377. Memorandum From Secretary of Commerce Stans to President Nixon1
- U.S. Foreign Commercial Services
This is a subject which we discussed early in your Administration. Since then, the report of the Williams Commission identifies it as a major problem: that our foreign policy and foreign representation give insufficient weight to our business interests overseas.
In this connection, I suggested in 1969 the advantages of transferring the commercial and economic functions of the Foreign Service to the Department of Commerce and you encouraged me to pursue the matter. Since then, the Departments of Commerce and State have discussed this and related matters extensively, but without agreement (Enclosure A).2 In my judgment, satisfactory commercial representation can be achieved through the Foreign Service only if the State Department recognizes and announces publicly that, except in extraordinary cases, commercial work is its most urgent task. Anything less will not [Page 821] accomplish the change of attitude needed in the Foreign Service. Our discussions with the State Department make it clear, however, that they will resist a shift in emphasis and a restructuring of the degree necessary, and that acceptable commercial representation abroad will be obtained only by new legislation or executive order.
Legislation to transfer the commercial and economic responsibilities of the Foreign Service to the Department of Commerce was recently introduced by Senator Magnuson in S. 2754. This bill would establish in the Department of Commerce an “International Commercial Service” to provide economic and commercial representation in our diplomatic missions throughout the world. The bill would also specifically authorize the Secretary of Commerce to engage in a broad range of export expansion activities.
In my judgment S. 2754 affords an attractive opportunity and vehicle for a Presidential decision to strengthen and upgrade our commercial services and representation abroad. I request your direction that the Administration support and testify favorably on S. 2754.
During the past decade, we have witnessed the steady erosion of our position in world trade. This erosion has culminated in a projected trade deficit of perhaps as much as $2 billion for the current calendar year. The deterioration of our international competitive position is attributable to many reasons, but a significant factor is the inadequacy of our commercial representation abroad. Although we are the major trading nation in the world, we maintain overseas a smaller number of commercial and trade promotion personnel than do other nations, and we afford those commercial representatives roles of only minor importance and little prestige.
There is increasing and voluminous evidence that the U.S. business community lacks confidence in and respect for the Government’s foreign commercial services. U.S. business needs and wants aggressive Government support overseas. The Williams Commission report confirms the need for an expanded and expert commercial service with increased status and importance. The National Export Expansion Council adopted a resolution in March urging the creation of a business-oriented Foreign Commerce Corps. The Ash Council made a similar recommendation last November, and a special study by Cresap, McCormick and Paget further documented the need for more effective foreign representation of U.S. business interests. The U.S. Chamber of Commerce in Asia supports the proposition and calls for an era of “economic diplomacy” for the United States.
Our foreign competitors have recognized—to their great competitive advantage—the primarily commercial responsibilities and functions [Page 822] of their Foreign Service. For example, the Duncan Report on British Overseas Representation stated that “Commercial work is the most urgent task of (British) overseas representatives.” The Duncan Report went on to state that “it seems right that it (commercial work) should absorb more of the Services resources than any other function.” The views of our foreign competitors on the dignity and significance of their commercial representation contrast markedly to the inadequate position, training and background of U.S. Foreign Service commercial personnel. It is indeed ironic that as we enter a generation of peace in which competition between nations will take the form of commercial endeavor rather than cannon shot, the Department of Commerce, which is the agency primarily charged with important international trade and investment responsibilities, lacks an official overseas service.
Presidential support of S. 2754 or similar legislation would assure the strengthening and upgrading of U.S. commercial representation abroad. In a new era of trade negotiations and trade competition, I believe that this should be a matter of top priority.
If you consider it inappropriate to support or propose legislation to create a foreign commercial service within the Commerce Department, or if in your judgment legislation of this sort would not be forthcoming from the Congress, I strongly urge that you direct by executive order the transfer of the commercial and economic functions of the Foreign Service to the Department of Commerce. There are direct precedents for this action in the creation of the Foreign Agriculture Service in 1954, and the earlier establishment of independent representation overseas for both the foreign aid program and the U.S. Information Agency. Detailed proposals and procedures for such a realignment of interdepartmental responsibilities have been submitted to Dr. Kissinger (Enclosure B).3 None of these would affect the position of the Ambassador as the Chief of Mission in each country.
Announcement of a favorable decision on S. 2754 or the realignment of international commercial responsibilities would be dramatic proof of the trade expansionist thrust of the New Economic Policy. It would help revitalize the leadership and enthusiasm of the business community and offer a timely response to Congressional unrest caused by the present bleak trade outlook.