How a 7% Cut to a U.S. Agency's Budget Can Take Down the World's Economy


The federal administration responsible for sending U.S. representatives to engage in global trade negotiations reports that envoys responsible for brokering complex trade negotiations with foreign diplomats are traveling less due to tightened budgets. The fear is that these under-the-radar shifts may, in fact, have lasting ripple effects on U.S. trade competitiveness in the long run.

The Office of the United States Trade Representative's budget shrank 7% this year down to $47 million because of sequestration budget cuts. The agency has been working to fight back on the cuts, saying that a cut of a few million dollars can effectively ground a number of its small (250 total) representative work force, who rely on extensive travel schedules across the globe to get negotiations done.

U.S. Trade Representative Michael Froman has tried to highlight the issue in a recent panel with the U.S. Chamber of Commerce chairman, Thomas Donohue, saying to Foreign Policy, “We are in a situation where we’ve having to choose: Can we send people to a negotiation? Can we bring this trade enforcement case or another?” 

Of course these are the difficult questions any agency must encounter in the face of budget cuts which may be crucial to navigate in order to cut back and improve the nation's overall financial health. But, in order to understand the full picture, the perhaps unforeseen implications on our trade negotiations brought by the smallest cuts are still worth highlighting.

A former trade representative under the George W. Bush administration, Susan Schwab, explained that even in better times for the agency, trade representatives have operated in a lean, streamlined manner, highlighting that the money is necessary for successful financial deals to be struck. She explained that negotiators generally fly economy class on 15-hour flights to Asia before engaging in round-the-clock talks with world representatives on a range of tough issues. A few million of dollar in setbacks could make even these less-than-glamorous trips impossible.

It's remarkable to hear just how necessary in-person deals seem to be for overall trade in the age of the internet. If millions of dollars can be spared by launching effective internet tools for global trade bargaining, this avenue should not be overlooked.

But trade negotiations, it turns out, may benefit from personal relationships. Global trade meetings are often described in a way reminiscent of another time, where the best outcomes can stem in smokey rooms and behind closed doors based on personal trust that's built, elements difficult to recreate on digital media.

"As anyone who has watched the ritual of the Doha Round of talks between World Trade Organization members can attest," a representative has explained to Foreign Policy, "international trade negotiations are grinding, labor-intensive ordeals, requiring teams of lawyers and other specialists...Breakthroughs, when they come, are often reached away from the bargaining table."