TREASURY DIRECTIVE: 27-04

Date: November 17, 1996

Sunset Review: November 17, 1998

Expiration Date: November 17, 1999

SUBJECT: Organization and Functions of the Office of the Under Secretary (International Affairs)

1. PURPOSE. This Directive describes the organization and functions of the Office of the Under Secretary (International Affairs).

2. THE UNDER SECRETARY (INTERNATIONAL AFFAIRS) advises and assists the Secretary and Deputy Secretary in the formulation and execution of U.S. international policy. These responsibilities include the development of policies and guidance of the Department's activities in the areas of international financial, economic and monetary affairs, trade and investment policy, international debt, environmental and energy policy, and U.S. participation in international financial institutions. The Under Secretary helps coordinate United States economic policies with finance ministries of the other G-7 industrial nations (France, Germany, Japan, United Kingdom, Canada, and Italy) and participates in preparing the President for annual G-7 economic summits. Reporting to the Under Secretary is the Assistant Secretary, including all of the functions of that office..

3. THE ASSISTANT SECRETARY (INTERNATIONAL AFFAIRS) reports to the Secretary through the Under Secretary (International Affairs) and the Deputy Secretary. The incumbent is a principal adviser to the Secretary, Deputy Secretary, and Under Secretary (International Affairs) in their exercise of international financial, economic, monetary, trade, investment, environmental and energy policies and programs.

4. ORGANIZATION STRUCTURE. The Assistant Secretary (International Affairs) supervises the Office of Program Services, the Counselor for Middle East Affairs, and six Deputy Assistant Secretaries: International Monetary and Financial Policy; Asia, the Americas and Africa; International Development, Debt and Environmental Policy; Trade and Investment Policy; Eurasia and the Middle East; and Technical Assistance Policy. The functions and responsibilities of the Deputy Assistant Secretaries are defined by the Assistant Secretary. The Deputy Assistant Secretaries serve under the policy guidance of the Assistant Secretary. Each Deputy Assistant Secretary supervises a number of offices managed by Directors. See the attached organization chart.

5. THE DEPUTY ASSISTANT SECRETARY (INTERNATIONAL MONETARY AND FINANCIAL POLICY) supervises: the Office of International Banking and Securities Markets; the Office of International Monetary Policy; the Office of Foreign Exchange Operations; and the Office of Industrial Nations and Global Analyses. The incumbent serves as a policy adviser to the Assistant Secretary (International Affairs) and is responsible for the following functions.

a. Formulates and implements Treasury policies concerning:

(1) maintenance and operation of a smoothly functioning international monetary system;

(2) coordination of economic policy among industrial nations through bilateral relationships, the Economic Summit/G-7 process, the G-10 finance ministries and central banks, and the Organization for Economic Cooperation and Development (OECD) framework;

(3) development and conduct of U.S. monetary and financial relations with other nations;

(4) U.S. participation in the International Monetary Fund IMF);

(5) foreign exchange operations and management of U.S. reserve assets; and

(6) international capital markets.

b. Provides analyses and forecasts of economic, monetary and financial developments in, and the policies of, the major industrial nations and maintains representatives at U.S. embassies in key industrial countries and at the OECD.

c. Analyzes and forecasts regional and global payment patterns and their implications for the functioning of the monetary system and the international economy.

d. Analyzes and assembles information relating to international banking, portfolio investment and insurance matters and the international practices of U.S. and foreign banks, their regulatory authorities, and the impact of their activities on the operation of the international monetary system.

e. Provides analyses relating to the formulation of coordinated international economic policies among major industrial nations.

f. Prepares analyses and reports on current developments and near-term prospects for the U.S. current account balance and capital flows.

g. Develops analytic techniques for the study of current international economic issues. uses macroeconomic models as tools for analysis of issues, and provides econometrics modeling assistance to other offices.

h. Provides direction to the Federal Reserve Bank of New York concerning Exchange Stabilization Fund (ESF) operations under the authority of the Secretary of the Treasury and other Treasury officials who are delegated such authority to assure that operations of the Federal Reserve System concerning the ESF are coordinated. In this regard, the incumbent intensively monitors foreign exchange markets and maintains continuing monitoring of gold markets and related developments.

6. THE DEPUTY ASSISTANT SECRETARY (ASIA, THE AMERICAS AND AFRICA) supervises: the Office of East and South Asian Nations; the Office of African Nations; the Office of Latin American and Caribbean Nations; and the Mexico Task Force. The incumbent serves as a policy adviser to the Assistant Secretary (International Affairs) and is responsible for the following functions.

a. Formulates, evaluates, and implements Treasury policy and positions in the areas of international economics and finance dealing with the developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa, and bilateral financial and economic assistance policies concerning these countries.

b. Monitors the relations of individual developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa with the international financial institutions (IFIs) and IFI programs in those countries; reviews and evaluates relations with, and programs developed by, the IFIs involving these developing and emerging market countries.

c. Formulates U.S. foreign economic policies and programs concerning developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa as they relate to international monetary stability and U.S. economic policy.

