THE INTERNATIONAL SALESMAN
MAY 21, 1996
From day one the Clinton administration pushed economics and trade as crucial to U.S. foreign policy. Last year, the Center for Public Integrity and other public interest groups alleged invitations to participate in trade missions were direct payoffs for corporations contributing to President Clinton's re-election effort. The Commerce Department denied the allegations.
JIM LEHRER: Now, the government official as international salesman and to Elizabeth Farnsworth.
ELIZABETH FARNSWORTH: This morning Commerce Sec. William Daley returned to Washington from a 10-day trade mission to Brazil, Argentina, and Chile, seeking telecommunications and energy markets for U.S. companies. Traveling with him were 31 corporate executives representing those interests, including Motorola, Raytheon, and Bell South. From day one the Clinton administration pushed economics and trade as crucial to U.S. foreign policy. The President made his close friend and former head of the Democratic National Committee, the late Ron Brown, Secretary of Commerce. Brown took the lead in promoting U.S. business abroad, even creating a war room at the Commerce Department, where more than 150 major contracts around the world were tracked daily. And Brown traveled continuously, often taking groups of business leaders with him. In China and elsewhere he met personally with foreign officials on behalf of American companies.
RON BROWN, Former Commerce Secretary: (October 1995) The United States truly believes that we have the best technology; that we have the highest quality products; and that they are priced competitively. But we also feel clearly that it's good for the United States; that competing at winning here in China helps the United States economy grow and helps create high wage, high quality jobs for the American people.
ELIZABETH FARNSWORTH: In all, Brown, who was killed last year during a mission to the former Yugoslavia, took at least 23 trips to 30 countries, including South Africa, Russia, and Indonesia. Executives from more than 200 companies traveled with him. Some critics argue taxpayer dollars shouldn't be used to promote business deals for corporations. And last year, the Center for Public Integrity and other public interest groups alleged invitations to participate in trade missions were direct payoffs for corporations contributing to President Clinton's re-election effort. The Commerce Department denied the allegations. At his confirmation hearings last January, William Daley said he would reform the way trade missions were organized.
WILLIAM DALEY, Commerce Secretary: There is a place for politics in our public life, but there is no place for politics in the Department of Commerce. If confirmed, I plan to take two immediate steps to address the concerns members of this committee and others have raised. First, I will defer all overseas trade missions and within 30 days conduct a top to bottom review of the procedures, rules, and criteria used to govern them. The second step I will take, if confirmed, is to vastly reduce the number of political appointees within the Department of Commerce.
ELIZABETH FARNSWORTH: In March, Daley held a press conference outlining new trade mission regulations, but he began by stressing the importance of the mission.
SEC. WILLIAM DALEY: The trade mission was continue to be productive and useful parts of our export efforts. To do less is tantamount to unilateral withdrawal from the global economic competition.
ELIZABETH FARNSWORTH: The new regulations include: business delegations will be chosen by a panel of mostly career Commerce Department officials, instead of mostly political appointees, as in the past; companies will be selected on the basis of relevance to the mission; business activity in the area to be visited; and diversity of the company's size, type, location, and demographics. A business's partisan political activities will be irrelevant to the selection process, and companies now must submit a formal application to be part of a trade mission, instead of being invited, as in the past.
ELIZABETH FARNSWORTH: Now, two views of government trade trips. Jeffrey Garten worked under Ron Brown as Undersecretary of Commerce for International Trade. He is now dean of the Yale School of Management and author of the new book " The Big Ten: The Big Emerging Markets and How They will Change Our Lives." And Claude Barfield is coordinator of trade policy studies at the American Enterprise Institute. He wrote the trade policy statement for the Reagan administration and is the author of several books on the subject. Thank you both for being with us. Mr. Garten, why are these trade missions necessary? What do they accomplish?
JEFFREY GARTEN, Dean, Yale School of Management: Well, I think in the broadest sense these trade missions are a symbol of changing American interests in the world economy. I believe that the centerpiece of our foreign policy in the future is going to have to revolve around closer commercial ties with emerging markets, in particular, like China, like India, like Brazil, and these trade missions are one component of really carrying that policy out.
ELIZABETH FARNSWORTH: Why would they be necessary, though? One could imagine a government, our government and our businesses having ties with those markets and not having trade missions. What did they do particularly well?
JEFFREY GARTEN: Well, the trade missions symbolize in the first instance American interest in linking our companies to the rest of the global economy, but secondly, we have an even narrower self-interest in that the growth of the American economy now is very dependent on exports. In fact, exports are about a third, account for about a third of our economic growth. And these trade missions say that the American government and American companies are working together to penetrate global markets, to sell American goods and services, and to create those jobs at home.
ELIZABETH FARNSWORTH: Do you think that's important too, or do you think it's that they don't work properly?
CLAUDE BARFIELD, American Enterprise Institute: Well, I think--I have no problem with trade missions, but I think we have to go back and look at the first four years of the Clinton administration. And I do not doubt that Mr. Daley is reforming the system because he's in the spotlight. My problem--there are several problems I think with the way it's been explained. No. 1, the hype in the first four years was that somehow the trade missions are key, and Mr. Garten just reflected a little bit, a key to U.S. export growth, and that's just nonsense. And we are the world's No. 1 exporter. The trade missions probably affect maybe 1 or 2 percent. They're just not necessary, and there was the--what's really--what's really increasing our exports are the slogging of day to day details of price and quality that U.S. corporations have. The second thing is, as we've seen, and I, again, do not doubt that Mr. Daley is trying to reform this, there is a--there was a political connection here. You cannot ignore the fact that you did have money going to the Commerce Department for trade missions. I mean, you mentioned in your introduction, I think, one of the Nader groups. Common Cause has also raised the same question, with direct memos saying that if you pay $100,000, you get to go on a trade mission. Now--
ELIZABETH FARNSWORTH: You said money going to the Commerce Department.
