Background

As part of its constitutional authority to regulate commerce with foreign  nations, Congress has long delegated to the President authority to proclaim  reciprocal tariff reductions with U.S. trading partners and has encouraged  the President to enter into certain trade agreements that meet  congressionally mandated objectives. Congress established the trade  advisory committee system in Section 135 of the Trade Act of 1974 as a  way to institutionalize domestic input into such 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.
In practice, USTR has primary responsibility within the executive branch  for developing U.S. trade policy, and the President has delegated to USTR  the role of leading the trade advisory committee process. Additional  players in developing U.S. trade policy include other executive branch  agencies, particularly the departments of Commerce and Agriculture; the  private sector, including business and nonbusiness groups; and state and  local governments. USTR also maintains close consultation with Congress.  The advisory committee system is one of several ways that USTR obtains  input from the private sector (see fig. 1). In fact, Section 135 of the Trade  Act also requires USTR to provide an opportunity to private organizations  or groups outside the advisory committee system to present their views on  trade issues.
The system, created in 1974, 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. 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.
The trade advisory committees are subject to the requirements of the  Federal Advisory Committee Act (FACA), with limited exceptions  pertaining to holding public meetings and public availability of documents.  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. FACA covers most federal advisory committees and includes a  number of administrative requirements, such as requiring rechartering of  committees if they are to continue for more than 2 years.
The structure of the trade advisory committee system consists of three  tiers, with the top tier directed by law to provide “overall policy advice,” the  second tier to provide “general policy advice,” and the third tier to provide  “technical advice and information.” However, Section 135 of the Trade Act  does not establish any formal relationship among these tiers, nor does it  authorize the first tier to exercise any control over the other two. USTR,  working jointly with the other relevant executive departments, has the  discretion to create, change, and terminate committees in the second and  third tiers.
The system comprises about 735 advisers spread across 34 committees,  with the bulk of the advisers and committees in the third, technical tier.  This tier consists of 17 industry sector advisory committees (ISACs), 4  industry functional advisory committees (IFACs), a committee of ISAC and  IFAC chairpersons, and 5 agricultural technical advisory committees  (ATACs). The second tier currently consists of five policy advisory  committees. The first tier consists of just one committee, the Advisory  Committee for Trade Policy and Negotiations (ACTPN), whose members  are appointed by the President. Figure 2 illustrates the committee  structure.
The advisory committees are administered by USTR, which assumes a  leadership role, along with the departments of Agriculture, Commerce, and  Labor. USTR is responsible for administering ACTPN and three of the tier-2  Policy Advisory Committees, and shares responsibility with the other  agencies for administering the rest of the committees. The Department of  Commerce co-administers the majority of these committees—the ISACs,  IFACs, and the Committee of Chairs. The Department of Agriculture  (Agriculture) coadministers six others—the ATACs and the tier-2  Agricultural Policy Advisory Committee. The Department of Labor (Labor)  is responsible for coadministering a tier-2 Policy Advisory Committee. The  Environmental Protection Agency (EPA) plays a supportive role in the  activities of the tier-2 Trade and Environment Policy Committee (TEPAC)  but does not administer it directly.

	Negotiators and Agency Officials Believe the Advisory Committee System Provides Value in U.S. Trade Policy

The advisory committee system’s unique features give it an important role  in U.S. trade policy. Many negotiators use the system and report that the  committees have made important contributions to successful U.S. trade  agreements. Our analysis of documents indicates that committees have  been given numerous opportunities to provide formal advice at committee  meetings and through informal channels.

		Committee System Has Unique Features and Makes Important Contributions

The advisory committee system is unique in U.S. trade policy because it  provides a forum in which business and other interested groups can  consult confidentially with and provide advice to the executive branch on  trade negotiations, U.S. trade policy, and implementation of trade  agreements. The formal nature of advisory meetings helps ensure that  representatives of the private sector and other groups have regular access  to officials engaged in U.S. trade policy. Further, the system provides  government officials with a body of private sector experts with whom they  can develop an ongoing dialogue. Since USTR’s administrative procedures  for the advisory committees require advisers to obtain security clearances  before participating, the committees offer an environment conducive to  discussing sensitive negotiating information.
Many participants said the advisory committee system serves an important  role in U.S. trade policy. A former USTR official and current committee  member termed the advisory committee system “one of the great strengths  of U.S. trade policy.” Among the comments made by negotiators whom we  interviewed and members responding to our survey were that the formal  advisory committee system is often preferable to more ad hoc means of  obtaining input because it is institutionalized and seeks to be  representative. Moreover, they said, the system provides assurance to  Congress that domestic interests with a stake in trade matters have a voice  when trade policy is formulated and will support the final agreements. It  thus helps make the executive branch accountable to Congress and,  ultimately, to the American public. According to multiple responses, the  system strengthens the U.S. bargaining position by bringing to bear on-the- ground perspective and information from the private sector that the U.S.  government lacks; establishing a clear set of U.S. priorities and fuller  appreciation of various American interests; and enabling the United States  to present a unified front when it faces foreign nations at the negotiating  table. Without the system, some participants commented, U.S. negotiators  would be operating in a vacuum and businesses would be unable to  effectively resolve with foreign governments issues that only the U.S.  government can pursue. The bottom line, negotiators and members agree,  is that when it works properly, the system results in better trade  agreements. Not only does it help the United States achieve commercial  benefits, it can help keep the trading system vital and responsive to actual  needs.
Agency officials also cited the system’s value and contributions to U.S.  trade policy. According to USTR, the advisory committee process was  extremely successful during negotiations (1) on China’s accession to the  WTO; (2) multilateral agreements on information technology, financial  services, and basic telecommunications; (3) the Uruguay Round of  negotiations that led to establishment of the WTO; (4) as well as regional  initiatives such as the North American Free Trade Agreement, the Summit  of the Americas, and the Asia-Pacific Economic Cooperation forum. Of the  27 USTR trade negotiators whom we interviewed, 18 indicated that they  had obtained useful advice from the system, as did most of the 12  Commerce officials we interviewed. They cited numerous specific  situations where advisory committee input had been helpful to  negotiations. For example, an Assistant U.S. Trade Representative  indicated that the advisory committees are playing a vital role in identifying  market-opening priorities for the more than 140 nations currently involved  in WTO negotiations. A Department of Commerce official described a  committee as instrumental in helping monitor implementation of China’s  accession commitments to the WTO. A USDA negotiator said a committee  was helpful in setting the tone regarding the language on tariff reductions  in the comprehensive U.S. agriculture proposal to the WTO. A USTR  negotiator reported that a committee helped develop a position on defining  “international standards” in the WTO’s Technical Barriers to Trade  Agreement and helped gain the international community’s support for the  U.S. proposal, expediting acceptance of U.S. goods in foreign markets.
Committee members also value the advisory committee system and devote  considerable resources to participating in it on a voluntary basis. Just over  one-half of committee members live outside of Washington, D.C., and pay  their own travel expenses to attend committee meetings. Further, when  the Department of Commerce renewed the charter for the ISACs and IFACs  in March 2002, more than 80 percent of those members continued.  Members whom we surveyed highlighted numerous benefits of committee  membership, including access to USTR and other agency officials, insights  into other members’ views, and face-to-face dialogue with all members.  Parties outside the system, such as U.S. subsidiaries of foreign-owned  businesses and nongovernmental organizations (NGO), have sought  representation on the committees, arguing that they should not be  excluded from such an influential system.

		The Executive Branch Consults with Advisory Committees through Formal and Informal Channels

Our analysis of committee documents found ample evidence that USTR  and other executive branch agencies are consulting committees on a wide  range of trade initiatives at formal committee meetings. For example,  agendas for the committee meetings during the 3 years leading up to the 4th  WTO Ministerial, held in Doha, Qatar, in November 2001, listed the  ministerial 60 times. Twenty of the advisory committees discussed U.S.  preparations for the ministerial. Also, during fiscal years 1999 through  2001, different elements of the Free Trade Area of the Americas agreement  were listed as items on more than 190 meeting agendas, at meetings of  almost every committee.
Such scheduled advisory committee meetings, usually held in Washington,  D.C., are the formal channels for the executive branch to consult with the  private sector advisory committees. In fiscal year 2001 there were  approximately 110 formal meetings across the committee system. The  number of meetings varied considerably by committee. The meetings  generally lasted 3 to 5 hours. According to our analysis, about 80 percent of  the meetings for fiscal years 1999 to 2001 were closed to the public.  Negotiators and other trade officials attend portions of the meetings, each  in turn briefing, discussing, and consulting with the committee. The private  sector committee chair and the managing agency’s designated federal  official (DFO) generally schedule meetings and select the agenda topics,  although occasionally negotiators seek out specific committees to consult  on a particular topic. Consultation during meetings is oral, but some  committees send their positions in writing to USTR and the corresponding  secretary or head of the agency. Many committee chairmen said their  committees seek to provide consensus advice, which may include  dissenting opinions. For the first- and second-tier committees, only  classified transcripts were kept until recently. For the third-tier  committees, DFOs prepare classified minutes of closed meetings for  internal committee use only, as well as unclassified public summaries.
In addition to formal meetings, USTR, Commerce, USDA, and others  informally request advice from committee members through faxes, E-mails,  ad hoc meetings, and teleconferences when they need a rapid response.  However, committee members consulted at ad hoc meetings or through  other means may provide advice only as personal opinions because, in  keeping with FACA rules, formal committee advice generally can only be  provided through formal committee meetings. In some cases, this informal  advice is solicited by a request from a negotiator to the coordinating offices  at USTR and other agencies, which then transmit the request to all advisers.  In other cases, direct contact between negotiators and selected committee  members occurs. Regardless of how contact is initiated, members typically  provide advice directly to the relevant official and no central record is kept.
Nevertheless, our review of existing agency records indicates that such  informal consultation is active. In fiscal year 2001, USTR scheduled at least  nine ad hoc meetings, mostly teleconferences or in-person meetings, to  which trade advisers were invited an average of 2 to 3 days in advance.  During this same period, USTR and Commerce faxed or E-mailed  approximately 63 requests for advice, usually addressed to the entire  advisory system membership or all of the industry sector and functional  committees; according to our analysis of available data, the advisers had an  average of 7.5 days to respond. Figure 3 shows the different processes for  obtaining formal and informal advice from the committees.

	Most Members Generally Satisfied with Their Committees, but Cite Problems with the Consultation Process That Are Hindering the System’s Effectiveness

Most advisory committee members are satisfied with key aspects of the  advisory process. However, some would prefer to be included more fully in  the deliberations before actual trade policies are made, and many cited  several problems with the consultation process that have hindered the  system’s effectiveness. In addition, accountability for the use or  consideration of advice could be improved.

		Members Reported Varying Levels of Satisfaction with Their Advisory Committee

More than 60 percent of the members who responded to our survey  reported that they were very satisfied or generally satisfied with 11 of the  16 areas of committee composition, operations, and effectiveness listed in  table 1. In addition, about half of the committee members responding to  our survey indicated that the system is fulfilling its statutory mandate to a  “very great extent” or “a great extent.” The areas with the greatest levels of  satisfaction (very or generally satisfied) were the knowledge of  government speakers (85 percent), the committee’s opportunity to ask  questions of government officials (84 percent), and the opportunity for  members with dissenting views to provide input at meetings (79 percent).  The areas with the lowest levels of satisfaction (very or generally satisfied)  were the executive branch’s response to committee advice (39 percent),  the use of technology to facilitate meetings (39 percent), and the time it  takes to appoint new committee members (16 percent), which had by far  the lowest level of satisfaction.
Despite reporting general satisfaction with many aspects of the system,  more than a quarter of survey respondents felt that the system has not  realized its potential contribution to U.S. trade policy (see app. IV, question  23). Many members responding to our survey supported actions to improve  committee operations. Through our survey, member interviews, and  document analysis, we identified several problems with the (1) timeliness,  (2) quality, and (3) accountability of consultations between the executive  branch and the committees. These problems have, at times, limited  member input into and influence over trade policy. Some of these problems  were particularly acute for specific issues or committees.

