Downside Of Federal Downsizing
Trade policy is so much at the center of the political debate that it’s astonishing to discover one critical piece has been sadly neglected. Simply put, the United States is not getting enforcement of the agreements it signs because it is short of enforcers.
The issue was raised with me not by a protectionist Democrat or a Republican hostile to the Clinton administration, but by Sen. Jeff Bingaman of New Mexico, an ally of the president and a supporter of expanded trade.
Here’s some of what he told me - and I confirmed with the administration. Compliance with trade agreements is a shared responsibility of the U.S. Trade Representative’s (USTR) office and the Department of Commerce. A key part of the latter agency is its Market Access and Compliance unit (MAC). In 1993, MAC had a staff of 230 people; as a result of budget cutting by Congress and Clinton, it now has 150.
That may sound like a substantial number. But here’s what it means in practice. MAC’s Japan desk has dropped from 21 people to eight in the last four years. The China desk has only three analysts. That is 11 people monitoring our dealings with two nations where we have run up a $77 billion trade deficit in the first nine months of this year!
Things are no better at the USTR office, which has the responsibility of presenting the American case in international trade disputes. Its compliance office has all of six lawyers - fewer, Bingaman notes, than many small-town law firms.
The Clinton administration does not challenge Bingaman’s figures or his conclusion that these offices are woefully undermanned.
This year, Ambassador Charlene Barshefsky, the head of USTR, lobbied with the Office of Management and Budget and on Capitol Hill in support of a successful effort by Bingaman and Sen. Judd Gregg, a New Hampshire Republican, to get funds to increase the number of compliance attorneys in 1998 from six to 13.
Commerce Secretary Bill Daley wrote Bingaman last month, “I wholeheartedly agree with your assessment that these programs which monitor and enforce compliance with trade agreements need more attention and support.”
But with a hiring freeze in place and steady pressure to continue downsizing his department, Daley told me, “I can understand why the American people think these trade agreements aren’t being enforced.”
The United States lost a big battle just last week when the World Trade Organization (WTO) ruled for Japan in an important test case involving Kodak’s efforts to crack a film market now dominated by Fuji. While complaining about that decision, Barshefsky was quick to point out that prior to that, the U.S. was 14-0 in cases it brought before the WTO.
The issue is not the competence of U.S. advocates, but the workload they are carrying. This year, her office has been handling four times the number of enforcement actions it had pending in 1993 - with the same number of lawyers. Next year, she will have more. But Commerce’s MAC will be limping along at the same shriveled level Bingaman cited.
Republicans who once talked of abolishing the department have whittled its budget. And Clinton, who likes to boast of the 220 trade agreements signed by his administration, also enjoys bragging that he has cut the federal work force to the lowest level since John Kennedy’s day - even if it means vital work is not getting done.
The American Chamber of Commerce in Japan issued a report earlier this year which found that of 45 trade agreements signed by Washington and Tokyo since 1980, only 13 have been successfully implemented. Just last week, Barshefsky said the targets set in a 1995 agreement on autos and auto parts are not being met by Japan.
Greg Mastel, a veteran of Capitol Hill now on the staff of the nonpartisan Economic Strategy Institute, told me, “Historically, we have been very good at negotiating agreements and very bad at enforcing them. There are probably hundreds of cases of countries not complying, but unless an industry has the time and money to document and pursue a complaint, the administration doesn’t have the wherewithal to do it.”
What Mastel is describing is an all-too-familiar Washington phenomenon. Enormous energy and attention are devoted to the fights over what the policy should be, but almost nothing is devoted to whether the policy is carried out. If the supporters and opponents of NAFTA and “fast track” would allocate just a fraction of the millions spent on those high-profile trade battles to seeing that the agreements the U.S. has negotiated are actually enforced, the disagreements would be fewer - and this country would be a lot better off.
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