Chapter 7: ORGANIZATION OF TRADE POLICY FUNCTIONS

Congress

The role of the Congress in trade derives from its powers under the Constitution to regulate foreign commerce and to lay and collect duties (see Preface). Consequently, the trade agreements program and application of duties or other import restrictions are based upon and limited to specific legislation or authorities delegated by the Congress. In order to ensure proper implementation of these laws and authorities, in accordance with legislative intent, Congress has included various statutory requirements in the trade laws to limit their application, to ensure Congressional oversight of their implementation, and to fulfill its responsibility for legislating any necessary or appropriate changes in U.S. laws.

More specifically, for example, periodic delegations of authority by the Congress to the President to proclaim changes in U.S. tariff treatment in the context of trade agreements has been limited in scope and periods of time, and use of the authority subject to certain prenegotiation procedures to protect domestic interests. On the other hand, Congress has granted Federal agencies permanent authorities to administer certain laws and programs, such as trade remedy laws or trade adjustment assistance, under certain specific guidelines and subject to Congressional oversight, including appropriations.

Specific statutory roles of the Congress became formalized under the Trade Act of 1974 with the grant of authority to the President under section 102 to enter into reciprocal trade agreements affecting U.S. laws other than traditional changes in tariff treatment. In authorizing implementation through an expedited, no amendment procedure, Congress ensured its role through statutory consultation and notification procedures prior to submission of a draft implementing bill by the Executive. This relationship has I continued under authorities granted by the Omnibus Trade and Competitiveness Act of 1988 (see Chapter 6).

Section 161 of the Trade Act of 1974 provides for appointment at the beginning of each session of Congress of five official Congressional advisers by the Speaker of the House from the Committee on Ways and Means and five official advisers by the President of the Senate from the Committee on Finance, and additional advisers where appropriate for specific policy matters or negotiations, to U.S. delegations to international negotiating sessions on trade agreements. The U.S. Trade Representative (USTR) must keep each adviser and designated committee staff members informed of U.S. objectives and the status of negotiations and of any changes

'Public Law 93-618, approved January 3, 1975, 19 U.S.C. 2101.

which may be recommended in U.S. laws. Section 162 requires transmission of any trade agreements to the Congress.

Section 163 requires annual reports from the President and from the U.S. International Trade Commission (ITC) to keep the Congress informed regarding actions taken under the various trade laws and programs. Additional reports are required on specific aspects of various authorities (e.g., from the ITC on the domestic economic impact of the Caribbean Basin Initiative).

Finally, Congress had maintained its institutional role with the Executive by requiring the USTR to advise the Congress as well as the President on trade policy developments, through requests to the ITC for studies and analyses under section 332 of the Tariff Act of 1930 of various current trade issues, and through its power to authorize and appropriate funds for the functions of major trade agencies.

Executive Branch

INTERAGENCY TRADE PROCESS

Trade policy is a major element of U.S. economic and foreign policy. A decision to raise or lower tariffs, to impose import quotas, or to take other trade policy actions affects both domestic and foreign interests. In light of the far-reaching effects of trade policy decisions, a large number of U.S. Government agencies have a role to play in the development of policy. Various interagency coordinating mechanisms have been used for bringing together conflicting views and interests and resolving them so that there can be a consistent and balanced national trade policy.

Until the late 1950's, the Department of State was the major initiator and coordinator of international trade policy. The Secretary of State chaired the interagency Trade Agreements Committee which originally included eight agencies: the Departments of State, Agriculture, Commerce, and Treasury, the Tariff Commission, the Agricultural Adjustment Administration, the National Recovery Administration, and the Office of the Special Advisor to the President on Foreign Trade.

Congress authorized the President under section 242 of the Trade Expansion Act of 1962 2 to establish a new interagency trade organization to carry out specified trade policy functions. The Trade Agreements Committee was replaced by the Trade Policy Committee (TPC) in 1975.3 The TPC performs the same functions authorized by section 242 of the 1962 Trade Act. Two subordinate coordinating groups, the Trade Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC), were subsequently created by the authority of the Special Representative.*

Section 1621 of the Omnibus Trade and Competitiveness Act of 1988 5 amended section 242 of the 1962 Act to provide that this interagency organization will include the USTR as chair, the Secretaries of Commerce, State, Treasury, Agriculture, and Labor, and

2 19 U.S.C. 1801.

9 40 Fed. Reg. 18419, April 28, 1975.

Exec. Order 11846, March 27, 1975 40 Fed. Reg. 14291.

5 Public Law 100-418, section 1621, approved August 23, 1988.

authorizes the USTR to invite other agencies to attend meetings as appropriate. The functions of the organization are: to assist and make recommendations to the President in carrying out his functions under the trade laws and to advise the USTR in carrying out his functions; to assist the President and advise the USTR on the development and implementation of U.S. international trade policy objectives; and to advise the President and the USTR on the relationship between U.S. international trade policy objectives and other major policy areas.

