Candidate Trump promised to boost American exports. But President Trump's budget proposes to eliminate a small agency that does just that.
The U.S. Trade and Development Agency, which links U.S. exporters with development projects in emerging economies, was one of 19 agencies that the White House proposed eliminating entirely in the budget it released last week. The budget blueprint, which would have to be approved by Congress before it becomes law, did not provide reasoning behind the cuts.
In a federal government made up of giant agencies — like the 40,000-employee Commerce Department — the U.S. Trade and Development Agency (USTDA) looks like a gnat. It has just 50 or so full-time employees and a current annual budget of $60 million — about as much as the Secret Service reportedly asked for to cover protection and travel costs for the new administration next year.
But the agency claims a hefty return on its investment. It says it generates $85 in exports for every $1 spent on its programming, and directly boosted U.S. exports by $3 billion last year.
“Any private sector business person would appreciate that as a phenomenal return of investment. I’m baffled, and I have to believe [the administration] just doesn’t understand what it is the agency does,” said Lee Zak, the director of USTDA under Obama who left her post Jan. 20.
“Everything about the agency is consistent with the administration’s priorities and as a matter of fact it should be scaled up, not eliminated,” she said.
Meanwhile, the administration’s plan to boost exports remains hazy. Trump has often talked about increasing U.S. exports by negotiating better trade agreements, including NAFTA — yet the White House has not started the process or clearly defined its goals for NAFTA renegotiation.
The White House and the Office of Management and Budget did not respond to requests for comment.
USTDA acts as a kind of matchmaker for parties that could not have found each other otherwise, connecting U.S. companies of all kinds with projects in emerging markets around the world. The agency researches projects, helps arrange U.S. companies to carry out feasibility studies and planning, and then finds other U.S. companies to supply those projects. It often works in energy, IT and transportation — sectors in which U.S. companies excel.
One beneficiary is a California-based start-up called Oorja Protonics, which manufactures methanol fuel cells, a renewable energy technology it supplies to telecom towers in South Africa. When the power grid goes out in South Africa — as it often does — local telecom companies typically turn to diesel generators, which are highly polluting and subject to theft. Under USTDA, Oorja is supplying its technology on a trial basis.
Shoibal Banerjee, the company's chief technology officer, says a small company like his would have had no chance linking up with remote telecom towers in South Africa. “I don’t think the strategic importance of [USTDA] is well understood,” he said. “I hope that organization lives to support small companies like us.”
The agency shares similarities with the U.S. Export-Import Bank and other commercial development agencies around the world, which don’t directly spend government money to finance projects but rather help facilitate connections in the private sector that are too risky or obscure to happen otherwise. Unlike the Export-Import Bank, however, which extends loans for foreign entities to buy U.S. products, USTDA works more on planning and coordination, helping to identify promising projects and connecting foreign buyers with potential U.S. sellers.
Supporters of these kinds of programs point out that they are often highly profitable, and argue that U.S. companies need this kind of assistance to compete on a level playing field with counterparts abroad. China, Germany and most other developed countries offer similar programs, sometimes more generous than that of the United States.
Meanwhile, critics on both the left and the right decry these programs as corporate welfare. They say these agencies channel taxpayer money to favored corporations, facilitating cronyism and distorting free markets.
Yet Trump has not expressed the same kind of ideological opposition to the U.S. government aiding companies. Instead, he appears to endorse some government intervention in the private sector to boost manufacturing and exports, whether he is proposing tariffs to help U.S. manufacturers or trying to jawbone companies into keeping U.S. jobs in the country.
Trump’s blueprint budget released in mid-March left the U.S. Export-Import Bank untouched. But lesser-known agencies such as USTDA were not.