KEY ISSUES REMAIN ON CANADA PACT BILL

KEY ISSUES REMAIN ON CANADA PACT BILL

Several aspects of the legislation needed to implement the trade liberalization accord with Canada sailed through the Senate Finance Committee Thursday, but many of the thorniest issues still remain unresolved.

The committee agreed to provisions dealing with multilateral and bilateral import relief for U.S. firms and an interim system of defining rules of product origin until the United States adopts the Harmonized Tariff Schedule, used by most of the world's industrial nations.Still to be dealt with are provisions dealing with the controversial mechanism for handling disputes between the two countries. Also left unresolved are issues of how to handle a binational dumping and export subsidy panel that will seek to ensure that each country follows its laws as written.

Provisions pertaining to how the accord might be amended in the future have also been put off. Committee Chairman Lloyd Bentsen, D-Texas, said that issue and several others will be thrashed out on Monday.

The Finance Committee is only one of several congressional committees examining the so-called implementing legislation, which would change existing law sufficiently to allow for the trade agreement to be put into place.

The House and Senate are scheduled to meet in conference during the week of May 23 in hopes of reaching compromise on their versions of the legislation.

The Reagan administration is working with the Congress on the legislation, and language decided on during the rest of this month will almost assuredly make up the bill the White House will send to Congress for consideration on June 1.

The trade agreement was signed by President Reagan and Canadian Prime Minister Brian Mulroney on Jan. 2. The agreement comes into effect following approval by the legislative bodies in the two countries.

If and when the accord is approved it would result in a phase-out of all tariffs over a 10-year period. Approval in the Canadian Parliament is virtually assured and more and more it seems likely that Congress will adopt the pact as well.

On fishing issues, the senators agreed with the administration on a measure sponsored by Sen. George Mitchell, D-Me., which would give the president authority to take Canada to the General Agreement on Tariffs and Trade if the Canadians persist in restricting U.S. fishing interests.

Additionally, rules-of-origin language was clearly stated to make it more difficult for meat products from a third country to receive duty-free status if they are shipped through Canada.

The changes and others needed to adapt existing law to suit the agreement are often complex in nature. Complicating matters further is the fact that several key sectors of the bill are contingent on whether the language in the huge omnibus trade bill or that of existing law is in place when the accord is approved by Congress.

For example, the rule of origin guidelines for determining tariffs would be set by the globally adopted harmonized code, a common code for commodity description. But the United States is not yet a party to the harmonized code.

Membership in the system is included as part of the trade bill, but that legislation seems sure to be killed following President Reagan's veto next week.

Instead the Finance Committee authorized the president to proclaim interim rules of origin. These rules would be based on the existing U.S. tariff schedule.

The import relief measures under Section 201 of the Trade Act of 1974 are similarly tied to the trade bill. Under the accord, Canada would be treated differently from other countries when a U.S. industry files for relief of fairly traded imports.

Tariffs on incoming Canadian goods would be limited to the levels given most favored nations and could last a maximum of three years. These limits would not pertain to other countries.

If the damaging imports are coming exclusively from Canadian producers, the agreement would supersede U.S. law. But if the Section 201 action is along global lines, confusion could ensue, one Senate aide said.