Trade

Time to Reshuffle the Export Deck Chairs?


There's a plum job opening in President Barack Obama's Cabinet, with plenty of global travel and face time with corporate executives. Except there's a hitch: No one is quite sure what the shape of the agency will be or how long its leader will be addressed as "Mr. Secretary."

Obama has set an ambitious goal to double exports by 2015—and getting there may require taking a wrecking ball to the current unwieldy U.S. export bureaucracy. Gary Locke's departure as Obama's Commerce Secretary creates a vacancy in the department at the center of the export push. Whether Commerce emerges as the hub of the Administration's export promotion efforts—or becomes a casualty of the reorganization—hasn't been determined. This uncertainty complicates the Administration's challenge of finding a replacement for Locke, who will become U.S. Ambassador to China, pending Senate confirmation. Bloomberg News reported Mar. 9 that Google's outgoing chief executive officer, Eric Schmidt, and Pfizer's former CEO, Jeffrey Kindler, are being considered for Commerce Secretary.

The President has asked Jeffrey Zients, the deputy budget director and former chairman of the Corporate Executive Board, an information service for directors, to lead a review of how to streamline the government. "We can't win the future with a government of the past," Obama said in his Jan. 25 State of the Union address.

Zients has some powerful backers. Before joining the Administration, Bill Daley, Obama's new Chief of Staff, called for a shakeup of the 12 agencies, divisions, offices, and bureaus that deal with exports. "There has to be some reorganization around these issues because it is ridiculous," he said at a December conference at the Center for American Progress (CAP), which is leading the outside push for an overhaul.

If a company needs help finding foreign customers, for example, it would contact the Commerce Dept.'s Foreign Commercial Service. If it needs government financing to make that sale, it must file an application with the U.S. Export-Import Bank. And if it runs into an unfair trade barrier blocking a sale, then it needs the help of either Commerce's market access division or the Office of the U.S. Trade Representative (USTR). What if it faces unfair competition from low-cost imports? It must file a complaint at both Commerce and the U.S. International Trade Commission. Some exporters find that a frustrating morass. "For smaller businesses there's a lot of confusion about where to go for help," says Rey Ramsey, chief executive officer of TechNet, a trade group for technology companies.

Obama is already planning a merger of the two agencies that oversee export controls. He says he will combine a Commerce bureau handling civilian items and a State Dept. office managing military products. Jitinder Kohli, author of a CAP report on the reorganization, has a more ambitious idea: Create a one-stop export supermarket, a department that would both decide and implement export policy. Call it, Kohli suggests, the Business, Trade, and Technology Dept.

Under that scenario, the U.S. trade rep and the Small Business Administration (SBA) would lose power by no longer reporting to the President; USTR would also lose its Cabinet status. The creation of a supercharged export department "only works if you effectively replace the existing Commerce Dept., the existing USTR, SBA, and Export-Import Bank with a new agency that does all these things," Kohli says.

A reorganization of that scale would require approval from Congress, where turf-conscious committee chairmen would be reluctant to let the agencies they oversee forfeit any responsibility. Skeptics from past Administrations are also lining up. "You can argue either side of the case, but effectiveness in my view, if you had to choose, is more important than efficiency," says Mickey Kantor, the U.S. trade rep under President Bill Clinton. Keeping the USTR's negotiation and enforcement functions separate from export promotion has worked well under Republican and Democratic Administrations, says Kantor.

Obama seems determined and could start the process soon. Of course, trying to eliminate a Cabinet-level agency is nothing new. A Republican-controlled Congress tried to level the Commerce Dept. in 1995. Two years later, Daley was named Commerce Secretary. Now he'll help the President decide if his old job is worth keeping.

The bottom line: The creation of a trade super­agency may be Obama's goal, but Congress could resist if it means giving up committee turf.

Nichols is a reporter for Bloomberg News in Washington.
Andersen Brower is a reporter for Bloomberg News.
Drajem is a reporter for Bloomberg News in Washington.

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