Department of Commerce: Office of Manufacturing and Services Could Better Measure and Communicate Its Contributions to Trade Policy
Published: 2011-06-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Declining U.S. manufacturing has been an issue of continuing concern for policymakers; this was reflected in the Obama Administration's (Administration) 2010 announcement of the National Export Initiative. The Administration has also shown interest in improving the efficiency of the federal support of trade operations. In 2004, the Office of Manufacturing and Services (MAS) was established within the Department of Commerce's (Commerce) International Trade Administration (ITA) to enhance the global competitiveness of U.S. industry. GAO was asked to examine (1) MAS's goals and activities and how they compare with those of other government entities; (2) how MAS prioritizes its activities and targets its resources; and (3) the extent to which MAS tracks and reports its efforts. GAO reviewed agency documents and interviewed officials from MAS, other parts of ITA and Commerce, and other agencies..
section_title: What GAO Found
paragraphs: MAS's primary goal is to support the competitiveness of U.S. industry, which it does largely through combining its industry and trade expertise to support other parts of Commerce, including other parts of the ITA and external U.S. government clients, such as the Office of the U.S. Trade Representative (USTR). The major activities of MAS's offices include: collection and dissemination of data on U.S. industry and trade, production of analyses on policies that can affect competitiveness, and identification and resolution of overseas trade barriers. While some activities may seem similar to those of other agencies, such as USTR, officials from MAS's client agencies stated that MAS's combination of industry and trade expertise is not readily available to them elsewhere in the government. MAS has undertaken an internal review to update its mission and priorities regarding activities and clients and has proposed changes currently under departmental review. MAS does not have a mechanism to systematically monitor analysts' workload or the amount of time spent on requests for different clients. The absence of workload data may hinder its ability to effectively allocate its resources to address the needs of the trade policy process. Further, MAS's role has not been clearly communicated, and ITA's Web site provides limited information about MAS. Consequently, the public and Congress have limited information about MAS's activities and contributions to policy making. MAS's ability to meet its performance targets largely depends on actions from other government agencies and other parties, making isolating its contributions difficult. MAS developed a series of steps, or milestones, to help isolate its contributions to trade policy outcomes, although officials acknowledged continuing challenges. Further, MAS does not systematically obtain feedback on its performance from the agencies to which it provides analysis, nor does it track its contributions to major policy decisions that fall outside its externally reported performance targets. This makes it difficult to assess the extent to which MAS's work adds value to the trade policy process.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of Commerce take actions, in concert with MAS, to finalize MAS's focusing of mission and priorities, systematically monitor workload, and more systematically obtain and communicate information on the value MAS adds to the trade policy process. In its comments, Commerce concurred with the findings and recommendations and expects to make progress by October 2011.

section_title: Letter
paragraphs: Declining U.S. manufacturing, particularly manufacturing jobs, has been  an issue of continuing concern for policymakers. This concern was  reflected in the Obama Administration’s (Administration) 2010  announcement of the National Export Initiative, which brought new  emphasis to one proposed government response to manufacturing  declines—a renewed federal focus on increasing U.S. exports. In addition,  the Administration has demonstrated increased interest in improving the  efficiency of the multiple federal agencies that support trade operations,  with President Obama requesting that the Office of Management and  Budget (OMB) prepare a reorganization proposal by June 2011. Recently,  Congress expressed interest in the activities and achievements of the  Office of Manufacturing and Services (MAS) within the Department of  Commerce (Commerce), which was established to enhance the global  competitiveness of U.S. industry, expand market access, and increase  exports.
In response to your request, we examined: (1) the goals and activities of  MAS and how the types of analysis and expertise MAS provides compare  with those provided by other government entities; (2) how MAS prioritizes  its activities and targets its resources; and (3) the extent to which MAS  tracks and reports its contributions to increasing U.S. competitiveness and  trade. In addition, you asked us to provide information on U.S. and global  manufacturing trends (see app. II).
To address these objectives, we reviewed relevant documents, including  legislative authority and budget and staffing information; documents  related to MAS’s performance measurement system; and examples of how  MAS’s work has been used by parts of Commerce and other U.S.  government agencies over the last 5 years. In addition, we discussed  MAS’s efforts with its officials, its government clients, and others who are  knowledgeable about MAS. We interviewed Commerce officials from the  Offices of the Secretary, Commercial Service, Market Access and  Compliance, Import Administration, and the National Institute of  Standards and Technology. We also interviewed officials from other U.S.  government agencies, including the U.S. International Trade Commission  (USITC), the Office of the United States Trade Representative (USTR),  Departments of State (State), Energy, Transportation, and Treasury, the  Environmental Protection Agency, and OMB. Appendix I provides more  information on our scope and methodology.
We conducted this performance audit from August 2010 to June 2011 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
subsections: section_title: Background
paragraphs: MAS is a 207-person unit within Commerce’s International Trade  Administration (ITA), as shown in table 1. ITA’s stated mission is to  strengthen the competitiveness of U.S. industry by promoting trade and  investment and by monitoring and enforcing U.S. trade laws and  agreements. MAS is one of four distinct, but interrelated, business units  within ITA, each led by an Assistant Secretary.
