International Trade
Prior Updates of the Trade Advisory System Offer Insights for Current Review Gao ID: GAO-09-842T July 21, 2009This testimony provides a summary of key findings from the comprehensive report on the trade advisory system that we provided to the Congress in 2002, as well as from our more recent report in 2007 on the Congressional and private sector consultations under Trade Promotion Authority. In particular, this testimony highlights our recommendations in three key areas--committee consultations, logistics, and overall system structure--as well as the changes that have been made by the U.S. agencies since those reports were published.
Our 2002 survey of trade advisory committee members found high levels of satisfaction with many aspects of committee operations and effectiveness, yet more than a quarter of respondents indicated that the system had not realized its potential to contribute to U.S. trade policy. In particular, we received comments about the timeliness, quality, and accountability of consultations. For example, the law requires the executive branch to inform committees of "significant departures" from committee advice. However, many committee members reported that agency officials informed committees less than half of the time when their agencies pursued strategies that differed from committee input. In 2002, we found that slow administrative procedures disrupted committee operations, and the resources devoted to committee management were out of step with required tasks. In several instances, for example, committees ceased to meet and thus could not provide advice, in part because the agencies had not appointed members. However, the length of time required to obtain a security clearance contributed to delays in member appointment. To address these concerns, we recommended the agencies upgrade system management; and in response, they began to grant new advisors interim security clearances so that they could actively participate in the committee while the full clearance is conducted. Despite these actions, however, trade advisory committee chairs we contacted in 2007 told us certain logistics such as delays in rechartering committees and appointment of members still made it difficult for some committees to function effectively. We found several committees had not been able to meet for periods of time, either because agencies allowed their charters to lapse or had not started the process of soliciting and appointing members soon enough to ensure committees could meet once they were rechartered. The Labor Advisory Committee, for example, did not meet for over 2 years from September 2003 until November 2005 due in part to delays in the member appointment process. These types of process delays further reduced a committee's ability to give timely, official advice before the committee was terminated, and the rechartering process had to begin again. This was particularly true in the case of the Labor Advisory Committee, which, at the time of our 2007 report, still had a 2-year charter. In addition to the need to improve certain committee logistics, we also found that representation of stakeholders is a key component of the trade advisory committee system that warrants consideration in any review of the system. In particular, as the U.S. economy and trade policy have shifted, the trade advisory committee system has needed adjustments to remain in alignment with them, including both a revision of committee coverage as well as committee composition.
GAO-09-842T, International Trade: Prior Updates of the Trade Advisory System Offer Insights for Current Review
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Testimony:
Before the Subcommittee on Trade, Committee on Ways and Means, House of
Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Tuesday, July 21, 2009:
International Trade:
Prior Updates of the Trade Advisory System Offer Insights for Current
Review:
Statement of Loren Yager, Director:
International Affairs and Trade:
GAO-09-842T:
[End of section]
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to appear today before the Subcommittee
to provide insight from GAO's work on the issues associated with the
private sector trade advisory system and public participation in the
development of trade policy. In particular, we have provided one
detailed report specifically on the subject of the trade advisory
system[Footnote 1] and another on the subject of Congressional and
private sector consultations under Trade Promotion Authority[Footnote
2]. The numerous negotiators, agency officials, and committee members
with whom we met in the course of our work emphasized that the trade
policy advisory committee system plays an important role in U.S. trade
policy and has made valuable contributions to U.S. trade agreements.
In my statement today, I will provide a summary of key findings from
the comprehensive report on the trade advisory system that we provided
to the Congress in 2002, as well as from our more recent report in 2007
on the Congressional and private sector consultations under Trade
Promotion Authority.[Footnote 3] In particular, I will highlight our
recommendations in three key areas--committee consultations, logistics,
and overall system structure--as well as the changes that have been
made by the U.S. agencies since those reports were published. I believe
that this material is directly relevant to the stated focus of this
hearing as the reports are based on extensive input from major
stakeholder groups and provide numerous insights into the revisions to
the system that have been implemented as a result of the GAO
recommendations.