		Consultations Are Not Always Timely because They Occur after Decisions Are Made

The timeliness of consultations was a concern to many advisers, who  stated that consultations sometimes occur too late to affect policy. Overall,  30 percent of respondents felt that the executive branch scheduled its  consultations so that the committees’ advice could be used in trade  negotiations to “some or little extent” or “no extent,” while only 25 percent  of the respondents believed the consultations were scheduled appropriately to a “very great extent” or “great extent.”  Members whom  we surveyed as well as interviewees reported that advice is often sought  after the executive’s policy direction is already set. Several members  reported that, in the past 5 years, the tendency has been for negotiators to  come to committee meetings and say, “Here is the agreement, what do you  think?” In one case that we documented, the administration did not consult  with the President’s overall policy advisory committee—ACTPN—before  submitting its proposed international trade agenda to Congress, including  the principles to be included in Trade Promotion Authority legislation. The  staff liaisons for ACTPN and TEPAC were only briefed on the matter the  day after the agenda was submitted. Furthermore, the advisory committees  were not consulted before the Clinton administration announced its  decision to pursue a Free Trade Agreement with Singapore. The  announcement provoked considerable concern across the private sector  for a variety of reasons, not least because the original proposed time frame  of completing the negotiations within 6 weeks would have allowed little  time for advisers to provide input.
Another problem with timeliness cited by members is that certain  committees meet infrequently. USTR, Commerce, and USDA procedures  generally indicate that agency officials are responsible for calling meetings.  The problem of meeting frequency is particularly acute for the first- and  second-tier committees, which averaged 1.7 and 2.5 meetings each year,  compared with the third-tier committees, which met an average of 3.7 times  each year. The ACTPN, which consists of CEO-level advisers and is  designed to provide overall policy advice, met twice in fiscal years 2000 and  2001. It did not meet for more than 16 months between March 2000 and July  2001. During that period, the Jordan Free Trade Agreement—which broke  new ground by including labor and environmental provisions in the text of  a U.S. trade agreement for the first time—was finalized without formal  executive branch consultation with the ACTPN. Members and negotiators  reported that the lack of regular meetings was a barrier to the effective  functioning of the committees.
Although Section 135 of the Trade Act requires the executive branch to  consult with the committees “on a continuing and timely basis” and “to the  maximum extent feasible . . . before the commencement of negotiations,”  the agencies involved have not adopted guidelines to implement these  directives. For example, Commerce’s and USTR’s procedures and rules for  managing these committees do not address the principle of timeliness or  consulting to the maximum extent feasible. USDA’s procedures also do not  refer to these issues, but in practice, the agency has developed a calendar  of key negotiation events to use in scheduling advisory committee meetings  in an effort to ensure that consultations are timely.

		Participants Believe the Quality of Consultations Is Not Always Meaningful

Committee members, agency officials, and negotiators reported several  problems that sometimes affect the quality and meaningfulness of  consultations. These problems included too little time for discussion at  meetings, limited access to background documents, insufficient  consultation on certain issues, and poor participation by some negotiators.

			Insufficient Time for Consultations at Meetings

In survey responses and interviews, many committee members said that  they did not have enough time to discuss issues or provide advice at  committee meetings. While respondents to our survey were broadly  satisfied with the amount of time spent on presentations by USTR and the  committees’ principal agencies, 42 percent of the respondents reported  that not enough time was devoted to providing advice, 43 percent reported  that not enough time was spent on members’ discussing trade issues, and  39 percent said that not enough time was devoted to presentations by other  executive branch agencies (see table 2). Commerce officials confirmed that  they were aware that the amount of time available for discussion is an  issue, but explained in agency comments that, because of the costs and  travel time associated with ISAC and IFAC meetings and the number of  issues to be discussed, meeting agendas are often packed. Negotiators  stated that this imposes practical constraints on the time devoted to each  agenda item. According to a USDA official, the agency is carefully  reviewing the number of items on committee agendas and scheduling full- day meetings for its ATACs to ensure that there is sufficient time for  member discussion.
Limited access to certain background documents also affects the quality of  consultations. USTR often provides national security classified and trade  sensitive documents, such as proposed negotiating objectives or text of  draft agreements, to committee members for comment. However, access to  these documents—which are kept in Washington, D.C., in secured reading  rooms—is often not feasible for advisers who live outside of the  Washington, D.C., area, and not always convenient for advisers who work  in Washington. Numerous survey respondents complained that current  arrangements for reviewing such documents are inadequate. Officials and  members said that being able to access documents electronically, such as  through an encoded Internet site, would improve the quality of committee  advice. In agency comments, USTR, Commerce, and USDA indicated they  are exploring options for electronic access, but stressed that safeguarding  sensitive or classified negotiating material must remain paramount.
Taking a detailed look at these documents is important to members  because it can materially affect negotiating outcomes. A Commerce official  related an example pertaining to the Chile FTA, when ISAC members felt  they had not had an opportunity to look at the negotiating text because it  was put into the reading room at the last minute before a holiday. A  subcommittee of the ISAC (8 to 10 people, mostly lawyers) reviewed the  text line by line at the Commerce reading room and provided numerous  changes to USTR, which were presented to the Chileans. The Commerce  official noted that what happens with the Chile negotiations is considered  extremely important because it will set a precedent for future trade  agreements.

			Consultation on Certain Issues Is Insufficient, According to Some Members

Consultation on certain issues appears to be particularly problematic. First,  although Section 135 of the Trade Act requires consultation regarding “the  development, implementation, and administration” of U.S. trade policy, 30  percent of respondents reported that they were dissatisfied (“very  dissatisfied” or “generally dissatisfied”) with the extent of consultation on  implementation of trade agreements, 26 percent were dissatisfied with  consultation on bilateral trade negotiations, 25 percent were dissatisfied  with consultation on general trade policy issues, and 23 percent were  dissatisfied with consultation on multilateral trade negotiations (see table  3). In one case, the administration prepared and issued, without first  consulting the top-tier committees, a comprehensive report reviewing the  WTO’s operation during its first 5 years, advocating that the United States  should continue participation in the WTO. Advisers were only briefed on  the 126-page report’s contents 5 days after the date it was signed by the  USTR.
Second, consultations with the tier-1 and tier-2 policy committees have not  been satisfactory, some respondents said.Table 4 illustrates differences in  tiers’ satisfaction rates for selected aspects of committee operations for  those who responded to our survey.
At the tier 1 ACTPN, as discussed above, lack of meetings and timely  consultation were additional concerns. Although the tier-2 Labor Advisory  Committee’s (LAC) formal steering committee met six times in 1999, six  times in 2000, and three times in 2001, the full committee did not meet at all  between 1994 and 2002. Steering Committee Members whom we  interviewed felt that USTR consulted them more out of obligation rather  than to obtain advice. One member added that USTR has treated the  committee like a “dissent group” and did not provide the same level of  briefings as it did to other advisory committees. Although members singled  out a few USTR negotiators for their willingness to listen to the  committee’s views, USTR acknowledges that it did not even have an official  liaison to the LAC between 1993 and 2001. None of the labor respondents to  our survey reported that they were satisfied with the degree of attention  the executive branch paid to their committee’s issues or the executive  branch’s response to the committee’s advice. Further, members of the tier- 2 Trade and Environment Policy Advisory Committee, comprising business  and environmental interests, generally agreed that the committee had not  been a successful vehicle for addressing environmental aspects of trade  policy. While members and negotiators said that the committee made  significant contributions to the development and implementation of  President Clinton’s executive order regarding the review of environmental  implications of trade agreements, many members cited frustrations over  the committee’s inability to provide advice on other environmental policy  issues. Few recognized environmental organizations still participate in the  committee, and some members reported that the diverse interests  represented in the group meant they had difficulty reaching agreement and  providing clear advice. Finally, despite USTR’s efforts to convene  meetings of the tier-2 committee designed to address the trade issues of  concern to state and local governments, the Intergovernmental Policy  Advisory Committee met only once in fiscal year 2000 and once in fiscal  year 2001, both via telephone conference calls. Both members and  negotiators reported that the lack of regular meetings was a barrier to the  optimal functioning of the committees.
Third, members and negotiators believe the system’s capacity for cross- fertilization among committees should be strengthened. Although  functional committees on issues such as customs and standards have been  established and are supposed to include representatives from industry  committees, participation by such representatives is reported to be limited.  Many issues—such as antidumping, biotechnology, and transparency in  trade regulation—cut across several committees, but the system’s capacity  to handle them is limited. A negotiator for antidumping, for example,  generally consults only with the ferrous ores and metals committee (ISAC  7), which includes steel, on such matters. Although FACA and Section 135  of the Trade Act do not preclude agencies from consulting with a cross- section of members on such issues, USTR and Commerce have not  generally taken advantage of this opportunity. Consulting with members  from different committees on an ad hoc basis also would not produce the  formal committee advice negotiators prefer. Some mechanisms for cross- fertilization already exist. A Committee of Chairs of the ISACs and IFACs is  empowered to provide collective advice and provide a cross-section of  views. Joint meetings of committees have also been convened. For  example, members of the labor committee reacted favorably to an initiative  by the USTR services negotiator to conduct a joint meeting of the services  and labor committees to discuss the issue of temporary entry of foreign  workers into the United States. Survey respondents supported additional  steps to better address cross-cutting issues, such as sharing meeting  agendas and recommendations—an idea that USDA is exploring.

