COMMITTEE ON FINANCE RUSSELL B. LONG, Louisiana, Chairman HERMAN E. TALMADGE, Georgia VANCE HARTKE, Indiana J. W. FULBRIGHT, Arkansas CABRAHAM RIBICOFF, Connecticut HARRY F. BYRD. JR., Virginia GAYLORD NELSON, Wisconsin WALTER F. MONDALE, Minnesota MIKE GRAVEL, Alaska LLOYD BENTSEN, Texas WALLACE F. BENNETT, Utah MICHAEL STERN, Staff Director (II) PREFACE On July 3, 1973 the Chairman of the Finance Committee requested several background documents for Committee use in its consideration of the Trade Reform Act. In his request, the Chairman asked Secretary Shultz for a document describing the responsibilities of each of the 57 or so Executive agencies in the foreign economic policy area and how these responsibilities are currently coordinated through interagency committees and by the Council on International Economic Policy. A response to this request came in a letter dated January 30, 1974 from Secretary Shultz which contained, as one of the background documents, the information in this report. (III) A. Agencies and Departments Which Have Responsibilities for Foreign (V) INTERNATIONAL ECONOMIC POLICY FORMATION AND THE CIEP Introduction The fundamental economic policy decisions of the U.S. Government-domestic as well as international-are made by the President, advised by his Cabinet-level Council on Economic Policy (CEP). For policy formation in the international field, the CEP, in turn, relies upon another and more spceialized Cabinet-level group, the Council on International Economic Policy (CIEP). The President has named Secretary of the Treasury George Shultz as Chairman of both CEP and CIEP, in recognition of the close links between domestic and international economic activity. On international economic matters, the President and the CEP are served by the CIEP staff under its Executive Director, the Assistant to the President for International Economic Affairs, Peter M. Flanigan. CIEP's functions in coordinating the activities of the many Executive Branch departments and agencies with international economic responsibilities are outlined below, together with the other key interagency mechanisms. An Appendix provides more detailed descriptions of the roles which individual departments, agencies and other specialized offices play in our economic relations abroad. Council on International Economic Policy In late 1970, to improve the coordination of Government agencies with responsibilities in the field of foreign economic affairs, the Advisory Council on Executive Organization recommended the creation of a Council on International Economic Policy (CIEP) as a part of the Executive Office of the President. The President accepted this recommendation and established the CIEP by memorandum dated January 19, 1971. The Congress first authorized the CIEP in Public Law, 92-412 of August 29, 1972, and granted further authorization in Public Law 93-121 of October 4, 1973. In authorizing the CIEP, the Congress recognized that the formulation and execution of U.S. international economic policy is a composite of the actions of numerous departments and agencies. The Council and its staff are designed to achieve a clear, top-level focus on the broad range of international economic issues. CIEP seeks to ensure that all factors affecting international economic policy are fully considered and that policy decisions are based on realistic assessments of U.S. foreign economic interests. (1) 2 The Council itself is currently chaired by the Secretary of the Treasury and is composed of key Cabinet-level and Executive Office officials: Chairman, George P. Shultz. Member, Dr. Henry A. Kissinger, The Secretary of State. Member, Roy L. Ash, The Director of the Office of Management and Budget. Member, Herbert Stein, The Chairman of the Council of Economic Advisers. Member, William D. Eberle, The Special Representative for Trade Negotiations. Member, Peter M. Flanigan, Executive Director, CIEP. The Council is served by a small staff under the management of its Executive Director. The staff does not itself undertake major research projects. Rather, it is used by the Council and its Executive Director-as well as by the CEP-to coordinate the efforts of individual agencies and to synthesize the sometimes divergent policy recommendations forwarded by them. While full Council meetings are held when necessary and appropriate, most of the Council's work is necessarily conducted by subcommittees. The subcommittees of the CIEP are: the Executive Committee, chaired by the Secretary of the Treasury Shultz; the Senior Review Group, chaired by the Executive Director; and the Operations Group, chaired by the Under Secretary of State for Economic Affairs. Attendance at meetings of these subcommittees is determined by the topics to be considered. In addition, the CIEP uses ad hoc interagency groups to handle specific problems and issues. Foreign economic policy subjects dealt with by CIEP machinery have been many and diverse, ranging from trade relations with Canada, the People's Republic of China, the USSR, and the European Community, to matters such as meat import quotas, tariff rate actions on various items of interest to domestic producers, informal agreements on items such as textiles and specialty steels, and numerous other topics of importance to specific producer or consumer interests. As an example of how the Council functions, one can cite monetary and trade negotiations. The Departments of Treasury, State, Commerce, and the Special Representative for Trade Negotiations all have particular areas of jurisdiction (see Appendix A), but none has complete coordination responsibility over the full range of monetary and trade matters. These issues are very closely intertwined and policy decisions with respect to one inevitably impact on the other. The Council provides a structured organizational mechanism by which the President can be provided an objective and comprehensive view of a problem, and can obtain the advice of the Council members in developing a strategy to deal with it. The CIEP structure also provides greater assurance that important interrelationships among different |