My remarks are based primarily on the two assignments mentioned above
that GAO conducted on the trade advisory system and the consultation
process. To address these issues, we surveyed 720 of the 735 committee
members in 2002 about their experiences in the system; interviewed
every type of participant in the committee process, including selected
committee chairs, members, relevant U.S. officials, nongovernmental
interest groups, and trade experts; and analyzed USTR and committee
data and documents. In addition, we collected information from USTR and
other agencies on the changes that they have made in recent years in
response to the recommendations in those reports. We conducted our work
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provided a reasonable basis for our findings and
conclusions based on our audit objectives.
Background:
Congress established the trade advisory committee system in Section 135
of the Trade Act of 1974 as a way to institutionalize domestic input
into U.S. trade negotiations from interested parties outside the
federal government. This system was considered necessary because of
complaints from some in the business community about their limited and
ad hoc role in previous negotiations. The 1974 law created a system of
committees through which such advice, along with advice from labor and
consumer groups, was to be sought.
The system was originally intended to provide private sector input to
global trade negotiations occurring at that time (the Tokyo Round).
Since then, the original legislation has been amended to expand the
scope of topics on which the President is required to seek information
and advice from "negotiating objectives and bargaining positions before
entering into a trade agreement" to the "operation of any trade
agreement, once entered into," and on other matters regarding
administration of U.S. trade policy.[Footnote 4] The legislation has
also been amended to include additional interests within the advisory
committee structure, such as those represented by the services sector
and state and local governments. Finally, the amended legislation
requires the executive branch to inform the committees of "significant
departures" from their advice.[Footnote 5] The Trade Act of 1974
required the President to seek information and advice from the trade
advisory committees for trade agreements pursued and submitted for
approval under the authority granted by the Bipartisan Trade Promotion
Authority Act of 2002.[Footnote 6] The Trade Act of 1974 also required
the trade advisory committees to provide a report on the trade
agreements pursued under the Bipartisan Trade Promotion Authority Act
of 2002 to the President, Congress, and USTR.[Footnote 7] This
requirement lapsed with TPA on June 30, 2007.
The trade advisory committees are subject to the requirements of the
Federal Advisory Committee Act (FACA),[Footnote 8] with limited
exceptions pertaining to holding public meetings and public
availability of documents.[Footnote 9] One of FACA's requirements is
that advisory committees be fairly balanced in terms of points of view
represented and the functions the committees perform.[Footnote 10] FACA
covers most federal advisory committees and includes a number of
administrative requirements, such as requiring rechartering of
committees upon renewal of the committee.[Footnote 11]
Four agencies, led by USTR, administer the three-tiered trade advisory
committee system. USTR directly administers the first tier overall
policy committee, the President's Advisory Committee for Trade Policy
and Negotiations (ACTPN), and three of the second tier general policy
committees, the Trade Advisory Committee on Africa (TACA), the
Intergovernmental Policy Advisory Committee (IGPAC), and the Trade and
Environment Policy Advisory Committee (TEPAC), for which the
Environmental Protection Agency also plays a supporting role. The
Department of Labor co-administers the second tier Labor Advisory
Committee (LAC) and the Department of Agriculture co-administers the
second tier Agricultural Policy Advisory Committee (APAC). The
Department of Agriculture also co-administers the third tier
Agricultural Technical Advisory Committees (ATACs), while the
Department of Commerce co-administers the third tier Industry Trade
Advisory Committees (ITACs). Ultimately, member appointments to the
committees have to be cleared by both the Secretary of the managing
agency and the U.S. Trade Representative, as they are the appointing
officials. Figure 1 illustrates the committee structure.
Figure 1: Trade Advisory Committee Structure:
[Refer to PDF for image: illustration]
Top level:
The President.
Second level, reporting to The President:
U.S. Trade Representative USTR).
Third level, reporting to USTR:
Tier 1 committee: Advise on overall trade policy;
* President's Advisory Committee for Trade Policy and Negotiations
(ACTPN).
Fourth level, reporting to USTR:
Tier 2 committees: Advise on general policy areas;
* Trade Advisory Committee on Africa;
* Intergovernmental Policy Advisory Committee;
* Agricultural Policy Advisory Committee, Department of Agriculture;
* Labor Advisory Committee, Department of Labor;
* Trade and Environment Policy Advisory Committee, Environmental
Protection Agency.