MAS was created in 2004, after the publication of Commerce’s  Manufacturing in America report which called for its creation to support  the Secretary of Commerce in his role as the federal government’s chief  advocate for the manufacturing sector. The report grew out of a 2003  review of the U.S. manufacturing sector initiated by former Secretary of  Commerce Donald Evans in response to “unprecedented challenges”  facing U.S. manufacturers. Commerce received input from industry  associations and large and small manufacturers from critical sectors, and  the report summarized manufacturers’ concerns, which included the  government’s limited focus on manufacturing and its ability to compete  globally. In addition to other recommendations, the report called for the  creation of an Assistant Secretary of Commerce for Manufacturing and  Services.
Congress made recommendations in a 2003 House of Representatives  Appropriations Committee Report to realign ITA’s structure and clarify the  mission of each business unit to better address an increasingly competitive  global economy and growing U.S. trade deficit. The report called for the  creation of a better analytic basis for U.S. trade policies and negotiations.  It contained several specific actions, including ones targeting U.S.  manufacturers. For example, Congress expected the proposed MAS unit to  develop tools and expertise to assess industry trends and evaluate the  impact of trade agreements, and to identify and address challenges facing  manufacturers through an interdepartmental advisory committee.  Subsequent legislative and agency activity established the reorganization  proposed in the committee report and transferred functions and staff  across ITA business units, with one result being the reorganization of the  Trade Development unit into MAS.
Congressional concerns leading to the reorganization of ITA stemmed, to a  large degree, from continuing trends in manufacturing and trade. Although  the United States remains the world’s largest producer of manufactured  products, there have been steep declines in manufacturing employment as  measured by share of hours worked, and manufacturing’s share of gross  domestic product (GDP) (see fig.1). Manufacturing employment fell from  about 28 percent of total U.S. employment in 1969 to about 10 percent in  2009. As a share of nominal GDP, the drop has been similar. However,  even with declines, almost 10 percent of the U.S. economy is in  manufacturing—roughly 11 million workers. In addition, manufacturing  continues to account for a large share of U.S trade. In 2009, manufactured  goods accounted for about 60 percent of U.S. exports.
The National Export Initiative brought new emphasis to the federal  government’s role in promoting exports. Commerce, with ITA as the lead  entity within Commerce, works with other federal government agencies  on the Export Promotion Cabinet, which, in collaboration with the Trade  Promotion Coordinating Committee (TPCC), is charged with carrying out  the initiative and spurring job growth through the doubling of U.S. exports  by 2015. ITA also works through the USTR-led interagency structure used  to formulate trade policy and represent U.S. trade interests in multilateral  and bilateral forums such as the World Trade Organization. MAS analysts  cover essentially all nonagricultural sectors of the economy.
section_title: MAS Combines Industry and Trade Expertise in Providing Analytical and Policy Support to the U.S. Government
subsections: section_title: MAS Offices Focus on Industry Sectors and Economic Analysis, Primarily in Manufacturing
paragraphs: MAS’s primary goal is to support the competitiveness of U.S. industry in  domestic and international markets, which it does largely through  providing policy advice, research, and analytical support to other parts of  Commerce and the U.S. government. MAS has distributed 182 of its 207  staff across three suboffices, with the largest share in its Office of  Manufacturing. As shown in figure 2, analysts in the Office of  Manufacturing and the Office of Services cover a number of industry  sectors, serving as sources of industry information from a trade  perspective. Analysts and economists in the Office of Industry Analysis  conduct economic and policy analysis to support U.S. industry and  evaluate industry recommendations for trade negotiations and U.S.  competitiveness.
section_title: MAS Supports Trade Policy Efforts of Internal and External Government Clients Mainly Through Industry Research and Sector-Specific Analysis
paragraphs: MAS analysts provide industry research and sector-specific analysis to  support trade policy efforts of both internal clients in Commerce and  external government clients, such as USTR. MAS’s major activities include:  collection and dissemination of data on U.S. industry and trade;  production of analyses on domestic and international trade and  investment policies that can affect competitiveness; identification and  resolution of overseas market and trade barriers; and management of the  Industry Trade Advisory Committees (see tables 2 and 3 for more detailed  descriptions of MAS’s activities; see app. III for examples of industry- specific trade barriers that MAS addressed in fiscal year 2010).
The 2004 reorganization of Trade Development into MAS transferred day- to-day servicing of private sector requests to the Commercial Service  offices in the field. The portion of MAS’s research and analysis that is  used primarily by internal government clients (including Commerce and  ITA business units, as well as other executive branch agencies such as  USTR and the Department of the Treasury) for sensitive negotiations and  policy making is not publicly available. However, some of the industry- specific information and data produced by the Office of Industry Analysis  is made publicly available.
