International Trade:

Intensifying Free Trade Negotiating Agenda Calls for Better Allocation of Staff and Resources

GAO-04-233: Published: Jan 12, 2004. Publicly Released: Feb 10, 2004.

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Loren Yager
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Free trade agreements (FTA) involve trade liberalization between the United States and selected countries or regions and are also expected to provide economic and other benefits. GAO was asked to review how potential FTA partners are selected, in view of the increased number of FTAs and their growing importance to U.S. policy. Specifically, GAO (1) provided information about the factors influencing the selection of FTA partners, (2) analyzed the interagency process for selecting FTA partners, and (3) assessed how the executive branch makes decisions about the availability and allocation of resources to FTAs.

The Trade Representative used 13 factors in selecting four potential FTA partners in 2002 (Australia; the Central American Free Trade Area, a subregional group of five Central American countries; the Southern Africa Customs Union of five countries; and Morocco). Subsequently, selected executive branch agencies decided to use six broad factors--country readiness, economic/commercial benefit, benefits to the broader trade liberalization strategy, compatibility with U.S. interests, congressional/private-sector support, and U.S. government resource constraints. These decisions are not mechanical, and the factors cited most often regarding the selected FTA partners primarily reflect U.S. trade strategy, foreign policy, and foreign economic development goals. The interagency process for selecting FTA partners now involves four interagency groups that use decision papers to assess potential FTA partners and make recommendations that eventually go to the president. This new process is more systematic and inclusive than the process previously used. The Office of the U.S. Trade Representative (USTR) reports that it routinely considers the Congress's views in making selections. Decisions about FTA partners are made with little systematic data or planning regarding trade-offs with other trade priorities, even though FTAs are resource intensive. USTR staff and travel funds are heavily committed to FTAs, and USTR relies on specialists at other agencies as well. As more FTAs are contemplated, existing mechanisms may prove inadequate to the task of aggressively pursuing a bilateral FTA agenda while remaining engaged in regional and multilateral forums.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: During the course of GAO's review, key trade agencies agreed to consider resource requirements as one of six key factors they weigh before initiating new FTA negotiations. Based on my on site review of USTR documents, USTR and other key trade agencies used the interagency mechanism known as the Trade Policy Staff Committee (TPSC) and the higher-level Trade Policy Review Group to weigh resource requirements and other agreed selection criteria before launching FTA talks with a series of partners. The documents also show that agencies had devised innovative ways to managing USTR's growing FTA workload while meeting other responsibilities, such as sequencing negotiations, "docking" new partners onto existing FTAs, negotiating with regional groups instead of individual partners, insisting on substantial progress in resolving bilateral concerns before announcing the launch of FTA negotiations, etc. Regarding development of more systematic data and resource plans, in response to this as well as the GAO human capital report, and a new "tone at the top" set by the subsequent USTR (Portman), USTR officials provided documentary and testimonial evidence that a more concerted and serious effort to develop, track, and update USTR's human capital, financial, and other management systems has been launched and has resulted in meaningful improvements. For example, USTR appointed a knowledgeable manager with considerable experience to perform this function who began work in November 2005. This person has developed a strategic human capital plan and put in place human capital reforms such as SES certification, flexible work arrangements, employee satisfaction surveys and training measures. New systems for tracking resource needs and expenditures, which provide more reliable and systematic information, have been put in place. Such systems have enabled USTR to improve its performance in preparing budgets and other plans in OMB's estimation, USTR officials told us. Based on this examination, GAO's other work regarding China enforcement, as well as FTA and WTO Doha negotiations, e.g., GAO-08-59 and GAO-07-379 (which we found did result in improved plans and resources and successful conclusion of most agreements and/or substantive progress in resolving many concerns) such plans appear to have been adequate in practice.

    Recommendation: In light of USTR's limited resources and management systems to track those resources, the Office of the U.S. Trade Representative should work with other key trade agencies to develop more systematic data and plans for allocating staff and resources across the full U.S. trade agenda, including FTAs and other negotiating priorities.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative


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