President's Export Council History
The President's Export Council ("the Council") was first created by Executive Order on December 20, 1973. Originally, the Council consisted of only private sector members drawn from business and industry, mostly CEO's of major U.S. companies. Eight of the members were chosen "without regard to geographic considerations." Twelve members were selected to provide appropriate regional representation. The Council advised the President on matters relating to export trade and report this advice to him through the Secretary of Commerce. Members served "at the pleasure of the President." Thus, a change in Administrations would bring a change in the Council. The Council's activities and operations were subject to the Federal Advisory Committee Act.
Since its inception, the Council's mission has remained fundamentally unchanged: it advises the President through the Secretary on export enhancement and works with industry encouraging U.S. companies to increase exports and enter new markets. Its members serve at the pleasure of the President and its activities are subject to the Federal Advisory Committee Act. On the other hand, changes to the Council's structure have elevated and expanded its voice in matters of export trade.
STRUCTURAL DEVELOPMENT OF THE COUNCIL
A major structural change was announced in September of 1978 by President Carter, who indicated his intention to reconstitute the Council to include representatives from industry, agriculture, labor, the Executive Branch and Congress. President Carter also appointed representatives of small and medium-sized business concerns, women and minorities. Council membership would no longer be balanced only along geographic lines. Rather, the Council now included representatives of key groupings within the private and Government sectors. The concept was to try to build consensus among all segments of the economy. Adding Congressional Members (five United State Senators, five House of Representatives) and the heads of seven Government agencies (Commerce, Agriculture, Labor, State, Treasury, USTR, and Export-Import Bank of the United States) was necessary because "historically the responsibility for implementing most of the recommendations [on export expansion] has rested principally with the President and Government agencies other than [the Department of Commerce]," according to the 1979 annual report submitted to the General Services Administration.
In 1995 and 1999 the PEC Charter was amended to add the Small Business Administration and the Department of Energy, respectively, as Executive Branch members of the PEC.
In 2003 the PEC Charter was amended by President George W. Bush adding the Department of Homeland Security as Executive Branch members of the PEC, thus bringing the total of ten heads of Government agencies represented on the Council.
The Subcommittees of the Council
Two separately chartered, permanent subcommittees were added to the Council: the President's Export Council Subcommittee on Export Administration ("PECSEA"), established in 1976, to advise on Government regulations and policies that control trade for national security and foreign policy purposes; and, the President's Export Council Subcommittee on Encryption (PECSENC), established in 1979, to advise on future key recovery, including evaluating the developing global key architecture, assessing lessons learned from key recovery implementation, advising on technical confidence issues, addressing interoperability and standards issues, and identifying other technical, policy, and program issues for government action. These subcommittees were originally proposed as separate entities that would report to the Secretary of Commerce; however, by making PECSEA and PECSENC permanent subcommittees of the Council, the subcommittees reporting level, authority and effectiveness were elevated.
Since the 1979 reconstitution, successive Councils have created an Executive Committee and from three to six Subcommittees to perform their work. Only the two separately chartered subcommittees, PECSEA and PECSENC, have members who are not represented on the parent Council. However, the position of Chair for PECSEA and PECSENC are on the parent Council. The Council has used subcommittees to identify issues and develop recommendations or programs for the full Council. The subcommittees cannot make decisions independently of the full Council. However, the two separately chartered subcommittees, PECSEA and PECSENC, make recommendations that are then reported to the full Council.
RECOMMENDATIONS AND ACCOMPLISHMENTS
Under different Administrations, the Council has identified barriers to and opportunities for U.S. export enhancement. Certain issues have been a mainstay for Council attention: foreign market development; trade liberalization through multilateral and bilateral agreements; the effects of U.S. law, such as tax and antitrust law, on U.S. export performance; concern over export controls for national security and foreign policy reasons; and the effectiveness of U.S. trade promotion. The Council has encouraged U.S. industry to enter new export markets and has, through the operations of the PECSEA, made industry-Government dialogue on export controls a regular feature of regulation and policy-making.
All of past Council's recommendations and achievements are reported annually under the Federal Advisory Committee Act. However, the Council itself has no required reports. The Council has usually chosen to submit ad hoc recommendations to the President rather than lengthy reports. Nevertheless, since 1980, the Council has always prepared a major report to the President at the end of each Presidential term.