Fifth level, reporting to USTR:
Tier 3 committees: Advise on technical aspects of trade agreements;
* Agricultural Technical Advisory Committees (ATACs), Department of
Agriculture:
- Animal and Animal Products;
- Tobacco, Cotton, and Peanuts;
- Grains, Feed, and Oilseeds;
- Processed Foods;
- Fruits and Vegetables;
- Sweeteners.
* Industry Trade Advisory Committees (ITACs), Department of Commerce:
- ITAC–1, Aerospace Equipment;
- ITAC–2, Automotive Equipment and Capital Goods;
- ITAC–3, Chemicals, Pharmaceuticals, Health/Science Products and
Services;
- ITAC–4, Consumer Goods;
- ITAC–5, Distribution Services;
- ITAC–6, Energy and Energy Services;
- ITAC–7, Forest Products;
- ITAC–8, Technologies, Services and Electronic Commerce;
- ITAC–9, Nonferrous Metals and Building Materials;
- ITAC–10, Services and Finance Industries;
- ITAC–11, Small and Minority Business;
- ITAC–12, Steel;
- ITAC–13, Textiles and Clothing;
- ITAC–14, Customs Matters and Trade Facilitation;
- ITAC–15, Intellectual Property;
- ITAC–16, Standards and Technical Trade Barriers.
Source: GAO and USTR.
[End of figure]
Consultations with Trade Advisory Committees Have Generally Improved:
Our 2002 survey of trade advisory committee members found high levels
of satisfaction with many aspects of committee operations and
effectiveness, yet more than a quarter of respondents indicated that
the system had not realized its potential to contribute to U.S. trade
policy. In particular, we received comments about the timeliness,
quality, and accountability of consultations. For example, the law
requires the executive branch to inform committees of "significant
departures" from committee advice.[Footnote 12] However, many committee
members reported that agency officials informed committees less than
half of the time when their agencies pursued strategies that differed
from committee input.
As a result, we made a series of recommendations to USTR and the other
agencies to improve those aspects of the consultation process.
Specifically, we recommended the agencies adopt or amend guidelines and
procedures to ensure that (1) advisory committee input is sought on a
continual and timely basis, (2) consultations are meaningful, and (3)
committee advice is considered and committees receive substantive
feedback on how agencies respond to their advice.
In response to those recommendations, USTR and the other agencies made
a series of improvements. For example, to improve consultations between
the committee and the agencies, including member input, USTR and TEPAC
members established a communications taskforce in 2004. As a result of
the taskforce, USTR and EPA changed the format of principals' meetings
to allow more discussion between the members and senior U.S. government
officials, and they increased the frequency of liaison meetings. In
addition, USTR instituted a monthly conference call with the chairs of
all committees, and now holds periodic plenary sessions for ATAC and
ITAC members. Furthermore, the agencies created a new secure Web site
to allow all cleared advisors better access to important trade
documents.
When we interviewed private sector advisory committee chairs again in
2007, they were generally pleased with the numerous changes made to the
committee system in response to our 2002 report. In particular, they
found the secure Web site very useful. Reviews of the monthly chair
conference call and plenary sessions were mixed, however. Chairs told
us that their out-of-town members might find the plenaries a helpful
way to gain an overall perspective and to hear cabinet-level speakers
to whom they would not routinely have access, whereas others found them
less valuable, largely due to the perceived lack of new or detailed
information. The chairs also said that USTR and the relevant executive
branch agencies consulted with the committees on a fairly regular
basis, although overall views on the opportunity to provide meaningful
input varied. For example, we heard from committee chairs who felt the
administration took consultations seriously, while other chairs felt
the administration told them what had already been decided upon instead
of soliciting their advice. USTR officials told us that the fact that
the advice of any particular advisory committee may not be reflected in
a trade agreement does not mean that the advice was not carefully
considered.
Changes Made to Improve Committee Logistics Have Not Been Fully Tested:
In 2002, we found that slow administrative procedures disrupted
committee operations, and the resources devoted to committee management
were out of step with required tasks. In several instances, for
example, committees ceased to meet and thus could not provide advice,
in part because the agencies had not appointed members. However, the
length of time required to obtain a security clearance contributed to
delays in member appointment. To address these concerns, we recommended
the agencies upgrade system management; and in response, they began to
grant new advisors interim security clearances so that they could
actively participate in the committee while the full clearance is
conducted.
