Tuesday, February 21, 2012

Re-inventing the Wheel

Well into his fourth year in office, President Obama seems to be just learning about trade.

In what was billed as far-reaching remarks and an ensuring President Memorandum to agencies issued after a swing across the west coast, "King" Obama issued his directive to his subjects to do what is right.

Below is a point-by-point description of how the pronouncements are far from revolutionary and amounts to simply "re-inventing the wheel."

Export Promotion Cabinet – already established as part of the 2010 National Export Initiative. As far as I could find out the cabinet has met once or twice since its inception. When first created, I immediately thought this would be a good way to hold "cabinet" meetings on trade without the President actually attending. President Reagan – who took trade seriously – had a better idea. He would call occasional cabinet meetings – that he attended – devoted to the topic of trade.

Last week the President also cited his previous idea of creating a super Department of Trade – which would integrate at least a half dozen US trade agencies, including the US Trade Representative. He also admits that Congress is not likely to give him that authority. Already on the books is a subcabinet-level coordinating structure known as the Trade Policy Review Committee. WTD was told recently that the committee has not met during the Obama Administration.

A Presidential memorandum to agencies released during his west coast visit also suggests greater "on the ground" coordination among the four major export and investment promotion agencies. Well, several years ago the Bush Administration established so-called "one-stop" shops whose responsibilities would be divvied up and shared among the various Commerce Department and Small Business Administration regional offices – and Ex-Im Bank’s two regional offices. As the case for most initiatives developed in Washington, the effort had a good start – and even a restart – a few years back, but succumbed to the fate of the Washington bureaucracy.

Budget constraints resulted in cut-backs on the ground. There was less and less money for Commerce/SBA officials to travel back to Washington to learn the inner workings of how to fill out applications the Export-Import Bank, for example. When push came to shove, international lending programs at the SBA came in low on the list of priorities, falling behind domestic lending programs. So that dried up a well.

The Friday memorandum also calls for a "consolidated" export budget that would compare spending – hence priorities – across agencies. Guess what? That law – drafted under a Congressional directive – is still on the books. But, the Office of Management and Budget has never implemented it because it would screw up the decades-old method of writing agency-centric budgets.

As an afterthought, the President announced in his speech in Seattle establishment of a new small-business direct lending program run by Ex-Im Bank – which has been under the Bank’s consideration for some time. A new revolving credit fund of up to $500,000 would be provided in six- to 12-month terms to qualified small business exporters. Well, that program – at least in theory – already is in place. There has been an understanding for years between policy-makers at Ex-Im and SBA that very small small business loans would be provided by SBA and Ex-Im would do the bigger small business business. One problem is the inadequate administrative budget at Ex-Im which limits the time personnel can spend on scrutinizing and approving applications.

As a footnote in the piles of paper coming out from the White House last week was something billed as the first major overall of the Foreign Trade Zones program in 40 years. A read-through indicates that application approvals for full trade zones should be shortened from 12 months to four months. Applications of subzones would be done in five months instead of 10. The real problem with the Commerce Department-run FTZ program is that it is situated in the department’s import administration – with its unique mind set – even though the great bulk of manufacturing and assembly taking place in those zones are directly exported and never enter the country. One big flaw in the program requires zone-based firms to pay antidumping and countervailing duties on their "imported" inputs. The National Association of Foreign Trade Zones has been fighting unsuccessfully for years to get both aspects of the program changed.

No comments:

Post a Comment