WHAT'S WRONG WITH THE TRADE BILL?

THE OMNIBUS TRADE ACT, for all the talk about concern for workers, imbalances in the world economy and the need for greater coordination in and out of government in promoting trade, is largely bereft of desirable, substantive ideas that could meet its proponents' stated goal of increasing America's competitiveness.

Instead, it offers Democrats and Republicans alike an opportunity to exploit the real concerns of American workers-- the exportation of jobs and an uncertain economic future--for political mileage. Such election-year posturing by elected officials is dispiriting.

The bill has something for everyone: "get tough" provisos aimed at foreign competitors; plant-closing notification and retraining requirements; and less than subtle "gung-ho" nationalism. Unfortunately, the bill would serve only to further undermine our already tenuous position in international markets. In addition, it is replete with protectionist, anti-Third World and anti-consumer nationalist passions. Among them:

• Gutting of the Foreign Corrupt Practices Act. The bill would allow corporate payments (read "bribes") to nations they seek to do business in if the payments were "reasonable" and an aspect of "local custom." It would also eliminate the "reason to know" bribery standard in the law, replacing it with the much looser "knowing" standard. As a result, corporate employees would have to exercise a "conscious disregard of" or "wilful blindness" to bribery by company officials or agents to violate the law.
• Repeal of the Windfall Profits Tax on Oil. Producers would no longer have to pay an excise tax on domestically-produced crude oil. (Although no taxes are being collected at the moment because of the dismal condition of the domestic oil market, the tax is scheduled to remain in effect until 1993.)
• Patent Extension to Warner-Lambert. The pharmaceutical company would be granted an extension for its patent on Lopid, a cholesterol-reducing drug. Patent extension would prevent the marketing of generic versions of the medicine, costing the drug's largely senior citizen users approximately $100 million extra each year.
• Increased Farm Subsidies. Farmers would reap as much as $500 million in additional payments unless General Agreement on Tariffs and Trade (GATT) negotiations resulted in the worldwide elimination of farm subsidies by 1990. This might be useful if payments were limited to family farms and producers of crops hard hit by overseas competitors. We suspect, however, that the money would instead boost agribusiness interests--already a favored beneficiary of corporate welfare.
• Retroactive Sanctions. Toshiba Corporation (Japan) and Kongsberg Vaapenfabrikk (Norway) would be prohibited from doing business with the U.S. government for three years as a result of sales through their subsidiaries of allegedly sensitive technology to the Soviet Union undertaken by their subsidiaries. (See MM, Nov./Dec. 1987, "Where Toshiba Went Wrong.") In addition, the subsidiaries would be banned from all government and commercial sales in the United States for three years. The bill would also mandate import bans of two to five years if a president certified that a foreign company's sales of "controlled" technology had a "serious adverse impact" on the East/West military balance.
• New Definitions of Dumping. The bill includes a new method for calculating "dumping" (the selling of specific products in targeted countries at less than their market value). The new formula, however, applies only to "non-market" economies-- socialist economies, in effect--making it a new weapon in the ideological war with little or no real value as a remedy for unfair trade.

On the positive side, the trade bill's provision requiring corporations to give employees about to lose their jobs 60-days advance notice would be an important first step in addressing worker displacement. The modest provisions in the bill for workers' transitional support and retraining are also laudable.

These provisions, ironically, are precisely what prompted President Reagan to veto the bill. Advance notification (and other lesser aspects of the bill), Reagan said, would "cost jobs and damage our economic growth."

Congress may reintroduce the bill in a different form, minus the provisions opposed by the administration. Instead, Congress should eliminate those truly odious aspects of the bill and strengthen the provisions guaranteeing workers notification and transitional assistance.