Despite these actions, however, trade advisory committee chairs we
contacted in 2007 told us certain logistics such as delays in
rechartering committees and appointment of members still made it
difficult for some committees to function effectively. We found several
committees had not been able to meet for periods of time, either
because agencies allowed their charters to lapse or had not started the
process of soliciting and appointing members soon enough to ensure
committees could meet once they were rechartered. The Labor Advisory
Committee, for example, did not meet for over 2 years from September
2003 until November 2005 due in part to delays in the member
appointment process. These types of process delays further reduced a
committee's ability to give timely, official advice before the
committee was terminated, and the rechartering process had to begin
again. This was particularly true in the case of the Labor Advisory
Committee, which, at the time of our 2007 report, still had a 2-year
charter.
To address these concerns, we recommended that USTR and other agencies
start the rechartering and member appointment processes with sufficient
time to avoid any lapse in the ability to hold committee meetings and
that they notify Congress if a committee is unable to meet for more
than 3 months due to an expired charter or delay in member
appointments. Furthermore, we recommended that USTR work with the
Department of Labor to extend the Labor Advisory Committee's charter
from 2 years to 4 years, to be in alignment with the rest of the trade
advisory committee system.
USTR and the other agencies have taken some steps to address these
recommendations. In May 2008, for example, the Labor Advisory
Committee's charter was extended to 4 years. Not enough time has
passed, however, to assess whether steps taken fully address the
problems associated with rechartering and member appointment, since at
present all committees have current charters and members appointed.
Furthermore, even though committees are now chartered and populated,
some of them have not met for over three years, despite ongoing
negotiations of the Doha Round of the World Trade Organization (WTO),
including the July 2008 ministerial meeting in Geneva. For example,
although the ATAC charters were renewed in May 2007 and members
appointed in January 2008, the FACA database shows that no ATAC has
held a meeting since fiscal year 2006. In addition, although USTR held
multiple teleconferences for all first and second tier advisors in
fiscal year 2008, LAC and APAC members did not participate.[Footnote
13] It is unclear, therefore, whether the administration received
official advice from all trade advisory committees for the Doha
negotiations.
Representation of Key Stakeholders Remains Important for Any Review of
Trade Advisory Committee System:
In addition to the need to improve certain committee logistics, we also
found that representation of stakeholders is a key component of the
trade advisory committee system that warrants consideration in any
review of the system. In particular, as the U.S. economy and trade
policy have shifted, the trade advisory committee system has needed
adjustments to remain in alignment with them, including both a revision
of committee coverage as well as committee composition.
In our 2002 report, we found that the structure and composition of the
committee system had not been fully updated to reflect changes in the
U.S. economy and U.S. trade policy. For example, representation of the
services sector had not kept pace with its growing importance to U.S.
output and trade. Certain manufacturing sectors, such as electronics,
had fewer members than their sizable trade would indicate. In general,
the system's committee structure was largely the same as it was in
1980, even though the focus of U.S. trade policy had shifted from
border taxes (tariffs) toward other complex trade issues, such as
protection of intellectual property rights and food safety
requirements. As a result, the system had gaps in its coverage of
industry sectors, trade issues, and stakeholders. For example, some
negotiators reported that some key issues such as investment were not
adequately covered. In addition, nonbusiness stakeholders such as
environment and labor reported feeling marginalized because they have
been selected to relatively few committees. The chemicals committee,
representing what at the time was one of the leading U.S. export
sectors, had been unable to meet due to litigation over whether the
apparent denial of requests by environmental representatives for
membership on the committee was consistent with FACA's fair balance
requirements.
