REORGANIZING
U.S. TRADE AGENCIES
GOVERNMENT EFFICIENCY OR SOMETHING MORE?
Robert Rosado
George Mason University School of Public Policy
U.S. Trade & Politics
April 2012
rrosado2@gmu.edu
Trade Agency Reorganization
Background
 Events Leading Up to Proposal
 2008 Presidential Campaign
 National Export Initiative – March 2010
 2011 State of the Union Speech
 Why?
 Budget/Government Reform
 Trade Policy Emphasis (or Shift?)
 Other Components
 Need for “fast-track” authority from Congress
 Other Government Reorganization (non-trade)
 Other Obama Trade/Export Task Forces
White House Proposal
Who’s In?
 Department of Commerce*
 International Trade Administration
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U.S. and Foreign Commercial Service
Manufacturing and Services
Market Access and Compliance
Import Administration
Office of the U.S. Trade Representative (USTR)*
U.S. Trade & Development Agency (TDA) State Dept
Export-Import Bank (Ex-Im)
Overseas Private Investment Corporation (OPIC)
Small Business Administration (SBA)*
Who’s Out?
Other Trade-Related Agencies
 USDA/Foreign Agricultural Service
 Office of Foreign Assets Control
 Treasury: International Affairs & Economic Policy
 U.S. International Trade Commission (USITC)
 U.S. Customs and Enforcement (DHS)
 Department of Labor: Trade Adjustment
Assistance
 U.S. Agency for International Development
 Other State Department Agencies???
Background – Commerce Dept.
"core business and trade functions"
 International Trade Administration – lead agency
for President’s National Export Initiative
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U.S. and Foreign Commercial Service
Manufacturing and Services
Market Access and Compliance
Import Administration
 Bureau of Industry and Security
 Export Administration
 Export Enforcement
Background – USTR
Lead on U.S. Trade Policy
 Established by Trade Expansion Act of 1962
 Expanded Under Trade Act of 1974
 Executive Order 12188 in 1979
 Omnibus Trade & Competitiveness Act of 1988
 Trade and Development Act of 2000
 USTR Chief Agricultural Negotiator
 Assistant USTR for African Affairs
Background - TDA, ExIm, OPIC, SBA
Supporting Trade Promotion, Financing
 Trade and Development Administration (USTDA)
 Trade Capacity Building and Export Promotion
Activities within State Dept
 Export-Import Bank of the United States
 ”Pre-export financing”
 “Buyer financing”
 Overseas Private Investment Corporation (OPIC)
 Financing of U.S. Private Foreign Economic
Development
 Small Business Administration (SBA)
 "aid, counsel, assist and protect, insofar as is possible,
the interests of small business concerns."
Brief History of Shift in
U.S. Trade Policy Functions
 Fiscal Function – led by Treasury Department
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Trade (Tariffs) Seen as Revenue
Declined as Income Tax Became Primary Source of Govt Revenue
Emergence of GATT; Declining Use of Tariffs
 Foreign Policy Function – led by State Dept
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World War II; Cold War (approx 1934-1962)
Trade Used to Reward Allies; Punish Foes Commercial Interests Secondary
 Commercial Function- led by USTR (established in 1962)
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Trade Expansion Act of 1962 – Congress Transfers Trade Policy to USTR
Emphasis on Economic Impact
 Trade Liberalization (1962-2010)
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Multilateral (GATT; WTO) and Free Trade Agreement Negotiations
 2010-2012 – Shifting to….
…..Export Promotion and Trade Enforcement
Reaction to Obama Proposal
 Congress – Openness, Followed By Objection
 Press/Public – Favorable to Reform
 Industry – Concerns About USTR
 Trading Partners; Organizations
 U.S. Agencies (Personnel and Programs)
Strengths of Obama Proposal
 Publicly Integrates (Elevates?)“Trade” into
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U.S. Economic Objectives
Eliminates Redundancies
Establishes One Agency Focused on U.S.
Business/Competitiveness Interests
Singular Objectives for Underlying Agencies
Increases Resources for U.S. Trade/Exports
Weaknesses of Obama Proposal
 Devalues Trade Negotiations
 Confuses Trading Partners/Negotiators
 Who has the President’s ear?
 Where are the Savings?
 Potential for USTR to be “lost” in Bureaucracy
 No mention of trade agenda (or liberalization)
 The wrong fast-track authority
 Other non-trade agency reorganizations
Likelihood of Action
 Now (2012) – ZERO
 Potential Hearings; Committee Action
 Placeholder for 2013
 Next Congress??? (Next President?)
