378. Memorandum From Secretary of State Rogers to President Nixon 1
- Secretary Stans’ Memorandum of December 23, 1971
I refer to Secretary Stans’ memorandum of December 23, 1971,2 to you in which he renews his recommendation that the commercial and economic functions of the Foreign Service be supplanted by a Foreign Commercial Service within the Department of Commerce, and, accordingly, that the Administration support S. 2754, which was recently introduced by Senator Magnuson. For the following reasons, I continue strongly to oppose this recommendation:
- Contrary to Secretary Stans’ assertion that what he terms the “inadequacy of our commercial representation abroad” has been a significant factor in our trade deficit, it is my understanding that the major factors have been our domestic inflation and an over-valued dollar. With the corrections in the situation which you have now achieved, plus our immediate and longer-term efforts to negotiate certain changes in international trade policies, a major favorable shift in our trade balance should take place over the next few years.
- The foregoing, of course, does not diminish the importance of our official USG commercial representation abroad and increasing its effectiveness wherever possible. In this I fully agree with Secretary Stans and, as in the past, am prepared to consider the assignment to appropriate positions abroad of any and all qualified nominees from the Department of Commerce whom Secretary Stans is able to furnish. I would also welcome whatever strengthening and improvement Secretary Stans is able to make in the Department of Commerce which, under our present arrangements, has the primary responsibility of “backstopping” all of our trade-promotion activities abroad, whether carried out by personnel specifically charged with this task or by Ambassadors, Consular Officers or other Foreign Service personnel. I look on the job not as being just that of specialized personnel but also that of the entire Foreign Service whenever and however appropriate. This is being reemphasized to all of our posts.
- In this connection, it is my belief that, however active our USG personnel should and must be as “salesmen” of US products abroad, the primary impetus must come from American business itself. The large firms who produce the major part of our exports normally have competent staffs dealing with their foreign business, and these firms generally deal with the Ambassador or DCM on broad policy matters. It is the smaller and medium-size American firms that rely more on our economic/commercial officers for advice and assistance. In this connection, I believe much more can be done than has been done in the past to encourage such firms to become more “export minded.” It is my hope that the Department of Commerce can increase and make its efforts in this field in the United States even more effective. We will do all we can to support this effort through the Department in Washington and our missions overseas.
- With respect to the “economic functions” abroad of the Foreign Service, which Secretary Stans proposes also be transferred to the Department of Commerce, it must be noted that the Foreign Service carries on a wide range of economic functions entirely outside the purview of the Department of Commerce. These involve a wide range of USG interests and activities, such as those of Labor, Transportation, Interior, Agriculture, Treasury, General Services Administration, Ex-Im Bank, OEP, AEC, CAB, FAA, etc. To attempt to differentiate those economic functions within the purview of the Department of Commerce from the wide range of other economic functions of the Foreign Service would be an impossible task and, in any event, to the degree that it could be accomplished would unquestionably bring about unnecessary duplication and inefficient and costly use of manpower.
- Secretary Stans underlines the importance the British and other foreign competitors attach to their overseas commercial work, but he fails to note that the British moved from an independent commercial service under their Board of Trade to a unified foreign service under their Foreign Office, that is, in precisely the opposite direction from that advocated by Secretary Stans. The Canadians are now in the process of changing to a unified foreign service. In both cases the decision to unify was taken because a separate commercial service not only brought organizational inefficiencies, but also caused ambassadors and senior diplomatic officers to give insufficient attention to business interests. The United States itself deliberately moved from a fragmented to a unified service in 1939. In fact, nearly every other major trading country organizes its foreign commercial service as we do.
- With respect to weight of effort, I might note that the Foreign Service now has 486 economic and commercial positions abroad as compared with 477 positions for all political or political related positions. Neither of these figures includes ambassadors, DCMs or [Page 825]principal consular officers who in many posts devote the major part of their effort to economic/commercial matters.
- I was not persuaded by the citations Secretary Stans gave in his memorandum in favor of his position for a separate overseas commercial service. The National Export Expansion Council is an organ created solely by the Department of Commerce, and its coordinator is the Director of the Commerce Department’s Bureau of International Commerce. The independent consulting firm cited presumably is Cresap, McCormick and Paget which, under the direction of Townsend Hoopes, the former Deputy Assistant Secretary of Defense for International Affairs and then Under Secretary of the Air Force in the Johnson Administration, made a survey of the State Department’s Foreign Service. This survey was contracted and paid for by the Department of Commerce without advance consultation with the Department of State. The Williams Commission’s recommendation was that our commercial services be given greater status and importance, but not that these services be transferred to the Department of Commerce.
- In spite of the large number of letters and other expressions of appreciation for assistance in economic/commercial matters we consistently receive from American business circles, I do not deny that there are cases of dissatisfaction. In our experience those cases arise primarily where there are competitive American interests involved, and thus the Foreign Service post is inhibited in promoting the interests of any particular American firm. This problem is inherent in our competitive economy and is often not present to the same degree among our foreign competitors, who are more likely to be able officially to promote the interests of a single “chosen instrument.”
- I am confident State and Commerce can work together closely and effectively under the present organization of the Foreign Service, and that the Secretary of Commerce and I can cooperate to ensure that we are doing the maximum to provide timely and effective assistance to the business community. Your intention to nominate Willis C. Armstrong—who is now President of the U.S. Council of the International Chamber of Commerce—as Assistant Secretary of State for Economic Affairs should be of great value in this connection.