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.

I thank you and I welcome you, Ambassador Strauss.

Mr. LAFALCE. Thank you, Mr. Skelton.

Ambassador Strauss, now that we have done our thing preliminarily, we would ask you to do your thing.

We welcome you today. You may proceed in any manner you see fit.

TESTIMONY OF ROBERT STRAUSS, SPECIAL REPRESENTATIVE FOR TRADE NEGOTIATIONS, ACCOMPANIED BY ROBERT T. GRIFFIN, SPECIAL ASSISTANT TO MR. STRAUSS; W. DOUGLAS NEWKIRK, DIRECTOR, TRADE NEGOTIATIONS AND AGREEMENTS DIVISION, DEPARTMENT OF COMMERCE; AND MORTON POMERANZ, SENIOR INDUSTRIAL ADVISER TO MR. STRAUSS

Ambassador STRAUSS. Thank you very much.

Before I read my prepared statement into the record, Mr. Chairman let me first thank you, Congressman Smith, for your remarks. I want, you to know I appreciate them very much.

Congressman Addabbo, I think that had I been furnished the information that you were furnished, and if I believed that it was reliable and acted upon it as reliable information, then I would have associated myself with your remarks. I certainly understand your position in view of the information you received.

Congressman Mitchell, of course I am distressed and disturbed that you feel as you do. I hope we will be able to dispel your concerns. I know that in the light of the actual facts these concerns are unwarranted.

While I may be guilty of many things, I assure you betrayal is not one of the things that I have been guilty of in my life of 60 years, particularly in the area of minorities.

Not only did the President reaffirm several weeks ago his commitment to small and minority business, but I am here today to again reaffirm for the President, this administration, and for myself, that the Carter administration is delivering that commitment with respect to the small and minority businesses.

Mr. MITCHELL. I will be out of order by saying that I do not think, preliminarily, the agreement can deliver if your program goes through, but I will wait for your testimony.

Ambassador STRAUSS. Thank you.

Let me proceed with my prepared remarks.

Thank you, Chairman LaFalce and members of the subcommittee. I am most appreciative, Mr. Chairman, to you and this subcommittee for affording me this opportunity to discuss with you the Tokyo round of the multilateral trade negotiations we are now completing in Geneva, particularly from the point of view of small business and minority enterprises.

As some of you may know, I have personally spent a good deal of my legal and business career counseling small and minority businesses, and participating in their success and failures. Since assuming my present position as Special Representative for Trade Negotiations, one of my negotiating objectives has been to secure greater access to foreign markets for small and medium, as well as larger, American

concerns.

The MTN package that we will submit to the Congress this spring will contain many positive benefits for small business and minority enterprise, but in no area are the benefits greater than in Government procurement.

Consequently, I was disappointed and distressed this past week when inaccurate information on the impact of this proposed code created false concerns. Each of you has every reason to be concerned with the inaccurate information that surfaced, as I assure you that I would be had I been furnished such information-regretfully, information that bears no relationship to the circumstances we are dealing with here.

It is for this reason that I am particularly grateful to you, Chairman LaFalce, and members of the subcommittee, for the invitation to appear here today and to put this matter in proper perspective. The actual effect of this code is small when compared to the large benefit to be gained.

Let me take just a minute to review with you first the background and purpose of this code. The American system of open and competitive bidding on procurement contracts simply does not exist overseas. Until now, American firms have been largely shut out of foreign government procurement.

For a decade, the United States has been trying to negotiate a code to require fairness and openness in foreign procurement; today we are on the verge of that vital first step. If we can successfully complete it, this code will be a key achievement in the overall agreement. It will provide us with significant new export opportunities which will benefit a wide range of industry including the high technology industries in which we excel. It will substantially contribute to export opportunities for U.S. producers of all types and sizes.

I am especially pleased because this code will be of particular benefit to American small businesses. While many U.S. Government procurement contracts tend to be for very large quantities, foreign procurement contracts are smaller and more manageable by small businesses. The Department of Commerce estimates that small business accounts for not more than 10 percent of U.S. annual export, other estimates put it as low as 3 or 4 percent. But, whatever the percentage, many more small firms have the capability and capacity to export than are now involved.

As part of the implementation of this trade agreement, we intend to work toward greatly expanding the export assistance programs for small and minority businesses to assist them in capitalizing on the foreign markets opened up by this code. This assistance can include direct contacts on pending tenders, translation activities, and direct assistance in dealing with foreign purchasing entities and other such assistance. This administration is working with small and minority business representatives in creating a useful program along these lines. A White House task force, under Assistant to the President Stuart Eizenstat, is presently monitoring progress in reaching the President's goal of a $1 billion minority set-aside under 8(a) during fiscal 1979.

I might also, to reassure this committee, point out that the task force will also evaluate with us the impact of the MTN procurement code and other codes on small and minority business to be certain it is