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Department of State and U.S. Information Agency

Recommendations and Actions

DOS03: Improve State Department Efforts to Promote U.S. Business Overseas

Background

The State Department is one of numerous government agencies involved in promoting U.S. exports. The Department of Commerce, the U.S. Trade Representative, the Export-Import Bank, the Department of Agriculture, and the Department of Defense are among several agencies that participate in some aspect of U.S. business promotion. In recent years, Congress has authorized increased funding for this function in 10 different federal agencies. However, the State Department has no line item in its budget for export promotion, and currently receives no additional funding, even though global competitiveness is a foreign policy priority.

Coordination among these agencies is good in many overseas posts where ambassadors have forged a cooperative effort to assist U.S. businesses. However, in Washington, agencies tend to work independently, thereby increasing the risk of duplicative government efforts in some areas and a lack of services in other areas. This fragmented approach to promotional activities makes it very difficult for businesses to determine which government agency is best suited to meet their overseas business development needs and complicates U.S. efforts to represent its economic interests abroad.(1)

Policy Coordination. Not only is the implementation of promotion programs fragmented, but the policymaking structure is similarly uncoordinated. This lack of coordination is being addressed, however, by the newly formed Trade Promotion Coordinating Committee (TPCC)-- which represents 19 federal agencies including the State Department. The Committee will submit a proposed federal trade promotion strategy to Congress by September 30, 1993.(2) Regardless of the specific provisions of the TPCC strategy, it is clear that each of the affected federal agencies will have to improve its day-to-day coordination and refine the scope of its activities in order to meet the TPCC objectives. Furthermore, the finite resources available to these agencies make it imperative that they work together to avoid duplication of effort and to ensure that their respective export promotion services are value-added and targeted to meet the needs of the private sector. The Department of Commerce should be the lead agency in export promotion policy.

The State Department's Role. Before 1980, the Department of State had primary responsibility for the implementation of nonagricultural export promotion programs and activities overseas. In 1979, Congress required the President to reorganize executive branch trade functions to improve the effectiveness of federal business promotion programs. In response, the President implemented a plan that transferred the State Department's commercial positions (roughly 162 officers in 65 countries) to the Department of Commerce.(3)

To facilitate a smooth transition, the Departments of Commerce and State negotiated a memorandum of understanding that created a framework for operating a Foreign Commercial Service (FCS) at Commerce after the reorganization. Among other things, the memorandum stipulated that the State Department's economic officers would take the lead in business promotion activities at non-strategic posts (where Commerce FCS officers were not present), but that the Department of Commerce would administer their workload together with that of its own FCS officers.(4) This arrangement is still in effect. Today, the State Department's economic officers take the lead in commercial affairs in over 100 countries, while the Department of Commerce FCS officers take the lead on commercial issues in roughly 130 posts in 69 countries.

The emphasis of U.S. foreign policy is shifting from defense to economic interests. In an effort to improve the State Department's overseas network for export promotion purposes, Congress included language in the Foreign Affairs Authorization Act of 1986 and 1987 requiring increased participation of U.S. embassies in the promotion of U.S. business interests.(5)

The State Department has always provided some useful services to U.S. businesses--services that are not duplicated by other agencies or even private sector organizations. For example, many U.S. ambassadors and State Department officers have played a pivotal role in helping U.S. businesses establish contacts with foreign governments and negotiate the removal of barriers to U.S. foreign trade. In other cases, the department's relationships with foreign governments, international associations, and many large U.S. and foreign businesses overseas have helped U.S. companies out of difficult situations. It should be noted, however, that although the level of commitment on the part of ambassadors and other agencies represented at the mission has improved recently, it has varied from year to year and post to post.

The State Department shares political information, in verbal or written form, with businesses upon request. This information, which has been declassified from State Department reports, can be helpful to businesses because it provides information on issues such as political stability and intergovernmental relations within countries where U.S. businesses are seeking to operate.

The Department of State also provides a variety of economic and commercial reports (such as the "Economic Trends" reports) to Congress and the business community. Much of this information is included in the National Trade Data Bank (NTDB), the automated information retrieval system managed by the Department of Commerce. Though the NTDB is inexpensive to operate and its products are widely available nationwide, many U.S. companies are unaware of it, or find that the information is not timely or only partially helpful. Since the inception of the NTDB a few years ago, the Department of State has been engaged in efforts to increase the amount of its reporting placed in the NTDB. Critics have noted, however, that State's economic reporting must first be refocused to increase its usefulness to the business community, and then more of it should be made available to the public.

Part of the problem is that economic officers often lack the appropriate understanding of business issues or trade practices to provide the most relevant information for trade promotion. Another part of the problem is priorities. State economic and political sections devote most of their time to reporting on bilateral and multilateral problems and negotiations, as well as responding to the requests for information and action from numerous government agencies. This reduces the amount of time spent on reporting business-related issues.

To improve this situation, the State Department must expand the focus of its economic reporting to meet the needs of the business community, train reporting officers to be more effective in responding to these needs, and work with Commerce and other agencies to improve the private sector's awareness of and accessibility to commercial related reporting.

