The President’s first focus under the Consolidation Authority Act would be to make it easier for America's small businesses – which are America’s job creators – to compete, export and grow.Unfortunately, other than this basic information and mention of a snazzy new "BusinessUSA" website, the White House "fact sheet" is pretty devoid of, you know, actual facts. Nevertheless, the President's big announcement elicited an avalanche of commentary from trade experts across the political and ideological spectrum. I won't get into all of that analysis tonight, but I think the most valid substantive concern relates to the differing mandates and focuses of the agencies at issue, particularly the Commerce Department and USTR. As former USTR Susan Schwab simply put it, "The point is that USTR works... You want from the Commerce Department a full-throated unapologetic advocate for the U.S. industry. You don’t want an agency that has to pull its punches."
Currently, there are six major departments and agencies that focus primarily on business and trade in the federal government. The six are: U.S. Department of Commerce’s core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.
Phil Levy and Bruce Bartlett - both of whom worked in the White House - provide, in my humble opinion, the best expansions of Schwab's pithy comments. First Levy:
In describing its latest proposal, the White House states: "[T]here are six major departments and agencies that focus primarily on business and trade in the federal government." The key word in that claim is primarily. The modern trade agenda involves a significantly larger number of government agencies. When financial services are on the table, Treasury is concerned. When intellectual property questions arise, there's the Patent and Trademark Office. When the discussion turns to beef market access, it's Agriculture. On export control questions, Defense speaks up. Almost every trade agreement raises diplomatic (State) and economic (CEA) questions and could well have an impact on workers (Labor) and business (Commerce). The list goes on.Then Bartlett:
For this reason, trade issues are commonly hashed out through an interagency process. With the benefit of its position in the White House, USTR serves as an impartial chair of this policy process. If USTR and the trade-related components of Commerce were to merge, how would an administration handle interagency disputes? Of course, a White House body like the National Security Council or the National Economic Council could play the impartial chairing role, but that would require a vastly expanded support staff to cover the broad range of intricate issues. That could effectively mean a re-creation of the current USTR, resulting in minimal savings.
Or the administration may just be arguing that it cares only about export promotion, the traditional domain of the Commerce Department. That would be consistent with the President's mercantilist view of trade, in which exports are good and imports are better left unmentioned. But it would be bad policy.
I know from personal experience at the Treasury Department that in internal administration discussions of trade policy the various agencies are expected to play certain roles. Commerce always defends whatever business wants because that’s its job. The Council of Economic Advisers always takes the principled free trade position, and so on.Having worked extensively with both USTR and Commerce, I had the same substantive concerns when I first heard about the White House's plan.
At the end, the Office of the Trade Representative is the “honest broker,” a role that would be impossible for it to play as part of the parochial Commerce Department. The Office of the Trade Representative’s ability to fulfill this function is now assured by its position as part of the executive office of the president. This allows it to take the broad view of what is in the best interest of the country as a whole and bargain with our trading partners in good faith.
To effectively abolish the Office of the Trade Representative is a dreadful idea. It is a small agency; there are no efficiency gains to be realized by making it another bureau within Commerce. And no matter what promises are made to guarantee its independence, placing the Office of the Trade Representative within Commerce will inevitably politicize the office....
The Obama proposal may just be an election year ploy so that he can continue to say that he will create two million jobs through exports.... But [it] may also indicate a commitment to discredited industrial policies and a subordination of trade policy to political interests.
But substance certainly wasn't my primary, or even secondary, reaction. Instead, I'm left wondering why pretty much every trade policy wonk in the country has decided to immediately write a few hundred words on a "plan" that quite literally doesn't - and might never - exist. Bartlett and Levy both mention this little concern in passing, as have a few other folks, but that didn't stop them all from then opining at length on the economic, legal and procedural aspects of the plan (and by "plan," I again mean the aforementioned bullet points).
This is no small matter, and it deserves more than passing mention. What the President has proposed is a major endeavor involving thousands of government employees, competing (if not outright conflicting) agency mandates, and, of course, congressional approval during what promises to be a very contentious election season. His idea isn't new - it's been proposed by previous administrations and was first raised by Obama about a year ago in his 2011 State of the Union Address. It comes on the heels of other trade-related White House announcements - such as the new US Trade "Panel" to watch China trade and the revival of the beloved "outsourcing tax" - that have more than a little "election year scent" attached to them. And it was proposed by a White House team that, as Levy notes, has a long history of using trade issues as political tools.
So here we have a trade policy concept that - whatever its actual merits - would require a very detailed and serious plan and very prolonged and serious political effort from a White House that, when it comes to trade, has repeatedly shown distaste for such things. And despite the fact that the President announced his concept a year ago, we've seen absolutely nothing from the White House beyond a very simplistic "fact sheet" that basically echoes what Obama said last year. Heck, even his fellow Democrats are pretty clearly ambivalent about the whole thing, yet I'm supposed to get excited about it?
Umm, no thanks.
But, hey, maybe the White House will surprise me and issue its reorganization blueprint tomorrow and its congressional lobbying strategy the day after that. I guess anything's possible. But until I see a concrete plan and concrete action, I remain more than a little skeptical that Friday's "big announcement" was anything more than Step 23(b) on the White House's re-election playbook.
And as for my friends and colleagues in the trade community, either they admirably possess far less cynicism than I, or, with the Doha Round on ice and pending US FTAs finally through Congress, they're really this bored and desperate for something to talk about.
I guess it could be both.