Washington Trade Daily
Volume 21, Number 11 Monday, January 16, 2012
Trade Reports International Group
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A Trade Agencies Reorganization
President Obama said Friday said he will ask Congress for special authority to consolidate six major federal departments and agencies focused on trade into a single department (WTD, 9/28/11).
Commerce, the US Trade Representative’s Office, the Small Business Administration, US Export Import Bank, Overseas Private Investment Corporation and the Trade and Development Agency would be consolidated into “one department with one website, one phone number and one mission,” Mr. Obama said.
Speaking to an audience of small business leaders at the White House, the President said he wants to end the redundancy and inefficiency that makes it difficult for US companies – particularly small businesses – to navigate through the federal government to find the help they need getting their products manufactured and sold in markets overseas.
Mr. Obama said he sees the trade reorganization as the first in a series of steps to streamline and downsize the federal government while making it more responsive to the needs of US business. “Right now, we have a 21st Century economy, but we’ve still got a government organized for the 20th century,” he said in his Saturday radio address.
The President first proposed reorganizing trade programs and agencies in last year’s State of the Union speech. His next state of the union address is set for January 24.
But before he can make the changes, the President needs to convince Congress to grant him the authority to consolidate federal departments and agencies (see related report this issue).
A New Department
The as-yet-unnamed new department will be headed by a single secretary, but there will be two other cabinet-level officials, according to Federal Chief Performance Officer Jeffrey Zients, who was charged by the President with leading the reorganization effort. The US Trade Representative would retain cabinet-level status after the agency is moved into the new department. The President on Friday announced that while awaiting Congressional approval of the plan, he was immediately elevating SBA Administrator Karen Mills to cabinet-level status – a position that the agency held during the Clinton Administration.
The new department will essentially be comprised of the current Commerce Department – with the exception of the National Oceanic and Atmospheric Administration – which would move to the Interior Department. To Commerce’s existing functions would be added in their entirety USTR, SBA and the three export financing agencies. The department will have four pillars, Mr. Zients told reporters – trade and investment, small business and economic development, technology and innovation and economic statistics.
Commerce Secretary John Bryson said the new department will have one mission – to spur job creation and expand the US economy. “This move would be of enormous benefit to US businesses of all sizes,” he said. “We will have more resources and less red tape. There will be fewer hurdles in our way to provide faster services and answers to businesses.”
Following is a White House fact sheet on the reorganization proposal –
Government Reorganization Fact Sheet
Looking to make our government leaner, smarter and more consumer-friendly, the President will call on Congress to reinstate the authority that past Presidents had, over decades, to reorganize the government. With the exception of President Ford, every President from Herbert Hoover to Ronald Reagan had reorganization authority. Presidents had this sort of authority for almost the entire period from 1932 through 1984. Unlike the authority granted in the past, the President’s proposal would initiate new accountability by mandating that any plan must consolidate government – reducing the number of agencies or saving taxpayer dollars.
The President will also lay out his first proposed use of that authority: consolidating six agencies into one more efficient department to promote competitiveness, exports and American business. The President knows this is a make or break moment for the middle class and those trying to reach it. The President’s proposed reorganization would help small businesses grow and, in doing so, would help get more Americans back to work.
For too long, overlapping responsibilities among agencies have made it harder, rather than easier, for our small businesses to interact with their government. Those redundancies have also led to unnecessary waste and duplication. President Obama is committed to rethinking, reforming and remaking our government so that it can meet the challenges of our time and is worthy of the American people.
Today’s proposal is just one example of the kind of action the authority he is requesting would allow.
Competing in a 21st Century Economy
We’re living in a 21st century economy with a 20th century bureaucracy. Our economy has fundamentally changed but the government has not. The needs of our citizens have fundamentally changed but their government has not. Instead, the government has grown only more complex.
Over the past three years the Obama Administration has taken numerous steps to address this problem by eliminating government waste and inefficiencies. Clearly there’s more work to be done.
The President’s First Action
The President’s first focus under the Consolidation Authority Act would be to make it easier for America’s small businesses – which are America’s job creators – to compete, export and grow.
Currently, there are six major departments and agencies that focus primarily on business and trade in the federal government. The six are: U.S. Department of Commerce’s core business and trade functions, the Small Business Administration, the Office of the US Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the US Trade and Development Agency.
This is redundant and inefficient. Small businesses often face a maze of agencies when looking for even the most basic answers to the most basic questions. There is a whole host of websites, toll-free numbers and customer service centers that at times offer them differing advice. The result is a system that is not working for our small businesses.
