SIC 9721

This industry consists of establishments of U.S. and foreign governments primarily engaged in international affairs and programs related to other nations and peoples.

NAICS Code(s)

928120 (International Affairs)

Industry Snapshot

The sovereign states of the world, with their mutual inter-dependence in the midst of economic and political forces, have put new emphasis on the need for friendly relations among nations. The creation of the United Nations at the end of World War II has facilitated consultations and negotiations between the community of states; nevertheless, bilateral contacts through U.S. consular and diplomatic missions remain a key force in official relations between governments. The Department of State works concurrently with U.S. consular and diplomatic missions to represent U.S. interests abroad.

Organization and Structure

Three main organizations comprise and assist United States foreign relations: the United Nations, the Diplomatic Mission, and Consular Officers and Consular Posts. The United Nations (UN) formally came into existence on October 24, 1945. It was created as a union of nations working to maintain international peace and security and cooperating in establishing political, economic, and social security. The adoption of the 1961 Vienna Convention on Diplomatic Relations established diplomatic relations, by mutual consent, for one person to act as the envoy of two or more states. An envoy, or diplomatic agent, represents the home state, acts as a government agent, and is an official channel of communication between the governments of the sending and receiving state. The Consular Officer is a representative of the sending state and is primarily concerned with the improvement of commercial and economic relations between the sending and receiving state.

The United Nations. Membership in the UN is open to all peace-loving states that accept the obligations of the United Nations Charter. The purposes of the United Nations, as set forth in the Charter, are to develop friendly relations among nations; to maintain international peace and security; to cooperate internationally to promote respect for human rights; and to solve international economic, social, and humanitarian problems.

The UN functions in accordance with the following principles: members are sovereign and equal; members are to act according to their charter obligations; members are to refrain in the use of force against any other state; members are to settle international disputes without endangering international peace; members shall not work against the UN in its efforts to act in accordance with the charter; the UN shall ensure that states, which are not members, act accordingly to ensure international peace; and the UN may not interfere within the domestic jurisdiction of any state.

The UN is composed of six principal organs—the General Assembly, the Security Council, the Economic and Social Council, the Trusteeship Council, the International Court of Justice, and the Secretariat.

The General Assembly consists of all the representatives of the member states. Each member has one vote, and decisions on important matters require a two-thirds majority vote. The General Assembly considers principles of cooperation in the maintenance of international peace and security; works with the UN budget; elects the non-permanent members of the Security Council and the members of the Economic and Social Council; jointly elects with the Security Council the judges of the International Court of Justice; and appoints the Secretary-General. In addition, the General Assembly makes recommendations for the peaceful settlement of situations that might impede friendly relations among nations. The Assembly also discusses and makes recommendations on questions relating to international peace and security and international political cooperation.

The Security Council consists of five permanent members and 10 members elected by the General Assembly for two terms. The five permanent members are China, France, Russia, the United Kingdom, and the United States. Each state has one vote. The functions and powers of the Security Council are to take military action against an aggressor; to maintain international peace and security; to formulate plans to regulate armaments; and to recommend action when there is a threat to peace. The Security Council also investigates disputes that might threaten international peace; recommends terms of settlement to such disputes; proposes economic sanctions in order to prevent aggression; recommends the admission of new members; utilizes the trusteeship functions in strategic areas; recommends to the General Assembly the appointment of the Secretary-General; and elects the judges of the International Court.

The Economic and Social Council is responsible for carrying out the functions of the UN with regard to international economic, social, cultural, educational, and health matters. The functions and powers of the Economic and Social Council are making reports and recommendations on international economic, social, cultural, educational, and health matters; serving as the primary forum for the discussion of international economic and social issues; promoting human rights; and consulting with nongovernmental groups concerned with the matters of the council.

The Trusteeship Council consists of one member administering trust territories—the United States. This council provides for an international trusteeship system to protect the interests of the inhabitants of territories that are not yet self-governing. The primary function of the Trusteeship Council is to promote the advancement of the inhabitants of the Trust Territories and their development toward self-government.

The International Court of Justice consists of 15 judges elected by the General Assembly and the Security Council. No two judges can be nationals of the same state. In deciding disputes, the International Court of Justice applies international conventions—establishing rules recognized by the contesting states, the general principles of law recognized by nations, international custom as evidence of general practice accepted as law, and judicial decisions and teachings of qualified publicists—as means for determining the rules of law.

The Secretariat is composed of the secretary-general and an international staff appointed under regulations of the General Assembly. The Secretariat carries out the daily work of the UN both at its headquarters in New York and in its offices abroad. The Secretariat administers peace-keeping operations; monitors international economic and social trends; organizes conferences on international problems and concerns; prepares studies on human rights, disarmament, and development; and translates information about the UN and supplies that information to the world media.