			Officials and Members Indicate Limited Involvement by Some Negotiators

Some agency officials and committee members believe that the quality of  consultations suffers because USTR is not as engaged as it should be with  the advisory process. While 88 percent of the members responding to our  survey supported (“strongly support” or “generally support”) actions to  ensure that USTR officials attend committee meetings on a regular basis  (see app. IV, question 18), we found that some committees have had little  or no contact with USTR. For example, although the head of the USTR  office that manages the advisory committee system said the office works  actively to ensure that USTR’s negotiators consult with the advisory  committees, several DFOs told us that arranging for USTR negotiators to  meet with their committees is one of their most difficult tasks. In one  example, two DFOs said they had never met their USTR liaison, nor had  they been able to arrange for the liaison to attend their committees’  meetings. One of these DFOs added that, despite attempts, they have not  been able to identify anyone at USTR who covers their issues, and,  consequently, no one from USTR has attended the last five committee  meetings. Even obtaining negotiating calendars is difficult, another official  reported, making it hard to ensure that committee meetings are scheduled  to support trade policy demands.
Our analysis of documents provided by USTR revealed that USTR  negotiators have not been actively working with some committees.  Attendance records do not indicate who was present for what portions of  committee meetings. As a proxy for this data, we reviewed scheduled  speakers at tier-3 committee meetings in fiscal years 1999 to 2001. We  found that, on average, USTR negotiators were scheduled to brief  committees on 42 percent of the topics raised at the meetings. However, for  10 of the tier-3 committees, the USTR negotiators were scheduled to brief  on 32 percent or fewer of the topics discussed. USTR argues that at tier-3  committee meetings the most knowledgeable speaker is often an employee  of another agency, not a USTR official, because that agency works most  closely with the technical information that is important to the committees.    However, a perceived lack of attention by USTR was a source of concern to  some members, who believe that the committee system was intended as a  mechanism for negotiators to obtain advice on trade policy and  agreements. For example, a committee chairman told us that a USTR  negotiator had not been meeting with its committee and put forward a tariff  proposal in ongoing FTA negotiations that placed the committee’s product  in the longest phase-out category. However, because many U.S. producers  now import, the committee actually favors lowering tariffs more rapidly.
Seven of the 27 USTR negotiators with whom we met stated that they  prefer to obtain advice outside the system because advisory committees  cannot provide the type or quality of advice that they need. For example,  three of the seven negotiators handle bilateral issues with key trading  partners and shared this view. One negotiator said that the committees  could not provide guidance on cross-cutting regulatory issues, so he speaks  to associations or key companies that can provide the necessary advice.  The negotiator also said that the committees generally do not provide  timely, targeted responses orally or on paper. The second negotiator does  not work with the ISACs or IFACs at all and, instead, uses informal  contacts to obtain industry input. She explained that the ISACs are too  broad to assist with the detailed issues she handles in bilateral trade  negotiations. The third negotiator agreed that the ISACs were most useful  when dealing with major, comprehensive negotiations like the Uruguay  trade round. She had not used the system very much in the past 4 years and  stated that, in her opinion, the system was not designed to handle the  specific disputes, often involving litigation, that dominate bilateral trade  relations.   One of the two USTR agriculture negotiators we interviewed  said the committees these negotiators work with often fail to advance  policy because they do not narrow differences among members’ competing  interests. A senior industry negotiator, meanwhile, indicated that the  wealth of information she obtains through informal channels is more  helpful than advisory committee input.

		Consultation Process Provides Limited Accountability and Means to Ensure Consideration and Use of Advice

The committee system provides limited accountability to ensure that  committee positions on trade negotiating objectives are considered, as  called for in Section 135 of the Trade Act. Prior to January 15, 1994, trade  advisory committees affected by certain bilateral or multilateral trade  negotiations were required to report to the President, Congress, and USTR  at the conclusion of negotiations. This requirement was linked to  legislation that gave the President the authority to negotiate certain trade  agreements and submit them for congressional approval under expedited  legislative procedures. The reporting requirement lapsed when the  negotiating authority expired in 1994 and was not renewed until the recent  passage of the Trade Act of 2002, which granted the President Trade  Promotion Authority. According to a former USTR official, this lapsed  requirement was an essential element in the trade advisory committee  process because it assured Congress that the executive branch had sought  and considered private sector advice. Without this reporting requirement,  there was limited accountability in the advisory committee system.
Moreover, mechanisms for tracking and distributing committee advice to  senior agency officials are not routine or reliable. Instead, agency officials  report that advice is transmitted through diffuse channels that range from  formal to informal. At the formal end of the spectrum, there is no  requirement that advisory committee input be sought before USTR officials  submit documents on U.S. trade policy for interagency clearance by the  Trade Policy Staff Committee. Although such documents sometimes  include a section on private sector views, our examination of selected  documents drafted by USTR in 2000 to 2002 revealed that many did not  acknowledge solicitation or use of advisory committee input. The problems  of tracking and distributing committee advice are aggravated bathe  predominance of oral, nonconsensus committee advice offered during  discussions at meetings. While oral advice from a range of perspectives can  be valuable, it does not provide as clear guidance as written, consensus  advice, which is easier to track and respond to. Commerce’s training  manual for DFOs notes that “advisors should be encouraged to provide  advice in writing, as advice imparted at meetings is often not captured for  follow-up and is difficult to document. Members often incorrectly assume  that resolutions made at meetings are passed to action officials by the DFO  or that minutes are widely circulated in a timely manner.”
Questions have been raised about how responsive agencies are to written  committee advice. A number of chairmen felt such advice received more  serious consideration, but several chairmen expressed frustration to us  about nonsubstantive or untimely replies to their committees’ letters. One  Commerce DFO stated that, at Commerce, committee letters are not  always sent to officials responsible for the issues involved and instead go  up the administrative chain and end up in a bureaucratic “black hole”;  another DFO reported that the letters from the committee on which he  serves have not been answered. Commerce denies that this is typical,  indicating that committee letters are considered controlled  correspondence that involves distribution of the incoming letter and review  of the draft reply by responsible officials. Although officials at Commerce  told us that it is common to send pro forma, rather than substantive,  responses to committee letters, they noted in agency comments that this is  generally because final U.S. policy has not been decided. USDA recently  initiated a practice of summarizing resolutions made and sensitive issues  raised at advisory committee meetings for senior USDA and USTR officials  in an effort to improve agency awareness of and accountability for  committee advice.
Finally, Section 135(i) of the Trade Act requires the executive branch to  inform committees of “significant departures” from committee advice.  However, 41 percent of survey respondents reported that agency officials  informed committees less than half of the time when their agencies  pursued strategies that differed from committee input; only 22 percent  reported that they were always or almost always informed of significant  departures from committee advice (see app. IV, questions 8 and 9). About  86 percent of the respondents reported that they would support obtaining  more feedback from USTR (see app. IV, question 18).

	Advisory Committee System’s Structure and Composition Do Not Fully Reflect U.S. Economy and Trade Policy Needs

Mismatches between the advisory committee system and the U.S. economy  and trade policy issues suggest that the system is not positioned to provide  the executive branch with all the advice it needs or to assure Congress that  negotiated agreements are fully in U.S. interests. While most U.S.  agricultural and industry sectors are represented in the committee  structure, the composition of the system does not proportionally match  each sector’s economic significance. Also, some specific industry  committees have gaps in coverage. The structure of the system has not  evolved fully to address new trade policy issues and stakeholders, and  incorporating nonbusiness groups has been difficult.

		Major Industry Sectors Represented but Membership Composition Not in Balance with Economy

In the 28 years since the advisory system’s creation, the U.S. economy and  trade have shifted toward services and high-technology industries (see fig.  4). However, membership composition and the number of committees that  comprise the system’s structure are still heavily weighted toward the  agriculture and manufacturing sectors (see fig. 5). In 1974, the committee  structure was largely designed to enable the private sector to provide input  on tariff negotiations, the principal issue in multilateral trade negotiations  at that time.
To determine whether the advisory committee system’s structure and  composition reflect the current U.S. economy, we examined calendar year  2000 U.S. industry sector trade and output data and compared these with  the corresponding membership data from the tier-3 industry sector  advisory committees and agricultural technical advisory committees. We  found the following:  The services sector accounts for the largest share of U.S. output (more  than 50 percent) and a sizable share of U.S. exports (almost 30 percent);  these shares both increased sharply since 1974. Yet the committee  system’s structure has only two services sector committees (the same  number it had 20 years ago), and its composition includes fewer than 50  members from services.
The number of committees in the system’s structure is heavily weighted  toward manufacturing, which has 15 of the 33 committees. This appears  to be consistent with manufacturing’s large share of U.S. goods exports.  However, within manufacturing, some sectors such as textiles and  apparel, nonferrous ores, and lumber and wood appear to be  overrepresented in the committee system’s membership compared with  their shares of U.S. trade, while large, exporting sectors such as  electronics (18.3 percent of U.S. exports) are underrepresented (see fig. 6).
Committee member composition is heavily focused on agriculture, even  though agriculture accounts for less than 1.5 percent of U.S. output and  2.7 percent of exports. In 2001, USDA boosted the number of  agricultural technical advisory committee members from 111 to 180. As  a result, 222 of the 745 members in the entire system during fiscal year  2001 represented agricultural interests.
This is not to suggest that there should be an automatic and linear  relationship between trade levels and committee membership. In a few  cases, other factors, such as policy considerations, might justify the  imbalances between economic importance and committee representation.
For example, sizable agriculture committees may be appropriate, since  exports represent 40 percent of agricultural output and trade barriers are  high. In services, the main services committee has been meeting monthly to  keep up with comprehensive negotiations to improve the WTO General  Agreement on Trade in Services. The government services negotiators we  spoke with believed that the committee represents the sector well, and 70  percent of services committee respondents to our survey reported  satisfaction with their sector’s representation in the system. Certain  manufacturing sectors such as textiles are recognized as import sensitive.     Nevertheless, such reasons may not apply to the remaining committees.  Indeed, according to Commerce and USDA officials, in most cases, current  committee membership levels are functions of private sector interest in  participating, rather than a deliberate effort by the agencies to determine  appropriate levels of representation.

		Gaps in Industry Representation on Committees

Membership in the system is also not fully aligned with the economy  because of gaps in industry representation that occur for at least two  reasons. First, there are gaps based on whether companies choose to join  the system or not, resulting in a lack of balance needed by negotiators to  cover all the industry-specific issues they must address in trade  negotiations. For example, according to one USTR negotiator, a major  telecommunications services provider opted not to participate because it  had access to USTR through other venues. The electronics committee does  not yet have a representative from the software industry, and the  intellectual property rights committee does not have a representative from  the generic drug or noncontent producing copyright industry. Second,  major foreign companies, such as DaimlerChrysler, cannot participate  because foreign-owned companies are generally prohibited from  membership on committees under USTR and Commerce procedures and rules. In commenting on a draft of this report, Commerce stated that the  rationale for this long-standing policy is the sensitivity of the subject matter  considered by the committees and possible conflicts that might be  experienced by U.S. firms that have foreign owners. U.S. subsidiaries of  foreign-owned firms accounted for more than 5 percent of U.S.  employment and more than 20 percent of U.S. goods exports in 1999; such  foreign ownership has grown with globalization and is particularly high in  certain manufacturing sectors, such as transportation equipment and  chemicals. These gaps in industry representation have encouraged  negotiators to seek advice outside the advisory committee system,  including from foreign-owned firms or trade associations that include such  firms.

		Need for More Outreach to Fill Gaps on Committees

Committee membership is significantly below the levels authorized in  committee charters, averaging 49 percent of authorized capacity (see fig. 7)  in 2001 and 48 percent of authorized capacity as of August 2002. The low  membership rates can at times severely limit the availability of advice for  negotiators from certain committees, particularly since just over half of the  members attend meetings, on average, according to the attendance records  made available to us. One negotiator with overall responsibility for a major  bilateral FTA said he had hoped to rely on the committee system  exclusively for advice, but had concerns that certain committees were not  sufficiently filled to provide a meaningful cross-section of industry views.  In addition, some meeting records we reviewed indicated that more  government officials were in attendance than committee members. On the  other hand, the fact that some committees are far below authorized  membership levels means agencies have opportunities to fill gaps in  industry representation.
Officials at USTR, Commerce, and USDA acknowledge the need for  increased outreach to fill gaps in membership and have recently taken  steps toward this end.   In the past, agencies primarily relied on recruitment  through Federal Register notices to attract new members, rather than  targeting specific needs or groups. Furthermore, negotiators were not  always actively involved in identifying candidates to fill gaps in  composition or representation. However, Commerce has stepped up its  outreach by encouraging current members to recruit applicants, directly  soliciting applicants at trade shows, holding meetings outside of  Washington, and speaking before trade associations and outside groups. In  addition, USDA solicited applications through different means, including  widely disseminating notices to state departments of agriculture and other  farm groups. Some USTR negotiators reported urging industry contacts  and experts to become involved, but USTR reports that a key obstacle to  filling vacancies is the difficulty in identifying qualified individuals in the  private sector who are willing to join the advisory committees, due to the  significant amount of time and resources required to serve.