In 2007, several committee chairs we interviewed also expressed the
perception that the composition of their committees was not optimal,
either favoring one type of industry or group over another or industry
over nonbusiness interests. Furthermore, some members were the sole
representative of a nonbusiness interest on their committee, and those
we spoke with told us that although their interest was now represented,
they still felt isolated within their own committee. The result was the
perception that their minority perspective was not influential. At the
same time, while Congress mandates that the advisory committee system
is to involve representative segments of the private sector (e.g.,
industry, agriculture, and labor and environmental groups),[Footnote
14] adherence to these statutory requirements has been deemed non-
justiciable. For example, although the Departments of Agriculture and
Commerce solicit new members for their committees through Federal
Register notices which stipulate members' qualifications, including
that they must have expertise and knowledge of trade issues relevant to
the particular committees, neither the notices nor the committee
charters explained how the agencies would or have determined which
representatives they placed on committees. Without reporting such an
explanation, it was not transparent how agencies made decisions on
member selection or met statutory representation requirements.
As a result, we made a series of recommendations suggesting that USTR
work with the other agencies to update the system to make it more
relevant to the current U.S. economy and trade policy needs. We also
suggested that they seek to better incorporate new trade issues and
interests. Furthermore, we recommended they annually report publicly on
how they meet statutory representation requirements, including
clarifying which interest members represent and explaining how they
determined which representatives they placed on committees.
In response, USTR and the other agencies more closely aligned the
system's structure and composition with the current economy and
increased the system's ability to meet negotiator needs more reliably.
For example, the Department of Agriculture created a new ATAC for
processed foods because exports of high-value products have increased.
USTR and Commerce also split the service industry into several
committees to better meet negotiator needs. Furthermore, USTR and the
Department of Agriculture now list which interest members represent on
the public FACA database, as the Department of Commerce has been doing
for years. USTR's 2009 Trade Policy Agenda and 2008 Annual Report also
includes descriptions of the committees and their composition. It does
not, however, explain how USTR and the agencies determined that the
particular membership appointed to each committee represents a fair
balance of interests in terms of the points of view represented and the
committee's functions.
Conclusion:
Mr. Chairman, we appreciate the opportunity to summarize our work
related to the Trade Advisory System. Based on the recommendations we
have made in the areas of quality and timeliness of consultations,
logistical issues, and representation of key stakeholders, we believe
that USTR and other managing agencies have strengthened the Trade
Advisory System. However, we support the Committee's oversight and the
ongoing policy review of the system to ensure that it works smoothly
and the input received from business and non-business stakeholders is
sufficient, fairly considered, and representative.
[End of section]
Footnotes:
[1] GAO, International Trade: Advisory System Should be Updated to
Better Serve U.S. Policy Needs, [hyperlink,
http://www.gao.gov/products/GAO-02-876], (Washington, D.C.: September
24, 2002).
[2] GAO, International Trade: An Analysis of Free Trade Agreements and
Congressional and Private Sector Consultations under Trade Promotion
Authority, [hyperlink, http://www.gao.gov/products/GAO-08-59],
(Washington, D.C.: November 7, 2007).
[3] In addition to the above reports, GAO has also done recent work on
federal advisory committees in general. See GAO, Federal Advisory
Committees: Additional Guidance Could Help Agencies Better Ensure
Independence and Balance, [hyperlink,
http://www.gao.gov/products/GAO-04-328], (Washington, D.C.: April 16,
2004) and GAO, Federal Advisory Committee Act: Issues Related to the
Independence and Balance of Advisory Committees, [hyperlink,
http://www.gao.gov/products/GAO-08-611T], (Washington, D.C.: April 2,
2008).
[4] Trade Agreement Act of 1979, Pub. L. No. 96-39, § 1103, 93 Stat.
144, 308.
[5] 19 U.S.C. § 2155(i).
[6] 19 U.S.C. § 2155(a).
[7] 19 U.S.C. § 2155(e).
[8] 5 U.S.C. App. 2 §§ 1-14.
[9] 19 U.S.C. § 2155(f).
[10] 5 U.S.C. App. 2 § 5.
[11] 5 U.S.C. App. 2 § 14.
[12] 19 U.S.C. § 2155(i).
[13] A Department of Labor official told us that the call-in
information for each teleconferences was passed on to the LAC liaison
group. Both LAC and TEPAC, as well as ACTPN, have liaison groups that
meet more often than the official committee. According to members from
these committees, liaison meetings are at the staff level and are
usually fairly technical, whereas the principals' meetings tend to look
at broader, political issues.
[14] 19 U.S.C. § 2155.
[End of section]
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