International Trade Administration is responsible for supporting the activities of the U.S. Trade Representative with sectoral and technical expertise. S. 929 appears not to recognize this fact. USTR is a successful agency that performs a critical function, yet it must be understood that it is made up of a mere 170 people. They could not possibly handle all of our trade negotiations without significant support from ITA and other agencies.

"As an example, when we negotiated the Japan auto parts deal in Geneva last month, Mickey Kantor led the team. Sitting next to him, however, was Jeff Garten, the Under Secretary for ITA, and behind them were experts from the Office of Automotive Affairs and the Office of Japan Trade Policy. S. 929 would appear to eliminate both of these agencies, which would leave our negotiator unsupported and unable to counter the Japanese negotiator on the other side of the table. We would have our head handed to us in future negotiations. The result would be a loss of U.S. jobs as our ability to negotiate fair trade agreements is eroded.

"The important role that ITA plays in trade negotiations is illustrated by looking at the recent NAFTA talks on which ITA experts spent more than 50,000 hours in the last year of the talks alone. I would also note that ITA plays the lead role in a wide range of trade talks. For example, ITA led the negotiations that opened Japan's construction and government procurement markets to U.S. firms.

"Even more important, in my opinion, is that the International Trade Administration is the federal agency with primary responsibility for monitoring bilateral and multilateral trade agreements. Elimination of the network of ITA specialists would severely hamper our ability to monitor trade agreements and ensure that other countries are playing by the rules. This is particularly important in view of the success we have had in trade negotiations over the past 20 years. As we negotiate more trade agreements, it becomes even more important to monitor and enforce them so that we can translate our gains on paper into gains in jobs.

“Second, S. 929 would effectively remove the Federal Government from providing export promotion and assistance for nonagricultural exports. Now, I realize many Senators would applaud that result, but would like to take just a moment to review the impact it would have on American companies.

"The economic battleground has moved solidly to the international marketplace. Our future economic growth depends, in large part, on American firms winning their share of the new markets developing in places like Indonesia, India, Brazil and China. These countries have huge populations hungry for development. The infrastructure needs alone are staggering. Even if we look only at Asia, investment in roads, bridges, telecommunications systems, power generation and other infrastructure projects is estimated to be $1 trillion over the next 5 years. The competition for these projects will be intense. Companies from Germany, Japan, Canada and other nations will aggressively seek to win them; and they will go after them with the active backing of their governments. Already, our companies compete with fewer government resources than their government competitors. If we send them in unarmed, they won't have a chance.

"We must also recognize that the market in most of these countries is not like ours. Almost all of these infrastructure contracts will be awarded by governments, not by private firms. The officials responsible for making the buying decisions are used to dealing with other government officials, rather than with businessmen. U.S. government support is needed to support the business effort so that they can win in these markets.

"A third problem with the proposal before us is that it would destroy the Import Administration.' The Import Administration is the agency responsible for enforcing and administering the laws against dumped and subsidized exports of other countries. Actions initiated by the Import Administration have played a key role in the revitalization of several U.S. industries. S. 929 would transfer the functions of the Import Administration to USTR which is not a proper agency to be making such determinations, and which will not have the manpower to handle the job. The result would almost certainly be a deterioration of our ability to enforce our anti-dumping laws.

"I would like to turn now to the Bureau of Export Administration and the problems this bill would raise with regard to that agency. S. 929 would transfer the responsibility for licensing dual use exports from BXA to the Department of Defense. Under the current system of export controls, the Commerce Department is responsible for licensing dual-use exports such as machine tools, computers, and telecommunications. The State Department has the responsibility for licensing weapons sold overseas. The Defense Department's role is advisory only-they are not responsible for issuing export licenses.

"The proposal to move the licensing function to the Defense Department won't work. DOD has responsibility for national security, not exporting. They do not have

the expertise to deal with dual-use commercial items such as machine tools, computers, and telecommunications items; and will not take commercial considerations adequately into account, even though dual use items have enormous importance for export growth and job creation here in the United States. The result is certain to be that they will err on the side of caution and deny all licenses or at least a majority of them. The balance that we currently have, in which the interests of exporters are balanced against our critical security needs would be lost.

"Furthermore, the proposal would transfer the responsibility for enforcing export controls from Commerce to the Customs Service. Now, I am a strong supporter of the Customs Service. I think they are doing a fine job with the limited resources we give them. I have visited several of their facilities, I have watched them in action at the border. We can be proud of the job they are doing, particularly in keeping illegal drugs out of our country.

"I am concerned, however, that the proposal to split enforcement from export licensing and transfer it to Customs will weaken our effort to control the spread of weapons of mass destruction. No matter how good a job Customs does, and they have done some good work in this area, they will still not be focused on it as their primary function, as the agents in Commerce are currently. Also, I fear that export enforcement will take a back seat to the more visible activity of combatting the spread of illegal drugs.

