A bill to amend the Trade Act of 1974 to improve enforcement of United States reciprocal trade agreements.

Amends the Trade Act of 1974 to require the national trade estimate prepared annually by the U.S. Trade Representative (USTR) to include a list of the trade barriers of each foreign country and an estimate of the value of additional U.S. goods and services and the value of additional foreign direct investment by U.S. persons that would have been exported to, or invested in, each foreign country if each of such trade barriers did not exist. Requires the USTR to consider the value of such U.S. exports and investments in determining the trade distorting impact of such trade barriers. Changes the date on which such annual report (to be known as the National Trade Estimate) is due to March 31.

Requires the President, if a country is identified in the 1986 National Trade Estimate as a country that has foreign trade barriers and the USTR determines that such country maintains a consistent pattern of barriers and market distorting practices, to initiate negotiations with such country to eliminate such barriers. Requires the USTR to determine, within 30 days of enactment of this Act, with respect to each such country whether such country maintains such a pattern of market barriers. Declares that Japan is such a country. Requires the President to report to the Congress by December 31, 1988, on the effects of any agreements reached by such negotiations.

Requires the USTR to initiate investigations with respect to those trade barriers identified in the National Trade Estimate which constitute significant trade barriers or distortions and which are likely to be: (1) unjustifiable; or (2) unjustifiable, unreasonable, or discriminatory and restrictive of U.S. commerce and, if eliminated are likely to result in the greatest expansion of U.S. exports. Exempts the USTR from initiating an investigation under (2) if such an investigation would be detrimental to other efforts to eliminate such barriers. Defines significant barriers to and distortions of trade.

Requires the USTR to determine within nine months of the start of an investigation, whether: (1) the United States is being denied any trade rights; or (2) the trade practices being investigated constitute unfair practices. Requires the USTR to provide an opportunity for the presentation of the views of interested parties and to obtain advice from appropriate advisory bodies either before or after making such determination depending upon whether expeditious action is required. Requires the USTR to make the determination more quickly (within six months) if export targeting is alleged. Requires the President to take the actions necessary to enforce U.S. trade rights and eliminate unfair trade practices if such determination is affirmative. Sets forth the time frame in which such actions must be taken. Authorizes the President to postpone taking such actions if the President makes a specified certification to the Congress. Prohibits the President from granting more than two postponements.

Declares that the President is not required to take any actions if: (1) the contracting parties to the General Agreement on Tariffs and Trade (GATT) make a determination that conflicts with the USTR's determination of unfair trade practices; (2) an agreement is entered into between the United States and the foreign country involved and the affected domestic industry or the petitioner agrees that such agreement adequately offsets the unfair trade practices and enforces U.S. trade rights; or (3) the investigation of such trade practices was not initiated by a finding in the National Trade Estimate of unjustifiable trade barriers and the President submits a specified certification to the Congress.

Terminates any actions taken in response to such investigations after seven years if there is no request for continuation of the action. Provides for formal review, upon request, of the necessity of the continuation of the action. Requires the USTR to report to the Congress on such review.

Authorizes the President to modify or terminate an action taken pursuant to such an investigation if: (1) the contracting parties to the GATT have determined, or a GATT panel of experts has reported, that the action violates U.S. international obligations or that the trade practice to which the action responds is not a violation of, or inconsistent with, a trade agreement or does not impair U.S. benefits under a trade agreement; (2) an offsetting trade agreement has been reached; or (3) the burden on the U.S. economy of the denial of trade rights or of the unfair trade practices has increased.

Includes foreign trade practices that threaten to burden or restrict U.S. commerce among the trade practices to which the USTR must respond.

Defines "burden on U.S. commerce" to include: (1) foreign trade practices which have adverse effect on trade between the United States and another foreign country; (2) the subsidization of exports that results in the displacement of U.S. exports to another foreign country; (3) the imposition of import restrictions or export performance requirements that result in the diversion of the exports of another foreign country to U.S. markets; and (4) the enforcement of trade restraining agreements that result in the diversion of the exports of another foreign country to U.S. markets.

Requires foreign instrumentalities and territories to be treated as foreign countries.

Authorizes the President, in reaction to unfair foreign trade practices, to: (1) enter into agreements that offset or eliminate any burden on U.S. commerce resulting from such practices; or (2) withdraw or refrain from proclaiming benefits under the Generalized System of Preferences for the country involved.

Includes within the definition of unreasonable trade practices: (1) export targeting; or (2) a requirement that intellectual property be licensed to the foreign country concerned or to a firm in such country or that technical information be submitted to such country as a condition of importation into such country.

Defines "export targeting" to include any government plan consisting of a combination of coordinated actions that are bestowed on a specific enterprise, industry, or group the effect of which is to assist the enterprise, industry, or group to become more competitive in exports. Sets forth actions included within the definition of export targeting.

Adds to the definition of service sector access authorization reference to a foreign supplier of goods related to a service.

Includes within the definition of "unjustifiable trade practices" trade practices: (1) which enable a state trading enterprise to compete in international trade or make purchases or sales in international trade without depending on commercial considerations; (2) through which a foreign country assists a state trading enterprise in such competition, purchases, or sales; or (3) which fail to afford U.S. firms adequate opportunity, in accordance with customary business practice, to compete for participation in purchases from, or sales to, state trading enterprises.

Defines "denial of benefits" under a trade agreement to include foreign trade practices that: (1) nullify, impair, or impede attainment of the objectives of such agreement; (2) constitute an unfair trade concession requirement with respect to any product or service within the purview of such agreement. Defines "unfair trade concessions requirement."

Authorizes the President, in order to meet U.S. international obligations, to take actions to compensate foreign governments for actions taken with respect to unfair foreign trade practices.