The Foreign Service Journal, April 2005

flict with the world’s dominant economy, during the Cold War the U.S. pursued a foreign policy that lacked an aggressive commercial component. By the mid-1970s this favorable economic environment was under considerable strain from chronic, structural trade and fiscal deficits and the shock of OPEC-led oil price increases, among other factors. By the end of the decade the Carter administration faced a difficult political environment in which to sell Congress on the package of trade agreements negotiated under the Tokyo GATT round of trade liberalization. This was the case even though the negotiations had simply built on the policy pre- scriptions of prior trade agreements in terms of furthering liberalization by expanding market-opening rules to new areas such as customs and government procurement. To allay fears that the United States was losing its eco- nomic edge, in 1979 the Carter administration presented Congress with a plan to reorganize federal international economic programs. As a result of this reorganization, which was reflected in the language of the Foreign Service Act of 1980, all responsibilities and programs related to commercial diplomacy were transferred out of the State and Treasury Departments. The plan designat- ed the Commerce Department as the agency responsible for providing trade representation at embassies in our most important overseas markets, and for administering the anti-dumping and countervailing-duty statutes. (The Foreign Agricultural Service already was responsible for the promotion of agricultural exports.) The State Department also lost all trade negotiation responsibilities to the Special Trade Representative in the President’s Executive Office, which eventually was transformed into the present-day Office of the United States Trade Representative. After a transition period to permit eco- nomic/commercial officers to decide whether to transfer to Commerce or stay at State, the U.S. & Foreign Commercial Service came into existence as a separate institution in 1982. Note that the reorganization of the commercial diplo- macy function basically focused on nuts-and-bolts — trade negotiations and export promotion programs — rather than a conceptual overhaul. The assumption was not that there was anything fundamentally wrong with the premises underlying our policy approach, but simply that the federal government was not doing all it could to assist American companies, workers and communities in taking advantage of the trade liberalization policies of the previous 30 years. In other words, the focus was on boxes and the lines connecting them on the organizational chart, not on policy prescriptions. Ironically, while these changes were made with the intent of strengthening the narrowly defined commercial program, the long-term impact was, in my view, to push commercial diplomacy to the margins of our mainstream foreign policy. To the extent the Reagan administration thought about commercial diplomacy during the ensuing decade, it defined it narrowly as an export promotion effort. As a consequence, throughout the 1980s those programs struggled for funding from their respective agencies and for relevance in the foreign policy arena. The Golden Years: 1989–1997 All that began to change in 1989. With the end of the Cold War in sight, the administration of George H.W. Bush initiated a strategic review of USFCS and the over- lapping programs of the 19 federal agencies involved in the commercial diplomacy effort. Susan Schwab, the assistant secretary and director general of USFCS during this period, declared in a retrospective interview in the January 1993 Foreign Service Journal that, unlike the zero-sum game of the Cold War era, now, “You can pur- sue an aggressive and successful international economic agenda and it is still a positive-sum game, where everyone sees benefit.” This strategic review led to a broad bipartisan agree- ment on a rationale and role for American commercial diplomacy appropriate for the times. There was general recognition that this initiative did not require significant new funding commitments but, rather, an approach more targeted on policies and programs of strategic benefit to U.S. economic interests, as well as to our overarching development objective of expanding the private sector and free markets around the world. The components of the core initiative were simple in their objective, yet com- plex in their implementation. Federal programs began to focus on a comprehen- sive strategy to gain access to foreign markets. In 1989 Deputy Secretary of State Eagleburger promulgated a “Bill of Rights for American Business” and, together with Secretary of Commerce Barbara Franklin, issued detailed advocacy guidelines to all American ambas- sadors to assist them in providing appropriate high- level support for U.S. business: • Trade liberalization , via new efforts to overcome C O V E R S T O R Y A P R I L 2 0 0 5 / F O R E I G N S E R V I C E J O U R N A L 23