Special Agencies. The United Nations system has created 15 specialized agencies to assist in providing international economic, social, and technical services. These organizations have separate budgets, statutes, and memberships, but they are all tied to the UN with a varying degree of affiliation. The UN family of organizations includes the International Bank for Reconstruction and Development (IBRD); International Civil Aviation Organization (ICAO); International Development Association (IDA); Inter-Governmental Maritime Consultative Organization (IMCO); International Monetary Fund (IMF); International Telecommunications Union (ITU); World Meteorological Organization (WMO); World Intellectual Property Organization (WIPO); World Health Organization (WHO); Universal Postal Union (UPU); UN Educational, Scientific, and Cultural Organization (UNESCO); Food and Agriculture Organization of the United Nations (FAO); International Labor Organization (ILO); International Finance Corporation (IFC); and the International Fund for Agricultural Development (IFAD).

Embassies. A U.S. diplomatic mission is classified as an embassy if the chief of the mission holds the rank of ambassador. Members of the Foreign Service and the Department of State staff U.S. embassies. The ambassador, as head of the diplomatic mission, represents the diplomat's native country by acting as a representative of his or her government and as an official channel of communication between the government and the state to which he has been assigned. The diplomatic agent must report on conditions and developments in the appointed state; protect the interests of his or her home state and its nationals in that state; promote friendly relations between the represented state and the host state; and help develop economic, cultural, and scientific relations.

The heads of a U.S. diplomatic mission are the chief of the mission—ambassador, minister, or charge d'affaires—and the deputy of the mission. Many diplomats are successful business people who offer specialized expertise and understanding of their countries, cultures, and societies.

Consular Officers. In the 1990s, separate consular services were abolished in favor of combined foreign service for both diplomatic and consular officers. Although many traditional functions of the consular have been taken by diplomatic agents, the consular plays an important role in connection with trading and commercial interests of the sending state. According to the 1963 Vienna Convention on Consular Relations, consular functions are concerned with promoting the development of commercial, economic, cultural, and scientific relations; protecting the interests of the state he or she represents and its nationals; issuing passports and travel documents to persons wishing to travel to the consular's native state; assisting nationals, both individuals and corporations, in their interactions with the host state; acting as notary and civil registrar; arranging appropriate representation for nationals before the authorities of the host state in order to preserve the rights and interests of the nationals; and exercising rights of supervision and inspection in respect to vessels and aircraft having the nationality of the state the consular represents.

Consular officers are appointed with the host government's permission and may be withdrawn at any time. They hold the rank of consul-general, consul, or vice-consul and are divided into two categories—career consular officers and honorary consular officers. Career consular officers are full time employees of their government and are appointed by their head of state. Conversely, honorary consular officers are non-career officials for whom consular functions are usually a part-time occupation.

Background and Development

The organizations that comprise U.S. foreign relations derive their power and authority from the executive branch of the government. The Constitution of the United States grants the president the authority to negotiate treaties and appoint diplomatic and consular officials. Foreign policy is conducted primarily through the U.S. Department of State. The Secretary of State, as head of the department, is the primary advisor to the president on foreign affairs issues.

Consular and diplomatic missions had a small role in world affairs for the first 100 years of the existence of the United States. In 1893, the United States and several European countries began ambassador reciprocation. President Woodrow Wilson had attempted to reduce U.S. involvement abroad during the isolationist period after World War I, but that policy gradually disappeared during the terms of successive presidents. In 1924, the Rogers Act combined consular and diplomatic service into the Foreign Service.

With the start of World War II, international conditions demanded that the United States take a leading role in world affairs. Under the direction of President Franklin D. Roosevelt, the United States proceeded with a program of foreign aid designed to promote world trade and cooperation. The Foreign Service Act of 1946 reorganized the Foreign Service, raised pay, and launched a promotion system based on merit.

As international responsibilities grew and world affairs became more complex, the responsibilities of the foreign relations departments increased. The Department of Defense—along with the Departments of Agriculture, Commerce, and Treasury—took on new responsibilities in world affairs. Under the direction of the Secretary of State, the Agency for International Development and the International Development Cooperation Agencies were created to assist in controlling and directing foreign aid.