The President is proposing to consolidate those six departments and agencies into one Department with one website, one phone number and one mission – helping American businesses succeed.
One Department: there will be one Department where entrepreneurs can go from the day they come up with an idea and need a patent, to the day they start building a product and need a warehouse, to the day they are ready to export and need help breaking into new markets overseas.
The new Department will lead the development and implementation of an integrated, strategic, government-wide trade effort and have a focused capacity to help businesses grow and thrive.
Business USA
We will also be unveiling a new website: BusinessUSA. This site will be a virtual one-stop shop with information for small businesses and businesses of all size that want to begin or increase exporting.
A Skeptical Congress
President Obama’s desire to consolidate the federal government’s trade agencies was met largely with stiff skepticism – if not outright opposition– by the Congressional lawmakers who must grant him the power to carry out his proposed reforms (see related report this issue).
In making his announcement, President Obama urged Congress to give him the authority to consolidate federal departments and agencies. Streamlining the US government and making it more responsive to the needs of 21st century business should have strong bipartisan support, the President asserted.
But few lawmakers endorsed the proposal and most said they had real concerns – particularly with the idea of moving the US Trade Representative’s office into a much larger department. The leaders of the two Congressional committees that have primary jurisdiction over trade – Republican House Ways and Means Committee Chairman Dave Camp (Mich) and Democrat Senate Finance Committee Chairman Max Baucus (Mont) were quick to put out a joint statement warning that taking the “nimble, lean and effective” USTR and “making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation.”
Ways and Means ranking Democrat Sander Levin (Mich) said he is open to the idea of giving President Obama the authority to reorganize the government. But he also signaled concern about moving USTR into a bigger department, pointing out that it was placed within the executive office of the President because US trade objectives were not being “adequately negotiated, implemented or emphasized when trade negotiators and enforcers were part of a broader agency.”
Senate Finance ranking Republican Orrin Hatch (Utah) blasted the President for failing to consult with Congress before seeking the authority – and for ignoring his request that lawmakers be briefed on the proposed trade agency reorganization.
Support From House Energy and Commerce
The idea to merge the various trade agencies into a single department did draw immediate praise from House Energy and Commerce Committee Chairman Fred Upton (R-Mich), whose panel could theoretically take over jurisdiction of the new department. Other key lawmakers – including Senate Commere Committee Chairman Jay Rockefeller (D-WVa) and Homeland Security and Governmental Affairs Committee ranking Republican Susan Collins (Maine) were on the fence, saying they needed to see more details.
Federal Chief Performance Officer Jeffrey Zients told reporters on Friday that the Administration had consulted with members of Congress, but suggested the White House primarily focused on getting input from small businesses that would most benefit from the reforms.
The reorganization authority was first granted to President Hoover and continued until the Reagan Administration, when Congress allowed it to lapse. Under the authority, the President would have to submit any proposed reorganizations to Congress, where they would be subject to a straight up-or-down vote. “I will only use this authority for reforms that result in more efficiency, better service and a leaner government,” Mr. Obama said in his Saturday radio address.
Business groups reacted with skepticism to the President’s reorganization plan, even while lauding the goals. The Emergency Committee for American Trade, American Soybean Association, National Foreign Trade Council and American Association of Exports and Importers all expressed particular concern about moving USTR into a bigger department. The Business Roundtable issued a statement endorsing reorganization authority for the President, but avoided taking a position on the actual proposals.
Two of the country’s largest business groups – the US Chamber of Commerce and the National Association of Manufacturers – did not release statements.
Trying to Resolve Airbus Compensation
Geneva – US and European Union negotiators met informally here on Friday on the increasingly troublesome disagreement over subsidies to the huge Airbus consortium (WTD, 12/23/11).
At the same time the World Trade Organization announced the make-up of an arbitration panel that will determine the fair amount of compensation owed to the United States due to years of EU industry subsidization.
Former Uruguay trade envoy Carlos Perez del Castillo will chair the arbitration panel which will be comprised of members of the original panel – New Zealand Ambassador John Adank and Thinus Jacobsz of South Africa.
The United States argued that it should receive compensation of between $7 billion and $10 billion due to the adverse effects arising from Brussels’ failure to withdraw the subsidy programs for Airbus – as set out in World Trade Organization Dispute Settlement Body recommendations.
Brussels said it objected to the US demand because it had fully complied with the DSB recommendations.
Both sides agreed to pose the issue to an arbitration panel while, at the same time, continuing informal talks.
