International Trade: Prior Updates of the Trade Advisory System Offer Insights for Current Review
Published: 2009-07-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This testimony provides a summary of key findings from the comprehensive report on the trade advisory system that we provided to the Congress in 2002, as well as from our more recent report in 2007 on the Congressional and private sector consultations under Trade Promotion Authority. In particular, this testimony highlights our recommendations in three key areas--committee consultations, logistics, and overall system structure--as well as the changes that have been made by the U.S. agencies since those reports were published.
section_title: What GAO Found
paragraphs: Our 2002 survey of trade advisory committee members found high levels of satisfaction with many aspects of committee operations and effectiveness, yet more than a quarter of respondents indicated that the system had not realized its potential to contribute to U.S. trade policy. In particular, we received comments about the timeliness, quality, and accountability of consultations. For example, the law requires the executive branch to inform committees of "significant departures" from committee advice. However, many committee members reported that agency officials informed committees less than half of the time when their agencies pursued strategies that differed from committee input. In 2002, we found that slow administrative procedures disrupted committee operations, and the resources devoted to committee management were out of step with required tasks. In several instances, for example, committees ceased to meet and thus could not provide advice, in part because the agencies had not appointed members. However, the length of time required to obtain a security clearance contributed to delays in member appointment. To address these concerns, we recommended the agencies upgrade system management; and in response, they began to grant new advisors interim security clearances so that they could actively participate in the committee while the full clearance is conducted. Despite these actions, however, trade advisory committee chairs we contacted in 2007 told us certain logistics such as delays in rechartering committees and appointment of members still made it difficult for some committees to function effectively. We found several committees had not been able to meet for periods of time, either because agencies allowed their charters to lapse or had not started the process of soliciting and appointing members soon enough to ensure committees could meet once they were rechartered. The Labor Advisory Committee, for example, did not meet for over 2 years from September 2003 until November 2005 due in part to delays in the member appointment process. These types of process delays further reduced a committee's ability to give timely, official advice before the committee was terminated, and the rechartering process had to begin again. This was particularly true in the case of the Labor Advisory Committee, which, at the time of our 2007 report, still had a 2-year charter. In addition to the need to improve certain committee logistics, we also found that representation of stakeholders is a key component of the trade advisory committee system that warrants consideration in any review of the system. In particular, as the U.S. economy and trade policy have shifted, the trade advisory committee system has needed adjustments to remain in alignment with them, including both a revision of committee coverage as well as committee composition.

section_title: Letter
paragraphs: Thank you for the opportunity to appear today before the Subcommittee  to provide insight from GAO’s work on the issues associated with the  private sector trade advisory system and public participation in the  development of trade policy. In particular, we have provided one detailed  report specifically on the subject of the trade advisory system and  another on the subject of Congressional and private sector consultations  under Trade Promotion Authority. The numerous negotiators, agency  officials, and committee members with whom we met in the course of our  work emphasized that the trade policy advisory committee system plays  an important role in U.S. trade policy and has made valuable contributions  to U.S. trade agreement s.
In my statement today, I will provide a summary of key findings from the  comprehensive report on the trade advisory system that we provided to  the Congress in 2002, as well as from our more recent report in 2007 on the  Congressional and private sector consultations under Trade Promotion  Authority. In particular, I will highlight our recommendations in three key  areas—committee consultations, logistics, and overall system structure— as well as the changes that have been made by the U.S. agencies since  those reports were published. I believe that this material is directly  relevant to the stated focus of this hearing as the reports are based on  extensive input from major stakeholder groups and provide numerous  insights into the revisions to the system that have been implemented as a  result of the GAO recommendations.
My remarks are based primarily on the two assignments mentioned above  that GAO conducted on the trade advisory system and the consultation  process. To address these issues, we surveyed 720 of the 735 committee  members in 2002 about their experiences in the system; interviewed every  type of participant in the committee process, including selected committee  chairs, members, relevant U.S. officials, nongovernmental interest groups,  and trade experts; and analyzed USTR and committee data and  documents. In addition, we collected information from USTR and other  agencies on the changes that they have made in recent years in response  to the recommendations in those reports. We conducted our work 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 provided a reasonable basis for our findings and conclusions  based on our audit objectives.
subsections: section_title: Background
paragraphs: Congress established the trade advisory committee system in Section 135  of the Trade Act of 1974 as a way to institutionalize domestic input into  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.
The system 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 Act of 1974 required  the President to seek information and advice from the trade advisory  committees for trade agreements pursued and submitted for approval  under the authority granted by the Bipartisan Trade Promotion Authority  Act of 2002. The Trade Act of 1974 also required the trade advisory  committees to provide a report on the trade agreements pursued under the  Bipartisan Trade Promotion Authority Act of 2002 to the President,  Congress, and USTR. This requirement lapsed with TPA on June 30, 2007.
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 upon renewal of the committee.