During the mid-1990s, Madeleine K. Albright succeeded Warren Christopher as Secretary of State, and the presidency of William (Bill) Clinton continued into its second term. Secretary Albright reiterated the Clinton Administration's aim of making commercial affairs and the promotion of American business interests abroad one of the highest priorities of foreign relations policies and officers. During this time, significant changes occurred in several important areas that affected U.S. foreign policy and international relations. Key among them were changes to the U.S. Immigration and Naturalization Service's provisions regarding illegal immigrants; U.S.-proposed changes to the United Nations system; changes and expansions of international trade agreements that affected U.S. global trade policies; and a focused and structured effort to include policies and programs to advance opportunities for women throughout the world.

The Immigration and Naturalization Service (INS). In September 1996, President Clinton signed into law the Illegal Immigration Reform and Immigrant Responsibility Act. The 1996 Act was targeted at reducing the flood of illegal immigrants along the U.S.-Mexico border. The Act contained provisions to increase the number of border agents and to strengthen enforcement efforts; increase penalties for alien smuggling and document fraud; enhance inspection, capture, retention, status review, and deportation of aliens; decrease the numbers of illegal aliens; restrict alien benefits; and implement new parole and safe haven procedures. Many of the Act's provisions—particularly those pertaining to retention, deportation, and to persons seeking safe haven—became effective April 1, 1997.

The United States and the United Nations. The United States played a pivotal role in the formation of the UN after World War II and was the UN's single largest contributor; total U.S. contributions to the UN in 1995 was $1.84 billion. The Clinton Administration took the lead during the mid-1990s to propose changes to the UN system to increase overall efficiency and effectiveness. U.S. proposed changes targeted more effective use of UN funds, greater accountability to UN members, and tighter focus on key UN objectives. In addition, the U.S. revised its decades-long history of participation in multilateral peace operations. These changes resulted in President Clinton's Presidential Decision Directive (PDD 25), which emphasizes that the President will never give up command of U.S. troops. Changes focused on peacekeeping activities as one means of serving U.S. interests abroad by promoting international security, democracy, and economic growth. Within this framework, several changes were to be made. These changes would affect decisions concerning which peacekeeping missions to support; the increased goal of reducing the U.S. cost burden from 31.7 percent down to 25 percent; re-examination of the circumstances under which U.S. troops would be under operational command of a foreign commander; provisions to improve the UN's ability to manage peacekeeping missions; and improving communications between Congress, the Executive Office, and the American public concerning U.S. participation in such missions.

U.S. Trade Policy. Building on the goal of promoting American commercial and business interests abroad as a cornerstone of American foreign policy, the United States became an active participant in the World Trade Organization (WTO), which succeeded the General Agreement on Tariffs and Trade (GATT) as the legal basis of the multilateral trading system. Formed in January 1995, WTO made provisions to open national markets, administer and monitor trade relations among countries, and served as a forum for settlement of trade-related disputes covered under its jurisdiction. WTO incorporated the structure of GATT and also consolidated governmental trade policies with regard to trade in goods, services, and intellectual property rights. Associated multilateral agreements focused on environmental, health, and safety issues. By mid-1996, 120 countries were WTO members, and an additional 30 countries were in the process of joining.

Big Emerging Markets (BEMs). Having historically focused its foreign commercial policies on Europe and Japan during the mid-1990s, the United States started shifting focus to 12 countries dubbed the "Big Emerging Markets" (BEMs). These countries consisted of Argentina; Brazil; the Chinese Economic Area, which included China, Hong Kong, and Taiwan; India; Indonesia; Mexico; Poland; South Africa; South Korea; and Turkey. The U.S. Department of Commerce, International Trade Administration anticipated that the BEMs' average gross domestic product (GDP) growth rate would increase by 6.5 percent from 1995 to 2000, in comparison to an average of 2.9 percent among the developed countries. In addition, BEMs' imports of goods and services were expected to increase by 75 percent over the same timeframe, compared to a 38 percent expected rise among the developed countries.

The U.S. Commercial Service. Today U.S. diplomatic officers work in accord with private organizations to develop strong and aggressive trade policies. New laws and greater cooperation between government agencies and private interests help promote U.S. business by increasing exports and appealing unfair trade practices. Diplomatic officers work with commercial officers at the U.S. Commercial Service—part of the United States International Trade Administration—to ensure that U.S. business interests are a central part of their embassy and consulate operations. The Commercial Service maintains more than 70 U.S. offices and operates in nearly 70 countries. The result of a collaboration among the Commercial Service, the Small Business Administration, and the Export-Import Bank, U.S. Export Assistance Centers are located throughout the United States and provide consulting services, market research, and trade information. A recent addition to the Commercial Service family of programs and initiatives is the creation of commercial centers—usually located outside U.S. embassies and within key business districts. They offer full business services, such as office space and equipment, when conducting business abroad. In addition, commercial officers serve the financial assistance needs of American businesses through a network of five multilateral development banks: the European Bank for Reconstruction and Development, Asian Development Bank, the World Bank, African Development Bank, and the Inter-American Development Bank. The National Trade Data Bank (NTDB) supports the efforts of U.S. diplomatic and commercial officers and American businesses and serves as the U.S. Government's premier source of global trade information contained in more than 130 separate databases from more than 20 federal sources.