		Committee System Generally Does Not Reflect Changes in Trade Policy Issues and Stakeholders

With little restructuring to mirror emerging trade policy issues and new  stakeholders, the committee system is unable to provide some negotiators  with all of the advice necessary to support trade policy development. New  trade issues and stakeholders have emerged since 1974, as trade  negotiations expanded beyond tariffs to include nontariff barriers to trade  and other complex trade-related issues, such as intellectual property rights  and health and safety. Moreover, the WTO negotiations launched in  November 2001 cover topics such as the relationship between WTO rules  and multilateral environmental agreements, and negotiations on a free  trade agreement with Chile cover investment and competition (antitrust)  policy. These issues require functional expertise and expand the number of  U.S. interests concerned with and affected by trade agreements. Trade  negotiators with whom we spoke stated that there are gaps in the  committee system structure regarding functional issues such as investment  and government procurement and in representation of stakeholders in such  areas as public health.
There have been few changes in the committee system’s structure to  address these new issues and avoid gaps in coverage. Section 135 of the  Trade Act gives USTR flexibility to restructure the committee system to  reflect changes in U.S. international trade interests. However, in the past  decade, only 3 committees—the Trade and Environmental Policy Advisory  Committee, the Trade Advisory Committee for Africa, and the Industry  Functional Advisory Committee on Electronic Commerce—have been added to the 34-committee structure. Most of the remaining committees  have existed for more than 20 years (see fig. 8). USTR officials  acknowledge the need to update the committee system to reflect the  current economy and new trade issues, but add that the agency would need  external guidance to support any sensitive decisions affecting existing  committees.
According to a former USTR official, a USTR effort to review the  committee system in 2000 did not even address the question of how well  the system was meeting USTR needs, because the agency did not have the  time to ask negotiators what they wanted from industry advisers. In some  cases, agencies forego addressing some recognized needs for advice on  new issues because of the time and effort required to create and amend  committees. For example, two USTR and Commerce negotiators, who are  in charge of their offices and oversee other negotiators, told us that current  ad hoc methods for obtaining advice on investment policy are inadequate  and that they believe a separate committee on investment would be  desirable. However, they expressed reservations about undertaking the  considerable effort involved to form one. (Commerce spent more than a  year establishing the E-commerce advisory committee.)

			Difficulties Incorporating Nonbusiness Stakeholders as Committee Members

Although many new trade issues impinge upon domestic regulatory areas  that are of concern to nonbusiness groups, USTR and the other managing  agencies have had difficulty incorporating nonbusiness stakeholders into  the committees. Some nonbusiness interests from the labor, environment,  and consumer communities participate in the committee system but stated  that they feel marginalized within it. Most nonbusiness members currently  participating in the system are placed on a few committees in the second  tier, where committees are less active and productive than in the third tier,  as shown in figures 9 and 10. New stakeholders in the trade process, such  as public health, development, and gender advocates, have limited or no  participation in the formal committee system, even though topics such as  intellectual property are of interest to them. Some negotiators on this topic  and on services believe that nonbusiness stakeholders’ perspective is  useful and necessary in formulating U.S. trade policy. However, the extent  of participation by nonbusiness members on tier-3 committees is still an  unresolved legal issue.
Nonbusiness participants with whom we spoke also feel marginalized  because they have difficulty ensuring their views get serious consideration.  For example, the ACTPN is meant to provide overall policy advice and is  required to be broadly representative of key sectors and groups affected by  trade. Six of the 33 current members represent nonbusiness interests. In  2000, the three labor representatives temporarily resigned from this  presidential committee because the chair said the committee would only  meet once and its sole focus would be the granting of Permanent Normal  Trade Relations to China. The labor representatives felt that their issues  were not being addressed and in their resignation letter said that the  advisory process “relegates minority views to a marginalized dissent.”

		Key Representation Issues Have Not Been Resolved, Despite Legal Challenges

Most of the 22 committees administered by Commerce do not routinely  allow representation from nonbusiness interests. As a result of legal  challenges to the business-only composition of several of the Commerce  committees, two of these committees (lumber and paper products) now  have environmental representatives and are reported to be functioning  productively. A third committee, chemicals, represents the second-leading  manufacturing export sector but still lacks a permanent environmental  representative as called for by a settlement order, resulting in the  committee’s operations being interrupted for the second time in 2 years.
Outside of these three committees, the extent to which nonbusiness  interests, including environmental interests, can be represented on tier-2  and tier-3 committees has not been completely resolved. Neither Section  135 of the Trade Act nor its legislative history is clear about how that  statute relates to the Federal Advisory Committee Act’s “fair balance”  requirement or about how to apply “fair balance” in the context of a trade  advisory committee system largely composed of discrete interests (see  app. II). Recently, the Commerce Department published a notice indicating  that except for environmental representation in the three committees  where representation has been successfully challenged, “non-government  organizations and academic institutions do not qualify for representation  on a committee.” Nevertheless, without further clarification by U.S.  appellate courts or amendments to the current legislation about what fair  balance means for trade advisory committees, some ambiguity about this  issue will remain. Negotiators, agency officials, and committee members  have suggested the need for Congress to clarify its intent for representation  in the committee system.
The current legal uncertainty also raises several practical issues. First, the  lack of clarity in what fair balance means for these committees makes the  system more vulnerable to court challenges. Second, our interviews with  agency officials suggest that these uncertainties may make it difficult for  agencies to consider revisions in the committee structure to better address  functional issues such as investment and public health, which are of  interest to business and nonbusiness groups.

			Other Issues Related to Nonbusiness Stakeholders

The appointment of environmental representatives to tier-3 committees has  generated concerns among some current committee members. For  example, the committee of ISAC/IFAC chairmen wrote to USTR expressing  concern that having nontraditional members on their industry sector and  functional committees would make the committees less productive in  performing their primary mission of ensuring that U.S. negotiators were  aware of industry interests and positions. One committee chair said that  business members would be less forthcoming about discussing trade issues  because of concern that nonbusiness representatives might release  sensitive information to the public, thus undermining candor and  confidence. More than 60 percent of respondents to our survey opposed  adding more nonbusiness interests to their committees (see app. IV,  question 18). These concerns were echoed many times in our interviews  with members who feared they would lose their voice in trade policy or  said that they would be unwilling to participate if the committees become  unproductive “debating clubs.” As an alternative, the ISAC/IFAC chairmen  recommended “the establishment of a functional committee or committees  to serve as parallel and equal fora for involvement by non-traditional  groups.”
Our interviews and review of agency documents found that USTR has been  making efforts to provide information to, and obtain input from, various  nongovernmental organizations outside the formal advisory committee  process. We contacted several such organizations that had demonstrated  an interest in U.S. trade policy by submitting formal comments in response  to USTR Federal Register notices or attending USTR public briefings.  While these groups welcomed increased outreach by USTR, most felt that  having a role in the formal advisory committee system was still desirable,  saying it would enhance accountability and add balance to U.S. trade  policy. However, several feared that creating NGO-only committees would  “ghettoize” them within the system and fail to ensure equal access to  information and decision makers. These NGOs favor a broader overhaul of  the system but acknowledge that NGOs often do not have the requisite  resources or desire to participate.

	System Lacks Sufficient Leadership, Administrative Support to Reliably Meet Mandated Responsibilities

Despite relatively high rates of member satisfaction with the support by  USTR and other agencies such as Commerce and USDA, we found in our  review that lack of policy direction and weak system administration at  executive branch agencies are limiting the advisory committee system’s  capacity to accomplish its statutory mission and contribute to U.S. trade  policy. USTR, as the lead agency, has not provided clear policy direction.  Execution of administrative tasks needed to keep advisory committees  operating and relevant has been slow. The limited resources USTR and the  other key agencies devote to managing the advisory committee system  have not been sufficient to position them to maximize input from the  committees.

		Clear Policy Direction and Commitment to Advisory Committee System Lacking

Several experts and committee members stressed the importance of  organizational leadership from the top in creating an environment for vital  and effective advisory committee input into U.S. trade policy. However,  USTR has taken a decentralized and delegated approach to obtaining  private sector advice and has not demonstrated a commitment to assume a  leadership role in the advisory committee system. Through interviews with  USTR negotiators and other officials, we learned that the agency’s overall  policy of consulting with the private sector generally has not ensured that  the formal statutory advisory committees are systematically consulted.  Agency officials explained that negotiators are encouraged to consult with  the private sector but that they exercise individual discretion over whether  to consult with the advisory committees. As noted earlier, some negotiators  whom we interviewed reported using the committee system to obtain  advice, while others consult the committees only on a pro forma basis or  do not consult them at all. This unevenness has economic consequences: In  one example, USTR did not inform a committee that a general effort to  reduce discriminatory tariffs against U.S. goods in central and eastern  Europe was under way, and as a result, its industry sector was not included  in the final package of agreed tariff cuts.
Our examination of USTR and Commerce procedures found that they do  not provide broad guidance to USTR officials and other negotiators on their  obligation to consult with advisory committees or on when, how, and with  whom to consult. Instead, they are largely aimed at committee members  and agency administrators and focus on committee operations. A USTR  negotiator and committee members have suggested that clearer  expectations for the consultation process need to be developed for both  negotiators and advisers. Without them, misunderstandings do occur. For  example, one committee chairman, who is generally satisfied with USTR’s  use of advisory committees, was outraged when USTR neglected to consult  his committee on an issue of long-standing interest and, instead, sent a  position paper in a broadcast E-mail to all advisers in the system with a 2- day deadline and then presented the proposal to other nations. Although, at  the time, a USTR administering official said the broadcast E-mail was  typical, the negotiator responsible later acknowledged that USTR  mishandled the process for seek advice in this instance.

