The Reagan administration is opposing a decades-old practice permitting foreign corporations to hire and promote their own nationals when operating in this country, in a Supreme Court case that ultimately may affect foreign relations and international trade.
The issue is based on a discrimination case brought by 12 women clerks and secretaries against their employer, Sumitomo Shoji America, a New York-based subsidiary of a Japanese export-import firm. The women charged the company with sex and national origin discrimination under the Civil Rights Act of 1964 for promoting only Japanese men.
Not only could the case determine the hiring rights of foreign-owned corporations here, but it could lead to changes in the privileges U.S. firms enjoy overseas.
The administration position, in a friend of the court brief filed by the U.S. Solicitor General, is that foreign-owned companies incorporated in the United States are treated as American corporations and cannot invoke preferential hiring privileges under reciprocal treaties with the United States. The same is true of American subsidiaries operating overseas, the government said.
Sumitomo, like other foreign-owned firms that have incorporated here, selected its own nationals as executives regardless of age, sex or race discrimination laws under post-World War II treaties of friendship, commerce and navigation with the United States.
The hiring provision in the treaties assured the parent company that control of the subsidiary stayed in its hands. Japanese companies generally chose men for their executives based on traditional roles of men in Japanese society and as part of corporate policy to give their managers experience in the United States. But the 12 women claimed that those companies must abide by the Civil Rights Act, which prohibits employment discrimination based on race, sex, age or national origin.
The solicitor general's office said in its brief, requested by the court, that under the treaties a foreign-based company that establishes an office here can adopt preferential hiring practices. However, once the company, such as Sumitomo, incorporates in another country, such as the United States, it is no longer considered a foreign company and may not invoke the hiring privileges.
The case has attracted the attention of civil rights groups, including the NAACP. American firms operating overseas and U.S. trade officials fear treaties will be jeopardized by the decision, as well as reciprocal rights given to American firms in foreign countries. U.S. officials are concerned about what impact the decision would have on negotiations of bilateral investment treaties.