The Appellate Body ruling was adopted by the DSB on June 1. Brussels was required to withdraw all the actionable subsidies provided to Airbus within six months after adoption of the DSB recommendations.
November Deficit Up
The Commerce Department on Friday announced a November trade deficit of $47.8 billion – resulting from the disparity in US exports of $177.8 billion and imports of $225.6 billion (WTD, 12/12/11).
The deficit figure was up from $43.3 billion registered in October.
November exports were $1.5 billion less than October exports of $179.4 billion. Import for the month were $2.9 billion more than October’s $222.6 billion, Commerce reported.
In November, the goods deficit increased $4.6 billion from October to $63.2 billion, and the
services surplus increased $100 million from October to $15.4 billion. Exports of goods decreased $1.5 billion to $126.6 billion; goods imports increased $3.1 billion to $189.7 billion. Exports of services were virtually unchanged at $51.3 billion, and services exports decreased $200 million to $35.9 billion.
The goods and services deficit increased $8.9 billion from November 2010 to November 2011.
Exports were up $16.6 billion – or 10.3 percent – and imports were up $25.5 billion, or 12.7 percent.
For the three months ending in November, exports of goods and services averaged $179.3 billion, while imports averaged $224.3 billion, resulting in an average monthly trade deficit of $45.1 billion. For the three months ending in October, the average trade deficit was $44.3 billion, reflecting average exports of $179.3 billion and average imports of $223.6 billion.
According to the report, November figures showed surpluses with Hong Kong of $3.2 billion; Australia, $1.5 billion; Singapore, $1 billion and Egypt, $100 million.
Bilateral deficits were recorded with China at $26.9 billion – down from $28.1 billion in October; European Union, $9.7 billion; OPEC, $9.1 billion; Japan, $6.2 billion; Mexico, $5.5 billion; Germany, $4.7 billion; Canada, $3 billion; Ireland, $2.8 billion; Nigeria, $2.3 billion; Venezuela, $1.9 billion; Taiwan, $1.4 billion and South Korea, $1.3 billion.
Around the Globe
China criticized US sanctions on a Chinese company selling refined petroleum products to Iran, calling Washington's punishment an unreasonable step beyond international sanctions on Tehran's nuclear program, Reuters news service reported from Beijing (WTD, 1/13/12). Thursday, the Obama administration invoked US law to sanction China's state-run Zhuhai Zhenrong Corp, which it said was Iran's largest supplier of refined petroleum products.
“Imposing sanctions on a Chinese company based on a domestic (U.S.) law is totally unreasonable, and does not conform to the spirit or content of U.N. Security Council resolutions about the Iran nuclear issue,” the Chinese Foreign Ministry spokesman Liu Weimin said in a statement issued on the ministry's website late Saturday. “China expresses its strong dissatisfaction and adamant opposition,” said Liu.
The Obama administration said its sanctions against the Chinese company and two other firms are part of a broadening effort to target Iran's energy sector and press Tehran to curb its nuclear ambitions, which Western governments say appear aimed at developing the means to make atomic weapons. Iran says its nuclear activities are legitimate and entirely for peaceful ends. The U.S. sanctions threat is a worry for China, the biggest buyer of Iranian oil, followed by India and Japan. Only Saudi Arabia and Angola sell more crude than Iran to China.
As a permanent member of the United Nations Security Council, China can veto resolutions mandating sanctions. But Beijing has voted for them, while working to ensure its energy ties are not threatened. China has, however, also long criticized the United States and EU for imposing separate, unilateral sanctions on Iran and said they should take no steps reaching beyond the U.N. resolutions. “Like many other countries, China and Iran maintain normal energy and trade and economic cooperation,” said the foreign ministry spokesman Liu.
Co-Chair of the U.S. Senate's India Caucus Senator Mark R. Warner said that they were pushing the Obama administration to expedite the signing of a Bilateral Investment Treaty with India to protect investors from both countries (WTD, 1/11/12). Addressing a press conference along with two other senators, Michael Bennet (Colorado) and Tom Udall (New Mexico), on the sidelines of the CII Partnership 2012 here on Thursday, Mr. Warner said BIT would be the first step forward as it would take some time to work through to have a Free Trade Agreement between the U.S. and India.
He said that he had written to President Barack Obama urging to him move this (BIT) up. On return to the U.S., they would press their case harder, he added. Emphasising that BIT would help protect American investors in India and vice versa, he pointed out that Indian IT companies were looking forward to expand their footprints in the U.S. He said that they saw tremendous opportunities in India in various sectors, including bio-pharma and lifesciences.