"I'd like to turn for a moment to the proposal to transfer several of these functions to USTR. I simply don't think that will work. USTR is part of the executive office of the President. For 2 years now, we have told the President that he must cut the White House staff back significantly. Now comes this proposal that would reverse any progress that has been made by transferring hundreds of new employees to the White House. That doesn't make a whole lot of sense.

"Just as important, USTR is not an appropriate home for these agencies or functions. USTR is a policy agency designed to advise the President and play the role of honest broker between other agencies with trade interests. Transferring the functions of the Import Administration, the Foreign Commercial Service, and other agencies to USTR will make it a line agency with significantly broader responsibilities than it currently has. I question whether that is a step we want to be taking. I, for one, do not think so.

"As I stated earlier, if we are in fact going to eliminate the Commerce Department, I believe the solution to this problem is to create a very small, but very effective Department of International Trade made up solely of the existing functions of the International Trade Administration and the Bureau of Export Administration, and represented in the cabinet. Creation of this agency will allow us to continue to remain effective in the international arena without spending more money than we are now. It keeps BXA and ITA together, thereby preserving the synergy that comes from keeping trade in one agency; and it allows exporters to continue to have a place at the cabinet table.

"This new Department of International Trade would not be the bureaucratic monster that today's Commerce Department has become. It would have a budget of less than. $400 million-not even one-tenth of the current Commerce Department budget. My plan would not consolidate other existing trade agencies. It would leave USTR, the Export-Import Bank, OPIC and TDA as independent agencies. Senators may ask why I do not consolidate them into this new agency, and my answer is very simple, they work, and I have long subscribed to the old adage, if it ain't broke, don't fix it. They are small agencies, performing critical functions, and we ought to leave them alone to continue that fine work.

"As I have said already, trade is the key to our economy's future. If we toss in the towel right now, we can give up on the hope of remaining the world's most important economy. We simply won't be able to do so. I am not willing to toss in the towel, and I bet a majority of Senators agree with me. I urge you to look closely at this issue and-when you mark up the bill, to ensure that the International Trade Administration and Bureau of Export Administration retain their critical role in our nation's trade policy."

Chairman ROTH. Thank you for being here, Senator Bond.

Let me say, first of all, that I strongly agree that trade is the engine on which this country is going to grow and create opportunity and jobs, so that whatever we do in reorganization, and I still have an open mind on that, it should be with the goal, with the objective of promoting the export of American-made products

and services. We look forward to working with you on this most important matter. Thank you very much for being here today.

Senator BOND. Thank you very much, Mr. Chairman. I am ready and willing to do so.

Chairman ROTH. At this time, it is my pleasure to call forward the Honorable Ronald H. Brown, the Secretary of Commerce. Secretary Brown needs no introduction. I do want to echo what a number of Senators have said. I have appreciated the aggressiveness of the Secretary in promoting the sale and the export of Americanmade products. For the reasons I have already briefly mentioned, there is nothing more important.

Mr. Secretary, it is a pleasure to welcome you. I was just saying, before you came in, a number of the Senators have congratulated and thanked you for your aggressive stance when it comes to trade, to exports. As I told you in our meeting a couple of days ago, I, too, very much appreciate the fact that you have given this a high priority.

As we come together here today to consider reorganization, it is not just a question of dismantling or making Government smaller. The important factor is how do we enable Government to provide better service? We are looking for an answer to that and we welcome you, Secretary Brown, and look forward to hearing your remarks.

TESTIMONY OF HON. RONALD H. BROWN, SECRETARY OF COMMERCE

Secretary BROWN. Thank you very much, Mr. Chairman.

For the very reasons that you just articulated, I am very pleased to be before the Committee this afternoon. I had the opportunity to be sitting in the room next door and watching some of it on television, and must admit that I was very pleased to hear the comments that all the members of this Committee, and some who are not on this Committee, made about the Department and the work that we have done and about our future.

I would like to make a few points briefly. I have a fairly lengthy prepared statement that I trust will be made a part of the record. Chairman ROTH. Your full statement will be included as if read. Secretary BROWN. Thank you very much, Mr. Chairman.

There has been a lot of hot rhetoric on this issue of the future of the Commerce Department, and that is why hearings of this type, when we have a chance to do some analysis and get into some dialogue and talk about what the real implications of the proposals are, are such a pleasure to participate in.

Some of those who have supported the legislation that the Committee is considering say that they support it because it saves money. I think that there is some considerable doubt about that. Others support it because they say it is a sensible effort to reorganize or restructure. I am hard pressed to figure out how elimination is a good way to restructure, and just scattering things to the wind is a way to provide the kind of synergy that is needed to be effective.

