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In this year’s presidential election, the dominant issues should be creating jobs and growing the economy. The Republicans are championing tax cuts, deregulation and elimination of government agencies. President Barack Obama and the Democrats prefer more federal spending.
Rhetoric may win votes, but the fact is that neither side is addressing the key issue. How we compete in today’s global economy will do more to get America out of this economic slump than arguing about tax reductions or more stimulus spending.
Obama’s initiative to “streamline” government services by merging several agencies under a new department charged with overseeing trade and investment programs has merit but not in the form he recently presented it.
Three of the agencies targeted were created a half-century ago with distinct mandates.
The Export-Import Bank, established in 1952 to help Russia enter U.S. markets, has evolved as a major provider of financial assistance (mostly loan guarantees) to American companies exporting goods and services. The Overseas Private Investment Corp. and the U.S. Trade and Development Agency were set up within the State Department to leverage U.S. investments to help the economies of developing countries.
For U.S. exporters, these are the critical agencies. They provide the financial assistance, loan guarantees, risk insurance, feasibility studies and other services that are essential. Other countries are far more generous in supporting their industries in pursuit of foreign markets, often placing U.S. companies at a disadvantage.
The two other agencies to be merged are the Small Business Administration and the U.S. Trade Representative.
The SBA brings value in that it has regional offices that could more readily make available export services to U.S. companies.
The idea of merging USTR with other agencies has already drawn heavy criticism from the trade community and Capitol Hill, and for good reason. USTR’s activity is international in its outlook and mission. Its mandate is to conduct trade negotiations and convince trading partners to comply with laws and preferences and to represent the U.S. at the World Trade Organization. This relatively small office should not be bureaucratized if it is to maintain its independence and credibility, domestically and internationally.
Most puzzling in the president’s announcement is the fate of the Department of Commerce.
The National Oceanic and Atmospheric Administration is the behemoth in the department and should be rightly split off and housed at the Department of Interior. Yet, Commerce houses agencies that provide a variety of services to American exporters, including the U.S. Commercial Services (its offices in U.S. embassies provide valuable assistance to American companies), the International Trade Administration and the Bureau of Industry and Security.
Midsize American companies need such programs if they are to be competitive. The reality of dealing in international markets, often called “burden of foreignness,” is that they must cope with foreign currencies, shipping and distribution outlets, custom regulations, language and cultural differences.
The president’s reorganization plan implies that the Department of Commerce will be streamlined out of business. There is nothing bold or even unique about proposing the dismemberment of the Commerce Department. It has been done before. In 1913, its labor section became the Department of Labor. In 1966, its transportation office became the Department of Transportation. Like a modern-day hydra, whenever a head is cut off, it is replaced by new ones.
The Department of Commerce’s newly appointed head will be limited in his influence at the table. A predictable turf battle of jurisdiction will be waged on Capitol Hill. The department’s bureaus and activities will be up for grabs, picked over like a cadaver in the desert, without achieving the efficiency sought by the White House.
Commerce needs a makeover, but it should not cease to exist. The purpose of the reorganization should be U.S. competitiveness, not job elimination.
If it is important to change the name, call it the Department of Industry and Trade, but place all the trade-related functions under one roof.
The Commerce Department should be the beacon light on the hill that radiates entrepreneurialism, and U.S. companies seeking export assistance should not even encounter a whiff of bureaucracy that is often more frustrating than helpful.
Former Rep. Don Bonker (D-Wash.) chaired the Speaker’s Export Task Force and wrote the Trade and Competitiveness Act of 1986. Michael Czinkota teaches international business and trade at the Graduate School of Business at Georgetown University and previously served as deputy assistant secretary of Commerce.