Trade Tangle

ast year, when Peter Scher left his job as chief of staff to Commerce Secretary Mickey Kantor to become the first U.S. special trade negotiator for agriculture, his friends at Commerce got together to buy him a pitchfork to wield in his new job.

"When the Europeans came in, I told them this was intended for them," says Scher. Critics say that Scher, U.S. Trade Representative Charlene Barshefsky and officials at Commerce, Agriculture and other agencies charged with monitoring and enforcing trade agreements should use the pitchfork more often. Other countries don't live up to those pacts, they charge, and U.S. agencies should put as much effort into monitoring and compliance as they do into negotiating new agreements.

These days the criticism of trade agencies is particularly compelling, because it comes not just from labor unions and environmentalists but from business leaders and members of Congress who supported President Clinton's failed attempt last fall to get Congress to approve fast-track trade negotiating authority. U.S. trade negotiators want that authority to complete future trade agreements because it allows them to assure negotiators from other countries that Congress will vote only "yes" or "no" on a trade agreement and will not try to amend it.

The budgets and staffs of the trade agencies have remained flat in recent years, while the value of U.S. trade has mushroomed from 13 percent of the country's gross domestic product in 1970 to 32 percent in 1997.

While the level of U.S. exports has grown, the level of imports has grown even faster. Some economists say the gap doesn't matter and is the result of rising demand in a strong U.S. economy and lower Asian currency values that make Asian products particularly cheap. But critics say that the gap in the midst of several years of worldwide economic expansion is a signal that foreign countries are keeping out U.S. products while gaining access to U.S. markets.

Monitoring and enforcing trade agreements is much harder today, critics say, than before World War II, when most agreements consisted of simple, straightforward tariff reductions. The key goal of trade pacts today is reducing non-tariff barriers such as product standards, government procurement regulations, subsidies and food safety rules that put foreign products at a disadvantage in domestic markets. Such barriers are much more difficult to detect.

Clinton administration trade officials have asked for small budget increases for fiscal 1999. They claim that they have increased monitoring and compliance since Congress' 1993 approval of the North American Free Trade Agreement (NAFTA) and the Uruguay Round agreement, which made agriculture subject to world trade rules and replaced the old General Agreement on Trade and Tariffs (GATT) with the more powerful World Trade Organization (WTO).

But different agencies have taken different approaches, and Clinton trade officials appear torn between acknowledging they need more staff and money for monitoring and compliance and living up to the President's and Congress' commitments to keeping a lid on federal expenditures in order to balance the budget. Barshefsky, for example, frequently says her agency is "lean and mean."

The trade agencies' severest critics say that the lack of monitoring and compliance is a reflection of deeper problems. Sen. Byron Dorgan, D-N.D., who opposed fast track, says he would "absolutely" support increasing the budget and staff for trade agencies if it would improve monitoring and enforcement. But Dorgan believes no change will occur unless trade officials change their attitudes.

"We don't have much of a stomach to go to the mat and enforce these agreements," he says. "You could put on a blindfold and listen to the trade rhetoric from the last three administrations and not detect any disagreement at all. It would not matter much if they had 10,000 people to enforce these agreements if they don't have the will and the nerve to do it. I want to give somebody a vitamin B-12 shot to give them the energy to decide what is right here."

Enforcement Shortage

Over the last two years, U.S. trade agencies have been criticized by several sources.

In 1997, the American Chamber of Commerce in Japan published a book, Making Trade Talks Work, which noted that Japanese cabinet ministries in charge of the insurance, semiconductor and paper industries had "no ability to take action that would ensure proper implementation of Japanese government commitments" in bilateral agreements with the United States. "When the chamber approached the U.S. government about addressing these issues, it "was astonished to learn that no U.S. government agency has a readily accessible list of all U.S.-Japan trade agreements or their complete texts," the book said. "This may indicate that it has often been more important for the two governments to reach agreements and declare victory than to undertake the difficult task of monitoring the agreements to ensure that their implementation produces results." Noting that tracking down the agreements took months, the chamber argued that compliance offices at USTR and Commerce should be strengthened.

Commerce Department officials are aware of the need to better monitor U.S-Japanese agreements. In March 31 testimony before a House Appropriations subcommittee, David L. Aaron, the department's undersecretary for international trade, pledged to "tackle our growing trade deficit with Japan" by undertaking "a comprehensive review of Japanese compliance with selected major bilateral agreements."

Sen. Jeff Bingaman, D-N.M., a strong fast-track supporter, has questioned whether trade agencies have the resources to conduct such a review. Last December, Bingaman told Washington Post columnist David Broder that in the spirit of downsizing, the Commerce Department's Market Access and Compliance Unit (MAC) had been reduced from 230 people in 1993 to 150, with the number of analysts working on Japan reduced from 21 to 8. Only 3 analysts, Bingaman said, work on China. USTR, Broder reported, is handling four times as many enforcement actions as in 1993 with the same number of lawyers.

