Discretionary Spending

Function 370 - Commerce and Housing Credit

Eliminate the International Trade Administration’s Trade Promotion Activities

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
Change in Spending                        
  Budget authority 0 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.5 -1.5 -3.6
  Outlays 0 -0.3 -0.3 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -1.4 -3.4

This option would take effect in October 2017.

The International Trade Administration (ITA) is an agency within the Department of Commerce that provides support to U.S. businesses that sell their goods and services abroad. The agency assists domestic companies that either are new to the exporting process or are seeking to increase their exports. Under its authority to provide assistance for trade development, ITA assesses the competitiveness of specific U.S. industries in foreign markets and develops trade and investment policies to promote U.S. exports. In addition, ITA supports U.S. exporters in their pursuit of receiving fair market value for their goods, monitors compliance with trade agreements, and enforces U.S. trade law. ITA is one of several federal agencies that engage in trade development and promotion. The Congressional Budget Office estimates that ITA’s 2016 appropriation for those purposes was $334 million—about 70 percent of the agency’s budget.

This option would eliminate ITA’s trade promotion activities. By doing so, the option would reduce discretionary outlays by $3 billion from 2018 through 2026, CBO estimates.

One rationale for this option is that the cost to taxpayers of providing trade promotion services at the federal level probably exceeds the benefit to U.S. businesses. Because those costs are not reflected in the prices of the goods and services sold abroad, a portion of the benefits are passed on to consumers and firms in other countries in the form of lower prices for U.S. exports. In addition, trade promotion activities developed by the private sector would probably be more efficient than those developed by government agencies because the private sector can better tailor policies to meet the particular needs of the businesses involved. Several private-sector entities already provide trade promotion services that target particular industries or regions. For example, TradePort, a joint venture of the Bay Area Council Economic Institute and the Los Angeles Area Chamber of Commerce, is a repository of free information and resources for businesses seeking to increase international trade to and from California.

An argument against eliminating ITA’s trade promotion activities is that those activities may be subject to economies of scale. It might therefore be more effective to have a single entity (the federal government) develop the expertise to counsel exporters about foreign legal and other requirements, disseminate information about foreign markets, and promote U.S. products abroad than to have several entities involved in those activities. In addition, eliminating the ITA’s trade promotion programs could curtail efforts that are currently under way to increase U.S. exports, including, for example, the National Export Initiative, which relies in part on those programs for support.