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.
  