		Slow Administrative and Security Procedures Disrupt Committee Operations

Slow and cumbersome administrative and security processes have also  hindered committee operations. Under FACA, Section 135 of the Trade Act  and implementing guidance and procedures, USTR and other federal  agencies are responsible for placing new members on committees,  rechartering committees, and creating new committees. These are  important functions that keep the advisory committee system operating  and relevant. However, our work at three key administering agencies— USTR, Commerce, and USDA—suggests that present methods for  accomplishing these responsibilities do not ensure that the system  functions reliably.
Turnover of membership occurs regularly given the pace of global  business, industry consolidation, and distress in certain segments of the  U.S. economy. Yet, applications for prospective members spend months in  the approval pipeline before the members can participate (see app. III). For  example, USTR submitted a list of candidates for appointment to the White  House for a presidential appointment to the Advisory Committee for Trade  Policy and Negotiations in mid-February 2002, which, as of early  September 2002 had not yet been cleared by the White House. Agency  officials acknowledged that these delays are frustrating for potential  members and can be a disincentive to joining the system. Indeed, 40  percent of our survey respondents were dissatisfied with the time it takes  to appoint new members to committees and 35 percent said the time to  appoint new members has deteriorated (see app. IV, questions 17 and 22).
Our analysis of agency documents indicates that the full appointment  process, which includes the time for members to complete the application  materials and the time for a required security clearance, regularly takes 6  months or longer. Some time-consuming elements of the clearance process  are beyond the trade agencies' control. However, all three agencies now  pay for the expedited security investigation offered by the Office of  Personnel Management. Some agencies have taken other streamlining  steps, such as providing interim security clearances. According to DFOs  and other agency officials, applying these reforms more widely could  alleviate this major irritant.
FACA’s requirement that committees continued beyond 2 years must be  rechartered has been disruptive for the trade advisory committee system,  posing a particular burden for new administrations until their key  policymaking vacancies are filled. In several cases during our audit period,  committees ceased to meet and thus could not provide advice, because the  agencies had not adopted new charters and appointed members. For  example, the agriculture advisory committees did not meet between April  and October 2001 while USDA went through the process of appointing  members for its six committees. The committee charters and rosters  expired before the United States was able to vet its market access proposal  for the Chile FTA negotiations, and as a result, a lead USDA negotiator  reported that he was not able to use the committees to obtain input on the  proposal. The Labor Advisory Committee’s charter expired in July 2001 and  was not renewed until February 2002. As a result, the LAC Steering  Committee could no longer meet or provide formal committee advice as  efforts to launch new WTO negotiations at the Doha Ministerial in Qatar  were under way. (Only one of the LAC respondents to our survey reported  that the system was fulfilling its statutory role in U.S. trade policy.)  Commerce successfully avoided disruptions in its most recent rechartering  by starting the process for the 22 committees it manages well before their  charters expired. However, the effort to appoint new members and obtain  security clearances required the full-time attention of two of the three  Commerce employees responsible for managing the committees and took 7  months to complete. Commerce, USDA, and USTR officials said the tasks  associated with the rechartering process—such as preparing new charters,  analyzing the attendance records of members up for reappointment, and  reviewing member application information—places a significant burden on  their ability to manage the committee system and detracts from their ability  to support committee operations.

		Resources Devoted to Committee Management Out of Step with Required Tasks

The resources USTR and the other agencies devote to managing the  advisory committee system do not match the tasks that must be  accomplished to keep the system running reliably and well.   (We recently  testified on human capital shortages at trade agencies, including USTR and  Commerce.) According to annual reports that the agencies prepare for the  General Services Administration, federal staff time allocated to managing  all the committees totaled 15.60 full-time equivalent (FTE) positions in  fiscal year 2001 and averaged 0.47 FTEs per committee. USTR officials  said the current staffing levels in the office responsible—three positions  with multiple responsibilities besides the committee system—do not allow  them time to proactively manage committee operations. The recent head of  the office said that simply restarting all the lapsed committees and keeping  the rest of the system operating were occupying much of the time she could  devote to the system.
Commerce and USDA manage more committees and face similar  challenges. Commerce officials responsible for managing the Commerce  committees reported that they must focus their limited staff on the  rechartering and appointment processes, which has not allowed them to  meet their responsibilities to attend all the committee meetings. However,  some improvement may be forthcoming: In its official comments on our  draft report, Commerce stated that it will shortly hire two new full-time  staff to support administration of the committee system. Meanwhile, a  USDA official in the office responsible for managing Agriculture’s  committees—which has one professional position devoted to advisory  committee work and two other positions with multiple responsibilities in  addition to managing the committees—said the reappointment process in  2001 took more than 85 percent of her time and prevented her from  fulfilling other key job responsibilities, such as legislative liaison.
Resource limitations also affect the use of technology. Although committee  members supported the use of technology to improve committee  operations (79 percent strongly or generally supported increased  technology to inform members and 60 percent supported the use of  videoconferencing technology to enable greater participation in meetings),  the cost of new technology is a significant determining factor in its  adoption and use. Commerce is examining options to expand the use of its  Web site for committee members, but the cost of options at the high end of  estimates ($200,000)—which include the security safeguards needed for  improved member access to sensitive documents—far exceeds available  funding. Finally, a USTR official reported that the agency’s live Web casts  from the WTO Doha Ministerial were very costly (estimated at $50,000) and  cannot be done on a routine basis. However, USTR plans to examine less  expensive technological options, such as taped presentations through its  Web site.

	Conclusions

Despite several weaknesses we identified, negotiators, agency officials,  and members told us that the advisory committee system Congress created  28 years ago still provides value to U.S. trade policy.   Many negotiators  report that input from the system has helped the United States achieve  more beneficial trade agreements. Members devote time and contribute  much to the process and report generally high satisfaction with many  aspects of committee operations and effectiveness. Nevertheless, our work  suggests that the committee system is not being used to full advantage and  has lost some of its vitality in providing useful advice on trade policy  matters. Consultations are not always timely or meaningful, and when  advice is provided, there is little assurance that executive branch officials  are held accountable for considering it. Furthermore, the committee  structure has not evolved fully to reflect today’s economy. Some key trade  interests that have recently surfaced—industries, issues, and  stakeholders—are missing or poorly represented in the system. Conflicts  over interpreting how FACA’s fair balance requirement applies to the  advisory committees have complicated the task of incorporating  nonbusiness stakeholders. Low membership rosters for most existing  committees further reduce the opportunity for negotiators to obtain a full  range of private sector views. Finally, USTR’s decentralized management of  the committees has left the system without sufficient direction or support.  With limited resources devoted to the system’s functioning, agencies are  struggling with administrative tasks such as security clearances associated  with appointments and 2-year rechartering requirements. To perform the  unique role in U.S. trade policy Congress has given it, the advisory  committee system’s capacity to provide frank and representative advice  needs strengthening.
Because important multilateral, regional, and bilateral negotiations are  currently under way for which ongoing advisory committee input is  expected and desirable, improvements should be made to the existing  system, particularly with regard to the timeliness and quality of  consultations, gaps in representation, and committee administration.  However, given the issues we identify, improving the system’s readiness to  play its envisaged role in U.S. trade policy will also require more  fundamental reform.

	Recommendations for Executive Action

As Congress seeks to provide new direction to the President on U.S. trade  policy, we recommend that the U.S. Trade Representative, as the lead  agency for the committee system, work with the Secretaries of Agriculture,  Commerce, and Labor and the EPA Administrator to make the existing  system’s consultation process more meaningful and reliable. 1. Specifically, we recommend that the agencies adopt or amend guidelines and procedures to ensure that   advisory committee input is sought on a continual and timely basis,  consultations are meaningful,  committee advice is considered and committees receive substantive  feedback on how agencies respond to their advice; 2. continue to increase outreach efforts to fill gaps in committee  composition and revitalize membership;  3. streamline the nomination and appointment process for committee  members and prevent disruptions in committee activity due to lapses in  charters; and 4. provide sufficient technological and human resources to support  meaningful consultations and ensure effective functioning of the  system.
In addition, we recommend that the U.S. Trade Representative work with  the Secretaries of Agriculture, Commerce, and Labor and the EPA  Administrator to conduct an assessment of the entire system and update it  to make it more relevant to the current U.S. economy and trade policy  needs.
In conducting this assessment and updating the system, USTR, in  conjunction with the other agencies, should seek to 1. more closely align the system’s structure and composition with the  2. better incorporate new trade issues and interests, 3. more reliably meet negotiator needs, and  4. better match agency resources to the tasks associated with managing  the system.

	Matters for Congressional Consideration

To assist the U.S. Trade Representative and the other agencies in updating  the system and improving advisory committee operations, Congress may  wish to consider 1. clarifying its intent regarding how to apply the FACA fair balance  requirement to the trade policy advisory committee system, and  2. providing an exception to FACA administrative requirements by  extending the charter period for the trade policy advisory committees  beyond 2 years.

	Agency Comments and Our Evaluation

We provided draft copies of this report to the following agencies for review:  the Office of the U.S. Trade Representative, the Department of Agriculture,  the Department of Commerce, the Department of Defense, the Department  of Labor, and the Environmental Protection Agency. We received formal  comments from USTR, Agriculture, and Commerce (see apps. VI through  VIII). The three agencies, as well as Labor and EPA, also provided technical  comments, which we incorporated in the report as appropriate. The  Department of Defense reviewed the report but did not provide formal  comments.
USTR and USDA agreed with our overall findings and reported on initial  steps they are taking to implement our recommendations. Commerce  characterized the report as thorough and fair, but urged us to make a  number of modifications. In general, Commerce believes that we underplay  member satisfaction with the system. Commerce also took issue with our  conclusions on apparent mismatches between the committee structure and  the current U.S. economy and agencies’ administrative capacity. Some of  Commerce’s comments contain new information or useful clarifications  that we have added to the reportfor example, language about the agency’s  concerns over security breaches and additional details about outreach  efforts. However, as explained in appendix VIII, we do not agree with  Commerce’s changes related to members’ concerns about the timeliness  and quality of consultations, accountability for seeking and responding to  committee advice, and the need to update the system’s structure. We  believe that the recent passage of Trade Promotion Authority and the  ambitious negotiating plans that have since been announced only heighten  the urgency of taking steps to ensure that U.S. negotiators have timely,  meaningful, and representative input from the private sector on U.S. trade  policy.
As agreed with your office, we plan no further distribution of this report  until 30 days from its issue date. At that time, we will send copies to  appropriate congressional committees and to the U.S. Trade  Representative, the Secretary of Agriculture, the Secretary of Commerce,  the Secretary of Defense, the Secretary of Labor, and the Administrator of  the Environmental Protection Agency. Copies will also be made available to  others upon request. In addition, this report is also available on GAO’s Web  site for no charge at http://www.gao.gov.
If you or your staff has any questions about this report, please contact me  on (202) 512-4128. Other GAO contacts and staff acknowledgments are  listed in appendix IX.

Scope and Methodology

This appendix discusses the scope and methodology for our work. We have  included a separate segment at the end of appendix IV providing technical  information on our methodology for the survey of committee members.

	Scope

The scope of our review included analysis of 34 private sector advisory  committees on all aspects of committee activities, as well as the 4 agencies  that currently administer them: the Departments of Commerce, Labor, and  Agriculture and the Office of the United States Trade Representative  (USTR). The time period covered by our review was generally fiscal years  1999 to 2001.
At the time we initiated our review, three policy advisory committees in the  second tier were in uncertain stages of activity. The charters for the Labor  Advisory Committee and the Defense Policy Advisory Committee on Trade  had expired in 2001, but Labor and Defense officials indicated that their  agencies were rechartering the committees. A third policy advisory  committee dealing with trade with Africa has a charter and seven members,  but the committee had not met during our review period.
Our survey of members, which focused on committee operations, was  under way when these uncertainties existed. Defense and Labor committee  members were included in our survey, but the Africa committee’s members  were not. Ultimately, the Department of Labor rechartered its committee in  February 2002. However, in January 2002, Defense officials informed us  that the Department of Defense did not intend to reconstitute its  committee, which had 10 members on its latest roster, as part of a  departmental effort to reduce the number of advisory committees.  Regarding the Africa committee, USTR informed us in March 2002 that it  had rechartered the committee and was seeking to appoint more members  to it. As a result, the Labor and Africa committees are included in our  discussion of the committee’s current structure and count of committees  and members, but the Defense committee is not.