Four agencies, led by USTR, administer the three-tiered trade advisory  committee system. USTR directly administers the first tier overall policy  committee, the President’s Advisory Committee for Trade Policy and  Negotiations (ACTPN), and three of the second tier general policy  committees, the Trade Advisory Committee on Africa (TACA), the  Intergovernmental Policy Advisory Committee (IGPAC), and the Trade  and Environment Policy Advisory Committee (TEPAC), for which the  Environmental Protection Agency also plays a supporting role. The  Department of Labor co-administers the second tier Labor Advisory  Committee (LAC) and the Department of Agriculture co-administers the  second tier Agricultural Policy Advisory Committee (APAC). The  Department of Agriculture also co-administers the third tier Agricultural  Technical Advisory Committees (ATACs), while the Department of  Commerce co-administers the third tier Industry Trade Advisory  Committees (ITACs). Ultimately, member appointments to the committees  have to be cleared by both the Secretary of the managing agency and the  U.S. Trade Representative, as they are the appointing officials. Figure 1  illustrates the committee structure.
section_title: Consultations with Trade Advisory Committees Have Generally Improved
paragraphs: Our 2002 survey of trade advisory committee members found high levels  of satisfaction with many aspects of committee operations and  effectiveness, yet more than a quarter of respondents indicated that the  system had not realized its potential to contribute to U.S. trade policy. In  particular, we received comments about the timeliness, quality, and  accountability of consultations. For example, the law requires the  executive branch to inform committees of “significant departures” from  committee advice. However, many committee members reported that  agency officials informed committees less than half of the time when their  agencies pursued strategies that differed from committee input.
As a result, we made a series of recommendations to USTR and the other  agencies to improve those aspects of the consultation process.  Specifically, we recommended the agencies adopt or amend guidelines  and procedures to ensure that (1) advisory committee input is sought on a  continual and timely basis, (2) consultations are meaningful, and (3)  committee advice is considered and committees receive substantive  feedback on how agencies respond to their advice.
In response to those recommendations, USTR and the other agencies  made a series of improvements. For example, to improve consultations  between the committee and the agencies, including member input, USTR  and TEPAC members established a communications taskforce in 2004. As  a result of the taskforce, USTR and EPA changed the format of principals’  meetings to allow more discussion between the members and senior U.S.  government officials, and they increased the frequency of liaison meetings.  In addition, USTR instituted a monthly conference call with the chairs of  all committees, and now holds periodic plenary sessions for ATAC and  ITAC members. Furthermore, the agencies created a new secure Web site  to allow all cleared advisors better access to important trade documents.
When we interviewed private sector advisory committee chairs again in  2007, they were generally pleased with the numerous changes made to the  committee system in response to our 2002 report. In particular, they found  the secure Web site very useful. Reviews of the monthly chair conference  call and plenary sessions were mixed, however. Chairs told us that their  out-of-town members might find the plenaries a helpful way to gain an  overall perspective and to hear cabinet-level speakers to whom they would  not routinely have access, whereas others found them less valuable,  largely due to the perceived lack of new or detailed information. The  chairs also said that USTR and the relevant executive branch agencies  consulted with the committees on a fairly regular basis, although overall  views on the opportunity to provide meaningful input varied. For example,  we heard from committee chairs who felt the administration took  consultations seriously, while other chairs felt the administration told  them what had already been decided upon instead of soliciting their  advice. USTR officials told us that the fact that the advice of any particular  advisory committee may not be reflected in a trade agreement does not  mean that the advice was not carefully considered.
section_title: Changes Made to Improve Committee Logistics Have Not Been Fully Tested
paragraphs: In 2002, we found that slow administrative procedures disrupted  committee operations, and the resources devoted to committee  management were out of step with required tasks. In several instances, for  example, committees ceased to meet and thus could not provide advice, in  part because the agencies had not appointed members. However, the  length of time required to obtain a security clearance contributed to delays  in member appointment. To address these concerns, we recommended the  agencies upgrade system management; and in response, they began to  grant new advisors interim security clearances so that they could actively  participate in the committee while the full clearance is conducted.
Despite these actions, however, trade advisory committee chairs we  contacted in 2007 told us certain logistics such as delays in rechartering  committees and appointment of members still made it difficult for some  committees to function effectively. We found several committees had not  been able to meet for periods of time, either because agencies allowed  their charters to lapse or had not started the process of soliciting and  appointing members soon enough to ensure committees could meet once  they were rechartered. The Labor Advisory Committee, for example, did  not meet for over 2 years from September 2003 until November 2005 due  in part to delays in the member appointment process. These types of  process delays further reduced a committee’s ability to give timely, official  advice before the committee was terminated, and the rechartering process  had to begin again. This was particularly true in the case of the Labor  Advisory Committee, which, at the time of our 2007 report, still had a 2- year charter.
To address these concerns, we recommended that USTR and other  agencies start the rechartering and member appointment processes with  sufficient time to avoid any lapse in the ability to hold committee meetings  and that they notify Congress if a committee is unable to meet for more  than 3 months due to an expired charter or delay in member  appointments. Furthermore, we recommended that USTR work with the  Department of Labor to extend the Labor Advisory Committee’s charter  from 2 years to 4 years, to be in alignment with the rest of the trade  advisory committee system.
