Commerce Secretary Malcolm Baldrige yesterday urged the repeal of a major portion of U.S. antitrust law that blocks corporate mergers, to help American companies become more competitive in international trade.

Baldrige said he recommended Friday that the Reagan administration get behind his proposal to repeal section 7 of the Clayton Act, which gives the Justice Department authority to prevent mergers that could have an anticompetitive effect. He said he sent his proposal to the Office of Management and Budget, which will send it to be considered by a Cabinet Council headed by Attorney General Edwin Meese III.

Baldrige, who has been talking about such a change for more than a year, said consumers still would be protected against corporate collusion and anticompetitive mergers by the Sherman Act, which bars monopolistic activities and actions that are in restraint of trade, and by the Federal Trade Commission.

He said times have changed since the Clayton Act was passed in 1914, and some of its restrictions place "unnecessary costs on our businesses and unnecessary impediments" to American companies' ability to compete in world trade.

"Looking backwards can get you run over today," he said.

Baldrige conceded that he faces likely opposition within the administration, especially from the Justice Department trustbusters. "I hope they will be lukewarm to it" instead of voicing full opposition, he said.

If he wins administration support, he said, he expects a sympathetic hearing from Congress, which is growing increasingly concerned with the effects of America's $123.3 billion trade deficit.

Section 7 of the Clayton Act allows the attorney general to block corporate mergers in advance where he finds "the effect . . . may be substantially to lessen competition or tend to create a monopoly."

Baldrige said his proposal means a company "would have to sin first" before trustbusters could move in.

Baldrige said the tentative nature of current law makes U.S. businessmen "very nervous, exceedingly nervous, in some cases flat-out scared" about proceeding with mergers that are needed to help their firms compete in world trade. "American businessmen have too much to lose by taking chances," he added.

He said the reasons for section 7 of the 50-year-old Clayton Act "no longer exist" with the United States battling other countries for a share of the global market. He said 75 percent of all U.S. products now face international competition, a vast change from a decade ago. U.S. managers, moreover, are lucky to hold on to a share of the domestic market, let alone get a monopolistic hold on it, he said.

Removing antimerger provisions from the Clayton Act would allow companies to combine in declining industries, such as steel, "where there is too much plant capacity." The Justice Department last year tried to block the merger of LTV and Republic Steel, only to reverse itself under pressure from Baldrige and others.

The benefits of some mergers, Baldrige said, are lower overhead and lower market costs that will allow companies to resist imports and compete more effectively in overseas markets. Mergers, furthermore, are needed to force the "structural readjustments" that are needed to shrink some industries down to a size where they can compete with foreign companies.

"If you don't allow American companies from shoes to steel to merge to get more efficient, you are going to see increases in protectionism, and that's not good for consumers," Baldrige said.

"Businesses are not going to merge unless they are going to be better off," he added.

His proposal ran into immediate opposition from Sen. Howard Metzenbaum (D-Ohio), a member of the Senate Judiciary Committee, who accused Baldrige of calling for "a merger free-for-all."

"His proposal would mean that even larger and more harmful business combinations would proceed while the government stood by with toothless laws," Metzenbaum said. "It would send a very loud and clear signal that this administration had reversed the antitrust policies in effect for over 70 years."