Foreign Relations of the United States, 1961–1963, Volumes VII, VIII, IX, Arms Control; National Security Policy; Foreign Economic Policy, Microfiche Supplement

435. Memorandum from Martin to Jones, February 2¹

February 2, 1961

SUBJECT

• Export Promotion

I understand you have been informed of the attitude of Senator Magnuson and some of his colleagues on the Senate Interstate and Foreign Commerce Committee in respect of reinstituting a separate Department of Commerce Foreign Service. Such a separate foreign service was included among the recommendations of a recent summary of the Committee’s forthcoming report on trade. This followed a staff report of last April which took a strong position on this point. It is apparent that several of the Committee members strongly favor such a development and are supported by some elements in the business community which feel, probably with some reason, that our commercial facilities abroad in recent years have been inadequate.

This situation was brought to sharp focus in a meeting in Secretary of Commerce Hodges’ office January 30, which Mr. Ball attended. Its purpose was to allow a group of businessmen representing some of the largest firms interested in foreign trade and investment abroad to present their views on what the United States Government should do to correct our balance-of-payments situation. Besides some ten or more businessmen, representatives of the President’s Council of Economic Advisers, Treasury, the Department of Labor, and the Export-Import Bank were present. The presentation by these businessmen elaborated on various sections of a report prepared by a committee of 14. It is of significance that the new Assistant Secretary of Commerce for International Affairs, Mr. Rowland Burnstan, was a member of this group. The pertinent section of their report follows:

“Foreign Service for Export”

Export promotion could be drastically improved by greater US Government initiative. Our government representatives stationed abroad today are not adequately trained in commercial reporting or representation. Further, they are more concerned with diplomatic niceties than in promotion of US commercial interests. Capable men should be recruited from the business community itself, by and under the charge of the Commerce Department. More funds and facilities should be put at their disposal, and they must be instructed to be active promoters of US exports. The fact that these men would, of course, continue to report to the Ambassador would advance the knowledge and sophistication of foreign service personnel from the top down in commercial matters.”

This comment follows the line also taken by the staff of the Magnuson Committee that export promotion requires the services of businessmen experienced in foreign trade under our Ambassadors, but reporting directly to the Department of Commerce. Mr. Elliott Haynes, editor of Business International and member of the group, said that they expected much more support by our embassies to promote American commercial interests than heretofore and that perhaps some 50 large U.S. corporations doing business abroad would make available one or two of their executives on a loan basis for an export drive under the Department of Commerce.

Those of us in the Department who have studied this problem believe that the present unified service is the most satisfactory means for sustained support of American business and that the present Foreign Service Act is sufficiently flexible to accommodate stepped-up personnel and activities if resources are made available. There is no question that we need to improve the commercial services offered by our embassies, for which reasonable amounts of financial support have been requested in the FY 1962 budget. The situation we face, however, is one which might result in unsatisfactory legislation from the standpoint of this Department and over-all U.S. interests.

I believe it would seriously impede our export efforts if we were now to dismantle the present commercial service and to establish it in another agency with all the problems of recruitment and organization, wholly apart from the fact that it would be expensive and wasteful. In this respect, I believe the Department’s position is fully defensible.

In regard to the employment of businessmen, however, there is some question as to the availability of the right type of people, at least in any number. Moreover, there is always the difficulty of such people adapting themselves readily to government organization. For general staffing in the middle grades, it is most difficult to attract competent business people at government salary levels without permanent status. Some top business executives experienced in foreign operations could undoubtedly contribute considerable spark and drive to the present export program if they could be fitted into our foreign service establishments.

I believe the Department should take the initiative in meeting this situation and propose as a suggestion the employment of 10 FSR–1’s from the business community to act as regional export promotion advisers to our various Ambassadors. I am informed that this can be done within our present personnel system. These advisers would be posted at London, Paris, Bonn, Tokyo, Bangkok, New Delhi, Buenos Aires, Beirut, Salisbury, and Mexico City, or such alternative posts as might be determined. These officers would require adequate travel and representation funds. As I envisage it, they would not be responsible for the day-to-day commercial reporting and activities but would be given special assignments on the export promotion aspects of commercial activities. They would be expected to travel extensively, make speeches, and establish highest level contacts in the business community. In some areas they would be accredited to several governments and operate on a regional basis. They would help and supplement the work of our regular commercial attaches and their staffs.

The highest rank for commercial attaches is currently FSO–2, with 8 officers serving in these posts, of which 6 are Department of Commerce employees. It would not be anticipated that the new higher adviser positions would be considered permanent or would be filled from the Foreign Service or from regular Department of Commerce employees, but only from the business world. These advisers would be nominated by Commerce, with the Department having the right to accept or reject such nominees.

This proposal is designed to test out the thesis that highly competent business people are available and could give real impetus to our export efforts. It would avoid the risks of drastic change at a time when our present export expansion program is just getting under way. Moreover, I believe such a proposal might satisfy the Magnuson Committee and obviate legislation unsatisfactory to the Department. If you concur, Mr. Ball may wish to sound out Secretary Hodges on the subject.

This proposal has been discussed with Mr. Herman Pollack and Mr. William Crockett.

1. Export promotion: Congressional interest in a stronger Department of Commerce role. No classification marking. 3 pp. Department of State, Central Files, 102.7/2–261.