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UPDATE 2-Obama orders study of consolidating trade agencies

* Obama asks for recommendations within 90 days

* Some fear consolidation could reduce effectiveness (Updates throughout, adds details)

WASHINGTON, March 11 (Reuters) - President Barack Obama on Friday ordered a 90-day study to examine whether to consolidate a dozen trade agencies scattered across the federal government into a revamped Commerce Department focused more on exports.

“Winning the future will take a government that judiciously allocates scarce government resources to maximize its efficiency and effectiveness so that it can best support American competitiveness and innovation,” Obama said in an executive order.

“Now is the time to act to consolidate and reorganize the executive branch of the federal government in a way that best serves this goal,” he said.

The push to combine agencies such as the U.S. Trade Representative’s Office, the U.S. Export-Import Bank and the Overseas Private Investment Corp. comes as both Obama and Congress are under pressure to reduce the U.S. budget deficit.

The initial focus on agencies involved with trade is driven by Obama’s goal of doubling U.S. exports to more than $3 trillion annually by the end of 2014 and is intended to be the first wave of a larger effort to streamline government operations.

“At first look, there appears to be an opportunity for consolidation” among trade agencies, Jeffrey Zients, deputy director of the Office of Management and Budget, said at a meeting of the President’s Export Council.

Congress would have to approve any major reorganization plan, but Zients told the business leaders the administration also hopes to develop ideas it can implement on its own.

He also sought to reassure skeptics such as Senate Finance Committee Chairman Max Baucus, a Democrat whose committee has jurisdiction over trade, the administration would be sensitive to concerns that combining smaller agencies such as USTR and Exim Bank could hurt their effectiveness.

“We are clear that moving boxes around for the sake of moving boxes around is always a losing proposition and that the benefits of anything that we propose have to be very clear and outweigh the obvious short-term costs,” Zients said.

LAYERS OF BUREAUCRACY

Baucus, at a hearing this week, said he feared consolidation would create “an absolute nightmare” because of the potential to add layers of bureaucracy to agencies used to functioning on their own.

USTR is headed by former Dallas mayor Ron Kirk, thought to be under consideration to replace current Commerce Secretary Gary Locke, who Obama recently tapped to be ambassador to China.

The agency of about 250 people is primarily responsible for negotiating market-opening trade agreements and ensuring other countries live up to trade rules.

That compares to the Commerce Department, which has thousands of employees in diverse agencies ranging from the International Trade Administration to the Census Bureau to the National Oceanic and Atmospheric Administration (NOAA).

David Rothkopf, who held a senior Commerce Department post in the 1990s, said he believed combining the various trade agencies would enhance U.S. competitiveness by making its easier to forge a unified strategy.

“It would send a strong message that the president was committed to saving and it would do nothing to devalue these efforts (on trade). If anything it would add impact,” he said.

Part of the reorganization should involve transferring NOAA to the Interior Department and merging the Commerce Department’s Bureau of Economic Analysis with the Labor Department’s Bureau of Labor Statistics to create a single national statistics agency, he said.

Editing by Vicki Allen and Philip Barbara

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