 Budget/Deficit Control
 Need for Reduced Government Spending
 Need to Address Globalization; Competitiveness
 Changes to Proposal Are Likely
Broader Impact
 Who is leading now???
 U.S. Competitiveness
 Formally moves agency functions into Obama
trade objectives
 Away from liberalization and negotiation
 Towards promotion and enforcement
 Highlights Business Distrust of Obama
Objectives
My Proposal
 USTR Leads (brains)
 Commerce Supports (the body)
 Include “fast-track” negotiating authority
 Build Specific Trade Objectives/Agenda
 Process/Reg Reform – Trade Impact Assessments
 Ensure trade rep at every U.S. Embassy
 Narrow Proposal to Specified Agencies
 Protect from additional agency reorganization
Does Any of This Matter?
 Impact on U.S. Trade, Economic Policy
 Perceptions by Public; Trading Partners
 Lack of Action = Lack of Authority?
 Success (or Failure?) of the Status-Quo
 USTR vs. Commerce (ITA) vs. State
 Liberalization vs. Fairness vs. Foreign Policy
Bibliography
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USTR Website, “History of the United States Trade Representative”, n.d., http://www.ustr.gov/aboutus/history.
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U.S. Department of Commerce, “About the Department of Commerce”, n.d.,
http://www.commerce.gov/print/about-department-commerce.
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Len Bracken, “Lawmakers Express Bipartisan Concern For USTR Under Proposed Reorganization,” Bureau
of National Affairs Daily Report for Executives, January 17, 2012.
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et al US Chamber of Commerce, “Letter to President Obama from US Chamber of Commerce and Several
Industry Groups”, January 24, 2012, http://www.federalnewsradio.com/pdfs/obama_tradereorg.pdf.
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Emily Kopp, “Outside experts see White House merger plan hitting choppy waters,”
FederalNewsRadio.com, February 23, 2012, http://www.federalnewsradio.com/145/2759206/Expertspredict-choppy-waters-for-agency-merger.
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Jonathan Sallet and Sean Pool, Rewiring the Federal Governmentfor Competitiveness (Center for American
Progress, January 2012),
http://www.americanprogress.org/issues/2012/01/pdf/dwwsp_competitiveness.pdf.
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Barack Obama, “Presidential Memorandum -- Maximizing the Effectiveness of Federal Programs and
Functions Supporting Trade and Investment” (White House, February 17, 2012),
http://www.whitehouse.gov/the-press-office/2012/02/17/presidential-memorandum-maximizingeffectiveness-federal-programs-and-fu.
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Small Business Administration, “Small Business Administration History,” US Government, n.d.,
http://www.sba.gov/about-sba-services/our-history.
Bibliography - continued
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Craig VanGrasstek, “The Reorganization of U.S. Trade Agencies: A Review of the Proposal
and its Prospects” (Washington Trade Report, February 16, 2012),
http://www.aei.org/files/2012/02/21/-the-reorganization-of-us-trade-agencies-areview-of-the-proposal-and-its-prospects_105348989683.pdf.
Stuart S. Malawar, “Trade Reorganization — USTR & Commerce Dept. — A Good Fit? …
Yes, But More is Needed.,” GLOBAL TRADE RELATIONS …. Law & Policy., January 14,
2012, http://globaltraderelations.com/2012/01/14/trade-reorganization-ustrcommerce-dept-a-good-fit-yes/.
American Enterprise Institute, Urge to Merge: Is Obama’s Idea to Reorganize Trade and
Commerce Good, Bad or Irrelevant?, n.d., http://www.aei.org/events/2012/02/22/urgeto-merge-is-obamas-idea-to-reorganize-trade-and-commerce-good-bad-or-irrelevant/.
Barack Obama, “White House Executive Order - Establishment of the Interagency Trade
Enforcement Center” (The White House - Office of the Press Secretary, February 28,
2012), http://www.whitehouse.gov/the-press-office/2012/02/28/executive-orderestablishment-interagency-trade-enforcement-center.
White House Office of the Press Secretary, “White House Government Reorganization
Fact Sheet” (White House, January 13, 2012), http://www.whitehouse.gov/the-pressoffice/2012/01/13/government-reorganization-fact-sheet.
Laura Meckler, “White House Seeks to Merge Agencies,” Wall Street Journal, January 13,
2012.
Preview Links
 Urge To Merge - Is Obama's Idea to
Reorganize Trade and Commerce Good-Bador-Irrelevant/
 Government Reorganization Tough Terrain for
Obama
 Presidential Memorandum -- Maximizing the
Effectiveness of Federal Programs and
Functions Supporting Trade and Investment