Foreign Relations of the United States, 1977–1980, Volume XXVIII, Organization and Management of Foreign Policy

119. Memorandum From the Under Secretary of State for Management (Read) to All Assistant Secretaries and Office Heads¹

Washington, September 28, 1979

SUBJECT

• International Trade Reorganization

Reorganization Plan No. 3 of 1979, entitled “Reorganization of Functions Relating to International Trade” (attached),² was transmitted to the Congress by the President on September 24 with an accompanying Presidential message (attached)³ in response to a directive contained in the Trade Agreements Act of 1979⁴ calling for a proposal to restructure the international trade functions of the Executive Branch.

The announced goal of the reorganization is “to improve the capacity of the Government to strengthen the export performance of United States industry and to assure fair international trade practices, taking into account the interests of all elements of the economy.”

The proposal (1) places enhanced trade policy coordination and negotiation responsibilities in the Office of the United States Trade Representative (USTR) as successor to the Special Trade Representative (STR), and (2) transfers to the Department of Commerce from State and Treasury consolidated “general operational responsibility for major non-agricultural international trade functions of the USG, including export development, commercial representation abroad, the administration of the antidumping and countervailing duty laws, export controls, trade adjustment assistance to firms and communities, research and analysis, and monitoring compliance with international trade agreements to which the U.S. is a party.”

Export Promotion and Commercial Functions

The Presidential message and the September 26 State-Commerce Memorandum of Understanding (attached)⁵ make clear that the transfer from State to Commerce will involve: (1) all (162) full-time American overseas trade promotion and commercial positions; (2) responsibility for the commercial representation function in the countries (66) where such positions now exist or may be shifted to, or where any other full-time positions which Commerce may be authorized to provide are established in the future; and (3) the Foreign Service National employee positions, variously estimated to number 481–494, in which employees devote seventy percent or more of their time to commercial representation work.

In addition OMB may levy on State a requirement to transfer to Commerce a small number of domestic American positions which are determined to support the functions being transferred, but there is no agreement on the number of positions or criteria to be used in making such determination. (When the Bureau of Educational and Cultural Affairs with more than 200 positions was transferred to the USICA in 1978, five support positions were determined by OMB to move with the functions transferred.)

No other Department of State positions will be transferred to the Department of Commerce under this part of the reorganization proposal now or in the future.

The Department of Commerce will use the positions it receives by transfer and others it may decide to allocate to establish a Foreign Commercial Service (FCS). Under the reorganization plan the President authorizes the Secretary of Commerce to utilize the Foreign Service personnel authorities under existing law, or as revised by the pending Foreign Service bill, to set up the FCS personnel system. This will facilitate transfers to the FCS by Foreign Service personnel who are invited and elect to do so and details of other Foreign Service personnel on a rotational basis.

As indicated in the Memorandum of Understanding, Commerce has agreed that all American incumbents of the positions to be transferred may complete their scheduled tours of duty and may be offered additional tours thereafter. Furthermore Commerce has agreed to accept details by State into FCS positions of a minimum of 105 Foreign Service Officers in the first year of the FCS; 90 in the second year; 75 in the third and 60 in the fourth year. Included in these minimums will be Foreign Service Officers who were invited and elected to join the FCS. Higher levels may be maintained during this four year period if mutually advantageous to both Departments.

In addition the existing personnel interchange agreement may cover or be amended to cover other positions in the United States and abroad, and efforts will be made to carry it out on a reciprocal basis.

At the end of four years the two agencies will evaluate their experience and develop arrangements for ongoing exchanges at agreed levels.

The last two sections of the Memorandum of Understanding specify the role of each Department in assignments, administrative support, communications, diplomatic status/privileges/titles, benefits and other operational aspects of the Foreign Commercial Service and its relationship to the Department of State and Chiefs of Mission.

Trade Functions

The Reorganization Plan gives the United States Trade Representative primary responsibility, with the advice of the expanded interagency Trade Policy Committee (TPC), for developing and for coordinating the implementation of United States international trade policy, including commodity matters and, to the extent they are related to international trade policy, direct investment matters. USTR will have the lead responsibility for the conduct of international trade and commodity negotiations and, with the advice of the TPC, will issue policy guidance with respect to a broad range of international trade issues, including matters concerning GATT; the expansion of United States exports; policy research on trade, commodity, and direct investment matters; unfair trade practices; bilateral trade and commodity issues, including East-West trade; and international trade issues involving energy.

Under the Plan, USTR will represent the United States in “matters concerning the GATT, including implementation of the trade agreements” resulting from the MTN legislation, and for this purpose, will have a “limited number of permanent staff in Geneva.” The Presidential Message states that in addition “it may be necessary to assign a small number of USTR staff abroad to assist in oversight of MTN enforcement.”

An Executive Order will be issued in the next few days relating to “GATT Representation.”⁶ An Executive Order on “International Trade Functions” will be issued subsequently before the proposed Reorganization Plan goes into effect.⁷ Secretary Vance is pressing for early clarifications and revisions of the latter Executive Order to cover several points which are not dealt with or are unclear in the Plan. The Department and STR will attempt to resolve separately other issues relating to working arrangements.

At a preliminary stage in the development of the reorganization proposal, it was suggested that approximately 15 State positions in the Bureau of Economic and Business Affairs and our Mission in Geneva be transferred to the USTR to carry out the Trade Representative’s added functions under the Plan. The Department has expressed strong opposition to any such transfers.

Other Provisions

The Plan states in Section 7 that: “Nothing in this Reorganization Plan is intended to derogate from the responsibility of the Secretary of State for advising the President on foreign policy matters, including the foreign policy aspects of international trade and trade-related matters.”

The Presidential message states that “in recognition of the responsibility of the Secretary of State regarding our foreign policy, the activities of overseas personnel of the Trade Representative and the Commerce Department will be fully coordinated with other elements of our diplomatic missions.”

The Plan will have an effective date of October 1, 1980, or earlier if so specified by the President, if not rejected by the Congress within 60 days following its introduction.

1. Source: National Archives, RG 59, Records of the Under Secretary for Management (M), 1978–1979, Box 10, Chron September 28–October 1, 1979. No classification marking.
2. Attached but not printed. For the text of Reorganization Plan No. 3 of 1979 and the President’s message to Congress, see Public Papers: Carter, 1979, Book II, pp. 1729–1738.
3. Attached but not printed.
4. P.L. 96–39.
5. Attached but not printed.
6. No such executive order was issued.
7. Executive Order 12188, issued on January 2, 1980. See Document 121.