MAS provides other parts of ITA and Commerce with industry sector  analyses, which contain background information on the specific industry;  evaluation of its competitive strengths and weaknesses both domestically  and internationally; and proposed strategic direction for industry sectors  (see app. IV for more information on MAS’s sector analyses). According to  agency officials, other ITA units use these analyses to address specific  trade issues that affect industries and regions. Table 2 shows examples of  the types of support MAS provides to its internal Commerce clients.
MAS also supports the efforts of other executive agencies, including  USTR, through activities that include review and analysis of trade  agreements, tariffs, and domestic regulations; involvement in the  interagency trade policy-making process; and serving as a source of trade  data to the government and public. USTR officials noted the contribution  of MAS’s expertise and analysis to the U.S. trade policy process. According  to USTR officials, MAS’s position in government, its insight into industry,  and its analysis through a trade focused viewpoint are utilized by USTR in  the trade negotiating process. A USTR official further stated that, in  addition to MAS’s role in supporting the trade policy process, it also  engages directly in trade promotion activities that benefit U.S. companies.  USTR noted that MAS can play an important role in providing insight into  industry’s concerns and potential reactions to policy changes. USTR  officials also commented that MAS provided useful information to them  during the U.S.-Korea free trade agreement negotiations. For example,  MAS provided detailed trade data on autos traded according to engine  sizes, which could affect the application of certain tariffs. According to  USTR officials, other government or private sector entities do not  generally have the capacity for the specialized trade and tariff data that  MAS can produce.
USTR officials stated they were unable to provide the actual documents  MAS provided to USTR because they were part of the internal deliberative  process used to develop U.S. negotiating positions. However, they did  state that the type of analyses are not unlike MAS state and sector  analyses, which are available to the public. That analysis is developed in  collaboration with other ITA units for each free trade agreement and are  posted on USTR’s Web site, as well as ITA’s. These analyses highlight the  new market opportunities that a particular trade agreement provides to  U.S. exporters and the effects of international trade on all 50 states’  economies.
In addition to supporting USTR, MAS plays a key role within Commerce in  providing support to other government agencies in areas such as  supporting trade negotiations and providing data on travel and tourism, a  leading U.S. services export. According to MAS officials, MAS provides  analysis of and policy advice to Commerce on transactions seeking official  financing from U.S. government agencies and multilateral development  banks in which the U.S. government has a vote, as well as on key official  finance issues under discussion in multilateral forums. These include, for  example, the U.S. Export-Import Bank, Overseas Private Investment  Corporation, and the Organisation of Economic Cooperation and  Development Exports Credits Group. Table 3 provides specific examples  of the types of MAS activities that support other executive branch  agencies.
section_title: MAS’s Clients Report that MAS Provides Analysis Not Readily Available Elsewhere in Government
paragraphs: While MAS conducts activities that have similarities to activities of other  agencies, officials from MAS’s client agencies stated that MAS can provide  analysis that combines industry and trade expertise that is not readily  available elsewhere in government. For example, government officials we  interviewed stated that some other agencies may have technical expertise  in particular disciplines but have less of a focus on developing trade  policy. Table 4 provides examples of how MAS differs from other ITA  units, the U.S. International Trade Commission, and other government  agencies.
section_title: MAS Faces Challenges in Prioritizing Activities, Monitoring its Workload, and Communicating its Role and Contributions
subsections: section_title: MAS Has Undertaken an Internal Review, but Has Not Had a Clear System to Prioritize Activities or a Clear Mission Statement
paragraphs: MAS has undertaken an internal review to update its mission and priorities  regarding activities and clients and has proposed changes which are  currently under departmental review. Since the 2004 reorganization of ITA,  MAS’s broad mission statement has not clearly defined its role in  government. MAS’s stated mission has been to strengthen the  competitiveness of U.S. manufacturing and services by addressing  commercial and economic impediments that disadvantage U.S. companies  overseas. However, ensuring the competitiveness of U.S. industry requires  policies and actions from many government agencies, not just Commerce.  For example, U.S. corporate tax policy affects the competitiveness of U.S.  industry, but Commerce does not have decision-making authority to  regulate tax policy.
MAS officials have acknowledged the need for having clearer priorities  and mission alignment with the Administration’s National Export  Initiative’s goals to successfully serve its clients. A MAS official stated that  MAS cannot be “all things to all people,” which has been a consistent  concern raised by staff. To address this need, in early summer 2010, MAS  officials began an internal review of its mission and activities. As a result,  MAS revised its mission statement: to advance the competitiveness of U.S.  industries by leveraging its in-depth sector expertise in the development of  trade policy and promotion strategies. MAS officials stated that the  changes made as a result of the internal review are still in process and  must be approved at the departmental level.