CLAUDE BARFIELD: Excuse me. To the Democratic National Committee--forgive me for that--not to the Commerce Department. In other words, political money in which you expected a kind of payoff. Now, I don't doubt that Mr. Daley, as I say, will be very careful about this, but the problem is that as long as we have a system in which people contribute money to parties and expect a quid pro quo, we're going to have a problem here.
ELIZABETH FARNSWORTH: Okay. Mr. Garten, respond to both of those points, one, that they're not really necessary to prevent exports, and two, that there's the potential for corruption.
JEFFREY GARTEN: Well, I don't think anybody would say that trade missions are the major force of American exports, but I think we have to look at what's happening in the world economy, the competition, the fact that the presidents of countries like France, or the chancellor of Germany, or the prime minister of England, they're all leading trade missions; they're all helping their companies break into markets where there are huge government barriers. And I think if we're absent from that over time we will suffer. It isn't the principal export generation but it is part of a much broader policy which says the world economy is very important; the success of the American companies are very important; and the American government is going to be behind it. Now, when it comes to the corruption angle, I think that this is totally misrepresented. If you look at who was on the trade missions in the first Clinton administration, there was a huge number of major Republican contributors as well. I don't--I don't argue with the fact that we ought to be very rigorous in picking who goes on the missions and we ought to be very rigorous in terms of what kinds of projects the American government lends support to, but if something happened that was untoward, it was such a small part of what is a--really the shifting American interest in the world--and I think it's been blown tremendously out of proportion.
ELIZABETH FARNSWORTH: What about the argument that if we don't do it, we'll be left out? I mean, just last week, Jacques Chirac, the president of France, was in China signing a huge Airbus deal.
CLAUDE BARFIELD: Mr. Chirac--the necessity for Mr. Chirac to go--and I think probably for France it is necessary for him to go--says something about the weakness of French companies, not about the fact that this is necessary. As I keep coming back to, this is--whether--I might agree or disagree with the number of trade missions--but this is a minor negligible part of the reason that we're a major exporter. We are a major exporter, and in China in sector after sector, because of the--of our internal economic strength. And this is just frost on the cake. It allows Sec. Brown or Sec. Mosbacher or whoever, to run around the world and say that this number of deals came from us. The other thing, if you look back at the Commerce Department, a lot of it in the first administration, as some of Jeffrey Garten's colleagues have said, since they left the government, had to do with--they would pick people who were going to sign deals and then claim the deal for themselves, or at times, as the "Wall Street Journal" or "New York Times," I forget, one or the other, did a survey after the--after a trade mission to see actually what was signed, and it was just a lot of hype that allows political leaders to take credit for things that I think the private sector is actually doing anyway.
ELIZABETH FARNSWORTH: Mr. Garten, can you give us an example of where it might not be hype, where it was really important to have this partnership and these trade missions?
JEFFREY GARTEN: Well, I think, if you look at the actual projects that the Clinton administration has supported, in most of the instances, it was heated competition with companies that were supported by their governments. I'll give you an example. In China, when Sec. Brown pressed the case for McDonnell-Douglas, it was a heated competition with Airbus and McDonnell-Douglas won. There was a big project in Brazil where Raytheon, Merck & Company, was competing with Thompson, which was a French company subsidized by the French government. There are quite a few very big projects which generate substantial jobs at home where if the American government hadn't been in support of our companies, I don't think we would have won, but I don't want to hinge this on any one company or any one project. The point is that if you look at where all the growth in demand is going to come from, as I've written in my new book, "The Big Ten," it's in big emerging markets like Brazil, like India, like China, where their governments are playing a very, very active role in awarding contracts. And if the American government doesn't show up in one form or another, we won't win the contracts because those governments expect--they expect our government to show up in the same way that France or England or Germany or Japan did.
ELIZABETH FARNSWORTH: What about that?
CLAUDE BARFIELD: I think it's a totally false picture of the way the world works. Our government can only show up in one or two contracts, let's say a month or a year, and there are hundreds of thousands of contracts being made. The other thing that I think down the road will haunt us, and I keep coming back to the point about where U.S. firms are and competitively now, is absent politicization of the process U.S. firms will do very well. And I don't think that foreign governments expect routinely that our Commerce Department or whoever intervenes in each contract, because they can't, but we have actually in the first four years of the administration, I think they're being more careful now, we didn't say that we're doing this defensively. Ron Brown and even the President said this is the way the world is going to work. I think ultimately that will hurt our firms because our firms could win without this, and all it does is give the excuse to the Chiracs of the world and the Kohls, who have weaker companies potentially, I think, in the future, to intervene and say we're only doing it because the Americans are doing it.
ELIZABETH FARNSWORTH: Well, I think that's all we have time for, but we'll come back to this sometime later. Thank you both very much.
CLAUDE BARFIELD: Thank you.