Additional material supplied for the hearing record-Continued Letter to Chairman LaFalce re agency target goals with chart List of social and economic programs subject to preference_-- Prepared statement_ Statement on socioeconomic programs implemented through Statements re problems with and effects of implementation of LaFalce, Hon. John J., chairman, Subcommittee on General Over- Lewis, John, president, National Small Business Association: Prepared statement.. McKevitt, James D. "Mike," Washington counsel, National Federa- Strauss, Robert, Special Representative for Trade Negotiations: Zayas, Edison R., economist, National Federation of Independent MULTINATIONAL TRADE NEGOTIATIONS TUESDAY, MARCH 20, 1979 HOUSE OF REPRESENTATIVES, AND MINORITY ENTERPRISE OF THE The subcommittee met, pursuant to notice, at 9:05 a.m., in room. 2359, Rayburn House Office Building, Hon. John J. LaFalce (chairman of the subcommittee) presiding. OPENING STATEMENT OF CHAIRMAN LaFALCE Mr. LaFALCE. The Small Business Subcommittee on General Oversight and Minority Enterprise will come to order. Over 4 years ago, the Trade Act of 1974 was enacted into law. This provided the President and his Ambassador, now Robert Strauss, with authority to proceed with the the multilateral trade negotiations that have been taking place since that time. These negotiations were thought desirable since Congress felt "that barriers to international trade are reducing the growth of foreign markets for the U.S. products, with an adverse effect on the U.S. economy." After 4 years of negotiations, President Carter advised Congress and the public this January that he intends to enter into a number of trade agreements relative to certain matters including subsidies and counterduties; technical barriers to trade; licensing; customs valuation; commercial counterfeiting; aircraft; and, the agreement which will be the focus of this morning's hearing-Government procurement. During the past week, there have been statements in the national media, by small business and minority business groups, and by many of my colleagues, that this so-called procurement code will have a highly disastrous effect on the set-aside programs presently in effect for small businesses, for minority businesses, and for firms located in labor surplus areas; under the code, certain procurements will no longer be eligible for set-aside. Equally as important, statements have been made that, apart from the set-aside programs, the procurement code will have a most deleterious impact on the number and dollar amount of contracts awarded in open competition to such firms. Since they are under the procurement code, they will now be competing for such contracts with foreign firms which will have cheaper sources of labor, which are not subject to stringent Government regulatory programs such as OSHA, and environmental controls-and which receive from their governments special treatment and/or subsidies. (1) Nevertheless, Ambassador Strauss maintains: One, that the impact on the set-aside programs will be relatively insignificant; and, two, that the export opportunities created by the agreement will more than compensate for any losses. As this subcommittee has jurisdiction over these three set-aside programs, it is imperative that we ascertain to the extent possible, and in advance of the formal signing of the agreement, the likely effect the procurement code may have on these areas of our concern. To this end, we have invited Ambassador Strauss, as well as representatives from small business, from minority business, and from the Northeast-Midwest coalition which is vitally interested in the labor surplus set-aside program. I sincerely hope that through today's hearing the uncertainty surrounding the effect of the multinational trade agreement will be eliminated and that the true facts of the situation will be established. The distinguished ranking minority member of this subcommittee, Representative Tim Lee Carter, will be joining us shortly. At this time, without objection, I would like to introduce into the body of the record, the remarks that he has prepared. I reserve the option for him delivering those remarks personally as soon as he arrives. OPENING STATEMENT OF HON. TIM LEE CARTER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KENTUCKY Mr. CARTER. Mr. Chairman, I appreciate your calling these hearings because I feel that the future of many of our smaller businesses is in jeopardy. Frankly, I was shocked to learn of what has already been traded away at the expense of our small and disadvantaged business community. It is my hope that our efforts are not too late to prevent the sacrifice of small business to the multinational business interests. Mr. Straussyour own employees have described the negotiating process as being in the "fine tuning" stage. I also understand that the trade agreement is to be signed sometime around the first week in April in Geneva. I trust that you will address your apparent noncompliance with the law which states that you must consult with the various committees of the Congress having jurisdiction over matters involved in your negotiations. I would also appreciate your telling us whether the President has personal knowledge of what you propose to do to our minority enterprise program and our labor surplus area program. The American people have never liked what I perceive as a "take it or leave it" attitude. And they are not going to buy a pig in a poke that costs more than it's worth. I trust that we will be provided with some hard answers to our concerns regarding our minority and labor surplus area programs. Thank you, Mr. Chairman. Mr. LAFALCE. Does any member of the