Which is the correct preposition?

Both could be right. To agree with a proposal that you hear about means you think it is a good idea, whereas to agree to a proposal which is made to you means you assent to it and wish to proceed.

Scenario 1:
A: I am going to propose to C that I give him a job. What do you think, B?

B: I agree with that. (I think it is a good idea).

Scenario 2:
A: I propose to you, C, that I employ you at my company. What do you say?

C: I agree to that. (I will take the job).

Thanks, contrex.