MAS has an annual planning process to identify industry issues and  determine actions to address them, but MAS officials acknowledged that  these plans do not capture the numerous day-to-day unanticipated  requests that come from sources such as the Secretary of Commerce,  Executive Office of the President, other Executive Branch agencies, and  the Congress. Every year, each industry office develops an assessment of  the industry sectors it covers which, MAS guidance states, should present  an analysis of the competitive strengths and weaknesses of the industry  and an assessment of the industry’s needs. Each office then uses these  industry assessments to develop business plans, which describe activities  the office plans to undertake during the year, and links business plan  activities to objectives, performance measures, and targets. For example,  the fiscal year 2010 business plan for MAS’s Office of Energy and  Environment included identifying market access opportunities and  barriers, as part of its energy-efficiency initiative. The plan linked this  activity to MAS’s performance measure to identify the percentage of  industry-specific trade barriers that were removed or prevented. MAS  officials told us that its management reviews the plans and uses them in  making decisions throughout the year. However, MAS managers told us  they prioritize the unanticipated requests based on resource availability  and importance of the activity.
As part of its internal review, MAS has developed decision criteria to assist  analysts in prioritizing their work demands. According to the proposed  criteria, which is in process awaiting departmental approval, MAS will  primarily support sectors that have a direct connection to exports or that  strategically impact trade. Such a sector must be a high-volume exporter,  with $10 billion or more in exports or be a high potential-growth sector  such as renewable energy. MAS management has set the goal of having 75  percent of MAS’s resources working toward National Export Initiative  objectives of doubling exports by 2015. However, MAS officials noted that  they currently conduct work that is important for U.S. global  competitiveness but not directly related to exports. For example, MAS  provides the business perspective on cases that go before the Committee  on Foreign Investment in the United States (Committee), and coordinates  Commerce participation in these cases. The Committee is an interagency  panel authorized to review transactions that could result in control of a  U.S. business by a foreign person. The review is to determine the effect of  such transactions on the national security of the United States and is not  directly related to exports. To align with its new approach for prioritizing  analysis related to exports, MAS management plans to streamline  resources devoted to working on those cases that are not of strategic  importance. In addition, MAS plans to reduce its effort in analyzing  domestic regulations that do not have a significant impact on exports.
section_title: MAS’s System to Monitor Its Workload is Used Unevenly
paragraphs: MAS does not have a mechanism to systematically monitor analysts’  workload or the amount of time spent on requests for different clients.  MAS officials identified several top-priority clients, but the many  unanticipated daily requests can pose difficulties for MAS analysts. Some  requests for the Offices of Services and Manufacturing come to analysts  through ITA’s formal “tasker” system and are delegated by senior  management to analysts. The “tasker” system is an electronic system  through which tasks are assigned to staff and signed off on by  management. MAS officials stated that it is useful for tasking out  assignments to multiple offices; however, they noted that it does not cover  all the work undertaken within MAS. They noted that for the Office of  Industry Analysis, most requests are directly communicated to managers  and analysts by a colleague in ITA or another government agency. They  stated that entering Office of Industry Analysis workload data into the  tasker system is not current practice. Moreover, according to MAS  officials, many of the requests involve sensitive documents which cannot  be entered into the system in order to comply with security protocols.  MAS managers said that the proportion of work captured by the tasker  system varies greatly among its program areas, ranging from 85-90 percent  for the Offices of Manufacturing and Services to less than 5 percent for the  Office of Industry Analysis. Without a way to systematically monitor staff’s  workload, it is difficult for management to determine how to most  efficiently allocate resources.
In prior work, we found that for an entity to run and control its operations,  management must have relevant, reliable, and timely information.  However, MAS did not systematically track the time spent on tasks by  different types of clients. After our inquiries, the Deputy Assistant  Secretary of MAS’s Office of Industry Analysis began monitoring short- term (2 to 3 days) requests by different types of clients and found that  approximately 70-75 percent of short-term requests for analysis came from  within ITA, 5-10 percent were generated from the rest of Commerce, and  the remaining 15-20 percent were from other agencies in the Executive  Branch and the Congress. However, these data reflect only the requests— which average 5,400 annually, according to MAS officials—submitted to  the 41 staff in Office of Industry Analysis, not MAS offices overall, and  they do not include information that involves security protocols or longer- term projects. According to agency officials, these short-term requests are  ad hoc and often time sensitive and must be balanced with the broader  long-term activities MAS analysts undertake. Given that management does  not have reliable and timely information about staff’s workload, it may be  difficult for management to ensure staff are working on the highest- priority efforts.
section_title: MAS Faces Challenges in Communicating Its Contributions to Congress and the General Public
paragraphs: Officials from agencies that work with MAS told us they understand MAS’s  role and contributions to trade policy and competitiveness issues, but  these contributions are not readily apparent to Congress or the general  public. This is partly because MAS’s policy-development work is not  publicly available. Although ITA’s Web site does provide public access to  industry, trade, and economic data and analysis produced in MAS, it  provides limited information about MAS’s role and activities.  Consequently, the public and Congress may have limited information  about MAS’s contributions to policy making. This lack of transparency  may hinder Congress’s ability to provide effective oversight of MAS’s  activities.
