Marino, Bermuda, or Haiti, where I would not be concerned with OSHA, Is it not time we restore a little sanity to our network of laws, agreements, and programs? Mr. ADDABBO. All right. Our next witness will be Lola Dickerman, director of the Small Business Association of New England. Ms. Dickerman? TESTIMONY OF LOLA DICKERMAN, DIRECTOR, SMALL BUSINESS ASSOCIATION OF NEW ENGLAND; ACCOMPANIED BY AL DANIELS, COCHAIRMAN, PROCUREMENT COMMITTEE Ms. DICKERMAN. Thank you, Mr. Chairman. My name is Lola Dickerman. I am the director of the Small Business Association of New England, which is the country's oldest and largest regional association. The association has been in existence for 41 years. I am the director of the association, and co-chairman of its Procurement Committee. Co-chairman of procurement is Mr. Al Daniels, who happens also to hold the title of president of the Black Corporate Presidents of New England. Through our co-chair, we work together in the interest of both small and minority businesses in New England. I would like, first of all, to say this. I do not have a prepared text. My invitation came on Thursday last, but I am delighted to be here without a prepared text. I would like to endorse what Mr. Lewis has said. His statement is very good. I do not disagree with anything that he said. Let me talk about New England. We have run perhaps the only privately sponsored small business export program in the country. We are very proud of it. It is only 2 years old. We have taken our small businessmen on trips abroad. We have had four such trips. We have had 25 companies involved, having from 10 to 400 employees. All of these trips were to Europe. They resulted in better than $2 million in sales in our first three trips. That is a tiny number, but we are awfully pleased about it. It gives you some idea about what can be done on a self-help basis. Mr. ADDABBO. That is what President Kennedy said. "Do not ask what your country can do for you. Ask what you can do for your country." MS. DICKERMAN. We are acutely aware of what our country is trying to do for us. We had Mr. Daniels come down last week to talk at the Sunset hearings over at the OFPP. When we spoke at those hearings we addressed ourselves to the new amendments to the Small Business Act and to the new regulations being written by OFPP. This is the first time that we have seen in many years at looking at regulations and a statute with new regulations that would put, for the first time, some real teeth into the procedure of getting subcontracting goals in our prime contracts for small and minority businesses. Although the phrase is no longer "minority business," either in the statute or the regulations, I will say it that way for shorthand. So, we are delighted in seeing that something was finally happening in that area. I can present to you, if I may, our comments about the new proposed Government Procurement Act, which is being proposed on the MTN. It will devastate that subcontracting program as well as all of the other business opportunities, nowwithstanding the exceptions that are available to small business and to minority business. This is our opinion. We do not even have those subcontracting regulations beyond the point of comment. They will be gone. We are shocked beyond telling that such a thing should be proposed now. On behalf of the association I would like to tell you that I perceive it in this way. We have the biggest buyer in the world, the U.S. Government, which has seen slowly and painfully the need to undertake to do supportive things for the parts of our economy which are important to our system and to the growth of our system, namely, the small businesses. This operates 180 degrees out of phase with that whole thrust. We are appalled by it. We are surprised by it. We were not consulted. We did not know of it until Thursday late. I have found out now the reason we are so late in learning is probably because we do not read the Washington Post up in Boston. [Laughter.] But in any event we thank you for inviting us. We are glad for the opportunity to speak to this question. We have to tell you this. Let me present a small analog. I am not suggesting that it is the Governor of our State, because we never speak ill of anyone, but in a mythical world, there was once a Governor of a State who promised the people, as he was getting elected, that he would roll back taxes. Everybody burdened with taxes was thrilled to hear of it. So, to achieve this great goal he then announced that if he were elected he was going to cut back on the money that was given to the families with dependent children. That struck some of us in this mythical state as being a terrible way to achieve a great national goal. So, I would like to endorse the great national purpose of free trade and opening up and dealing with our trade problems in this country, but, please, gentlemen, not on our backs. Thank you. Mr. ADDABBO. That is the best description I have