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Lawmakers and Experts Call for Institutional Reform to U.S. Economic Statecraft
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Summary
At a House Foreign Affairs subcommittee hearing, members and outside experts urged stronger leadership, clearer strategy, and institutional changes to align economic policy with U.S. foreign policy, including proposals to elevate economic security inside the State Department and create new interagency coordination mechanisms.
At a House Foreign Affairs Committee Subcommittee on East Asia and the Pacific hearing, lawmakers and four outside experts urged structural reforms to U.S. economic statecraft, saying current authority and capacity are scattered across dozens of agencies.
The hearing focused on whether and how to elevate economic statecraft as a permanent, leading function of U.S. foreign policy and how the Department of State should be organized and resourced to carry that function.
Why it matters: Witnesses said poorly aligned institutional structures hamper the United States’ ability to use trade, investment, sanctions and other economic tools quickly and coherently in crises and competition, and they recommended specific leadership and staffing changes to close gaps.
Elaine Dzanski, senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies, argued the United States “may have launched an economic war without an economic Pentagon,” and recommended creating a senior leadership role at State dedicated to economic security, new economic specialists in the diplomatic corps, and a standing capacity to plan and execute coordinated economic campaigns.
Dr. William Norris, associate professor at the Bush School of Government and director of the Economic Statecraft Program at Texas A&M, recommended moving from a tools-based organization to an effects-oriented model. He noted authorities are “scattered across more than 1,400 different offices that are spread across 13 departments and 10 agencies,” and said the government lacks strategic campaign planning, contingency modeling and consistent economic analysis from a statecraft perspective.
Wendy Cutler, vice president at the Asia Society Policy Institute and a former U.S. trade negotiator, and Matthew Goodman, director of the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations, both emphasized that organization alone will not suffice. Cutler said “economic security is national security,” and recommended targeted reforms—such as elevating economic work inside State and a new fast-track program to recruit international economic officers—while warning against wholesale reorganizations that could undermine worker and business interests. Goodman urged a capable State Department that “puts a priority on economic diplomacy” and cautioned that budget cuts could disproportionately affect economic functions.
Members asked whether the Office of the U.S. Trade Representative (USTR) should be consolidated into State or another agency. Witnesses differed: some urged a stronger coordinating role for State, while others argued for preserving agencies’ comparative advantages and improving interagency coordination, possibly through an empowered White House process or a new interagency council.
The committee will use the testimony as it develops State Department reauthorization language and invited additional written questions from members. No formal organizational change was approved at the hearing.
The subcommittee made clear that next steps could include legislative proposals in the authorization process and written follow-up from witnesses and agencies.
