WASHINGTON — President Obama placed a premium on international trade, proposing significant increases in funding for agencies that govern trade negotiations and enforcement, counterfeits and ports in the federal budget blueprint he submitted to Congress on Wednesday.
This story first appeared in the April 11, 2013 issue of WWD. Subscribe Today.
Obama’s $3.77 trillion budget proposal for fiscal year 2014 that begins Oct. 1 reverses the steep spending cuts, known as the “sequester,” that took effect last month and threaten to curtail some trade initiatives and enforcement. The President’s budget proposal would also increase these areas from the level where they stood prior to the steep, automatic spending cuts.
Obama’s budget aims to achieve $1.8 trillion in deficit reduction over 10 years. Added to the prior $2.5 trillion in deficit cuts, it would bring the total above the $4 trillion reduction Republicans and Democrats have said would be an acceptable goal. However, Obama’s plan is simply a blueprint, and it is highly unlikely to become law. Instead, it will be used to help guide Democrats in Congress as they attempt to craft legislation on agency funding and wrangle with House Republicans over how to reduce the nation’s deficit.
Obama’s proposal calls for increasing the budget for the U.S. Trade Representative’s office to $56 million from its $47.7 million budget this year, which includes a $3.6 million cut from the sequester. Acting USTR Demetrios Marantis has warned that the sequester cuts will impede the agency’s ability to negotiate trade deals and initiate new enforcement disputes.
The Obama administration is in talks for the Trans-Pacific Partnership with 10 countries, including Vietnam, the second-largest apparel supplier to the U.S. It is also set to launch trade negotiations with the European Union, as well as a separate international services agreement with 20 other nations.
“One of the really big problems that we have seen from the sequester is the cancelation of travel by trade policy officials,” said Julia Hughes, president of the U.S. Association of Importers of Textiles & Apparel. “Whenever the administration is negotiating an agreement like TPP or get ready to start negotiations like the Transatlantic discussions with the EU, it is so important for the government to meet with the industry and have that kind of a dialogue on a regular basis. We applaud the restoration and increase in funding [in the president’s budget].”
The International Trade Administration, a division of the Commerce Department that is leading the President’s National Export Initiative to double exports by 2014 and also houses the Office of Textiles & Apparel, would receive an $84.6 million increase in funding to $520 million under the President’s proposal. The ITA’s budget this year of $458 million includes a $23 million cut under the sequester. Funding for the ITA includes $20 million for the Interagency Trade Enforcement Center, an interagency effort to address unfair trade practices and barriers.
A Commerce spokeswoman said last month the sequester cuts would have “a major impact on ITA’s operations” and curtail the case load and activities of the trade enforcement center that are “needed to protect U.S. companies doing business abroad.” The President’s budget would restore the funding of the ITEC, an important trade enforcement unit.
Obama’s budget proposal also reiterated support for his plan to seek reorganization authority from Congress to merge Commerce, USTR and four other trade and business agencies, but it did not include a formal request for funding for a new cabinet agency. Obama must first get the authority from Congress, which would be followed by the agencies and stakeholders formally submitting a reorganization proposal and then a budget request at some point in the future.
U.S. Customs & Border Protection, a division of the Department of Homeland Security that seizes counterfeit goods shipped through U.S. ports, would see its budget increased to $11.1 billion from $10.2 billion. The Wool Trust Fund, operated by CBP, would have its funding restored to $15 million. The fund, based on tariff collection on wool apparel imports, makes payments to U.S. wool fabric and yarn producers, as well as sheep growers, to encourage more production of wool fabrics. Its budget was cut by $1 million under the sequester.
“Hopefully, this is a signal that the administration is serious about international trade as far as looking at completing negotiations for both the TPP as well launching a U.S.-EU free-trade agreement,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.