subcommittee wish to make a very brief introductory comment before we hear Mr. Strauss? We are honored today to have in attendance the chairman of the full Small Business Committee, Representative Neal Smith of Iowa. Mr. Smith? OPENING STATEMENT OF HON. NEAL SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IOWA Mr. SMITH. I want to welcome Ambassador Strauss to the subcommittee today not only because you are a good drawing card, but also because you are a guy who talks our language and maybe we can understand what is going on. We really do need some consultation in this subcommittee and what is going on in the trade conferences. Ambassador STRAUSS. Thank you. Mr. LAFALCE. Mr. Addabbo? Mr. Addabbo is the past chairman of this subcommittee. OPENING STATEMENT OF HON. JOSEPH P. ADDABBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK Mr. ADDABBO. As the Ambassador knows, I have the greatest admiration for Ambassador Strauss and the efforts he has vigorously undertaken to better the functioning of our economy in the world marketplace. It was, therefore, with great personal reluctance that I publicly disagreed with him last week concerning the effect of the Government procurement code provisions of the proposed trade agreement now being finalized. Let there be no mistake I have expressed my concern not because I am opposed to liberalized trade since I am not-but, because I am strongly in favor of small and minority business enterprise and am willing to go to any length to preserve the progress we have long fought for in this area. I sincerely hope that Ambassador Strauss will demonstrate to us today, in the clearest terms, that his efforts to liberalize trade are not only commensurate with but, indeed, in furtherance of, expressed national policy to foster small and minority business enterprise. I do not want to be forced into the position of deciding between liberalized trade and full implementation of small and minority business programs. These two great goals should not be considered mutually exclusive. But, if the proposed trade agreement casts the issue in that light-if it purports to limit the scope of 8(a) or set-asides or the subcontracting program mandated by Public Law 95-507, or the Buy American Act, I shall not hesitate to take whatever action is necessary to advocate small and minority business interests. For members of the public who may not be fully aware of the congressional procedure mandated by the Trade Act of 1974, this hearing does not, in any way, start to toll the 45-day limitation this committee has to consider proposed legislation implementing the trade agreement. That time period starts to run from the time the implementing bill is introduced in the House. Therefore, when the administration offers its implementing bill, this committee will have additional opportunity to review the exact text of the President's recommended statutory changes. Thank you very much. Mr. LAFALCE. Thank you very much, Mr. Addabbo. I should have mentioned that in addition to being the past chairman of this subcommittee, that he is present chairman of the Defense Appropriations Subcommittee of the full Appropriations Committee. We are also fortunate to have on the subcommittee the chairman of the task force of the Subcommittee on Minority Enterprise and the chairman of the Congressional Black Caucus, Parren Mitchell. I know he has words to say. OPENING STATEMENT OF HON. PARREN J. MITCHELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MARYLAND Mr. MITCHELL. I will be very brief. Ambassador Strauss, you were kind enough to share with some of the members of the committee the information which purports to be a justification for the incursion into the set-aside programs for small minority businesses. I thank you for sharing those with me. It is with regret that I advise you, and members of this committee, that if this scenario is allowed to stand, it represents a betrayal of small business. More specifically, what the Ambassador is recommending represents a betrayal of minority business in light of what the President has done over the last year. The President, on three occasions, has recommitted himself to the cause of minority business. One of those occasions of recommitment was reiterated no later than a few weeks ago. I do not think the President knew about this agreement, because I think it is a sellout. I think it is a betrayal of small business and minority businesses; and, indeed, a betrayal of the President, if this is allowed to stand. I thank you, Mr. Chairman. Mr. LAFALCE. Thank you, Mr. Mitchell. We are honored today to also have in attendance members of the full committee who are not members of the subcommittee, but who were invited to attend. We have Mr. Baldus, Mr. Skelton, Mr. Marriott, and Mr. Erdahl. I wonder if any of the others have brief remarks they would like to make? Mr. Skelton? OPENING STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI Mr. SKELTON. I would like to welcome Ambassador Strauss. As he knows, I have long been an admirer of him and his ability. As a preface, I am undertaking a survey in my own congressional district, Mr. Ambassador, of the small businesses which deal in exports. I will be particularly interested in your comments regarding the benefits for small business and minority enterprises in the area of exports. I am quite distressed with the article that I found in the Washington Post on the 14th of March. According to your statement, which I have glanced at, that article is rather inaccurate. I hope you will address yourself to those inaccuracies. It gives concern to those of us who have small businesses, and particularly those who are involved in export businesses. |