The Foreign Service Journal, May 2009

20 F O R E I G N S E R V I C E J O U R N A L / M A Y 2 0 0 9 States to wean us off foreign oil and tackle global warming,” Curtis says, “so this is one area where we don’t want to lose the lead.” The Foreign Agricultural Serv- ice plays a similar role, the officer in South America says. He spends a substantial part of his time re- searching the widespread use of biofuels in the region. The agency is also studying the effect of climate change on global agricultural out- put. And in these days of tight credit markets, FAS is pro- viding billions in credit guarantees to help finance sales of American agricultural products. Demand has spiked in recent months. Normally, the agency guarantees an average of $2.8 billion in sales each year. In just the first four months of FY 2009, it had nearly hit that mark. At the same time, the Commercial Service recently began to expand its promotion of foreign investment in the United States. That will be essential to its future suc- cess, says the Chamber of Commerce’s Litman, especially in these days of tight credit markets. “We’re hearing loud and clear that in the global economy, financing is essen- tial to the growth of American enterprise, and we need to make sure that companies working in the United States have access to finance,” he says. Another concern is the rising tide of trade isolationism in Washington. Free trade deals have been a boon to the economy, officers say, but they remain politically contro- versial on Capitol Hill and in the Obama administration. During his presidential campaign, for example, Obama criticized pending deals with Colombia and South Korea and said he thought the United States should renegotiate the North American Free Trade Agreement to provide better protections for U.S. workers and the environment. In this winter’s stimulus legislation, Congress approved a provision requiring that recipients of stimulus funds limit their purchases to goods made by U.S. companies. “It’s important to get the best terms you can,” says Curtis. “No one wants to lower working or environmen- tal standards. But you also don’t want to throw the baby out with the bath water or kick off a worldwide depres- sion like we did with the Smoot-Hawley Tariff Act in 1930,” a now-notorious protectionist law. To resolve the controversy, it may take a renewed commitment on Congress’s part to ensure that workers displaced by trade are given the retraining they need, along with more educational efforts on the part of trade’s back- ers to inform skeptics of its bene- fits. Hale says, for instance, that without the North American Free Trade Agreement and the estab- lishment of permanent normal trade relations with China nearly a decade ago, U.S. farmers would have missed out on billions in exports. The Challenges of Globalization Foreign investment in the U.S., like free trade agree- ments, is controversial. The debate over both topics points up the pitfalls FAS and FCS face as they seek to adapt to rapid globalization. “It’s not about selling a container of jeans anymore,” says Litman. The Commercial Service, for example, has debated at great length which companies it should help when a product may be assembled from components made abroad. The standard protocol has defined a U.S. product as one whose inputs are 51-percent American. But consider the difficulty, then, of factoring in the value of a U.S. design or the value of U.S. research and devel- opment. The export of services can be even more complicated when officers must determine whom to help. When it’s a U.S.-based service provider, that’s an easy call. But should the Commercial Service help a U.S. citizen work- ing abroad? At the moment, officers say, the policy on that is not clear, leading to different interpretations across offices. And, increasingly, U.S. companies are eager to secure Commercial Service assistance in investing abroad, a massive “political hot potato,” in the view of one longtime officer posted in Western Europe. Implementing transformational diplomacy —moving officers out of Europe and into developing countries — was controversial, too. One officer in Europe said that the shift made little sense for a commercial agency fo- cused on helping small and medium-size businesses to export. “You look at that and it’s not based on smart busi- ness decisions,” this officer said. “For a new American exporter, the first place they’ll start is England, France, F O C U S FAS provides billions in credit guarantees to help finance sales of U.S. agricultural products, and demand has spiked in recent months.