Businesses object to Obama trade agencies plan

President Barack Obama pauses as he talks to the 2011 NHL Stanley Cup champions the Boston Bruins in the East Room of the White House in Washington, January 23, 2012.

WASHINGTON (Reuters) - A coalition of over 80 U.S. business groups on Tuesday raised concerns about President Barack Obama's plan to create a new department of trade by consolidating the relatively small office of the U.S. Trade Representative with five other agencies.

"We believe that such a move will weaken the ability of USTR and the United States to pursue effectively a strong trade policy that is responsive to Congress, business and other stakeholders," the groups said in a letter to Obama hours before his annual State of the Union speech.

Obama rolled out his proposal for modernizing U.S. government efforts to promote exports just two weeks ago.

He wants to combine USTR with five other trade agencies spread across Washington, including key parts of the Commerce Department, the U.S. Export-Import Bank, the Overseas Private Investment Corporation and the Small Business Administration.

It received mixed reviews in Congress, with those lawmakers most directly involved in trade expressing concern that USTR could lose effectiveness if made part of a larger department.

USTR, which has a staff of less than 250 people, was created as separate government agency in 1962 and then expanded by Congress in 1974. Its primary responsibilities are negotiating and enforcing trade agreements and resolving trade disputes.

Its head, currently U.S. Trade Representative Ron Kirk, reports directly to the president as a member of his cabinet.

The business groups said subsuming USTR into a broader trade and business department would severely damage the agency's credibility with foreign governments and its ability to coordinate trade policy within the executive branch.

They included the U.S. Chamber of Commerce, National Association of Manufacturers, Coalition of Services Industries, American Farm Bureau Federation, Motion Picture Association of America and U.S.-China Business Council.

"We welcome your and your administration's objective to improve how the government works with business and promotes U.S. international economic engagement, but we have immediate concerns about fundamental aspects of the trade-agency reorganization proposal," they said.

Kirk told reporters last week that he supported Obama's reorganization plan "a hundred percent," but acknowledged its fate was up to Congress.

USTR was involved in talks on the reorganization plan "from the beginning and I am very comfortable with the fact the president understands what makes USTR special," he said.

"So we're not afraid of it. It's a good thing, but right now the ball is in Congress' hands," Kirk said.

(Reporting By Doug Palmer; Editing by Eric Walsh)