Mr. BROOKS. Plan No. 3 carries out a provision of the recently enacted multilateral trade legislation by transferring to the Department of Commerce certain trade functions currently under the jurisdiction of the Department of State and Department of the Treasury. In addition, it increases the duties assigned to the Office of the Special Trade Representative by making the Trade Representative responsible for U.S. trade negotiations, coordinator of U.S. trade policy, and chief adviser to the President on trade matters. The plan also adds an additional, voting, non-Government affiliated member to the Board of Directors of the Overseas Private Investment Corporation and designates the Trade Representative a voting, ex officio member of that Board as well as its Vice Chairman. Both the Trade Representative and the Secretary of Commerce will sit on the Board of the Export-Import Bank, ex officio and without vote. I understand the President intends to issue an Executive order to further clarify the duties and responsibilities of the Office of U.S. Trade Representative. Mr. Horton, the gentleman from New York. Mr. HORTON. Thank you, Mr. Chairman. This trade reorganization proposal now before us could well be the most important plan we will have looked at since the President started sending up these plans in 1977. I say this for two reasons. First, there is no question that the trade functions of our Government must be reorganized into a more rational structure. Approximately one dozen departments and agencies in the Federal Government are currently responsible for some aspect of the formulation and implementation of U.S. foreign trade policy. Second, equally, or perhaps even more important, is the fact that while foreign trade is vitally important to our economy, it is unfortunately shrinking. Some of the statistics point this out. In 1968, the United States had a trade surplus of $1 billion; in 1978, our trade deficit was approximately $28.5 billion. In 1960, the United States had a 20-percent share of the world export market: in 1978, that share had shrunk to just 14 percent. In 1968, the value of U.S. exports was twice that of Japan and slightly greater than West Germany's. In 1978, Janan's exports exceeded U.S. exports, and Germany exports were almost 25 percent greater than those of the United States. In 1978. U.S. imports of oil alone totaled $54 billion. By 1990, experts estimate that, in current dollars. the U.S. oil bill will reach approximately $178 billion, meaning that our trade balance will worsen unless something is done. Finally, the Congressional Budget Office has estimated that for every billion dollars worth of exports, 40.000 to 50,000 additional American jobs are created. And I could go on and on. Trade, in short, is very important to this country. Since there is no question of the need for reorganization from both an organizational and substantive viewpoint, the question is. does this plan before us meet all the desired goals? In some respects, I think that the answer is "yes." There seems little question that trade is given a higher profile from this proposal. The Office of Special Trade Representative is strengthened with little doubt left that he is the man in charge of trade. He seems to have clear authority for all important trade negotiations, and more important, he is in charge of trade coordination. With the creation of a new Under Secretary of Commerce and two new Assistant Secretaries for Trade Matters, there is no question that trade will also be given a higher profile within the Department of Commerce. These are, in my opinion, positive steps. On the other hand, there are some problems with the proposal. The main criticism of this plan is that it splits policy from implementation with the former in STR and the latter in the Department of Commerce. Then, from a substantive viewpoint, there is nothing in the plan, per se, that will enhance foreign trade export policy. There is the potential that with a new Assistant Secretary of Commerce for Export Development and the commercial attachés being transferred to Commerce, that export promotion will be enhanced, but this is something that must be carefully monitored. Therefore, when you add both the "pluses" and "minuses" of the plan before us, I think you have to conclude that it is a positive step, but it is only a first step. I look forward to hearing from our witnesses this morning and hope that any fears I have will be allayed. We are fortunate, I think, that the new STR office will be headed by Governor Askew who is preceded by an excellent and outstanding reputation. Unfortunately, we are losing our very competent Secretary of Commerce who I understand has spent quite a lot of time on this proposal. And, of course, I do welcome our friend, OMB Director Jim McIntyre whom we have seen many times on these various proposals. Mr. Chairman, I am glad to see that the Office of OMB is well represented here this morning. Mr. BROOKS. Thank you, Congressman Horton; we appreciate that. Our first witness is the Director of the Office of Management and Budget, James McIntyre, Jr., well known to the subcommittee. He has testified here on several occasions in the past in hearings, including background hearings on trade reorganization held in August. He is a native of Georgia. As a lawyer, he served in various legal capacities in Georgia for the University of Georgia, the Georgia Municipal Association, and for the State of Georgia. He has been Director of the OMB for 2 years. We are delighted to see you back down here, Mr. McIntyre. Accompanying Mr. McIntyre is Eric Hirschhorn, a former staff member of this committee, an able and competent man; and a very distinguished gentleman, Harrison Wellford, who has a broad background in government, economics, business, and politics. We are delighted to see you again. STATEMENT OF JAMES T. MCINTYRE, JR., DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET; ACCOMPANIED BY HARRISON WELLFORD, EXECUTIVE ASSOCIATE DIRECTOR FOR REORGANIZATION AND MANAGEMENT; AND ERIC HIRSCHHORN, DEPUTY ASSOCIATE DIRECTOR FOR INTERNATIONAL AFFAIRS AND TRADE ORGANIZATION Mr. MCINTYRE. Thank you, Mr. Chairman. It is a pleasure to appear before you today to discuss the President's proposal for reorganization of our international trade functions. I have a lengthy statement that I would like to submit for the record, so that I may confine my remarks to some highlights in that statement. Mr. BROOKS. Without objection, your full statement will appear in the record at this point. [Mr. McIntyre's prepared statement follows:] JAMES T. MCINTYRE, JR., DIRECTOR SUBCOMMITTEE ON LEGISLATION AND NATIONAL SECURITY Mr. Chairman and Members of the Subcommittee: I am pleased to appear before you today to discuss the President's proposal for reorganization of our international trade functions. I want to emphasize at the outset that although the formal proposal has been transmitted to the Congress by the President, its final form was arrived at after extensive consultations with Members of the House and the Senate. The constructive suggestions of such Members as Chairman Brooks, Gillis Long, Charles Vanik, Jim Jones, and Bill Frenzel played a large part in shaping the reorganization plan that you are considering today. Recent events --including our negative trade balance, increasing dependence on foreign oil, and the resulting pressure on the dollar have focused much attention on the vitality of our international trade position and on the way our trade machinery is organized. New challenges, such as MTN implementation and trade with state economies, will further test our Government organization. The primary goal of this reorganization is to improve the Government's capacity to strengthen the export performance and import competitiveness of U.S. industry, taking into account the interests of all elements of our economy. Accordingly, this reorganization is designed to prepare the Federal Government for aggressive enforcement of the MTN codes, which potentially open new markets for U.S. labor, farmers and business. It aims to improve our export promotion activities so that U.S. exporters can better take advantage of trade opportunities and challenges in foreign markets. And it provides an effective mechanism for shaping the disparate, legitimate views of numerous Executive branch agencies into an effective, comprehensive U.S. trade policy. |