d. Develops, and monitors closely, policy recommendations regarding U.S. financial relations with the developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa, including overseeing compliance with the U.S.-Mexico financial agreements of 1995, timely payment of principal and interest due from Mexico and debt repayment by other countries, rescheduling and other financial and economic policy issues.

e. Analyzes financial sector liberalization programs and foreign exchange systems in the developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa and, as delegated by the Assistant Secretary, negotiates with various countries to encourage greater openness in their financial sectors and market-oriented exchange regimes.

f. Maintains acute awareness of financial and economic policies of these developing and emerging market countries, including stationing of Treasury representatives in key countries.

g. Assists senior Administration officials by identifying and evaluating existing programs, issues and projects and by developing new and viable approaches, techniques, and alternatives for programs involving such considerations as:

(l) liberalization of capital markets;

(2) more effective utilization of bilateral and development funds in the developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa;

(3) greater integration of these developing and emerging market countries into the international financial and economic system;

(4) more effective utilization of multilateral channels for assistance;

(5) development of stable fiscal and monetary practices as well as a commitment to economic reform and adjustment in developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa; and

(6) protection of the U.S. balance of payments and similar international monetary matters affecting the finances of the developing and emerging market countries of Asia, the Americas, and sub-Saharan Africa.

7. THE DEPUTY ASSISTANT SECRETARY (INTERNATIONAL DEVELOPMENT. DEBT AND ENVIRONMENTAL POLICY) supervises: the Office of Multilateral Development Banks (MDBs); and the Office of International Debt Policy. The incumbent serves as a policy adviser to the Assistant Secretary (International Affairs) and is responsible for the following functions.

a. Formulates, evaluates, and implements Treasury policy and positions on a wide range of economic, financial, and environmental issues pertaining to U.S. participation in the MDBs and international debt policy. This includes continuing liaison with nongovernmental organizations; foreign governments and international organizations; other Federal agencies; and academic and research institutions.

b. Advises the Assistant Secretary International Affairs) on matters that concern:

(1) MDB financial, lending, and governance policies;

(2) MDB environmental policies and procedures;

(3) U.S. business and export opportunities through MDB lending;

(4) Treasury positions on specific MDB loans and technical assistance proposals; and

(5) economic and financial issues pertaining to U.S. international debt policy.

c. Develops and presents Treasury positions for Federal interagency and international discussions concerning formulation of negotiating objectives, strategies, and tactics, as well as implementation of MDB replenishment, lending, and borrowing practices, programs, and objectives.

d. Coordinates, within Treasury and with other agencies, implementation of the Enterprise for the Americas Initiative including, among other things, working with Congress to gain needed authorization and appropriations, leading negotiations on bilateral debt reduction, and carrying out Treasury's role as Chair of the President's Enterprise for the Americas Board.

e. Develops, evaluates and implements Treasury policies, positions, and initiatives concerning commercial bank debt, capital market developments, official bilateral debt, and U.S. Government bilateral debt.

f. Reviews policies of international and interagency bodies involved in development financing, such as the Development Assistance Committee of the OECD, the United Nations (UN) Conference on Trade and Development and other UN organizations, the Interagency Country Risk Assessment System, the Overseas Private Investment Corporation, and the National Advisory Council on International Monetary and Financial Policies.

g. Provides technical advice on issues involved in international debt management and

h. Prepares policy guidance for U.S. participation in the Boards of Directors of the MDBs and for use by the Secretary of the Treasury in that official's role as U.S. Governor of the MDBs.

8. THE DEPUTY ASSISTANT SECRETARY (TRADE AND INVESTMENT POLICY) supervises: the Office of International Trade; the Office of International Investment; the Office of Trade Finance; and the Office of Financial Services Negotiations. The incumbent services as a policy adviser to the Assistant Secretary (International Affairs) and is responsible for the following functions.

a. Formulates, evaluates and implements Treasury positions on:

(1) U.S. trade and commercial policy in general;

(2) multilateral and bilateral trade negotiations;

(3) financial services negotiations, concerning such matters as the General Agreement on Trade in Services;

(4) trade financial matters with respect to the Export-Import Bank, the Commodity Credit Corporation, and international organizations , such as the OECD;

(5) U.S. military sales abroad;

(6) trade programs, such as the General System of Preferences and textile regimes;

(7) direct investment issues, including matters pertaining to national security implications of mergers and acquisitions of U.S.-based firms by foreign entities, expropriation, the Oversees Private Investment Corporation, and bilateral investment treaties; and

(8) basic natural resources which are not energy-related, in particular, non-fuel minerals and agricultural commodities.

b. Provides the staff chair of the interagency Committee on Foreign Investment in the United States established by Executive Order 11858, as amended, and chaired by Treasury.

c. Coordinates investigations under the Exon-Florio amendment (section 5021 of Public Law 100-418) to the Defense Production Act to determine the effects on national security of foreign acquisitions, mergers or takeovers of U.S. companies.

d. Drafts recommendations to the President on whether to prohibit or suspend transactions which are investigate under Exon-Florio, and drafts, in cooperation with the Office of the General Counsel, regulations issued pursuant to Exon-Florio.

e. Develops and implements Treasury policies within the incumbent's areas of responsibility which arise in such international fora as the World Trade Organization (WTO), the IMF and International Bank for Reconstruction and Development, and various committees of the OECD.

f. Develops trade finance policy and provides the lead U.S. Government negotiator on OECD Export Credit Arrangement issues; and leads and coordinates interagency, U.S. Government implementation of Arrangement policies and agreements.

g. Develops negotiating objectives and strategy, and provides the lead U.S. negotiator on financial services, excluding insurance matters, in the WTO.