There is little publicly available information about MAS’s priorities and  contributions to policy making. As noted above, MAS’s work is largely  intended for use by internal government clients, and much of that output is  not in the form of products that are externally available. Previously, we  found that, in addition to adequate internal communications, management  should ensure there are adequate means of communicating with external  stakeholders, which can include Congress.
An organization’s Web site is typically a readily accessible source of  information to the public about the organization’s mission and activities. A  MAS official stated that when she worked in the private sector, she relied  on the Web site to get the analysis and information they needed and that  its Web sites were organized in a manner useful for industry users. In  addition, officials from agencies that rely on MAS for analytical support  stated they generally communicate with MAS via phone or e-mail and do  not rely on the Web site. Further, MAS and other officials stated that ITA’s  internal Web site, or intranet, provides a primary means of communication  among ITA units and, thus, a public ITA Web site is less important for that  purpose.
For the general public, ITA’s Web sites provide limited information about  MAS’s priorities and activities. According to a 2007 Commerce Inspector  General report, ITA’s Web sites have duplicative, confusing, disorganized,  and outdated pages. In a December 2010 meeting, members of ITA’s Web  Governance Board (Board) told us that the issues raised in the report are  still relevant. The board observed that Web sites are important tools to  increase public awareness of ITA programs and expertise, not only for the  business community, but also for external stakeholders who may have  difficulty finding useful information about MAS as an organization and its  role in trade policy.
The board members told us that because ITA does not have a centrally  directed web management office, each business unit is responsible for  managing its own web presence, but there is great variation among the  offices’ ability and technical expertise. A MAS official stated that, MAS,  like some of the other ITA business units, does not have dedicated full- time staff focused on maintaining MAS’s web presence. Instead there are  several MAS analysts who have the auxiliary duty of working on MAS’s  Web site in addition to their other duties. Consequently, MAS and ITA as a  whole lack cohesive, transparent, and consistent Web sites. This may also  hinder MAS’s ability to effectively communicate its priorities and  contributions to stakeholders, Congress, and the public.
section_title: MAS Faces Challenges in Measuring Its Contributions to the Trade Policy Process
subsections: section_title: External Factors Affect MAS’s Achievement of Its Broad, Outcome-Based Performance Targets
paragraphs: Due to its policy-support role, MAS’s ability to meet its performance  targets, such as breaking down trade barriers faced by U.S. firms, depends  on actions from other agencies, Congress, businesses, and foreign  governments. MAS has three main objectives linked to five outcome-based  performance measures that it reports on externally in assessing its  performance. One objective—to ensure appropriate industry and other  stakeholder input into trade policy development, negotiations, and  implementation—covers much of what MAS does, including addressing  industry-specific trade barriers and working with USTR on trade  agreements. MAS has also developed internal measures that are used to  track activities and for planning, but are not reported externally (see  tables 5 and 6).
MAS’s fiscal year 2011 budget justification stated that one limitation to its  meeting its performance targets is that many factors—including U.S.  business cooperation, global trade trends, political developments, and the  extent to which foreign governments create barriers or act inconsistently  with trade obligations—affect the number of barriers removed. MAS’s  performance-measurement process attempts to address this challenge by  breaking its outcome-based measures into specific milestones, according  to officials. The specific milestones—such as identifying market-access  issues of interest to U.S. industry or industry-specific opportunities  resulting from a trade agreement—are analyses or industry-outreach steps  that MAS itself can undertake and complete, even though MAS cannot  control the ultimate impact of those actions. MAS sets targets for its  performance measures annually. These milestones, while more specific  than the overall performance measures, are nonetheless qualitative  measures.
In Commerce’s fiscal year 2010 Performance and Accountability report,  MAS reported that it had met or exceeded all of its targets for its four  performance measures. For example, MAS reported that it had met its  target of removing or preventing 30 percent of the industry-specific trade  barriers it addressed. In both 2008 and 2009, Commerce’s Performance  and Accountability reports stated that MAS exceeded three of its targets  and did not meet its target for its work on trade agreements, because the  Administration suspended work on two trade agreements MAS was  working on.
section_title: MAS Does Not Systematically Obtain Feedback from All Its Clients or Track Its Contributions to Policy Decisions Not Covered by Its Performance Measures
paragraphs: MAS does not systematically obtain feedback on its performance from all  its clients on whether or not it is meeting their individual needs. In  previous work, we stated that it is important for agency managers to  collect performance data that are sufficient to support decision making.  A MAS official stated it does not have the resources to systematically  survey its clients about their satisfaction with MAS’s activities. In addition,  MAS officials stated they do not view administering a survey to obtain  feedback as feasible since many of their clients are senior policy makers.  MAS officials said that if their clients were not satisfied with their work,  the clients would not continue to request analysis and information.