	Methodology

For our first and second objectives--determining the advisory system’s  value to U.S. trade policy and which aspects of the consultation process  participants indicate are and are not satisfied--we used three methods of  inquiry: interviews, a survey, and document analysis.
Regarding interviews, in initial meetings with agency officials and other  trade experts involved in the committee process, we were told that the best  way to obtain information on how well the trade advisory committee  system functions is to interview the key participants. These officials and  experts stated that the available documentation on committee activities  would not provide as comprehensive a picture as interviews. We therefore  first conducted 168 interviews with every type of participant in the process,  including 25 executive branch negotiators, 40 other agency officials, 30  committee chairmen, 50 committee members, and 15 trade experts. To gain  the perspectives of organizations that do not currently participate in the  advisory committee system, we interviewed selected representatives of  nonbusiness non-governmental organizations (NGOs) having a  demonstrated interest in trade policy. Interest was evidenced by submitting  formal comments in response to USTR Federal Register notices or  attendance at USTR public briefings.
In addition to interviews, we conducted a Web-based survey of 720  committee members and staff liaisons between January and March 2002  to obtain views on matters such as overall satisfaction with committee  operations and effectiveness. We surveyed all the members and staff  liaisons whose names appeared on lists obtained from the Departments of  Agriculture, Commerce, Defense, Labor, and USTR. We developed our  questionnaire in November and December, 2001. We put the instrument on  a special Web site on the GAO server, activated it on January 17, 2002, and  kept it open until March 15, 2002. In all, we received a total of 515 usable  responses to our survey, for an overall adjusted response rate of 72 percent.  The response rate varied considerably by committee and by tier. For  example, seventy-eight (78) percent of tier-3 members responded to the  questionnaire, compared with 55 percent of tier-2 members and 57 percent  of tier-1 members. Consequently, while we present the aggregated  responses for all committee members who responded, we are not  generalizing to the universe of all committee members. The survey also  allowed for some open-ended responses. Members provided considerable  commentary, which is reflected in the body of the report but is not  summarized statistically. The survey results and a technical description of  the survey methodology are in appendix V.
Third, we collected and analyzed documents from four agencies that  currently administer committees. Documentation generally covered fiscal  years 1999 through 2001. Specifically, we collected and reviewed applicable  laws, legislative history, and implementing rules; committee charters and  rosters; agency operating procedures and other guidance; meeting notices,  agendas, summaries, minutes, and transcripts; interagency decision  memos; formal committee reports; and agency correspondence with  advisory committees. We also reviewed written responses to an April 2000  Federal Register notice requesting suggestions to improve the advisory  committee system.
To investigate whether the system matches the current U.S. economy and  supports U.S. trade policy needs, we obtained and analyzed U.S. trade data  and committee membership rosters, as well as information obtained during  our interviews and Web-based survey. Specifically, we examined data on  annual industry sector contributions to U.S. gross domestic product from  1974 to June 2000 and determined commodity shares of U.S. imports and  exports using data collected by Commerce, the U.S. International Trade  Commission, and the Department of Treasury. We defined commodity  groups using Commerce’s 4-digit Standard Industrial Classification level  codes, and we used Commerce’s determination of how best to match each  advisory committee to a commodity group. We determined which  industries are over- and under-represented in the committee system with  respect to their U.S. import and export contributions by comparing this  data with lists showing annual numbers of members on each committee in  fiscal years 1999 through 2001. We also discussed the adequacy of coverage  of industry sectors with agency and industry officials. We identified trade  issues and associated stakeholders that have emerged since 1974 by  reviewing academic and agency literature. We discussed the system’s  coverage of these issues and stakeholders in interviews with agency  officials and selected business and nonbusiness organizations.
To examine how well USTR and the other agencies are managing the  advisory committee system, we collected and examined available data  from USTR, USDA, and Commerce about the time involved in the  appointment process for new members. We also interviewed agency  officials, negotiators, and committee members about agency practices and  other factors that affect the extent of consultation with the advisory  committees and the capability of the managing agencies to maintain full  and active committees. Finally, for information about agency resources  devoted to the committee system we obtained and reviewed the annual  reports for each advisory committee for 1999 to 2001 from the General  Services Administration (GSA) and conducted interviews with agency  officials.
We conducted our work from August 2001 through May 2002 in accordance  with generally accepted government auditing standards.

Applying Fair Balance Requirement to Trade Advisory Committees

The Federal Advisory Committee Act (FACA) includes a fair balance  requirement that applies to each advisory committee covered by the act. In  this regard, the legislative history of FACA shows that the focus of  committee membership should be on the groups directly affected by the  work of a committee, rather than whether these groups represent business  or nonbusiness interests. The broad language of section 135 of the Trade  Act of 1974 making FACA generally applicable to the trade advisory  committees indicates that the fair balance requirement applies to them.  Nevertheless, there is still some legal ambiguity about what this means  within the context of the trade advisory committee structure. Aside from  lack of clarity in the legislation, at this point, there appear to be too few  decided court cases to show any trend in fair balance challenges by  nonbusiness groups to the composition of trade advisory committees.

	FACA Requires Fair Balance on Federal Advisory Committees

FACA, passed in 1972, sets forth certain requirements for Congress to  follow in creating federal advisory committees. One such requirement  states that any legislation establishing an advisory committee shall require  that the membership of the committee be fairly balanced in terms of points  of view represented and the functions the committee performs. GSA  guidelines implementing FACA indicate that to attain a fair balance of  membership on an advisory committee, agencies should ensure that they  consider a cross-section of those directly affected, interested, and  qualified, as appropriate to the nature and functions of the committee.
The legislative history of FACA shows that the fair balance requirement  was intended to ensure that persons or groups directly affected by the  work of a particular advisory committee would have some representation  on the committee. In this regard, the House Report on FACA criticized the  composition of an advisory council for only having industry  representatives. The report suggested that representatives of conservation,  environment, clean water, consumer or other public interest groups should  have been present at meetings with government officials to consider a  proposed questionnaire regarding national industrial wastes inventory.

	FACA’s Fair Balance Requirement Applies to Trade Advisory Committees

The Trade Act of 1974, which mandated creation of advisory committees  on trade policy, was enacted 2 years after FACA was passed. Section 135(f)  of the Trade Act states that the provisions of FACA do apply to the trade  advisory committees, with limited exceptions relating to open meetings  and public availability of documents. As the fair balance requirement is  not one of the excepted FACA provisions, the requirement and the  implementing GSA guidance would apply to the trade advisory committees  established under section 135 of the Trade Act. This was one of the findings  made by one of the two United States courts that have considered  application of the FACA fair balance requirement to section 135.

	Trade Act Not Clear on What Fair Balance Means within Trade Advisory Committee Structure

Although the language of FACA indicates that the fair balance requirement  applies to each advisory committee, there is some ambiguity about what  this means within the context of the trade advisory committee structure.  Section 135 of the Trade Act called for formation of three different kinds of  trade advisory committees for the purpose of creating an institutional  framework to ensure that representative elements from the private sector  have the opportunity to present their views to U.S. negotiators. The three- tier structure established by section 135, as amended,(1) requires  establishment of an Advisory Committee for Trade Policy and Negotiations  (ACTPN) whose function is to provide overall trade policy advice (tier 1);  (2) authorizes establishment of general policy advisory committees whose  function is to provide general policy advice (tier 2); and (3) requires  establishment of industry sector and functional advisory committees, as  may be appropriate, whose functions are to provide technical advice and  information about negotiations over particular products and other factors  relevant to positions of the United States in trade negotiations (tier 3).
The language of section 135(b), as amended, does show that ACTPN, the  tier-1 committee, is to include both business and nonbusiness interests.  Specifically, ACTPN is to be broadly representative of the key sectors and  groups of the economy affected by trade and “shall include representatives  of non-federal governments, labor, industry, agriculture, service industries,  retailers, non-governmental environmental and conservation organizations,  and consumer interests.” However, section 135 of the 1974 Trade Act and  its legislative history do not specifically discuss how the fair balance  requirement of FACA was intended to apply to the tier-2 and tier-3  committees.   With regard to the general policy advisory committees of tier  2, section 135 authorizes, but does not require, the President to establish  such committees for industry, labor, agriculture, services, investment,  defense, and other interests, as appropriate. Section 135 states that these  committees, to the extent practicable, are to be representative of all  industry, labor, agricultural, service, investment, defense, and other  interests, including small business interests. Regarding the industry sector  and functional advisory committees of tier 3, the President is directed to  establish them as appropriate, and similar to the tier-2 committees, to the  extent practicable each tier-3 committee is to be representative of all  industry, labor, agriculture, or service interests, including small business  interests in the sector or functional areas concerned. The language of  section 135 suggests that each of the tier-2 and tier-3 committees is to be  composed of members involved in the particular sector, and does not  indicate any intention to expand these committees to include other  interests.
The legislative history of the 1974 act, which shows that Congress was  concerned that in prior trade negotiations there had not been adequate  input from U.S. producers, would appear to support this view. In this  regard, the Senate report stated that the purpose of the procedures in  section 135 were to “strengthen the hand of U.S. negotiators by improving  their knowledge and familiarity with the problems domestic producers face  in obtaining access to foreign markets.” Similarly, the House report stated  that in past trade negotiations “there has not been adequate input from U.S.  producers who are in the best position to assess the effects of removing  U.S. and foreign trade barriers on their particular products.” Nevertheless,  the legislative history of the 1979 amendments to section 135 indicates  congressional interest in broadening representation of the tier-2 and tier-3  committees to include other interests. In this regard, the Senate report  states that in establishing the membership of the policy, sector, or  functional advisory committees, it was expected that each of these  committees “will fully represent the interests of the Government, small  business, retailers, wholesalers, distributors, consumers and the general  public, as well as labor, industry, agriculture and services, as the case may  be.” The House report has similar language and also stated that “ll  major recognized organizations, regardless of their point of view, should be  invited to participate in appropriate advisory groups.” These statements  are consistent with the legislative history of FACA, which shows that the  focus of committee membership was intended to be on the groups directly  affected by the work of a committee, rather than whether those groups  represent business or nonbusiness interests.

		Court Decisions Provide Little Guidance in Applying Fair Balance

An additional problem in applying the FACA fair balance requirement to the  trade advisory committees concerns the relatively small number of court  decisions that have considered the issue. Although several U.S. Courts of  Appeal had rejected challenges under FACA to the composition of other  federal advisory committees, until 1999 no case had involved a civil- society, fair-balance challenge to membership on a trade advisory  committee. Since then, two rulings have been issued, and a settlement  agreement has been reached in another case. These dispositions have  affected three tier- 3 advisory committees.
In November 1999, several environmental organizations brought an  action in the Federal District Court for the Western District of  Washington, Northwest Ecosystem Alliance v. USTR, challenging the  composition of two tier-3 industry advisory committees that deal with  forest products. The district court found that fair balance meant  balanced representation within each trade advisory committee, not  among all advisory committees, and ruled that the two committees  should include environmental representatives. Two of the factors the  court relied on in making its ruling were that (1) the forest product  committees routinely advised the government on trade issues that  affected the environment, both nationally and internationally, and (2)  the positions supported by the committees were directly contrary to  those supported by the environmental organizations challenging their  fair balance. Importantly, the court also rejected USTR’s position that  fair balance is fulfilled if the membership of an industry sector advisory  committee is broadly representative of the industry sector for which the  committee was established. The court found that this position  contradicted one of the primary purposes of FACA, which was to end  industry domination of advisory bodies. To implement its holding, the  court ordered USTR to make a good faith effort to expedite the  appointment of at least one properly qualified environmental  representative to each of the two committees. USTR and Commerce  appealed the case to the U.S. Court of Appeals for the Ninth Circuit, and  the United States filed a brief in support of the appeal. Nevertheless,  the United States later dropped the appeal, and environmental  representatives were appointed to the two forest product advisory  committees.
After the decision in Northwest Ecosystem Alliance, various public  interest groups filed a lawsuit in the same federal district court,  Washington Toxics Coalition v. USTR, asking the court to require  USTR and Commerce to appoint one or more environmental  representatives to the chemical and allied products industry sector  advisory committee. In March 2001, the parties entered into a settlement  agreement in which USTR and Commerce agreed to make a good faith  effort to expedite the appointment of one or more qualified  environmental representatives to this committee. In response to the  Washington Toxics Coalition case, in early 2001, several members of the  chemical and allied products advisory committee brought an action  before the U.S. District Court for the District of Columbia, Gamble v.  Zoellick,asking the court to preclude environmental representatives  from becoming members of their committee. The court rejected this  position and held that the committee members lacked standing to  challenge the appointment of an environmental representative to their  committee. In support of its ruling, the court also found that there was  nothing in the Trade Act of 1974 that prohibited USTR and Commerce  from appointing an environmental representative.   The court noted that  the appointment of other members was not precluded by the mandatory  language of section 135 requiring that the industry sector advisory  committees be representative of all industry, labor, agricultural, or  service interests in the sector concerned. In this regard, the court  endorsed the U.S. government’s position that the language of section 135  gave the government considerable discretion in making appointments to  the chemical and applied products committee beyond those required.

