic importance to the United States.
Staff generally support increasing the lending resources of the World Bank and Eximbank guarantee authority, particularly since they do not entail any new budget outlays. However, these measures are unlikely to provide a reduction in the debt burden that would stimulate U.S. exports to these countries. Accordingly, some staff support a scheme by which the World Bank (or other international institution) would assume a substantial portion of the outstanding commercial loans of these private banks at interest rates substantially below those currently borne by these loans. In exchange, the LDC debtors would be expected to liberalize their trade and investment rules. In this way --
- Debtor countries would get debt relief permitting the resumption of economic growth and increased U.S. exports, and
- The commercial banks would improve the quality of their loan portfolios, but reduce their earnings by the amount of the interest forgone as a result of the swap.
Opponent argue that this idea --
- Will be seen as a bail-out of the big banks,

(page 9)
6
- Would encourage future imprudent lending by banks, and
- Encourage farmers to demand equivalent relief.
Proponents argue that --
- This debt crisis offers the United States an opportunity to liberalize the restrictive trade and investment practices commonly found in the LDC debtors.
- Choices which we do not wish to face now will be forced on the United States later; the real choice is between constructive management now or damage control later.
- The proposal (underlined) would (end underline) force banks to absorb some costs for their lending mistakes; right now, the exporting sector has been forced to bear the cost of the banks' mistakes.
- There is no prospect for increasing trade with LDC debtors without some significant debt relief.

Trade Package Meeting, November 4, 1985

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