On outsourcing, Mr. Warner said the concerns on outsourcing were less at present than what they were five-six years ago. Observing that U.S.-India Caucus was the largest in U.S. Congress, he said the ties between the two countries were one of the most important strategic relations of the 21 century. Government-to-government relations could sometimes have “bumps” but it was important to continue economic trade.
Addressing a plenary session later on “The India and U.S. promise: partnership for progress” Mr. Warner expressed disappointment over the Indian Government's decision to move back on allowing FDI in multi-brand retail and hoped that it would be revisited. It was also a matter of concern that civilian nuclear liability issue was yet to be resolved.
A seven-member bipartisan House delegation led by Speaker John Boehner (R-Ohio) has completed the Colombia leg of a three-country mission to Latin America focused on jobs, energy, and economic security, the Speaker’s office said (WTD, 1/10/12). The Colombia portion of the trip was highlighted by meetings with Colombian President Juan Miguel Santos in the capital city of Bogota and the port city of Cartagena.
“We are impressed by the steps being taken by Colombia to implement the free trade agreement, which is vital for jobs and economic security in both of our countries. There is a clear commitment on the part of President Santos and the Colombian people to implementing the agreement, which will benefit both nations,” Boehner said.
Members participating in the delegation include Reps. Dan Boren (D-Okla); Greg Walden (R-Ore), Chairman of the House Republican Leadership; David Camp (R-Mich), Chairman of the House Committee on Ways & Means; Doc Hastings (R-Wash), Chairman of the House Committee on Natural Resources; John Kline (R-Minn), Chairman of the House Committee on Education and the Workforce; and Devin Nunes (R-Calif), a member of the Committee on Ways & Means.
Statistics Canada says rebounding merchandise exports turned a trade deficit into a surplus in November, the Canadian Press news service reported from Ottawa. The agency says exports increased 3.2 per cent, while imports declined 0.8 per cent, turning an October trade deficit of $475 million into a November surplus of $1 billion. Exports rose to $39.1 billion, with gains in most sectors. Imports slipped to $38 billion, mainly because of lower imports of automotive products, as well as industrial goods and materials. The trade surplus with the United States rose to $4.4 billion in November from $3.4 billion in October.
A surge in exports helped the euro zone post a major surplus on trade with the rest of the world in November, an unexpected development that could boost hopes that the region will avoid a severe economic downturn, Dow Jones news service reported from London. The 17-nation currency bloc posted a $8.84 billion surplus on trade in November, the European Union's statistics agency Eurostat said Friday.
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On the Web......
Agriculture
Cotton. Customs Bureau announcement of tariff-quota levels for upland cotton. (available at: http://www.cbp.gov/xp/cgov/trade/trade_programs/textiles_and_quotas/qbts/qbt2012/qbt_article.xml ) issued: 1/13/12.
Meat Exports. US Meat Export Federation statement on US meat exports. (available at: http://www.usmef.org ) issued: 1/13/12.
USTR Reorganization. American Soybean Association statement on Administration plan to reorganize the US Trade Representative’s office. (available at: http://www.soy.org ) issued: 1/13/12.
Asia-Pacific
TPP. Comments to the US Trade Representative on Japan, Canada and Mexico joining the TransPacific Partnership negotiations. (available at: http://www.ustr.gov ) issued: 1/12/12.
Aviation
Airbus. European Union statement at the World Trade Organization on the US-EU airbus dispute. (available at: http://docsonline.wto.org/GEN_viewerwindow.asp?http://docsonline.wto.org:80/DDFDocuments/t/WT/DS/316-20.doc ) issued: 1/13/12.
Chile
China. Statement by Chile at the World Trade Organization on its free trade agreement with China. (available at: http://docsonline.wto.org/GEN_viewerwindow.asp?http://docsonline.wto.org:80/DDFDocuments/t/WT/REG/230-5.doc ) issued: 1/12/13.
China
Chile. Statement by Chile at the World Trade Organization on its free trade agreement with China. (available at: http://docsonline.wto.org/GEN_viewerwindow.asp?http://docsonline.wto.org:80/DDFDocuments/t/WT/REG/230-5.doc ) issued: 1/12/13.
Export Controls
Iran. Statement by Rep. Berman on US sanctions against Iran. (available at: http://hfac.house.gov ) issued: 1/13/12.
Foreign Investment
Inward. President Obama’s Saturday radio address on insourcing and government trade agencies reform. (available at: http://www.whitehouse.gov/the-press-office/2012/01/14/weekly-address-helping-american-businesses-succeed ) issued: 1/13/12.