Others seem to say that they support this legislation just because there is something written in stone which implies that getting rid of a cabinet agency is good for America. It has nothing to do with

downsizing or rightsizing. It has nothing to do with how many people the Federal Government employs. It has nothing to do with how much money the Federal Government spends, but just in and of itself, there is something wonderful and beautiful about getting rid of a cabinet agency. I doubt that a good case can be made for that rationale.

I must admit, Mr. Chairman, when I first heard of these proposals, and I know when a good many others in our country, including in the business community heard these proposals, they could not believe them. They were incredulous about proposals that would, in effect, conclude that the United States of America would be the only country in the world where the business community, the private sector, has no seat at the cabinet table.

That makes little or no sense in a globalized economy with global competition being what it is, and I acknowledge that there was not, therefore, much response initially to the proposals because people were virtually incredulous about them. They found them, most, rather ludicrous.

I believe that what is needed is a thoughtful dialogue. It seems to me that there are many who do not really know what the mission of the Commerce Department is, what we do and why we do it. The fact is, our mission is to ensure and enhance economic opportunity for all the American people, and I would maintain that that is exactly what we are doing.

I would like to begin, Mr. Chairman, if I might, by assessing a little bit about what it is that we do and why we do it and how it fits together. I know that the assertion has been made by many, even some who have been supportive of the Commerce Department, that it is this hodgepodge of agencies that does not fit together.

I do not believe that to be the case. I believe that that is a false assertion. I believe that virtually every agency, every unit in the Commerce Department, in fact, has much to do, is inextricably connected to the ability to grow our economy and create jobs. That is the focus of every single unit.

I know a lot has been made of NOAA, and people say, what is NOAA doing in the Commerce Department? I would be the last person to argue that there cannot be a rational argument made for NOAA being someplace else, being an independent agency, being in another department of Government. I would suggest when those proposals are reviewed, most would conclude that it fits pretty well in the Commerce Department, and this has been a subject that has been discussed for probably 20 years on Capitol Hill, about what to do with this agency.

I would suggest that if you try to tell a commercial fisherman that he or she has nothing to do with American commerce, they are liable to throw you overboard. They think they have got a lot to do with American commerce. I know in many of the States of New England, they understand that. I know in the Gulf Coast States, they understand that. In the Pacific Northwest, they understand that.

Tell some of our farmers that the National Weather Service has nothing to do with whether they are able to survive, commercially survive. Tell our transportation industry that the Weather Service and the work they do through their satellites, through their

Nexrad, through their Doppler radar, has nothing to do with whether they can survive and prosper, has nothing to do with the American economy. I think it has a lot to do with the American

economy.

That is not to say that we are a status quo agency. That is not to say that I am a status quo Secretary of Commerce or that I come to make a case that nothing should ever change. That would be a ridiculous position to take. We have to be better. We have to be more efficient. We have to rightsize. We have to reinvent ourselves, and that is exactly what we are about the business of doing.

I know, although there is, I think, acknowledgement that we are doing well at promoting exports and creating economic growth and jobs in the United States, there continue to be a lot of questions about, well, why is there not more support from the business community? That has been taken as a fact, that there is no support from the business community.

I have with me over 2,000 letters that we have received in the last couple of weeks from business leaders of companies both large and small stating unequivocally their support for the work of the Department of Commerce. If the Chairman thinks it is not inappropriate, I would like to have those entered into the Congressional Record, since so much has been made about the lack of business support.

I think you would be very pleased and very interested in looking at the names of those companies. Some of those companies will be companies you never heard of because they are very small companies. Others are some of the giants of the American private sector. I would request, if the Chairman feels it appropriate, to have those letters entered into the record.

Let me now turn, if I could, to the importance of public-partnership, Mr. Chairman. We believe that we have begun to redefine a whole set of relationships in America. One of the relationships that has been in desperate need of redefinition is the relationship between the public and private sector. It seems to me that we have wasted about 40 years in a debate in our country about the role of Government vis-a-vis the private sector.

While we have been in this ideological or philosophical debate, our global competitors figured out that role a long time ago, and that is why they are doing much better in this global economy than they ought to be doing and we are not yet doing as well as we should be doing.

I maintain, Mr. Chairman and members of this Committee, that we cannot compete and win in the global economy unless there is a real partnership between the public and private sectors, unless we are communicating and working together, unless we at the Department of Commerce are standing shoulder to shoulder with American business and industry.

That partnership must be defined within a context and that context is that the private sector has to lead. That is a given. That the private sector fuels the engine that pulls the train of economic growth and job creation in America. But we in Government have a responsibility, too, and that is to clear the track so that that train can run swiftly and smoothly, so that we can remove obstacles.