Officials stated they do obtain feedback from its ITA clients through  periodic meetings with managers in the other ITA business units.  Although MAS does not obtain systematic feedback from all its clients,  officials from other government agencies told us that while there is a great  deal of industry expertise in critical areas within MAS, the level of  expertise varies by sector, and some gaps do exist. Officials from the  Departments of State and Treasury stated that MAS provided valuable  analysis on export financing for airplanes for the Organisation for  Economic Cooperation and Development interagency delegation on  export financing. In addition, officials from the Department of  Transportation stated that MAS’s knowledge of trade policy  complemented its transportation-policy expertise and its technical  understanding of engineering and infrastructure, allowing it to better serve  industry. However, officials from State and USTR noted that the level of  expertise in MAS is not consistent across all sectors and, consequently, the  usefulness and relevance of MAS input can be uneven. In addition, an  Import Administration official stated that while it relies on MAS to assist  with industry analysis of foreign trade zone applicants, the coverage of  some sectors is uneven. MAS officials recognized there is unevenness in  the level of expertise across sectors and said they are trying to address the  issue as part of its internal-review process and by providing better training  for analysts.
Some of MAS’s activities fall outside its external and internal measures.  For example, MAS officials stated it is difficult to measure some of the  economic analysis work that does not contribute directly to breaking  down trade barriers or toward developing a trade agreement. Some of this  work is used by senior government officials in Commerce and other parts  of the Executive Branch. Further, MAS activities that contribute to the  performance measures of other parts of ITA are reported not by MAS, but  by the unit with primary responsibility for each specific performance  measure. MAS’s strategic plan includes performance measures related to  the goals and objectives that other ITA units have primary responsibility  for and on which it does not report. As a result, the performance measures  MAS reports on do not include its contributions to the other ITA units’  goals. For example, MAS’s contributions to antidumping and  countervailing duty proceedings are reported by Import Administration.
Responding to our request, MAS officials compiled two large volumes of  examples (i.e., analysis documents, information used in trade negotiations,  and regulatory cost analyses) illustrating MAS activities over the past few  years. MAS officials told us this was not an exercise the office conducts on  a regular basis, and that it was very useful. The officials said that it  provided a way for staff to link their activities to broad outcomes  separately from the overall performance measures. However, they added  that the exercise was resource intensive, and they do not have plans to  regularly repeat this type of effort.
section_title: Conclusions
paragraphs: At a time of heightened interest in both expanding U.S. exports and  streamlining government operations to lower costs and avoid  inefficiencies, the role and effectiveness of MAS within ITA is of particular  interest. Created out of an existing Commerce unit in 2004 to more  explicitly focus on U.S. competitiveness, MAS’s services are primarily  provided to government clients. Unlike other Commerce offices such as  Commercial Service and the Import Administration, or independent  agencies such as USITC, MAS functions largely as an internal consulting  group for government trade policy. MAS’s clients report that MAS provides  analysis not readily available elsewhere in the government.
Because of the reduced visibility that accompanies this role, it is important  for MAS to clearly define its contribution to the Administration’s trade and  economic policy. We found that MAS continues to refine its mission and  develop decision criteria to prioritize its activities, and enhancements are  still undergoing departmental review. Given that MAS does not face a  market test for its services, a clear set of priorities could help it meet its  clients’ needs.
MAS faces challenges in measuring its contributions to trade policy,  because as a policy support organization, MAS may have difficulty  isolating its specific contributions to the trade policy process. MAS has  established a detailed process to measure its performance, but the office  does not systematically obtain feedback from all its clients or track its  contributions to major policy decisions that fall outside its performance  measures. This makes it difficult for MAS to accurately determine the  extent to which it adds value or to identify opportunities for improvement.
In terms of communication, MAS also faces challenges in creating  transparency because of the nature of its activities. Because MAS provides  industry and trade policy expertise, seldom through products that are  publicly attributable to MAS, there is limited visibility of MAS’s  contributions in key work areas. Its Web site could be a useful  communication tool, but as part of ITA, MAS relies on ITA-level support  for management of the Web site. Nonetheless, since its support functions  are central to its contributions, presenting them more clearly would be  useful for congressional and stakeholder oversight of its activities.
MAS is in the process of finalizing its mission statement and decision  criteria and is taking steps to more clearly prioritize its activities and  better align its resources to meet the goals of the Administration’s  National Export Initiative. Moving this initiative forward within Commerce  will be an important step.
section_title: Recommendations for Executive Action
paragraphs: To better assure MAS is meeting the needs of its clients, we recommend  that the Secretary of Commerce, in concert with MAS management, take  the following four actions: 1.  To facilitate MAS’s efforts to prioritize its activities, establish time  frames to finalize the clarification of MAS’s mission and decision  criteria. 2.  To better enable MAS to target its resources, ensure MAS has a way to  more systematically monitor how staff time is allocated across various  efforts. 3.  To improve transparency and ensure that priorities are consistent with  those of key stakeholders, explore methods for MAS to more clearly  communicate its mission, priorities, and activities to clients,  stakeholders, the public, and Congress. These methods could include,  among others, working with ITA leadership to develop a strategic plan  with associated time frames to improve ITA’s web presence and  management. 4.  In order to ascertain whether MAS is meeting the needs of its  government clients involved in the trade policy process, explore ways  to more systematically obtain information on the value it is adding.  This could include collecting feedback from its clients on its activities  more systematically and tracking the outcomes of the analyses it  provides for major trade policy decisions.
section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this report from Commerce. In its  comment letter, Commerce stated that it fully concurred with our findings  and recommendations. The letter also said that MAS’s current redefinition  plan is expected to be completed by October 2011. Commerce’s complete  letter is reprinted in appendix V.