		Current Status

To date, there have been no further court challenges by environmental or  other civil society groups to the composition of trade advisory committees.    Without further clarification by U.S. appellate courts or the Congress about  how to apply the FACA fair balance requirement to the trade advisory  committee system, some ambiguity about this issue will remain.
Current executive branch policy is that tier-3 committees are generally not  open to nonbusiness groups. A March 20, 2002, Federal Register notice  issued by the U.S. Department of Commerce states that with the exception  of the 3 committees affected by fair balance challenges—ISAC 3  (chemicals), ISAC 10 (lumber and wood products) and ISAC 12 (paper and  paper products)—“non-government organizations do not qualify for  representation on a committee.” Regarding to the Washington Toxics  Coalition case, the settlement agreement provided that until an  environmental representative was appointed, USTR and Commerce could  call meetings of the chemical and applied products advisory committee but  had to make a good-faith effort to include an interim qualified  environmental representative at any such meetings. An interim  environmental representative has attended all but one of the nine  committee meetings held since the settlement, but he declined to continue  to serve beyond the renewal of the committee's charter in March, 2002. The  committee--which represents the second-leading manufacturing export  sector--has not met since March 13, 2002. One potential environmental  representative has applied to serve as environmental representative on the  committee, and the application is being considered. To date no  appointment has been made.

Nomination and Security Clearance Process for Trade Advisory Committees

Commerce, USDA, and USTR follow slightly different procedures in  screening applicants for advisory committees and in obtaining security  clearances. Generally, the vetting process for new members includes an  internal agency review and a security clearance investigation performed by  the Office of Personnel Management (OPM). This appendix provides  information on the nomination and security process, based on data  provided by the three agencies.
Agencies begin a review process after they receive a nomination or a letter  of interest from a prospective member. Figure 11 illustrates the screening  process by each agency and the approximate time for applicants to move  through different stages of the process toward committee membership. For  example, the initial review process averages 70 days at the Department of  Agriculture, while the Department of Commerce conducts an initial, 5-day  review and then saves time by continuing the review concurrently with the  security clearance process. Figure 11 does not include the time spent by  committee members in completing the application materials and  assembling the documents required for the security clearance because  agency data on this part of the process is not systematic or complete.  Based on our review of available agency data and interviews with agency  officials about their typical experience, we found that the appointment  process can regularly take 6 months or longer to complete, if additional  time for completing application materials is added.
The security clearance process can take about 3 months, according to  agency officials and data. Although we found an average waiting time for  clearances at USTR of 227 days for the period fiscal years 1999 to 2001, the  average wait time for a clearance fell to 84 days when USTR began using  the OPM to perform its security clearances in 2000. Department of  Agriculture officials said the process of obtaining a clearance takes about 3  months once the completed paperwork is submitted. Security clearance  data provided by the Department of Commerce show that the process takes  an average of approximately 105 days. All members receive a secret-level  national security clearance, following a background investigation from the  OPM. The clearance is valid for 10 years.

Results of GAO’s Survey of Trade Advisory Committee Members

Section I: Committee Activities and Advice Q2) In general, do you feel that too much, too little, or about the right amount of time was devoted to the following activities at your committee meetings? n=480 (number of responses to question)
Q3) How satisfied or dissatisfied are you with the extent to which the Executive Branch sought your advice on the following matters during the last 3 years?
Members of the ACTPN, TEPAC, and IGPAC are permitted to appoint one or more staff liaisons to help them prepare for and participate in committee deliberations.  These liaisons have clearances and meet on their own; some also participate in member meetings.
Q4) How satisfied or dissatisfied are you with the opportunities your committee had to provide advice for the following trade agreements/ negotiations?

	t) Other (please specify)

	Q 

	Q6) In general, to what extent do you feel that the executive branch times its requests so that your committee’s advice can be used in trade negotiations?

	Q7) How satisfied or dissatisfied are you with the extent that (a) USTR and (b) your committee’s principal agency considered your committee’s advice during the last 3 years?

	Q 

	Q11) To what extent were you given the opportunity to place items on your committee’s meeting agendas?

	a) Amount of notice provided for the meetings E &ODULW\RIWKHDJHQGDLWHPV

	Q 

Section III:  Committee Composition and Membership Q13) In your opinion, do the current members of your committee generally have similar, different or mixed views on trade policy? ❒ 9HU\VLPLODU 6RPHZKDWVLPLODU ❒ 0L[HGYLHZV ❒ 6RPHZKDWGLIIHUHQW ❒ ❒ Q14) In your opinion, did the dissimilarity of views on your committee make it easier or more difficult for your committee to provide advice to the executive branch? ❒ ❒ ❒ ❒ ❒ Q15) During the past 3 years, how often has your committee provided written or oral advice to the executive branch that reflected a consensus position?

	Q16 When your committee provided advice reflecting a consensus position, did it also provide a dissenting opinion?

	Section IV: Overall Satisfaction

Q17) Overall, how satisfied or dissatisfied are you with the following aspects of your committee?

	Committee operations and procedures G $PRXQWRIQRWLFH\RXU

	Effectiveness and impact of your committee N <RXUFRPPLWWHH¶VRSSRUWXQLW\

Q19) In your opinion, what effect have the following recent actions had on the effectiveness of your committee operations?
Section VI: Benefits of Committee Membership Q20) In your opinion, to what extent do you obtain the following benefits as a result of being a committee member?

	Committee operations and procedures G $PRXQWRIQRWLFH\RXUHFHLYHIRU

	Effectiveness and impact of your committee N <RXUFRPPLWWHH¶VRSSRUWXQLW\WR

	Section VIII: Overall Assessment

	Section IX: Questions for Committee Chairs

Comparisons of Committee Structure with Trade Indicators

To examine how well the committee structure reflects the current  economy, we identified the range of goods or services represented by  individual third tier committees and the export and import shares of those  goods and services in total U.S. exports and imports. We then compared  this data to membership data for each committee obtained from the GSA,  which maintains annual reports covering each fiscal year covered by our  review. Based on these calculations, table 5 shows the export and import  shares as well as the relative percentage of membership for each  committee in 2000.

Comments from the Office of the United States Trade Representative

Comments from the U.S. Department of Agriculture

The following is GAO’s comment on the Department of Agriculture letter  dated August 5, 2002.

	GAO Comment

1. Regarding our findings that the nomination and appointment process is  slow and cumbersome, USDA indicated that it took steps to streamline  the process during the most recent rechartering period. We appreciate  that the rechartering was completed within 4 months of being started.  However, we note that it did not begin until May 2001---more than a  month after the APAC and ATAC charters had expired in March 2001.  As a result, as our report indicates, none of the six agricultural advisory  committees met during the April to October 2001 period. Moreover, we  note that USDA indicated in a July 2002 meeting with us that many  advisers appointed to the current charter term have yet to receive final  security clearances.

Comments from the Department of Commerce

The following are GAO’s comments on the Department of Commerce’s  letter dated August 5, 2002.