heard of the program yet. [Laughter.] Mr. Dennis, Director of Research of the National Federation of Independent Business is our next witness. Mr. Dennis? TESTIMONY OF WILLIAM R. DENNIS, DIRECTOR OF RESEARCH, NATIONAL FEDERATION OF INDEPENDENT BUSINESS Mr. DENNIS. Thank you, Mr. Chairman. I am director of research for the National Federation of Independent Business. [NFIB prepared statement follows:] PREPARED STATEMENT BY JAMES D. "MIKE" McKEVITT, WASHINGTON COur NATIONAL FEDERATION OF INDEPENDENT BUSINESS NFIB, on behalf of its 565,000 small and independent member firms apprec the opportunity to present our views on the Multi-Lateral Trade Negotiations possible contents of its implementing legislation. We applaud the Chair interested Members of the Committee and Subcommittee, and the staff for prompt response to published reports regarding the content of this Agreer Since we are essentially discussing a secret document, NFIB wants to b cumspect. We do not wish to go off "half-cocked" without any more inform than that found on page 1 of a recent Post article. But, we are interested--i ested from the twin perspectives of a trade agreement that benefits the Ame economy, of which small business is an integral part, and interested from the spective of a critical segment of the economy which directly stands to los important part of a market upon which its vitality is tied. It appears to NFIB that the critical steps at this juncture are to gather info tion, sift fact from fantasy, evaluate the relative advantages and disadvant and subsequently rationally determine our course of action. As a result, our mony raises questions; it does not present a view. However, we must admit the tenor of events and the information available to date do not leave us wi positive disposition toward the Agreement. NFIB's basic questions are as follows: I. CONTENT AND IMPACT A. Specifically, what small business "set-aside" programs would be aff by the Agreement? 1. Approximately how many small businesses would be affected? (a) How were those figures derived? (b) What types of businesses and products will be affected, e.g. high tech and products, new enterprises, etc. (c) Do these affected firms have potential for export, bearing in min direct relationship between firm size and export capacity? 2. What is the dollar value of procurement affected? (a) How were those figures derived? (b) Are any changes in "breakout" contracts included in the calculation (c) Are renewable contracts covered by the Agreement? B. Approximately how much American procurement is covered by the 150,000 exclusion? 1. How does that compare with other nations, particularly industrial nat 2. How would this be affected if the exemption were changed to SDR 1,000 or SDR 5,000,000? 3. What was the United States' position on this issue and why? C. What other exemptions or exceptions are provided by the Agreement security? 1. Can any nation unilaterally declare one or more? What if one does? 2. Are "developing industries" excluded? (a) Does the United States have any "developing industries"? What are 3. Do Lesser Developed Countries (LDC's) have any particular privileg (a) What about a multi-national operating in an LDC? Is it considered tional of the LDC or its corporate headquarters? D. Does the Agreement apply only to the Federal Government or State local governments as well? 1. Will the Administration propose tying Federal assistance or grant-i programs of any type to State and local adherence to the Agreement? 2. Will the Administration encourage or in any way use its persuasive p to reach the same end? E. Who would be eligible to bid on these former set-asides? Foreign business? Foreign multi-nationals? American multi-nationals? 1. Would Robinson-Patman apply to foreign multi-nationals? 2. Would small business be forced to compete with foreign firms receivin port subsidies, tax advantages, and other types of preferential treatment? (a) If "Yes" 1. Doesn't that place American small business at a disadvantage? 2. What similar compensating advantages do American small businesses have? (b) If "No" 1. How is it to be enforced? 2. How is a small business going to be able to prove unfair competition? 3. As a practical matter, what type of assistance can be expected from any government agency in pressing a small business claim? 3. How are taxes paid by American firms to be calculated in bidding here and abroad? II. SMALL BUSINESS EXPORT A. Approximately how many small businesses export and what percent of American exports do their products constitute? 1. How are those figures derived? 2. For purposes of these figures, how is a small business defined? 3. Of all small business exports, how much is trade with Canada or Mexico? B. What is the U.S. Government prepared to do to assist small American firms to export? 1. What are the possibilities of small business increasing their exports? in terms of numbers of businesses and dollar volume? 