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If you or your staffs have any questions about this report, please contact  me at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Other GAO contact and staff acknowledgements are listed in  appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this report were to examine (1) the Office of  Manufacturing and Services’s (MAS) goals and activities, and how the  types of analysis and expertise it provides compare with those provided by  other government entities; (2) how MAS prioritizes its activities and  targets its resources; and (3) the extent to which MAS tracks and reports  its contributions to increasing U.S. competitiveness and trade.
To assess MAS’s activities and how they compare with the types of  analysis and expertise provided by other government entities, we reviewed  relevant documents, including legislative authority, Department of  Commerce’s (Commerce) 2004 Manufacturing in America report,  National Export Initiative documents, and budget and staffing information.  We reviewed the International Trade Administration’s (ITA) strategic plan  and Web site to evaluate how the type of work MAS undertakes compares  to that conducted by the other ITA business units. Additionally, we  reviewed information on other agencies’ Web sites to obtain information  on the types of analysis and expertise they offer and initiatives the  agencies participated in with MAS. We discussed similarities and  differences in the types of work that MAS’s government clients conduct  with officials with knowledge of the unit. We interviewed Commerce  officials from the Office of the Secretary and National Institute of  Standards and Technology and representatives from the other ITA  business units—Commercial Service, Market Access and Compliance, and  Import Administration. We also interviewed officials from other U.S.  government agencies, including International Trade Commission, Office of  the United States Trade Representative, the Departments of State, Energy,  Transportation, Treasury, Environmental Protection Agency, and Office of  Management and Budget (OMB). Additionally, we interviewed the Industry  Trade Advisory Committees’ designated federal officers (DFO),  representatives from two industry associations, and the chairman of one  of the committees. To gain additional information on MAS’s activities, we  also attended multiple MAS events, including its Manufacture America  conferences in Pittsburgh, Pennsylvania, and Chicago, Illinois; a meeting  of the U.S. government’s Manufacturing Council; and a congressional  event in Washington D.C., for ITA’s Market Development Cooperator  Program. We also reviewed documents provided by MAS containing  examples of how its work has been used by other parts of Commerce and  other U.S. government agencies over the last 5 years.
To obtain information on how MAS prioritizes its activities and targets its  resources, we reviewed documents related to MAS’s proposed decision- making criteria and revised mission and discussed them with MAS  officials. Additionally, to assess the availability of information to the  public about MAS’s role in the U.S. government, we reviewed the  Commerce Inspector General’s 2007 report on trade coordination efforts  and met with ITA’s Web Governance Board. In order to understand any  past and current issues related to MAS’s priorities, we reviewed OMB’s  2006 Program Assessment Rating Tool (PART) report and National  Export Initiative documents. We also interviewed MAS leadership from  the offices of the Assistant Secretary and Planning, Coordination, and  Management; officials from its offices of Manufacturing, Services, and  Industry Analysis; the administrators of MAS’s assignment tasker system;  and ITA’s Deputy chief financial officer.
To assess the extent to which MAS tracks and reports its contributions to  increasing U.S. competitiveness and trade, we reviewed documents related  to its performance measurement system, including MAS’s industry  assessments, business plans, performance targets, and Commerce’s fiscal  year 2010 Performance and Accountability Report. We also reviewed past  GAO work on the principles of effective performance measurement. In  order to ensure consideration of any past issues concerning MAS’s  performance measurement, we reviewed OMB’s 2006 PART report. We  also discussed MAS’s performance measurement with knowledgeable  officials from MAS, ITA, and OMB.
In order to present information on manufacturing’s share of U.S. gross  domestic product (GDP), employment, and exports, we relied on data  from Commerce. Information on GDP and employment was obtained from  the Bureau of Economic Analysis (BEA). We used calculations of hours  worked to report shares of employment. To report the numbers of  employees in the U.S. economy, we computed full-time equivalents,  assuming 2,080 hours worked in each calendar year. Information on  manufacturing exports was obtained from MAS’s TradeStats Express. To  compute the U.S. share of world-wide production and exports in  manufacturing data, we relied on the World Bank’s Data Bank. To assess  the reliability of the World Bank and Commerce data, we interviewed  knowledgeable agency officials. To the extent possible, we compared  values against alternative sources. We found that the data were sufficiently  reliable for the purposes of presenting historic trends on manufacturing  production, exports, and employment.