Iran
Sanctions. Statement by Rep. Berman on US sanctions against Iran. (available at:
Latin America
US Relations. Statement by House Speaker Boehner on US relations with Latin America. (available at:
Mexico
US Trade. Statement by House Speaker Boehner on US relations with Mexico. (available at: http://speaker.house.gov ) issued: 1/13/12.
Myanmar
Trade Balance
November. Commerce Department report on the November trade balance. (available at: http://www.bea.gov/newsreleases/international/trade/tradnewsrelease.htm ) issued: 1/13/12.
November. Commerce Department statement on the November trade balance. (available at: http://www.commerce.gov/news/press-releases/2012/01/13/statement-us-commerce-secretary-john-bryson-us-international-trade-go ) issued: 1/13/12.
November. US Export-Import Bank statement on the November trade balance. (available at: http://www.exim.gov issued: 1/13/12.
November. Alliance for American Manufacturing statement on the November trade balance. (available at: http://www.americanmanufacturing.org ) issued: 1/13/12.
Trade Policy
Reorganization. Remarks by President Obama on trade agencies reorganization. (available at: http://www.whitehouse.gov/the-press-office/2012/01/13/remarks-president-government-reform ) issued: 1/13/12.
Reorganization. President Obama’s Saturday radio address on insourcing and government trade agencies reform. (available at: http://www.whitehouse.gov/the-press-office/2012/01/14/weekly-address-helping-american-businesses-succeed ) issued: 1/13/12.
Reorganization. White House statement on proposed trade agencies reorganization. (available at: http://www.whitehouse.gov/the-press-office/2012/01/13/president-obama-announces-proposal-reform-reorganize-and-consolidate-gov ) issued: 1/13/12.
Reorganization. White House fact sheet on proposed trade agencies reorganization. (available at: http://www.whitehouse.gov/the-press-office/2012/01/13/government-reorganization-fact-sheet ) issued: 1/13/12.
Reorganization. White House press briefing on reorganization of the trade agencies. (available at: http://www.whitehouse.gov/the-press-office/2012/01/13/press-gaggle-press-secretary-jay-carney-and-omb-deputy-director-manageme ) issued: 1/13/12.
Reorganization. Statement by Commerce Secretary Bryson on the Administration plan to reorganize the US Trade Representative. (available at: http://www.commerce.gov/blog/2012/01/13/secretary-bryson-making-it-easier-do-business-america ) issued: 1/13/12.
Reorganization. Statement by Rep. Camp and Sen. Baucus on the Administration’s plan to reorganize the US Trade Representative. (available at: http://waysandmeans.house.gov ) issued: 1/13/12.
Reorganization. Statement by Rep. Brady on the Administration’s plan to reorganize the US Trade Representative. (available at: http://www.house.gov/brady ) issued: 1/12/12.
Reorganization. Statement by Sen. Grassley on the Administration’s plan to reorganize the US Trade Representative. issued: 1/13/12.
Reorganization. Statement by Sen. Hatch on Administration plans to reorganize the US Trade Representative. (available at: http://finance.senate.gov ) issued: 1/13/12.
Reorganization. American Association of Importers and Exporters statement on the White House plan to reorganization the US Trade Representative’s office. (available at: http://www.aaei.org ) issued: 1/13/12.
Reorganization. Emergency Committee for American Trade statement on Administration plans to reorganize the US Trade Representative. (available at: http://www.ecattrade.org ) issued: 1/13/12.
Reorganization. American Soybean Association statement on Administration plan to reorganize the US Trade Representative’s office. (available at: http://www.soy.org ) issued: 1/13/12.
Reorganization. National Foreign Trade Council and Coalition for Exports Through Trade statement on reorganization of the US Trade Representative’s office. (available at: http://www.nftc.org ) issued: 1/13/12.
Reorganization. Statement by Sen. Rockefeller on the Administration plan to reorganize the US Trade Representative. (available at: http://commerce.senate.gov ) issued: 1/13/12.
Reorganization. Statement by the Business Roundtable on Administration plans to reorganize the US Trade Representative. (available at: http://businessroundtable.org/news-center/business-roundtable-supports-president-obamas-request-to-congress-to/ ) issued: 1/13/12.
Reorganization. Alliance for American Manufacturing statement on Administration plans to reorganize the US Trade Representative. (available at: http://www.americanmanufacturing.org ) issued: 1/13/12.
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