What follows are selected examples of the Council's work over the years:
o From 1973 to 1979, the Council made some fifteen recommendations to President Nixon. These included recommendations about changes in U.S. tax laws affecting exports; comments on an Office of Management and Budget (OMB) draft report on U.S. Government Export Promotion Policies and Programs; a response to a request from the President and the Chairman of the United States Export-Import Bank (Eximbank) for the Council's views on the "threatened dilution of the Eximbank as a competitive source of export financing for U.S. firms;" and recommendations on the metric system, export control bottlenecks, and the importance of East-West trade. This Council also produced a report on the need for a consistent, future-oriented U.S. foreign trade and investment policy. After two and one half years of dialogue with representatives of Justice Department's Antitrust unit, the Council helped the Department of Commerce develop the "Antitrust Guide for International Operations."
o From 1979 to 1980, President Carter's Council made a number of recommendations summarized in its December 1980 report to the President. Many of these recommendations contained broad policy directions for U.S. approaches to international trade negotiations and other policies, urging changes in legislation or regulations.
Among the most significant accomplishment of this Council was to convince his Administration to fully support tax relief for Americans working abroad. Once the Administration changed its position, the way was paved for the tax bill signed on August 13, 1981. This bill provided for substantial exclusion from U.S. taxation on foreign earned income. In addition, the this Council made recommendations that ultimately resulted in passage of a bill that gave the Office of Private Investment Corporation (OPIC) a clear trade mandate and eased restrictions on the operation of OPIC programs in upper income countries. Export controls were relaxed where U.S.-origin, COCOM-controlled goods were reexported. It is this Council that called for the passage of export trading company legislation.
o During 1981 and 1982, the Council continued to urge passage of the Export Trading Company Act, amendments to the Foreign Corrupt Practices Act, and a bill to give the Government a negotiating mandate in trade in services. In response to a Council recommendation, the Department of Agriculture prepared a study on the use of export trading companies by U.S. agriculture companies. At the prompting of the Council, the Department of Commerce organized an internal task force to study alternative approaches to the provision of financing for U.S. exports, which led to an inter-agency review under the auspices of the Cabinet Council on Commerce and Trade.
o In the period from 1983-84, the Council sponsored a series of conferences on specific service industries. The three conferences brought together industry representatives, government officials and Council members to discuss the international trade problems faced by the insurance industry, the leasing industry, and the architecture, construction and engineering industries. The Council encouraged the Government to recognize the role of state regulators in trade negotiations on insurance. The Council's work resulted in the inclusion of leasing provisions in the Treasury Department's model tax treaty used as a basis for negotiations with other countries.
The Council also initiated changes in ExIm Bank's leasing financing programs, and in 1984, issued a White Paper on Industrial Targeting, drawing attention to practices by Japan and other countries that would affect long-term U.S. competitiveness.
o In 1985-88, the Council helped to develop a national consensus on the importance of competitiveness through establishment of its Competitiveness Subcommittee. During the late 1980's, the deterioration in the U.S. merchandise trade balance was regarded as a problem in U.S. competitiveness. The Council sponsored debates among noted academics and proposed economic and trade policy strategies including recommendations on strengthening the U.S. research base and work force skills, accelerating commercialization of new technologies, producing quality products and winning new global markets. As a result of Council deliberations, two Congressional members initiated a GAO study on the causes of the trade deficit that helped decision-makers focus on exchange rates. During this time, the Council also recommended the creation of a single agency department on trade.
In 1988, the Council sponsored a major conference in San Francisco of all trade groups and District Export Councils in the West with hearings on the General Agreement on Tariffs and Trade (GATT) multilateral trade negotiations, regional trade problems and the state of U.S. manufacturing.
o At the end of the Reagan Administration, the Council issued a report containing forty recommendations. The Council intended its report to help the new Administration set its trade policy agenda. The Secretary of State arranged for the report to be sent to all U.S. embassies abroad to heighten awareness of the importance of the trade issues raised by the Council. These included support for the multilateral and bilateral trade negotiations, then on-going, and explicit support for the ground-breaking U.S.-Canada Free Trade Agreement that went into effect on January 1, 1989.
In 1990, the Council urged that both Eximbank and the Agency for International Development (AID) be given resources and an adequate mandate to level the playing field for the U.S. in mixed-credit competition. On May 15, 1990, Eximbank and AID announced the creation of a $500 million tied-aid pool combining Eximbank and AID funding to advance U.S. development and commercial interests.
o From 1991- 1992, the Council studied export promotion problems and urged increased authority for the Trade Promotion Coordinating Committee, including the power to rationalize the export promotion budgets of U.S. Government agencies. Congress gave the TPCC expanded functions at the end of 1992.
Also in 1992, the President announced his intention to eliminate recoupment fees on U.S. export of items derived from defense contracts and specifically cited consultations with the Council as bringing about the decision to change the policy. The Council had held a hearing, made recommendations to the President and consulted with business groups, OMB, the Defense Department and White House staff. The Council monitored the Defense Department's implementation.
