Establishment of Office of Trade and Manufacturing Policy

Overview

Establishment of the Office of Trade and Manufacturing Policy (OTMP)

Executive Order 13797, issued by President Donald Trump on April 29, 2017, established the Office of Trade and Manufacturing Policy within the White House. This initiative represents a significant step in Trump's administration to prioritize the interests of American workers and domestic manufacturers. The focus of this order lies in reducing the trade deficit, enhancing economic growth, and bolstering U.S. manufacturing and defense industrial bases. The creation of OTMP was part of a broader effort to realign trade policies in adherence to the administration's "America First" agenda. A Director directly chosen by the President was mandated to lead OTMP, ensuring focused policy advice and strategic decisions concerning trade and manufacturing practices.

Mission and Responsibilities

The OTMP's mission was clearly outlined: to serve and defend the interests of American workers and domestic manufacturers while actively advising the President on strategic trade policies. Its responsibilities included serving as an advisory body to the President, liaising with the Department of Commerce, and improving domestic procurement and hiring policies. These responsibilities underpin a concerted effort to reverse outsourcing trends and reinforce domestic economic resilience. Through direct communication with key departments and implementation of Buy American and Hire American policies, OTMP became pivotal in the President's economic strategy landscape.

Liaison and Special Projects

In addition to its primary advisory role, the OTMP was designed to be a central hub for initiating trade-related special projects as demanded by the President. By acting as a liaison between the White House and the Department of Commerce, the EO intended to enhance the coherence and effectiveness of trade strategies. This reflects the administration's attempt to streamline communication, ensuring consistency across different arms of the federal government as policy directives are executed swiftly. The OTMP’s role underscored the administration's heightened focus on reshaping the U.S. trade landscape explicitly to favor domestic interests.

Alignment with Broader Economic Policies

EO 13797 further aligns OTMP's activities with EO 13788, emphasizing a cohesive framework aimed at strengthening domestic economic structures. This organization underscores an initiative to leverage federal procurement to boost employment and manufacturing domestically. Thus, the administration seeks to reinstate manufacturing as a central pillar of the U.S. economy. By embedding OTMP within a broader policy initiative network, the executive branch aims to create synergy across multiple policy areas, enhancing the efficacy of its "America First" approach.

Implementation and Legal Scope

The EO noted that its implementation must remain consistent with applicable laws and subject to budgetary constraints, indicating the legal and financial framework's cognizance within which the OTMP would operate. Furthermore, the order maintains provisions ensuring the OTMP's establishment would not adversely impact other executive departments or the Office of Management and Budget's authority. These provisions sought to mitigate potential jurisdictional conflicts, thereby allowing OTMP to function without overstepping existing legal boundaries or creating new enforceable rights.

Legal and Policy Implications

Constitutional and Statutory Foundation

Executive Order 13797 is grounded in the President's constitutional powers, notably the power over foreign affairs and executive operations. This authority enables the EO to realign the executive's focus towards domestically favorable trade policies. While the EO does not create new statutory obligations, it places emphasis on existing laws governing trade agreements and procurement practices, reinterpreting these laws to favor domestic manufacturing significantly.

Interagency Coordination and Regulatory Environment

A critical policy implication of the EO is the reshaping of interagency coordination mechanisms. By establishing OTMP within the White House and directly linking it to the Department of Commerce, the EO delineates new pathways for executing trade-related policies. This shift suggests the administration's interest in consolidating decision-making authority and reducing bureaucratic fragmentation, fostering a more centralized policy-making approach within the executive branch concerning trade policy formulation.

Impact on Existing Trade Regulations

EO 13797 seeks to influence various aspects of U.S. trade regulations, potentially revitalizing older statutes or invoking existing trade law provisions with renewed vigor. The EO's reference to Buy American policies illustrates an intensified focus on federal procurement laws, leading to their reinterpretation to favor U.S. producers. Such measures could impact regulatory compliance frameworks and shape international perceptions of U.S. commitment to fair trade practices.

Effect on Legislative Relations

This Executive Order represents an assertive use of presidential power, potentially shaping legislative agendas around trade and economic policies. Although the EO does not change statutes directly, its broad implications for trade and economic policies may influence legislative priorities, particularly concerning trade agreements and procurement policies. This dynamic poses a backdrop for potential budgetary appropriation negotiations and legislative endorsements necessary for full EO implementation.

Judicial and Administrative Discretion

The EO's implementation involves significant administrative discretion, allowing officials to interpret and apply its provisions within their jurisdictions. However, this discretion introduces challenges, especially related to compliance with more rigid regulatory frameworks. Although the EO's implementation is intended to be consistent with existing law, its broad mandates can lead to overlapping jurisdictional claims or disputes, potentially raising judicial challenges if perceived as encroaching on statutory mandates or exceeding executive powers.

Who Benefits

American Workers and Manufacturers

The direct beneficiaries of Executive Order 13797 are American workers and domestic manufacturers. By rejuvenating the manufacturing sector and protecting domestic jobs, the EO reflects a commitment to reversing the offshoring trends that have historically impacted domestic employment adversities. The EO emphasizes reducing trade deficits, suggesting attempts to protect U.S. markets from trade imbalance repercussions.

Small and Medium-sized Enterprises (SMEs)

SMEs involved in manufacturing and production stand as another potential beneficiaries of the EO. By enhancing access to federal contracts, the EO offers opportunities for SMEs to engage in lucrative procurement frameworks. Smaller companies would benefit from competing alongside larger corporations, thereby diversifying the domestic industrial base and stimulating local economies.

