Reorganizing U.S. Trade Agencies - US-Global

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 [email protected]

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    

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   

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  

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)  

Trade Expansion Act of 1962 – Congress Transfers Trade Policy to USTR Emphasis on Economic Impact

 Trade Liberalization (1962-2010) 

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    

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 

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