Trading places - plan to dismantle Dept. of Commerce

Nation's Business, Sept, 1995 by James Worsham

The congressional Republicans' crusade to shut down a Cabinet department as part of their plan to shrink the federal government has taken an interesting and ironic turn.

Who's Involved In Trade?

Amounts authorized in fiscal 1994 for trade activities in selected federal agencies. OPIC's trade-related revenues exceed expenditures, and its net income--$167 million--is not included in the total. Dollar amounts are in thousands.

Department of Agriculture                   $2,152,512
Export-Import Bank(*)                          981,595
International Trade Administration(*)          260,000
Department of State                             92,640
Trade and Development Agency(*)                 54,014
U.S. International Trade Commission(*)          44,000
Bureau of Export Administration(*)              35,000
U.S. Information Agency                         28,618
U.S. Trade Representative(*)                    21,150
Department of Transportation                    16,000
Small Business Administration                    8,385
Department of Energy                             8,091
Department of the Treasury                       2,000
Department of Labor                              1,716
Overseas Private Investment Corp.(*)         (167,000)
TOTAL                                       $3,705,771

(*)Agency's entire budget is trade-related.

SOURCES: BUDGET OF THE U.S. GOVERNMENT, FISCAL 1996; VARIOUS AGENCIES

While GOP leaders move to dismantle the venerable Department of Commerce, some Republican lawmakers are concerned about what would happen to the agency's role in promoting U.S. exports, regulating imports, and generally helping small businesses develop markets overseas.

One proposed solution is a new Cabinet-level trade agency.

"When we take a look at weeding out the chaff and cutting out unnecessary activities, we must be well-advised to keep those things which are working, to keep those things which are vitally important for ensuring the continued competitiveness of small and medium-sized firms in the world market," says Sen. Christopher S. "Kit" Bond, R-Mo., chairman of the Small Business Committee.

Under the Republican proposals to dismantle Commerce, most of the department's trade activities would go to other agencies, most prominently the Office of the U.S. Trade Representative (USTR), the government's principal trade negotiator. Some Commerce trade functions would be eliminated.

Bond isn't opposed to breaking up the multifaceted Commerce Department, but he wants to retain its two trade arms--the International Trade Administration and the Bureau of Export Administration--as a tiny Department of International Trade, at the Cabinet level.

Across Capitol Hill, Rep. John Mica, R-Fla., is suggesting a slightly different tack: consolidating the two Commerce agencies with USTR and the Trade and Development Agency, which helps U.S. firms find big-ticket capital projects overseas. He would call it the U.S. Office of Trade and give it USTR's seat at the cabinet table.

Meanwhile, Sen. Jesse Helms, R-N.C., chairman of the Senate Foreign Relations Committee, proposes creation of an undersecretary of state for export, trade, economics, and business, and he calls for a study of whether the major trade-promotion arms of the Agriculture and Commerce departments should be merged with the Foreign Service, which is part of the State Department.

The Bond and Mica measures are expected to be added to legislation to dismantle Commerce. Action on the Helms bill has been blocked by opponents on the Senate floor.

Congressional action on these proposals is to occur this fall as Congress seeks to translate its already-approved budget-reduction goals into actual legislation that would dismantle, eliminate, reduce, or slow the growth of large parts of the federal government to save $983 billion in projected spending over the next seven years.

The concern over the trade role voiced by some of those supporting consolidation comes as new trading rules under the General Agreement on Tariffs and Trade have stiffened competition for the United States in the rapidly growing global market, where small and medium-sized businesses are more often looking for increased sales and business expansion.

Supporters argue that consolidation would foster a more coherent trade policy, eliminate duplication, and reduce overall trade-related costs since such functions as trade assistance offered by several agencies could be consolidated in Washington and into a single set of field offices in the U.S. and overseas.

The fact that 19 federal departments and agencies have some trade authority reflects the hodgepodge way U.S. trade policy has developed over many years as various departments and agencies, as well as various congressional committees, sought to get into the act.

The agencies include the mammoth Agriculture Department, which spends more than $2 billion annually on export subsidies for raw commodities such as corn and wheat and on promotion of brand-name, table-ready foods made by major U.S. companies. Commerce, the traditional focal point for nonagricultural trade, regulates imports, licenses exports, and promotes U.S. business overseas.