We conducted this performance audit from August 2010 to June 2011 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
section_title: Appendix II: Manufacturing’s Role in the U.S. Economy and Exports
subsections: section_title: Manufacturing’s Share of U.S. GDP Has Declined, but the United States Remains a Leading Manufacturer
paragraphs: Over the past two decades, manufacturing’s share of the output of the U.S.  economy has fallen. In 1989, manufacturing’s output expressed in  constant 2009 dollars to correct for inflation was approximately $1.5  trillion, while total output was approximately $8.6 trillion. By 2009, while  manufacturing output had grown to $1.6 trillion, total output had grown to  more than $14 trillion. Using data from BEA, figure 3 shows  manufacturing’s share of total U.S. output, measured by GDP. As the figure  shows, from 1989 to 2009, U.S. manufacturing as a share of GDP declined  from a peak of about 17 percent to about 11 percent, and has generally  displayed a steady decline.
While the share of U.S. economic output devoted to manufacturing has  fallen, the United States remains a leading producer of manufactured  goods. Table 7 uses data from the World Bank to compare selected  countries’ proportions of world production in manufacturing in 2000 and  2008. These four countries collectively represent more than 50 percent of  world manufacturing. As the table shows, the U.S. share of world  production in manufacturing fell from about 26 percent to about 18  percent. During the same period, China’s share increased from about 7  percent to about 15 percent.
section_title: Manufacturing Exports Remain a Chief Component of Total U.S. Exports
paragraphs: Over the past 20 years, the percentage of U.S. exports represented by  manufacturing has remained largely unchanged. In 1989, correcting for  inflation, the United States exported approximately $800 billion of goods  and services, of which about $450 billion were manufactured goods,  according to BEA and MAS data. In 2009, the United States exported  approximately $1.6 trillion, of which about $917 billion were manufactured  goods. Figure 4 shows the share of total exports that were in  manufacturing. Over this time manufacturing’s share of exported goods  and services has stayed between 58 and 65 percent.
The U.S. share of world-wide exported manufactured goods has remained  consistent over the past decade. Table 8 shows manufacturing exports for  selected countries in 2000 and in 2009 using World Bank data. In 2000, the  United States represented about 13 percent of manufactured merchandise  exported, which declined to about 8 percent in 2009. During this period,  China’s contribution to world manufacturing rose from about 5 percent in  2000 to about 13 percent in 2009.
section_title: Over the Past Two Decades, Manufacturing’s Share of Employment Has Fallen
paragraphs: From 1989 to 2009, manufacturing’s share of employment has fallen. In  1989, measured by hours worked by full- and part-time employees, there  were approximately 18 million U.S. workers in manufacturing and  approximately 94 million in the entire U.S. economy. In 2009, the number  employed in manufacturing had fallen to approximately 11 million, while  the number employed in the United States had grown to about 107 million.  Figure 5 shows the share of hours worked in manufacturing, which fell  from almost 20 percent in 1989 to about 10 percent in 2009.
Over the past 10 years, the drop in manufacturing employment has been  matched by an increase in the share of employment in services. Table 9  shows employment in the United States by sector for 2000 and 2009. As the  table shows, over this period manufacturing’s share has fallen by about 5  percentage points, while the service industry’s share has increased by  about 4 percentage points.
section_title: Appendix III: Industry-specific Trade Barriers MAS Addressed in Fiscal Year 2010
subsections: section_title: Access to China’s electronics recycling market
paragraphs: China insurance branching and licensing  Japan postal insurance (new)
Canada and Mexico CITEL Mutual Recognition Agreement implementation  China Joint Commission on Commerce and Trade health  Environmental trade liberalization World Trade Organization  European Union (EU) access for U.S. wine (Phase II)
Recently, in response to the National Export Initiative, MAS began to  prepare “global sector strategies,” which, according to MAS officials,  identify and provide information on potential export markets for high- priority sectors; identify obstacles and risks associated with the sector;  and provide policy recommendations for decision makers. Agency officials  stated that the global sector strategies are based on a common template  and will be MAS’s signature product, with portions available to the public.
Currently, one strategy, for aerospace, has been completed. An excerpt is  reproduced in figure 6. The other 14 strategies that are listed below are in  various stages of completion:   Automotive;    Basic chemicals;    Civil nuclear;    Travel and tourism;    Professional services;    Digital content;    Medical technologies;    Building products;    Semiconductor industry;    Franchising/distribution;    Renewable energy;    Supply chain and logistics;    Architecture, engineering, and construction; and  Insurance and asset management.
section_title: Appendix V: Comments from the Department of Commerce
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Celia Thomas, Assistant  Director; Christina Werth; Benjamin Bolitzer; Jacob Beier; Gezu Bekele;  and Margaret McKenna made key contributions to this report. Other  contributors include Karen Deans, Ernie Jackson, David Dornisch,  Elizabeth Curda, Kim Frankena, Etana Finkler, Rob Ball, and Joe Carney.