International Trade: Advisory Committee System Should Be Updated to Better Serve U.S. Policy Needs
Released: 2002-10-23T00:00:00

Letter

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)

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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?

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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

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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

GAO Contact

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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