	GAO Comments

1. The Department of Commerce stated that our draft report understated  member satisfaction with the timeliness of consultations, arguing that  62 percent of the respondents to our survey reported that consultations  were held on a timely basis to a moderate or great extent. We do not  agree with this characterization of our survey data. In our survey, we  asked to what extent the executive branch timed requests so that  committee input could be used in trade negotiations. Respondents  answered this question according to a five-point extent scale that  ranged from “No extent” through “Very great extent.” Only 25 percent of  respondents checked the top two categories, “Great extent” and “Very  great extent.” As the Department of Commerce notes, another 37  percent of respondents checked the middle category on the scale,  which was “Moderate extent.” If all three of these categories are added  together, they total 62 percent of respondents. However, we do not  agree that all three categories should be added together. Our report  includes the full range of responses to the question, adding together  only the top two (very great and great extent) and bottom two (some or  little and no extent) categories, and reporting those who checked “to a  moderate extent” separately.   As the report already notes, 37 percent of  respondents reported that they were satisfied to a moderate extent, the  third point on a five-point scale. Furthermore, 30 percent checked the  final two points on the scale, “Some or little extent” and “No extent.”  Consequently, we believe our finding that “onsultations were not  always timely enough to have an impact on U.S. policy . .  .” is justified.  Finally, we are accurately reporting member statements in both the  survey and interviews that there were instances when advice was  sought after the fact or not sought at all. 2. We agree that the frequency of meetings varies considerably across  committees, and we have added language to this report to that effect.  With respect to scheduling meetings on a timely basis, we recognize  that there is a tension between scheduling meetings far enough in  advance and scheduling additional meetings as needed. However, it is  clearly important to have timely consultations. 3. We recognize that Commerce, USTR, and USDA have made extensive  use of electronic transmissions to provide information to and seek  input from committee members. To capture the extent of such  communication, we reported on our analysis of such transmissions  during fiscal year 2001. Specifically, we calculated the number of times  during fiscal year 2001 that USTR officials used electronic means to  request comment from advisers, including when USTR sent requests for  comment to Commerce’s Industry Consultations Program (ICP) office,  which relayed them to advisers electronically. Our analysis yielded a  result of 63 requests for comments, rather than the 84 suggested by  Commerce in its agency comments. Commerce may have additional  information not made available to GAO about the content of each  communication that could account for the discrepancy between our  counts of agency requests for comment in fiscal year 2001. However,  because GAO and Commerce are analyzing the same data for the same  period, the number of requests for comment is certainly not 63 plus 84,  as Commerce’s comments imply. We welcome the fact that use of  electronic means to communicate with advisers is continuing in fiscal  year 2002, a period that was outside the scope of our document review. 4. Commerce reports that USTR has been responsive to ICP requests to  extend deadlines for ISAC and IFAC members to provide comments on  fast-moving issues. However, we note that in earlier interviews ICP  officials told us that the reason they have requested extensions from  USTR was because members complained that the given deadlines were  too short to provide meaningful input. 5. We believe that, if implemented, the technological improvements  Commerce and USTR are pursuing to allow sensitive documents to be  viewed on a secure interactive Web site could help remedy member  concerns over access to key documents required for meaningful and  timely advisory committee input. 6. Regarding agency procedures, Commerce does not disagree with our  statement that Commerce’s and USTR’s procedures and rules “do not  address the principle of timeliness or consulting to the maximum  extent feasible.” However, it requests a clarification in the report to the  effect that these rules and procedures only apply to the ISACs and  IFACs operating at the third, technical tier of the advisory committee  system. But in reaching the conclusion that Commerce’s and USTR’s  procedures and rules do not address the principle of timeliness and  consulting to the maximum extent feasible, we examined procedures  that apply to all three tiers of the advisory process, including the first-  and second-tier committees having the most severe scheduling  problems. Specifically, we examined the procedures for the USTR-only,  Commerce-USTR, and USDA-USTR committees. The procedures for  USTR-only committees pertain to the first- and second-tier committees  having the most acute meeting scheduling problems. The Commerce- USTR procedures pertain to 22 of the third-tier committees. Neither the  USTR-only nor the Commerce-USTR procedures address the principle  of timeliness or consulting to the maximum extent feasible. The USDA  procedures—which apply to six committees at the second and third  tier also do not address these issues. Although we recognize that the  procedures are based on the legal framework created by Section 135 of  the Trade Act as well as other laws and orders, Section 135 (i) states  that it shall be the responsibility of the United States Trade  Representative, in conjunction with the Secretary of Commerce and  other executive departments, “to adopt procedures for consultation  with and obtaining information and advice from the advisory  committees” on “a continuing and timely basis.”  7. Commerce recognizes that committee meetings frequently include a  very full agenda, but stresses that this reflects efforts to balance a  variety of factors, including cost, members’ time, and the number of  issues to be addressed. We have added language to the report to this  effect, but we note that many survey respondents expressed a desire  for more time for committees to discuss issues and formulate advice.  Survey respondents and interviewees also indicated that the format of  meetings is sometimes not conducive to the two-way dialogue that  would characterize quality consultations. Formulation of advice is the  fundamental purpose of the advisory committees, and we urge  Commerce to consider time available for committee deliberations as it  seeks to structure meetings to make best use of members’ time. 8. We have added language to the report noting Commerce and USTR’s  concerns over safeguarding classified information. 9. We have added language to the report noting that Commerce and USTR  already have some mechanisms to bring to the table crosscutting issues  including the Committee of the Chairs of the ISACs and IFACs. We note  that according to documents we obtained from Commerce, that  committee met three times in fiscal year 1999, twice in fiscal year 2000,  and twice in fiscal year 2001. 10. Commerce notes that the statute places limits on sharing of advice and  information across advisory committees that could inhibit the trade  advisory committee system’s capacity for cross-fertilization. Although  we agree that Section 135 places some limitations on the disclosure of  trade secrets and confidential information, it does not appear to  preclude provision of confidential information to designated advisory  committee members who possess the requisite security clearances. 11. Commerce asserted that significant departures from committee advice  are rare, and that in those infrequent instances committee members are  appropriately informed. This point of view is supported by the GAO  survey, in Commerce’s opinion. In our survey, we asked committee  members how often the executive branch had pursued negotiating  strategies that significantly differed from the committee advice. One  hundred twenty committee members responding to our survey  reported that the executive branch significantly departed from their  committees’ advice about half of the time, or more frequently. These  120 members constitute 25 percent of all respondents to our survey,  and about one-third of those who provided an answer to this question.  While they, by no means, constitute a majority of respondents, they do  represent a sizable minority. In any case, significant departures from  committee advice do not seem to be a rare event, as Commerce  suggests. Our survey then asked a follow-on question for respondents  who indicated that there had been significant departures from  committee advice. Thirty percent of those answering this question  indicated that they had rarely or never been informed of these  significant departures. Another 21 percent of those who answered this  question indicated that they had been informed of significant  departures about or less than half of the time. As a result, we do not  agree with Commerce’s statement that committee members are  appropriately informed when there are significant departures from  advice. Section 135(i) clearly states that USTR “shall inform the  advisory committees of significant departures” from committee advice  or recommendations. 12. We have updated this report with the information Commerce provided  about its practices for handling formal letters from advisory  committees. We note that chairmen and members with whom we spoke  expressed some frustration about lack of feedback from the  government as to how it intends to use or respond to committee  advice—a sentiment not inconsistent with Commerce’s practice of  providing pro forma responses to committee advice unless it has  already made a final decision on policy. Moreover, 21.9 percent of  committee chairmen responding to our survey reported that their  committees written advice was not acknowledged most of the time  (see Q25). In general, the members told us they want to have an  opportunity to influence policy before it is finalized and expressed  dissatisfaction when feedback on committee input was not substantive  or timely in nature.  13. Regarding changes to sectoral and functional committee, our report  already notes that only three committees have been created in the past  decade to respond to emerging needs. We believe that continued efforts  by Commerce and USTR to reevaluate the sectoral and functional  advisory committee alignments with the economy and trade policy  needs are warranted. 14. Commerce’s position on the services committee is consistent with the  statements in this report that certain services negotiators and 70  percent of ISAC 13’s members said that the services sector is well  represented in the system. However, we note that some negotiators  with whom GAO spoke made a point of saying that the services sector  is a large share of U.S. output and trade and that it is only represented  in 2 of the 17 industry sector advisory committees; in the scheme of the  whole committee system, therefore, they stated that services is  underrepresented relative to manufacturing. This report has been  updated to note that Commerce has efforts under way to fill the gap in  representation of the software industry. 15. Commerce asks us to “note and explain” USTR’s long-standing policy  against including foreign-owned or –controlled firms among committee  membership. Commerce indicates that this policy is based on the  sensitivity of the matters considered by the committees and the  possible conflicts that would be experienced by U.S. firms that have  foreign owners, and we have added language to this report to that  effect. However, we note that first, the U.S. government does not have a  uniform policy against inclusion of foreign-owned firms on the trade  advisory committees. USDA stated in its technical comments on our  draft report that it does not preclude foreign-owned firms from  participating in its trade advisory committees. Indeed, USDA indicates  that at least one foreign-owned or -controlled firm already participates.  USDA officials indicate that although foreign ownership can be  considered in the nomination review process, in practice, it was not  actually considered during the 2001 rechartering of the six USDA trade  advisory committees. Second, as to the rationale for the  USTR/Commerce exclusion, we note that there does not appear to be  any bar in Section 135, FACA, and GSA implementing regulations  specifically precluding participation by foreign-owned or -controlled  firms from having representatives on trade advisory committees. The  legislative history of Section 135 does not deal directly with this issue,  and in their comments, neither USTR nor Commerce bases its long- standing policy on a legal prohibition. Third, while we recognize  Commerce’s and USTR’s concerns about the sensitivity of the subject  matters considered by the committees, we note that neither Commerce  nor USTR has provided us with requested explanations of why the  requirements that advisory committee members obtain security  clearances and sign a legally binding nondisclosure agreement to  protect classified information, along with giving members procedural  guidance on safeguarding trade sensitive information, are not sufficient  to address these concerns. Fourth, we acknowledge that a majority of  our survey respondents expressed reservations about inclusion of  foreign-owned firms in the system. However, several members and  negotiators still suggested that the long-standing policy barring foreign- owned firms from membership altogether should be revisited, in part  because of the contribution to U.S. employment and production that  some of these firms provide. Indeed, several U.S. negotiators reported  to GAO that they already actively work with foreign-owned firms on an  informal basis during trade negotiations, many of which are already  members of key trade associations. 16. Regarding participation levels and outreach, Commerce took issue with  our position that the number of members specified in each committee’s  charter represents a proper level of membership.   We note Commerce’s  assertion that the “authorized capacity” numbers specified in each  committee’s charter are “somewhat arbitrary,” but we hold that they do  provide useful guidance regarding committee size. Each committee  charter specifies that it “consists of approximately X members,” and  each committee’s charter specifies a distinct membership number,  ranging from 30 to 50 members. For example, the charter for the Small  and Minority Businesses Committee states that it “consists of  approximately 35 members,” while the charter for the Chemicals and  Allied Products Committee specifies approximately 50 members.  Further, while for some trade advisory committees managed by other  agencies the charter states that these numbers represent a maximum,  this is not the case for the committees that Commerce administers.  Even if the numbers specified in the charters do not represent an  absolute ideal, our conclusion that the trade advisory committees were  at 49 percent of their authorized capacity in fiscal year 2001 highlights  the ample room available on the committees that could be used to fill  gaps in representation.  17. We appreciate that Commerce provided us with current membership  numbers as of August 2002, although the scope of our document review  was through fiscal year 2001 (September 30, 2001). We note that  according to these current membership numbers, at 48.3 percent of  charter levels, the committees administered by Commerce remain just  below half of their authorized capacity, and well below the 55 percent  of capacity they had reached in fiscal 2000. 18. We recognize Commerce’s efforts to recruit new members and have  updated the report to reflect them more fully. These efforts may  alleviate the difficulties of maintaining robust and representative  membership, concerns that both Commerce and USTR officials  expressed during our review. 19. Commerce believes that the draft report’s treatment of the issue of  nonbusiness participation may be somewhat misleading and states that  the report should contain a more detailed and specific discussion of the  congressional delegation in Section 135 of the Trade Act of 1974,  particularly in distinguishing the functions and makeup of each of the  three “tiers” of committees. We believe this report’s treatment of the  nonbusiness issue is fair and accurate and note that appendix II of our  draft report contains a detailed discussion of the functions and  committee structure for each tier. 20. We recognize that many members expressed satisfaction with the  support provided to committees by USTR and other managing agencies,  including Commerce and USDA, and we have added language to this  report to that effect. However, certain members also expressed  concerns about overall leadership of the system and stated that delays  or disruptions associated with agency execution of administrative tasks  such as rechartering and new appointments were hindering the  system’s ability to fulfill its statutory purpose. Our report already notes  that unlike USTR, USDA, and Labor Commerce’s ICP successfully  avoided disruptions in committee operations typically associated with  rechartering. This report has been updated to note that Commerce is  taking steps to fill administrative support needs by hiring additional  staff. With the renewal of trade promotion authority on August 6, 2002,  the U.S. negotiating agenda and resulting demands on the committee  system are likely to increase.

GAO Contact and Staff Acknowledgments

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	Staff Acknowledgments

In addition to the person named above, Dennis Richards, Venecia Rojas  Kenah, Kay Halpern, Jon Rose, Janet Lewis, Sharla Draemel, Martin De  Alteriis, Richard Seldin, and Janey Cohen made key contributions to this  report.

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Summary:
Why GAO Did This Study

In 1974, Congress mandated creation of a private sector advisory system to ensure that representatives from private business and other groups with a stake in trade policy could provide input as negotiations unfolded. The hope was that such involvement would result in trade agreements that Congress could approve with confidence. The law established a three-tier structure of committees to advise the President on overall U.S. trade policy, general policy area, and technical aspects of trade agreements. Four agencies, led by the Office of the U.S. Trade Representative (USTR), currently administer the committee system. According to many negotiators, agency officials, and committee members, 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. Although GAO's survey of committee members found high levels of satisfaction with many aspects of committee operations and effectiveness, more than a quarter of respondents indicated that the system has not realized its potential to contribute to U.S. trade policy.

What GAO Found

GAO found that consultations could be more timely and meaningful and that the consultation process needs greater accountability. The structure and composition of the committee system have not been fully updated to reflect changes in the U.S. economy and U.S. trade policy. In general, the system's committee structure is largely the same as it was in 1980, even though the focus of U.S. trade policy has shifted from border taxes toward other complex trade issues, such as protection of intellectual property rights and food safety requirements. Leadership direction and administrative support by USTR and the other managing agencies have not been sufficient to ensure that the advisory committee system works reliably. GAO found that negotiators have used inconsistent approaches to solicit committee member views, with some negotiators not consulting with committees at all.