Bloomberg News

Obama’s Agency Revamp May Diminish U.S. Trade Representative

January 23, 2012

(Updates with reaction from export trade analysts and economists starting in fifth paragraph.)

Jan. 13 (Bloomberg) -- A proposal by President Barack Obama to reorganize U.S. trade agencies would force together departments that have different missions, something industry groups say may diminish effectiveness.

Obama announced today the first step in a plan to revamp the federal government, which includes combining the U.S. Trade Representative’s office and Commerce Department, among others, and reducing the workforce.

“The point is that USTR works,” said Susan Schwab, a trade representative during George W. Bush’s administration and now a professor at the University of Maryland at College Park. “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.”

She said it would be “crazy to fold” the trade representative’s office into the Department of Commerce or some bigger entity because it’s small size is what has made it effective.

Gary Hufbauer, a senior fellow with the Peterson Institute for International Economics in Washington, said the current structure of multiple agencies creates confusion, especially for small businesses.

‘One-Stop Shopping’

“For most companies that have an issue with the government, it’s one-stop shopping,” Hufbauer said.

The president said his plan is aimed at making the U.S. government leaner and more consumer-friendly. The first step would be to merge six trade-related agencies, now spread out among different departments, into a single unit.

“It’s redundant and inefficient,” Obama said today in Washington. “With the authority I am requesting today, we could consolidate them all into one department with one website, one phone number and one mission -- helping American businesses succeed.”

Obama is seeking the authority to combine federal agencies and then have Congress hold an up-or-down vote. This would restore power to reorganize agencies that had been granted to presidents.

The business and trade functions of the Commerce Department along with the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corp., the Trade and Development Agency and the Small Business Administration would be consolidated into one department. The National Oceanic and Atmospheric Administration would move from Commerce to the Interior Department.

Negotiator as Arbiter

Currently, the trade representative negotiates free-trade and multilateral agreements while Commerce enforces them, filing complaints over violations and promotes exports.

Lumping those functions together could hurt both. Negotiators may be more likely to add exceptions to accords, hampering enforcement, said William Reinsch, the president of the National Foreign Trade Council.

“You don’t want your trade negotiator to be the arbiter of trade law and enforcement,” Reinsch said. “The concessions to trade laws would be overwhelming.”

The reorganization may lead to confusion at a time when the administration is trying to boost trade and reduce unemployment, said Scott Lincicome, a trade attorney with White & Case LLP in Washington.

“It raises concerns -- which agency will become the more dominant?” Lincicome said.

Doubling Exports

Obama has set a goal of doubling U.S. exports to $3.14 trillion by 2015, from $1.57 trillion in 2009. The U.S. exported $177.8 billion in goods and services in November, with exports for the past year totaling $2.089 trillion, according to data released today from the U.S. Commerce Department. The 12-month total is more than 32 percent higher than 2009.

“The administration has to carefully consider the importance of collapsing nimble and adept agencies such a USTR into a broader organization when you’re dealing with markets that are as complicated as Russia is,” said Randi Levinas, executive vice president of the U.S.-Russia Business Council, with members such as Boeing Co., General Motors Co. and Exxon Mobil Corp.

--With assistance from Kate Andersen Brower and Hans Nichols in Washington. Editors: Jon Morgan, Steve Geimann

To contact the reporter on this story: William McQuillen in Washington at

To contact the editor responsible for this story: Jon Morgan at

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