Reorganizing U.S. Trade Agencies Government Efficiency or something more?

1. Robert Rosado George Mason University School of Public Policy U.S. Trade & Politics April 2012 rrosado2@gmu.edu ReorganizingU.S. Trade AgenciesGovernment Efficiency or something more?

2. Trade Agency ReorganizationBackground • 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

3. White House ProposalWho’s In? • Department of Commerce* • International Trade Administration • 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)*

4. 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???

5. 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

6. Background – USTRLead 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

7. Background - TDA, ExIm, OPIC, SBASupporting 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."

8. Brief History of Shift inU.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

9. 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)

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. Bibliography • USTR Website, “History of the United States Trade Representative”, n.d., http://www.ustr.gov/about-us/history. • U.S. Department of Commerce, “About the Department of Commerce”, n.d., http://www.commerce.gov/print/about-department-commerce. • Len Bracken, “Lawmakers Express Bipartisan Concern For USTR Under Proposed Reorganization,” Bureau of National Affairs Daily Report for Executives, January 17, 2012. • 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. • Emily Kopp, “Outside experts see White House merger plan hitting choppy waters,” FederalNewsRadio.com, February 23, 2012, http://www.federalnewsradio.com/145/2759206/Experts-predict-choppy-waters-for-agency-merger. • 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. • 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-maximizing-effectiveness-federal-programs-and-fu. • Small Business Administration, “Small Business Administration History,” US Government, n.d., http://www.sba.gov/about-sba-services/our-history.

17. Bibliography - continued • 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-a-review-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-ustr-commerce-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/urge-to-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-order-establishment-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-press-office/2012/01/13/government-reorganization-fact-sheet. • Laura Meckler, “White House Seeks to Merge Agencies,” Wall Street Journal, January 13, 2012.

18. Preview Links • Urge To Merge - Is Obama's Idea to Reorganize Trade and Commerce Good-Bad-or-Irrelevant/ • Government Reorganization Tough Terrain for Obama • Presidential Memorandum -- Maximizing the Effectiveness of Federal Programs and Functions Supporting Trade and Investment