That same year the Council sponsored a trade mission to Taiwan in connection with that country's $300 billion Six-Year Development Plan. While U.S. policy restricted official high-level representation, other governments were sending Cabinet-level officials to promote their countries' exports. The Council, with its unique status and "Presidential" image, stepped in to "carry the flag" for U.S. commercial interests.
At the end of the Bush Administration the President's Export Council issued its report to both President Bush and to President-Elect Clinton which made 36 recommendations, many of which were incorporated into the National Export Strategy.
o Between 1995 and 1997, the Council sent to the President a total of 13 reports which encompassed a variety of issues and concerns. One of these reports recommended that the level of the Small Business Administration (SBA) export working capital guarantee, which had recently been lowered to 75 percent, be restored to its former level of 90 percent. Since the Council issued its recommendation to the President, a bill which reestablished the 90 percent level was passed by Congress. In addition, the SBA incorporated the PEC's report into its study on the impact of legislation, which was requested by Congress.
Responding to a request from the White House in 1996, the Council undertook a study of unilateral economic sanctions, producing a first-ever catalog of unilateral sanctions. The Council assessed the impact of sanctions on U.S. economic interests and recommended specific actions to improve policies and processes. In additional separate reports, the Council focused on specific issues as they affect trade with India, China, Japan, the NIS and Brazil.
Also during this period, the PEC initiated an innovative program called the Virtual Trade Mission, using videos, workbooks, CDs and online programs to provide students with "hands-on" experience in building export markets around the world. After a very successful first year, with pilot programs in twelve schools across the country, the Virtual Trade Mission has become a separate incorporated non-profit organization.
o Between 1997 and 1999, the PEC developed eight letters of recommendations. In response to the PEC's June 1997 recommendation that the impact of unilateral economic sanctions on export activities needed to be thoroughly analyzed, the White House asked the PEC to undertake a report that described all existing sanctions and to assess the impact of unilateral sanctions on U.S. economic interests and recommend specific actions to improve policies and processes. In the PEC's June 1997 report, "Unilateral Economic Sanctions: A Review of Existing Sanctions and Their Impacts on U.S. Economic Interests With Recommendations for Policy and Process Improvement," the PEC concluded that existing sanctions comprise a complex and growing web of restrictions and legal impediments in the international trading system and recommended policies and processes to overcome what the PEC believed was an absence of transparency and discipline in dealing with the countries against which unilateral economic sanctions are being imposed. At the time, the report did not undertake to review sub-federal foreign policy sanctions, and, in follow-up to the report, the PEC forwarded two letters of recommendation to the President: 1) Sub-Federal Economic Sanctions (dated June 2, 1998) noted the increased use of secondary boycotts by state and local governments to sanction those who trade in or with certain foreign countries. The PEC urged the President to direct an early assessment of whether federal initiatives might be appropriate in respect to such actions that may impinge upon federal responsibilities in the areas of foreign and trade policy; and, 2) Foreign Policy-Based Unilateral Sanctions (dated, April 14, 1999) was written in response to Under Secretary of State Stuart E. Eizenstat's 1998 testimony on the Hamilton-Luger bill regarding reform of unilateral sanctions policies and processes. The PEC was expressing concurrence with the Administration's principal policy recommendations of the PEC's 1997 report. The PEC was concerned that disagreement between the Administration and the Congress over certain aspects of the bill might prevent adoption of these recommendations, which were designed to make the imposition of sanctions more disciplined and to lessen avoidable burdens on U.S. workers and economic interests. The PEC suggested that the Administration proceed immediately with the improvements supported in the testimony of Under Secretary Eizenstat so that Congress may be encouraged to follow the example.
November 1998 marked the 25th Anniversary of the PEC, and, in recognizing the many opportunities and challenges it faced, the PEC members made trade education their number one priority issue they hoped would become their lasting legacy. During the November 10, 1998, full Council meeting, the PEC hosted a 'National Town Hall Meeting on Trade.' In conjunction with the Virtual Trade Mission Foundation (a non-profit educational organization created by the private-sector leadership of the PEC in 1996), this program was the first-ever meeting between America's top trade business leaders from the PEC and a national audience of students, teachers, employees, and small business leaders. The discussion centered on the PEC's theme: "Building a New National Consensus on Trade for the 21st Century," and President Clinton provided the keynote address.
During the April 14, 1999, Council meeting, the PEC members continued with their work on trade education and teamed up with the Department of Commerce, the U.S. Chamber of Commerce (USCOC), the Business Roundtable (BRT), and other organizations active on international trade issues in launching, "Trade Globally, Prosper Locally: The National Trade Education Tour." The objective of the National Trade Education (May thru November, 1999) is to promote a greater understanding of the importance of international trade at the grass roots level. It involves a coordinated effort between community business leaders; federal, state, and local government officials; workers and labor unions; as well as consumers in developing a new national consensus on trade.
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