The chairman of the House small business subcommittee warned yesterday that a proposed multinational trade agreement may be in jeopardy unless President Carter eliminates provisions that would overturn longstanding policy of earmarking special government contracts for domestic, small and minority businesses.
Rep. John J. LaFalce (D.N.Y.), chairman of the Small Business subcommittee on general oversight and minority enterprise, said he will ask President Carter to eliminate that portion from the treaty. "If he hopes for passage, he'll have to do it," La-Falce said after a three-hour hearing on the proposed treaty's effects on small businesses.
Robert S. Strauss, Carter's special trade negotiator, defended the proposed treaty for nearly two hours before intense grilling by the committee. But he claimed that Carter had been unaware of the provisions eliminating traditional preference for domestic firms.
In addition to opposition from supporters of small and minority business, proponents of the country's Buy America policy oppose the treaty because it would eliminate the longstanding preference in awarding government contracts to domestic firms.
"We have a whole host of congressmen opposing it because of the Buy America Act," LaFalce said after the hearing. "The administration can't afford to allenate natural allies" of open trade agreements.
The new procedures, which have provoked charges that the proposed treaty is meant to aid large, multinational corporations, while hurting small and minority business, are part of along-shought provision in the multilateral trade agreement, which is expected to be in final form around the first week of April.
As part of that trade pact, the United States has agreed to allow foreign producers greater access to bidding on federal contracts here in return for a pledge by European governments and Japan to open up more of their procurement business to American exporters.
To carry out its part of the agreement, the administration has pledged to relax current restrictions in federal procurement policies that have required key agencies to grant special preferences to domestic firms, small business and minority companies.
Congressional committees are holding hearings on the proposed agreement, which is still being negotiated, to determine informally what aspects of it will be acceptable to both houses before final agreement is reached in Geneva. Ultimately, Congress must accept or reject the agreement without amendment.
Strauss said the effect of the proposed treaty would be less disastrous to small and minority firms than they perceived and would open up the varitually closed foreign trade for them.
Strauss, reaffirming the administration's commitment to helping those businesses, admitted under pointed questioning from Rep. Parren Mitchell (D-Md.) that he had not consulted with the president on the procurement portions of the treaty. Mitchell had said he didn't believe Carter would agree to such a "sellout" and "betrayal" of minorities.
While small businesses would lose about $400 million in government business to foreign companies, not $9 billion as originally estimated, they would be eligible to compete for $20 billion in foreign business, Strauss said.
Bu Mitchell, speaking in firm deliberate tones, said that minority and small businesses, often with low capital to expand in foreign markets, will be unable to compete effectively for the foreign business.
Strauss contended that minority businesses and workers would benefit from the proposed pact. "I'm going to fight for it. I'm right and I know that I'm right."