Implementation of a multilateral trade agreement prohibiting some trade agreement prohibiting some government procurement setasides may hurt employment in Maryland particularly hard, according to Gov. Harry Hughes.
In a letter to Rep. John J. LaFalce (D-N.Y.), Hughes noted that half of the state's political subdivisions have unemployment rates exceeding the national average of 6.1 percent. Those areas are eligible for special breaks by the federal government as part of the labor surplus setaside program which was cut in the trade agreement signed in April. Legislation to implement the agreement still must be approved by Congress.
The agreement "could exacerbate the growing unemployment picture in our 12 eligible areas and could, perhaps, result in increased unemployment in other communities," Hughes wrote.
"Again we recognize the need to balance our internal national interests with international interests," Huges said in the letter. "But at the same time that we are trying to reduce the high levels of unemployment, we should not establish trade price levels that seriously change or erode our other efforts."
The letter from Hughes, as well as letters from other governors and mayors with large ageas of unemployment, were solicited by LaFalce, who is attempting to garner support to eliminate amendments prohibiting special breaks for businesses bidding on Defense Department contracts.
Unemployment in Virginia and the District is not severe enough to include those areas in the campaign, a spokesman for the congressman said.
LaFalce is attempting to kill the Maybank amendments, which have been tacked onto the Defense appropriations bill since President Harry S. Truman signed it into law, the spokesman said.
The amendment requires the Defense Department to by goods and services at the lowest possible price. But LaFalce, chairman of a house small business subcommittee, said the contracts should be subject to the government's labor surplus setaside. In the way, firms located in areas of high unemployment would be granted a differential in their bids on defense contracts.
"We strongly believe that the Maybank amendments should be modified to enable the Department of Defense to purchase more products from firms in high unemployment areas," Hughes wrote. The Defense Department's "military procurement actions in Maryland have a substantial impact on our economy."
Purchases from Maryland firms were 2.4 percetn of total Defense Department purchases in 1977, which exceed $52.7 billion, and 2.5 percent of total purchases of $61.1 billion in 1978, Hughes said.
"With 12 of our 24 major political jurisdictions eligible for surplus labor area assistance, we submit that Maryland should receive a greater portion of Department of Defense procurement and that could result from changes in the Maybank amendments . . . ," Hughes said.
LaFalce said in a recent telephone interview that he no longer opposes the trade agreement as he did earlier because it threatened to eliminate minority and small business setasides.
"The good to be accomplished by the (agreement) will override its adverse effects," LaFalce said. But LaFalce said he is attempting to influence the Carter administration with letters like Hughes' to support dropping the Maybank amendments. Hearings had been planned this spring, with testimony scheduled by several governors and mayors on the adverse unemployment pictures in their jurisdictions, but many of the officials couldn't attend on the hearing date, a spokesman for LaFalce said.
Maryland officials couldn't provide exact figures on the effect in the state of the trade agreement or the Maybank amendments. But the trade agreement would be "particularly harmful" to the economies of Baltimore City and western Maryland counties, one state official said.
The areas eligible for the labor surplus setaside program and their unemployment rates are: Baltimore City, 8.4 percent; Allegany County, 14.6 percent; Garrett County, 18.6 percent; Somerset County, 22.7 percent; Worcester County, 20 percent; Calvert County, 10.2 percent; Dorchester County, 7 percent; Caroline County, 12.2 percent; Kent County, 14.5 percent; Queen Anne's County, 13.2 percent; Washington County, 7.8 percent; and Wicomico County 9.6 percent. CAPTION: Picture, GOV. HARRY HUGHES . . . fears increased unemployment