USTR and the other agencies have taken some steps to address these  recommendations. In May 2008, for example, the Labor Advisory  Committee’s charter was extended to 4 years. Not enough time has passed,  however, to assess whether steps taken fully address the problems  associated with rechartering and member appointment, since at present all  committees have current charters and members appointed. Furthermore,  even though committees are now chartered and populated, some of them  have not met for over three years, despite ongoing negotiations of the  Doha Round of the World Trade Organization (WTO), including the July  2008 ministerial meeting in Geneva. For example, although the ATAC  charters were renewed in May 2007 and members appointed in January  2008, the FACA database shows that no ATAC has held a meeting since  fiscal year 2006. In addition, although USTR held multiple teleconferences  for all first and second tier advisors in fiscal year 2008, LAC and APAC  members did not participate. It is unclear, therefore, whether the  administration received official advice from all trade advisory committees  for the Doha negotiations.
section_title: Representation of Key Stakeholders Remains Important for Any Review of Trade Advisory Committee System
paragraphs: In addition to the need to improve certain committee logistics, we also  found that representation of stakeholders is a key component of the trade  advisory committee system that warrants consideration in any review of  the system. In particular, as the U.S. economy and trade policy have  shifted, the trade advisory committee system has needed adjustments to  remain in alignment with them, including both a revision of committee  coverage as well as committee composition.
In our 2002 report, we found that the structure and composition of the  committee system had not been fully updated to reflect changes in the U.S.  economy and U.S. trade policy. For example, representation of the  services sector had not kept pace with its growing importance to U.S.  output and trade. Certain manufacturing sectors, such as electronics, had  fewer members than their sizable trade would indicate. In general, the  system’s committee structure was largely the same as it was in 1980, even  though the focus of U.S. trade policy had shifted from border taxes  (tariffs) toward other complex trade issues, such as protection of  intellectual property rights and food safety requirements. As a result, the  system had gaps in its coverage of industry sectors, trade issues, and  stakeholders. For example, some negotiators reported that some key  issues such as investment were not adequately covered. In addition,  nonbusiness stakeholders such as environment and labor reported feeling  marginalized because they have been selected to relatively few  committees. The chemicals committee, representing what at the time was  one of the leading U.S. export sectors, had been unable to meet due to  litigation over whether the apparent denial of requests by environmental  representatives for membership on the committee was consistent with  FACA’s fair balance requirements.
In 2007, several committee chairs we interviewed also expressed the  perception that the composition of their committees was not optimal,  either favoring one type of industry or group over another or industry over  nonbusiness interests. Furthermore, some members were the sole  representative of a nonbusiness interest on their committee, and those we  spoke with told us that although their interest was now represented, they  still felt isolated within their own committee. The result was the  perception that their minority perspective was not influential. At the same  time, while Congress mandates that the advisory committee system is to  involve representative segments of the private sector (e.g., industry,  agriculture, and labor and environmental groups), adherence to these  statutory requirements has been deemed non-justiciable. For example,  although the Departments of Agriculture and Commerce solicit new  members for their committees through Federal Register notices which  stipulate members’ qualifications, including that they must have expertise  and knowledge of trade issues relevant to the particular committees,  neither the notices nor the committee charters explained how the agencies  would or have determined which representatives they placed on  committees. Without reporting such an explanation, it was not transparent  how agencies made decisions on member selection or met statutory  representation requirements.
As a result, we made a series of recommendations suggesting that USTR  work with the other agencies to update the system to make it more  relevant to the current U.S. economy and trade policy needs. We also  suggested that they seek to better incorporate new trade issues and  interests. Furthermore, we recommended they annually report publicly on  how they meet statutory representation requirements, including clarifying  which interest members represent and explaining how they determined  which representatives they placed on committees.
In response, USTR and the other agencies more closely aligned the  system’s structure and composition with the current economy and  increased the system’s ability to meet negotiator needs more reliably. For  example, the Department of Agriculture created a new ATAC for  processed foods because exports of high-value products have increased.  USTR and Commerce also split the service industry into several  committees to better meet negotiator needs. Furthermore, USTR and the  Department of Agriculture now list which interest members represent on  the public FACA database, as the Department of Commerce has been  doing for years. USTR’s 2009 Trade Policy Agenda and 2008 Annual Report  also includes descriptions of the committees and their composition. It  does not, however, explain how USTR and the agencies determined that  the particular membership appointed to each committee represents a fair  balance of interests in terms of the points of view represented and the  committee’s functions.
section_title: Conclusion
paragraphs: Mr. Chairman, we appreciate the opportunity to summarize our work  related to the Trade Advisory System. Based on the recommendations we  have made in the areas of quality and timeliness of consultations, logistical  issues, and representation of key stakeholders, we believe that USTR and  other managing agencies have strengthened the Trade Advisory System.  However, we support the Committee’s oversight and the ongoing policy  review of the system to ensure that it works smoothly and the input  received from business and non-business stakeholders is sufficient, fairly  considered, and representative.
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