Schultz Proposes Compromise Language in Trade Reform Act to Aid Commerce with the USSR

Treasury Secretary George P. Schultz proposed to the Senate Finance Committee today that compromise language be worked out in the Trade Reform Act to resolve the conflict between trade with the Soviet Union and the latter’s restrictive emigration policies. Schultz was the first Administration figure to testify before the Committee which opened four days of hearings today on the Trade Reform bill embodying the Jackson Amendment.

Schultz did not say either in his prepared statement or in reply to Senators’ questions what he thought the compromise language should be. He told the Jewish Telegraphic Agency later that he had “no particular proposal” in mind on the language. He emphasized that Secretary of State Henry A. Kissinger would discuss the Jackson measure when he appears before the Committee Thursday. Schultz indicated that behind-the-scenes activity might be involved to kill or neutralize the Jackson-Mills-Vanik measures which would ban U.S. trade benefits and credits to the Soviet Union until it modifies its emigration policy.

Other Administration spokesmen who appeared today were Peter M Flanigan, executive director of the Council on Economic Policy, a White House agency, and William D. Eberle, special representative for trade negotiations for the White House. Kissinger, who had been scheduled to lead off the Administration case against the Jackson bill, will testify during the final day of the hearings. He returns tonight from diplomatic missions in the Middle East and Europe.

Schultz pointed out in his prepared statement that the 1973 Trade Reform Act deals with the President’s authority to extend equal tariff treatment to “non-market economies” meaning Communist countries. Referring to the Mills-Vanik measure which is identical to the Jackson Amendment and was adopted by a 4-1 majority by the House, Schultz said:

“Restrictions proposed by the House on the use of this authority and additional provisions which would effectively preclude the continued granting of official credits to some of these countries would, in my view be extremely ill-advised, I believe, however, that a substitute wording could be found effectively to express the concern of the Congress that the issues of basic human rights not be ignored while not blocking the development of more normal economic relations with the non-market economy countries.”

KISSINGER TO PRESENT ADMINISTRATION’S VIEW

Schultz told the JTA, when questioned about the nature of a possible compromise, that “that is a matter to be negotiated with the Senators rather than to have it thrown out in public…The matter must be resolved.” Schultz also noted to the JTA that the Administration’s “efforts were, unsuccessful in the House. It is a tough problem,” he said.

Sen. Russell B. Long (D.La.). chairman of the Finance Committee, told the JTA that he was unable to predict when the Committee would offer the trade bill to the Senate and that he has “no idea what the final result will be.” Long, one of the 78 Senators supporting the Jackson Amendment, said, however, that “something along that line will be in the bill” although “I cannot predict what it will be in actual language.” Flanigan, in his statement, declared that Kissinger would discuss the Administration’s “strong reservations” with respect to “the restrictions on granting non-discriminatory tariff treatment and the use of expanded credits in trade with Communist nations.”

These developments came as a high ranking 26-member Soviet trade delegation, headed by Foreign Trade Minister Nikolay S. Patolichev, is lobbying in the U.S. with influential members of government and Congress and business groups in a dozen principal American cities. The seriousness of the situation was underlined by reports from the Soviet Union that Jewish emigration from that country in the past few weeks has declined.

The Arab oil embargo was injected into today’s hearings by two Committee members, Sens. Abraham Ribicoff (D.Conn.) and Walter Mondale (D. Minn.). Both sharply criticized the Arab oil producing countries for using their economic resources for political purposes. (By Joseph Polakoff)