Industrial and Defense Sectors

The defense sector, constituting a vital part of the country's industrial base, stands to gain immensely from the EO's strengthening directives. By fortifying the defense industrial base, the EO aligns with national security priorities, potentially resulting in increased funding opportunities and collaborative initiatives aimed at augmenting defense-related manufacturing capabilities, ensuring sustained sector investment.

Economic Clusters in Manufacturing-Heavy Regions

The outcomes of EO 13797 are anticipated to benefit U.S. regions heavily reliant on manufacturing industries, such as the Midwest. Through policy targeting to revitalize domestic production, the administration strives to impact economic clusters dependent on manufacturing directly, potentially driving job growth and regional economic revitalization.

Advocates of "Buy American" Policies

The EO's implementation aligns with groups advocating for stronger domestic procurement laws. By reinforcing the administration's commitment to prioritizing American-made goods, the EO provides a policy framework for advocacy groups to leverage for stricter legislative enforcement of domestic sourcing requirements.

Who Suffers

Import-dependent Industries

Industries heavily reliant on imports face potential challenges due to the EO's mandates. With increased focus on Buy American policies, these industries might encounter elevated operational costs due to restricted access to cheaper foreign goods. The shift favoring domestic products might lead companies to reassess their supply chains, impacting competitiveness and profitability adversely.

Foreign Trade Partners

As the EO prioritizes policies focused on reducing the trade deficit, foreign countries maintaining substantial trade surpluses with the U.S. could find themselves disadvantaged. U.S. shifts towards protectionist trade measures might exacerbate tensions with these partners, potentially leading to retaliatory measures affecting American exporters and broader global trade ecosystems.

Consumers Facing Price Increases

American consumers might bear negative consequences if the EO's policies increase costs for goods by reducing market competition. The emphasis on domestic product sourcing could lead to price hikes in the market, affecting consumer choices and overall living costs, particularly if supply chain disruptions lead to higher production costs translating into consumer-level prices.

Global Supply Chain Stakeholders

Global supply chain stakeholders, including multinational corporations with integrated production models, might face operational efficiency challenges. The EO's promotion of domestic manufacturing might encourage companies to reconsider international logistics and sourcing strategies. These shifts can introduce complications for global companies seeking streamlined operations across borders.

Advocates of Free Trade

The EO's objectives contradict free trade advocates' priorities, promoting protective trade policies favoring domestic production. The EO stands in contrast to global efforts fostering open markets and reducing trade barriers. Free trade proponents might perceive this policy shift as regressive, warning of potential long-term economic drawbacks resulting from isolationist practices.

Historical Context

Continuation of Historical Trends

Executive Order 13797 is part of U.S. economic policy's broader historical continuum, oscillating between globalization and protectionism. This order reflects a modern take on mid-20th-century policies aimed at bolstering domestic industries against foreign competition, driven by growing concerns over trade deficits and declining manufacturing sectors.

Reinforcement of "America First" Ideology

The order reinforces the administration's "America First" policy, characterized by nationalist economic practices. Prioritizing American economic interests, this direction encapsulates the administration's broader ideological approach, pivoting away from multilateralism towards bilateralism in trade and foreign policy.

Response to Global Economic Shifts

The EO responds to late 20th and early 21st-century global economic shifts, where American industries faced significant competition from emerging economies. Such pressure led to outsourcing and domestic manufacturing declines, prompting policy measures aimed at reviving domestic capabilities as global economic dynamics evolved.

Connection to Previous Executive Measures

EO 13797 complements other executive measures such as EO 13788, focusing on trade and domestic economic policies. The order amplifies a policy chorus emphasizing returning production and procurement activities to domestic grounds, aiming to reinvigorate American industrial competitiveness through synergies among policies.

An Adaptation to Economic Nationalism

The EO reflects a global trend toward economic nationalism, gaining traction amid discontent with globalization. Policymakers globally have adopted measures protecting national industries, signaling the EO's directives align with international movements safeguarding domestic markets against perceived foreign encroachment.

Potential Controversies or Challenges

Trade Relations and International Backlash

One prominent challenge is the potential backlash from international trade partners. Emphasizing protectionist policies risks instigating trade disputes escalating into conflicts over market access and tariffs, potentially undermining existing trade agreements and multilateral frameworks.

Legal Scrutiny Over Executive Power Boundaries

The EO's scope and implications invite potential legal scrutiny concerning presidential authority and separation of powers. Questions may arise over its reach, especially if stakeholders view its implementation as encroaching on legislative mandates or disrupting balance by unilaterally redefining trade policies without congressional input.

Compliance and Enforcement Difficulties

Enforcing EO policies presents challenges, including monitoring compliance with Buy American provisions and quantifying trade deficit impacts. Such monitoring might tax administrative agencies, causing implementation delays or inconsistencies across different sectors and regions, burdening enforcement capacity and precision.

Domestic Industry Adjustments and Labor Concerns

Adjustments by industries to comply may prompt operational shifts with complex socioeconomic implications. Labor unions and worker collectives might express concerns, especially if new trade policies result in job losses in industries penalized by reduced import options, fueling legal or political challenges.

Potential Congressional Pushback

Though the EO doesn't alter legislative powers, its implications could provoke congressional opposition, particularly if viewed as counter to free market principles. Lawmakers favoring economic internationalism might challenge the EO's premises, seeking legislative counteractions or proposing checks on executive authority over trade policy reforms.