9. THE DEPUTY ASSISTANT SECRETARY (EURASIA AND THE MIDDLE EAST) supervises: the Office of Central and Eastern European Nations; and the Office of Middle Eastern and Central Asian Nations. The incumbent serves as a policy adviser to the Assistant Secretary (International Affairs) and is responsible for the following functions.

a. Formulates, evaluates, and implements Treasury policies and positions in the areas of international economics and finance dealing with countries in Central and Eastern Europe, the Middle East, North Africa, and Central Asia, and bilateral financial and economic assistance policies concerning these countries.

b. Advises the Assistant Secretary International Affairs) on the implications of financial and economic developments in these areas.

c. Develops U.S. foreign economic policies and programs with respect to Central and Eastern Europe, the Middle East, North Africa, and Central Asia as they relate to international monetary stability and U.S. economic policy.

d. Formulates, and monitors closely, policy recommendations regarding U.S. financial relations with Central and Eastern Europe, the Middle East, North Africa, and Central Asia, including debt repayment and rescheduling and other financial and economic policy issues.

e. Reviews and evaluates the relations with and programs developed by IFIs and other Federal agencies involving countries of Central and Eastern Europe, the Middle East, North Africa, and Central Asia.

f. Maintains acute awareness of financial and economic policy of these countries including stationing of Treasury representatives in key countries.

g. Identifies and evaluates existing projects, programs and issues, and develops new and viable approaches, techniques, and alternatives to assist Treasury officials in developing policies regarding Central and Eastern Europe, the Middle East, North Attica, and Central Asia involving such considerations as:

(l) more effective utilization of development funds;

(2) greater integration of countries of Central and Eastern Europe, the Middle East, North Africa, and Central Asia into the international financial and economic system;

(3) more effective utilization of multilateral channels for assistance,

(4) development of stable fiscal and monetary practices and a commitment to economic reform and adjustment; and

(5) protection of the U.S. balance of payments and similar international monetary matters affecting the finances of countries of Central and Eastern Europe, the Middle East, North Africa, and Central Asia.

10. THE DEPUTY ASSISTANT SECRETARY (TECHNICAL ASSISTANCE POLICY) supervises the following offices: the Office of Technical Assistance and the U.S.-Saudi Arabian Joint Commission Program Office. The incumbent serves as a policy adviser to the Assistant Secretary (International Affairs) on economic and financial technical assistance and is responsible for the following functions.

a. Develops, evaluates and implements Treasury policies and positions on economic and financial technical assistance to transitional and developing countries including Eastern Europe and the former Soviet Union.

b. Serves as U.S. coordinator of the U.S.-Saudi Arabian Joint Commission on Economic Cooperation and chairs its Interagency Advisory Policy Group.

c. Serves as principal Treasury representative in interagency meetings and international negotiations concerning the provision of economic and financial technical assistance to foreign countries.

d. Maintains close contact with the various IFIs and other international organizations to monitor their technical assistance efforts and coordinate U.S. bilateral financial and economic technical assistance in order to maximize program effectiveness and optimize program efficiency..

e. Provides timely and pertinent policy advice to senior Treasury officials, including legislative proposals and administrative actions that relate to technical assistance.

f. Manages multi-million dollar interagency allocation agreements which provide bilateral economic and financial technical assistance to foreign countries.

g. Provides oversight of all administrative and operational functions of Treasury economic and financial technical assistance programs, including authority to approve interagency and international agreements for conducting technical assistance.

11. COUNSELOR FOR MIDDLE EAST AFFAIRS serves as a policy adviser to the Assistant Secretary (International Affairs) for specialized financial and economic policy issues on the Middle East including multilateral development, selected regional macroeconomic issues, energy policy issues, and the financial interrelationship of the various Middle East countries.

12 THE OFFICE OF PROGRAM SERVICES is responsible for performing various management and administrative functions, such as personnel, travel, budget, information technology, security, correspondence control, distribution of reports, and responses to Freedom of Information Act and General Accounting Office requests.

13. CANCELLATION. Treasury Directive 27 04, "Organization and Responsibilities of the Office of the Assistant Secretary (International Affairs)," dated November 19, 1986, is superseded.

14. EXPIRATION DATE. This Directive expires three years after the date of issuance unless canceled or superseded prior to that date.

15. OFFICE OF PRIMARY INTEREST. The Office of the Under Secretary (International Affairs).

Jeffrey R. Shafer

Under Secretary (International Affairs)

Attachment

Attachment: Office of International Affairs Organization Chart, November 17, 1996 (Click on title to view attachment)