2. What is to prevent a foreign government from imposing all types of administrative barriers? (a) How is the small firm able to redress a grievance? (b) How is a small firm able to locate opportunities in a series of relatively small markets? III. BENEFITS A. What are the direct benefits that will accrue to small business under the Agreement? B. What are the indirect benefits including impact on inflation, savings to the taxpayer, etc.? IV. PROCEDURE A. Were representatives of small business, formal or informal, in the private sector or the public sector, consulted before or during the negotiations? 1. If "Yes" (a) Who were these representatives? (b) What are (were) their positions? (c) What is their background? (d) To what extent did they attempt to elicit the views of others in small businesses? (e) How often were they consulted? (f) What were their views? (g) When were they brought into the process? (h) Did they actively participate in any decision affecting small businesses? 2. If "No" (a) Why were there none? (b) Why wasn't the Small Business Administration (SBA) at least consulted? (c) Were representatives from the Departments of Commerce and Labor ever involved? Mr. Chairman, with the limited time for preparation and the lack of solid information, we have not been able to supply a more comprehensive list of the points in which we have an interest. Nevertheless, we hope these questions will help you understand our concerns. From the answers received will NFIB's direction be determined. Mr. DENNIS. On behalf of 565,000 small and independent member firms, we appreciate the opportunity to be here. We particularly express our appreciation to this committee, to the committee members, and to the staff, for bringing this matter to light. We have hoped for a long time that the Small Business Committee, of both the House and the Senate, would engage in such activities as this. It is the type of activity we have envisioned. You have done it well. We thank you very much. At this particular juncture we are attempting to gather information and ask questions. We are attempting to be as judicious, if I may say so, as possible, despite everything we read. We are waiting for the administration to try to make the case. So far we have not seen that they have. Unfortunately, the act and the procedures under which this entire matter will be considered is going to make it very difficult for us to get the type of information that we would like. Nevertheless, we look at this with jaundiced eye, particularly from the tenor of events today. Many of the questions that we posed are questions that you have posed, particularly questions on figures and how figures are derived. This is something that the chairman brought up and the point is well taken in that regard. It seems that the administration is operating under the assumption that what small firms will lose, they will gain through exports. We are being asked to take this on faith. We are being asked to take a number of things on faith. First of all, there is a claim that there are going to be more firms exporting and that there will be all types of help forthcoming. We have not seen it. It is a promise. It is faith again. Secondly, these types of contracts that supposedly will be eligible to small businesses abroad, as well as many others, are with governments. Governments are not profitmaking organizations. That is not their purpose. While their purpose is to extend economic benefits, it also has social and security functions. Therefore, depsite any best attempts, or any best offer that small business may give a foreign government, in the back of their minds there must always be that consideration for the local enterprise, which is also bidding on that contract. As a practical matter, can you see a representative from the State Department coming down hard on a foreign government for a failure to give a legitimately won contract of, let us say, $1 million, to a small American firm? We cannot. There is one problem or one other point that I would like to make. It is clear that no small business association, and no small business group, has ever been consulted during the process of these negotiations. We are also very doubtful that at any time the Small Business Administration was consulted. As you may have recognized, NFIB has emphasized to this committee many times our desire that advocacy at SBA be beefed up and strengthened to become a viable and recognizable part of the Federal Government and the Federal Establishment. This is a perfect example of why that is needed. Thank you. Mr. Mitchell? Mr. MITCHELL. I want to thank all of the witnesses. Let me make one comment to you. That was excellent testimony, Mr. Dennis. The fact that you did not know about the negotiations that were going on does not surprise me. Neither did we, as Members of Congress. It was apparent that there was a veil of secrecy cloaked over this until the dastardly deed was accomplished. So, I am not surprised you did not know. that |