The TPSC is the working level interagency group, with members drawn from the office-director level of member agencies. Over 30 subcommittees and task forces support the work of the TPSC. In the absence of consensus at the TPSC level or in the case of particularly significant policy matters, issues are referred to the Assistant Secretary-level TPRG. Disagreements at the Assistant Secretary-level are referred to the TPC for Cabinet-level review. When Presidential trade policy decisions are needed, the Chairman (USTR) submits the recommendations and advice of the Committee to the President. 6

The Reagan administration created administratively additional interagency mechanisms to coordinate trade and, more generally, international economic policy and domestic policy issues. On April 11, 1985, President Reagan announced the creation of two Cabinetlevel bodies the Economic Policy Council (EPC) and the Domestic Policy Council-replacing the seven preexisting Cabinet Councils and the Senior Interagency Group-International Economic Policy. President Bush has retained these coordinating mechanisms. The President chairs both Councils.

The function of the EPC is to advise the President on all aspects of national and international economic policy, and to oversee the coordination and implementation of the Administration's economic policies.

The EPC is composed of the Secretaries of State, Treasury, Agriculture, Commerce, and Labor, the Director of the Office of Management and Budget, the USTR, and the Chairman of the Council of Economic Advisors. The heads of the national security departments and agencies and the Assistant to the President for National Security Affairs participate in Council meetings whenever international policy or budget matters are discussed. The heads of nonmember departments and agencies are invited to participate whenever matters affecting their organizations are on the agenda. The Vice President and White House Chief of Staff serve as ex-officio members. The Secretary of the Treasury serves as Chairman ProTempore.

OFFICE OF THE U.S. TRADE REPRESENTATIVE

Section 241 of the Trade Expansion Act of 1962 established the Office of the Special Representative for Trade Negotiations. Con

"The Senate Report on Reorganization Plan No. 3 stated that "the USTR has the authority to make decisions even in the absence of consensus or compromise among agencies, and to enforce his decisions on other agencies, subject of course to the ultimate decision-making role of the President." Senate Report 96-402, at p. 15.

7 Public Law 87-794, approved October 11, 1962, 19 U.S.C. 1801.

gress' stated purpose for creating the position was to provide better balance between competing domestic and international interests in the formulation of U.S. trade policy and negotiations. The Special Trade Representative (STR), whose rank was ambassador extraordinary and plenipotentiary, was to serve as the chief U.S. representative for negotiations conducted under authority of the Act and for other trade negotiations authorized by the President.

Various Executive orders issued by President Kennedy in 1963 established an Office of the Special Trade Representative and provided for the appointment of two Deputy Special Representatives for Trade Negotiations. These deputies, one based in Washington, D.C., and the other in Geneva, Switzerland (headquarters of the GATT Secretariat), were assigned major responsibilities for the conduct of the 1963-67 multilateral trade negotiations under the GATT, commonly known as the Kennedy Round.

Section 141 of the Trade Act of 1974,8 established the office as an agency within the Executive Office of the President and expanded STR's duties to include responsibility for the trade agreements program under the Tariff Act of 1930, the Trade Expansion Act of 1962 and the Trade Act of 1974. Other duties and responsibilities also were assigned by the 1974 Trade Act and by Executive Order 11846 of March 27, 1975, as amended. Section 141 elevated the STR to Cabinet level by adding it to the list of positions at level I of the Executive Schedule of salaries with the rank of ambassador. The STR was also made directly responsible to the President and the Congress.

Reorganization Plan No. 3 of 1979, implemented by Executive Order 12188 of January 4, 1980,9 authorized certain changes in the trade responsibilities of the STR. Plan No. 3 redesignated the Office of the Special Representative for Trade Negotiations as the Office of the United States Trade Representative (USTR). The new name reflected the plan's intent for the Trade Representative to have overall responsibility, on a permanent basis, for developing and coordinating the implementation of U.S. trade policy.

The 1979 Reorganization Plan specified that the USTR is the President's principal adviser and chief spokesman on trade, including advice on the impact of international trade on other U.S. Government policies. The USTR also became Vice Chairman of the Overseas Private Investment Corporation (OPIC), a nonvoting member of the Export-Import Bank, and a member of the National Advisory Committee on International Monetary and Financial Policies. In addition to these responsibilities, section 306(c) of the Trade and Tariff Act of 1984 10 specified that the USTR, through the interagency organization, is responsible for developing and coordinating U.S. policies on trade in services.

Section 1601 of the Omnibus Trade and Competitiveness Act of 1988 11 amended section 141 of the 1974 Act to the responsibilities of the USTR first enumerated under Reorganization Plan No. 3 and other statutes, as the following:

Public Law 93-618, approved January 3, 1975, 19 U.S.C. 2171.

44 Fed. Reg. 69273.

10 Public Law 98-573, approved October 30, 1984.

11 Public Law 100-418, section 1601, approved August 23, 1988.