The Washington Post

Commerce revamp raises trade policy questions

President Obama delivers remarks on government reform in the East Room of the White House in Washington on Jan. 13. (JIM WATSON/AFP/GETTY IMAGES)

President Obama’s plan to streamline the government’s trade and commerce agencies could raise major issues involving trade-policy negotiations, and while lawmakers expressed enthusiasm for making the government more efficient, some wanted more details before pledging support.

Agencies such as the Office of the U.S. Trade Representative were established with a fairly distinct role, and former government officials and others said that agency, in particular, needs to maintain its stature.

At a late-morning news conference Friday, the president asked for congressional authority to begin reorganizing and possibly merge several commerce and trade-related agencies.

The move comes amid both intense debate over how to curb government spending and efforts to boost U.S. exports to create jobs. The USTR was the lead agency last year in striking free trade deals with South Korea, Colombia and Panama — the president’s most aggressive trade initiative to date.

The USTR was set up under the Kennedy administration as the focal point for trade negotiations with other countries. The current head of the office, former Dallas mayor Ron Kirk, is a Cabinet-level appointee with ambassadorial rank — important status that former trade officials say should be maintained.

An Obama administration official said that under the president’s plan, the USTR would not lose its Cabinet-level rank, even as it shifted to the Commerce Department.

Still, lawmakers and others were concerned about the impact on an agency that congressional leaders praised as “nimble, lean and effective.”

“Taking USTR, one of the most efficient agencies that is a model of how government can and should work, and making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation,” Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich) said in a joint statement.

Others noted that the country’s lead trade negotiator needs White House authority.

“When you have international talks, rank matters,” said Philip Levy, a Columbia University professor who was a senior trade economist in the George w. Bush administration.

“Any changes must protect the nimbleness of our trade negotiators to press forward with a strong pro-trade agenda,” said Daniel A. Varroney, acting president and chief executive of TechAmerica, a trade group. “Any changes that are made to the USTR must not dilute its mission or hamper our ability to respond in real time.”

He said trade is particularly important to the technology industry, which produces $228 billion in exports from U.S. tech companies.

The trade representative’s office also helps coordinate trade policy among agencies, said Susan Schwab, who held the top USTR job from 2006 to 2009. Trade policy, she said, often ignites disputes among agencies, putting foreign policy or strategic goals in potential conflict with commercial interests.

Resolving such disputes, she said, needs a White House-level arbiter.

“I don’t think it makes sense to put USTR in Commerce because you’d have to reinvent USTR,” she said. “You want the honest broker and negotiator associated with the White House.”

The Export-Import Bank would also fold into Commerce under the president’s proposal. Fred P. Hochberg, the Ex-Im Bank’s chairman, said the consolidation would provide “better strategic coordination” among agencies that are, in effect, competing with well-organized efforts by governments in China and elsewhere to support their businesses.

“I see what the foreign competition is and what American companies face and making our agencies more streamlined, leaner, better connected is going to be good for American business,” he said.

Business leaders were supportive of Obama’s request that the president be empowered to reorganize some of the bureaucracy.

“Until the 1980s, all presidents had the authority to reorganize the government, eliminate waste and achieve efficiencies,” said John Engler, president of the Business Roundtable and a former Michigan governor.

Obama also announced Friday that he was elevating administrator of the Small Business Administration, a post held by Karen G. Mills, to a Cabinet-level position. The move has bipartisan support.

In a January 2009 letter, Sens. Mary Landrieu (D-La.) and Olympia J. Snowe (R-Maine) urged Obama to change the status of the SBA chief.

“I am confident Administrator Mills will be a strong voice in the Cabinet during this recovery,” Landrieu said Friday.

The SBA chief would be removed from the Cabinet, however, if the consolidation of the agencies is completed, officials said.

Other lawmakers said that they supported moves to make government more efficient but that they were awaiting details on the proposal.

“Decreasing the size of government and reducing bureaucracy is something that I support in principle; however, it is important that any effort to make significant changes to federal commerce and trade programs must be done carefully and in a way that protects America’s small businesses,” said Rep. Sam Graves (R-Mo.), chairman of the House Small Business Committee.

Peter Whoriskey is a staff writer for The Washington Post handling investigations of financial and economic topics. You can email him at



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