Additionally, the State Department's own export promotion activities have been hampered by a lack of coordination and communication among key bureaus in the department. The extent of this problem has been identified by the department itself and proposals have been made to improve communications and coordination within bureaus, among key bureaus, and at the interagency level. The department has identified key areas of knowledge such as commercial skills, and is revamping training programs under Secretary Christopher's Diplomacy for Global Competitiveness initiative.(6) The Secretary has given business promotion high priority and instructed all ambassadors to assume personal leadership of a concerted and integrated effort to involve all agencies represented in the embassies. The Secretary has also created the position of Coordinator for Business Affairs to marshall the department's resources in support of U.S. business.

As a part of an internal reinvention effort, the department is drawing up plans to increase the involvement of all posts in business promotion. This increased involvement will be supported by a Business Facilitation Laboratory. It will, among other things, provide for the creation of a Business Facilitation Incentive Fund Program. The department proposes to set aside funding for this program to encourage and accelerate business facilitation activities at all posts and geographic bureaus.

Actions

1. The State Department should improve coordination with other agencies involved in international trade.

The State Department should improve coordination at all levels with the Department of Commerce and other agencies on the Trade Promotion Coordinating Committee to share trade information and implement an export promotion strategy. A state-of-the-art interagency electronic mail capability would improve communications.

2. The State Department should define the scope of its business facilitation activities.

The department should provide a value-added effort to the promotional activities of the Department of Commerce and other agencies. The State Department should maintain some current business promotion activities while enhancing others. These should include:

--- Refocusing the nature of political-economic reporting and analysis at all posts to meet the needs of U.S. businesses. This step may require cutting back on more traditional reporting, including that required by other agencies. It will certainly require a better understanding on the part of reporting officers about the kind of information most useful to businesses. Expanded exchange programs with the business community and additional training as part of the Department's Diplomacy for Global Competitiveness initiative, for example, can provide this understanding.

--- Seeking ways to improve the private sector's awareness of and accessibility to political and economic/commercial reporting. The NPR supports the State Department's goal to work closer with the Department of Commerce to publicize more widely the NTDB and promote greater interaction between the private sector and the federal government. This recommendation is included in the State Department's Business Facilitation Laboratory, within which a business outreach program is proposed.

--- Redoubling advocacy efforts for U.S. businesses at all posts. To this end, the department should continue to expand its commercial training activities. It should also play a major role in any interagency group on advocacy created by the TPCC.

--- Improving efforts on a missionwide level to enhance export promotion activities. This means enhanced coordination at overseas missions among all federal agencies to promote exports.

3. The State Department should rotate Foreign Service officers to the Department of Commerce headquarters and field offices, where possible.

Such rotations could be part of the State Department's new training program or its tours of duty for senior officers.While an agreement exists between the Departments of Commerce and State to set provisions for the exchange of economic officers, few officers take advantage of this opportunity. In fact, only one economic officer has been on detail to the Commerce Department in the last five years.

While certain obstacles to rotations do exist, such as workload arrangements and the ability of the departments to arrange rotations related to the officers' assignments, the President's increased emphasis on business promotion activities should spur the State Department to explore new and creative ways to increase rotational opportunities. This experience would dramatically enhance officers' understanding of Commerce's role in export promotion.

4. The State Department should improve coordination between various internal bureaus to facilitate the exchange of vital trade information.

Communication should occur at all levels of the organization to facilitate the exchange of trade information and raise the awareness of all bureaus to business-related activities within the agency. Commercial coordinators in each of the bureaus would be the focus for this effort.

5. The State Department should provide greater authority and resources to ambassadors to improve the promotion of U.S. business interests.

The increased authority should be given to ambassadors at posts where the United States has strategic economic interests. Among their duties should be the establishment of standards for measuring progress in business promotion efforts and a strategy for conducting these activities.

Implications

The above recommendations will facilitate increased cooperation between the State Department and other federal agencies involved in trade promotion activities. Their implementation will also improve the accuracy, quality, and timeliness of each agency's products and services provided to the business community. Additionally, it will serve to clarify the roles and responsibilities of the almost 20 agencies involved in such activities.

Fiscal Impact

Significant efficiencies could be achieved in the form of improved service to the business sector. While the above proposals can reasonably be expected to produce some savings, there will be costs associated with additional training for State Department personnel and new equipment. Neither the savings nor the costs can be specifically estimated at this time.

Endnotes

1. U.S. General Accounting Office, Export Promotion: Governmentwide Strategy Needed for Federal Programs (Washington, D.C.: U.S. General Accounting Office, March 15, 1993), pp. 3-4.

2. Note that the National Economic Council (NEC) is responsible for recommending U.S. economic policy to the President, and is not represented on the TPCC. Ibid., pp. 4-5. Additionally, see the NPR Accompanying Report Department of Commerce for proposed roles of the Department of Commerce, the TPCC, and the NEC in federal export promotion.

3. U.S. Department of State, Office of Inspector General, A Review of the Export Promotion Efforts of the Department of State (Washington, D.C., 1989), p. 5.

4. Ibid.

5. U.S. Congress, House, Committee on Foreign Affairs and Senate, Committee on Foreign Relations, "Foreign Affairs Authorization Act, Fiscal Years 1986 and 1987," Legislation on Foreign Relations Through 1991, Vol. II (Washington, D.C.: U.S. Government Printing Office, January 1992), p. 194.

6. Soon after his confirmation, Secretary of State Warren Christopher launched a "Diplomacy for Global Competitiveness" initiative, designed to reorient training and management to strengthen the department's capability to advance U.S. economic interests abroad.

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