Trade Reorganization — USTR & Commerce Dept. — A Good Fit? … Yes, But More is Needed.


     President Obama has finally outlined his proposals for the reorganization of U.S. trade agencies and is now asking Congress for necessary authority. There are various interconnected reasons why these proposals should be authorized by Congress now and implemented quickly. This reorganization is long overdue.
     President Obama’s proposals would restructure a bifurcated and diffused trade organization into a more focused and streamlined one. This is a model followed by most of our global competitors, for example, China and Brazil, who have organized and energized to compete aggressively in global commerce over the last few decades.
President Obama proposed consolidating six trade and commerce agencies. This would merge the USTR, OPIC, ExIm Bank, TDA and the SBA within the U.S. Department of Commerce, to be renamed.
The major argument against this reorganization is that it puts the USTR in with Commerce, as just one unit. Thus, reversing the independence USTR has enjoyed since the 1960’s. But the history of the 1960’s is vastly different from the 21st Century. It makes no sense to have trade negotiations conducted by one agency and trade promotion and job creation by another. This reorganization would merge policy and operations.  It’s about time.
In the 1960’s during the Kennedy era Congress wanted to make sure that trade negotiations were given a high-profile, somewhat removed from the State Department and the Department of Commerce. At that time trade was viewed by many as being almost independent from both global politics and domestic commerce. But that is not the case today.
Global trade is central to U.S. commerce and international politics. Most of our trading partners have hyper-focused executive agencies dealing with trade, recognizing it as a meld between global commerce and international affairs. We should not be the outlier in this arrangement.
Giving cabinet level access to the USTR can override concerns that trade would be lost in the domestic political decision-making process within the United States.
It is in our national interest to foster greater international transactions and global competitiveness of U.S. firms.  This can be done only by creating a strong and more unified government support system.
Bringing together disparate agencies dealing with various aspects of global trade — from trade negotiations, trade enforcement, trade promotion, trade financing, import remedies and small business support — into one agency is essential. An agency that is focused as a laser beam to help crack international markets and promote global commerce for U.S. business is critical today.
Some thought should also be given to including other agencies such as those in the Dept. of Agriculture dealing with agricultural exports, from the Dept. of State concerning arms exports, and from the Treasury Department concerning foreign direct investment. The problem is we don’t want to windup with an unruly conglomeration as in Homeland Security.
Congressional committee jurisdiction would be impacted by President Obama’s proposals. Some committees would gain oversight and others would lose some. It is mutually reinforcing if Congress would streamline its oversight functions to parallel the streamlining of the executive agencies and departments.
There is one additional point that needs to be made. Trade relations are central to national security. National strength is dependent on vibrant economic underpinnings. This is more true today than ever before. Care must also be taken to streamline the inter-agency process that coordinates trade issues with national security concerns.
Just look at the imposition of aggressive trade and financial sanctions on Iran.  Coordinating the efforts of the State, Defense and Treasury departments is essential. This coordination must also provide for enhanced congressional oversight and dialogue.
President Obama’s proposals for revamping U.S. government trade organization are good for both policymaking and business creation. They should not be viewed as a partisan battleground. They are a good beginning. But promoting exports and manufacturing is a complex, multi-year undertaking.

About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (Schar School of Public Policy).
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