"Simply put, the United States is not getting enforcement of the agreements it signs because it is short of enforcers," Broder wrote on Dec. 5, after the administration confirmed Bingaman's figures. The situation, Broder said, "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 to whether the policy is carried out."

Broder also reported that Commerce Secretary William Daley had written to Bingaman that he agreed that monitoring and enforcement compliance "needs more attention and support." Commerce's International Trade Administration, which includes MAC, confirmed that MAC's regional staff had been cut nearly in half, from 230 positions in fiscal 1992 to 125 in 1997 but said President Clinton had asked for a budget increase in fiscal 1999 that would include 18 new full-time monitoring employees..

Barshefsky strongly defends USTR's compliance efforts. The Broder column, Barshefsky told Government Executive, "aggravated" her and was "not only factually inadequate but wrong in concept" because it did not note USTR's successes before the World Trade Organization. The agency, she notes, has brought 35 cases to the WTO and has won all but one of the 18 that have been decided.

Barshefsky also says that, while her agency had only 164 employees in fiscal 1997, she won a supplemental appropriation in 1997 to hire seven new lawyers and that the President's fiscal 1999 budget request would bring USTR's full-time staff to 180 employees, including 10 new enforcement officers.

Barshefsky describes the U.S. trade apparatus as a "nimble" match for any other country's trade department because she can draw on the talents of every agency of the U.S. government.

Nevertheless, criticism of U.S. trade monitoring efforts continues to mount. Last December, the General Accounting Office reported that the full effect of foreign governments' health regulations regarding U.S. food exports cannot be determined because the U.S. approach for addressing such rules is "not integrated or systematic." The report says that 12 federal trade, regulatory and research entities are involved, but "no one entity is directing and coordinating federal overall efforts."

An Agriculture Department official says that if GAO was looking for a "czar" to be in charge of these health rules, it will never find one, because they involve a range of foreign policy and domestic agencies.

New Monitoring Units

Aadministration officials are quick to note they have launched several new monitoring and compliance initiatives after the completion of the Uruguay Round and NAFTA.

In January 1996, then-U.S. Trade Representative Mickey Kantor decided the new agreements warranted the creation of a division within USTR to monitor and enforce trade agreements. Shortly thereafter, Secretary of Commerce Ron Brown was killed in Bosnia, and Kantor took over Brown's job. At Commerce, Kantor and then-Commerce Undersecretary for Trade Stuart Eizenstat in late 1996 created a Trade Compliance Center in Commerce's International Trade Administration to establish a database on all nonagricultural trade agreements and develop methodologies for analyzing them.

Agriculture Department officials decided, however, that an agricultural database was unnecessary. Lloyd Harbert, director of the food safety and technical services division of the Foreign Agriculture Service's International Policy Office, says that Commerce may need a database because the agreements it monitors cover many sectors of the economy, but USDA doesn't. "We've already documented the trade problems. We're working on solving them," Harbert said.

Geoffrey W. Wiggins, director of the Foreign Agriculture Service's Multilateral Trade Negotiations Division, says USDA "for years has had a close relationship with the agriculture sector" and that his agency quickly investigates complaints brought by agricultural firms that are "testing the boundaries" of new trade laws. Wiggins said that he assigned employees who had worked on negotiating trade agreements to monitoring them but will not ask for additional staff until he needs additional negotiators for agricultural talks scheduled to begin in 1999.

An Agriculture Department spokesman said trade agreement monitoring is the primary responsibility of 31 employees who are backed up by agricultural attachés in 77 countries. USDA did establish a new assistant deputy administrator position to coordinate issues regarding health regulations on food exports and doubled the staff of the food safety and technical services division to 14 employees to help monitor such rules.

Over the next few years, the U.S. trade agencies' workload will become even heavier. In 1997, the United States was party to the completion of what Barshefsky calls the "trifecta" of global agreements on 21st century industries-information technology, telecommunications and financial services-which will require the United States to find out if other countries are in fact opening major sectors of their economies to competition.

The United States also still has many cases pending with the WTO. Barshefsky says U.S. negotiators will continue working on further multilateral trade negotiations scheduled to begin in 1999 and on other regional and bilateral pacts, particularly the effort to create a Free Trade Area of the Americas.

Dorgan argues that only the President can strengthen the U.S. trade effort to the point that Americans will feel comfortable with new trade agreements. Barshefsky says all the Cabinet agencies will have to mount an education effort to help the American people "understand that we live in a global economy," that 80 percent of job dislocation is brought about by technology and only 20 percent by trade, and that trade improves most workers' lives by creating jobs and keeping consumer prices down.

Whether Barshefsky and other U.S. trade officials can succeed in those efforts with their current small staffs located in many different agencies will determine whether President Clinton gets fast track trade authority-or becomes the first president not to get it since fast track was first passed in 1974.