Ambassadors assist the U.S. business community by lending their time at trade events, interceding on behalf of U.S. bidders for major contracts, providing current foreign market information, and informing business leaders of new opportunities in foreign markets. During the 1990s, ambassadors focused their negotiating efforts on three areas in which the United States was a major international competitor: services, agriculture, and intellectual property rights. Two multilateral agreements: the Information Technology Agreement (ITA) and the Agreement on Basic Telecommunications were expected to reduce global trade barriers in these high-technology industries, significantly reduce international taxes, increase U.S. jobs, and save American consumers billions of dollars. By 1999, U.S. ambassadors expected to be entrenched in negotiations to further open the $526-billion global agricultural market, considered to be a key component on the U.S. trade agenda. Negotiations to further open the $1.2-trillion global financial services market were expected to begin in January 2000.

Intellectual Property Rights. Increasingly aware of the international tensions created and exacerbated by differing global standards, protection, and enforcement of intellectual property rights, the World Trade Organization's (WTO) agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was implemented to address these issues. Among its numerous provisions were the recognition of computer programs as literary works and the rights of authors of computer programs and audio recordings to authorize or prohibit commercial rental of their work to the public. In addition, the agreement protected industrial designs for ten years and patents for 20 years in nearly all fields of technology, whether for a product or a process. TRIPS was to apply to existing as well as new intellectual property, and a council monitored countries' timely implementation of the new agreement and their compliance with it. Further negotiations to protect the interests of U.S. copyright industries, which exported over $400 billion annually, were to be continued into the year 2000.

Women. Reflecting the rapidly increasing integration, contributions, and growing acceptance of women into all aspects of the global community, Secretary of State Albright included the advancement of women throughout the world as another integral part of America's foreign relations policies. During the mid-1990s, the President's Interagency Council on Women was formed to coordinate and implement the Platform for Action adopted at the UN's Fourth World Conference on Women held in Beijing in early fall 1995. Following up on the Beijing conference, the Clinton Administration outlined additional specific commitments in areas pertaining to working women, violence against women, discrimination, women entrepreneurs, health, women's political participation, and education. In 1997, the UN launched an Internet site called "Womenwatch" as an entry into its vast array of information pertaining to women throughout the globe. The three UN organizations that created Womenwatch—the Division for the Advancement of Women in the Department for Policy Coordination and Sustainable Development (DPCSD), the United Nations Development Fund for Women (UNIFEM), and the International Research and Training Institute for the Advancement of Women (INSTRAW)—also launched Internet sites accessible via the Womenwatch gateway.

The decision on whether or not to pay its long outstanding dues to the UN was a politically polarized controversy for the United States in the late 1990s. Congress had been fighting to continue withholding the payments in arrears—conditioning payment on contentious anti-abortion restrictions ("riders") attached to the bill authorizing payment. President Clinton, eager to have his Administration remembered for cleaning up debts, fought to have the dues paid. Consequences of continued nonpayment included the loss of voting rights in the General Assembly.

Another polarizing issue in 1999 was the admission of China into the World Trade Organization. China ranked second of the world's largest economies, based on gross domestic product. The ostensibly-accidental bombing of the Chinese embassy in May 1999, coupled with the Report of the House Select Committee on U.S. National Security ("The Cox Report"), which cited recent and repeated incidence of Chinese espionage at U.S. nuclear laboratories, kept scholars and politicians uncertain of the propriety of continuing fortification of Chinese capability. China remained the only nation to have its nuclear warheads aimed at the United States.

Finally, the U.S. refused to join other nations in ratifying the Comprehensive Test Ban Treaty, a decision the consequences of which were too early to gauge.

Current Conditions

By the early 2000s, the United States remained at the center of the world stage. A number of unfortunate events—including the infamous terrorist attacks against the nation on September 11, 2001; the bombing of the U.S.S. Cole in Aden, Yemen; and U.S. mail tainted with deadly anthrax bacteria—signified the beginning of a frightening new era. Following these occurrences, it became evident that the gravest threats to national security came not from a massive enemy invasion, but from individuals or small groups of terrorists with malicious intentions.

Amidst heightened sensitivity about terrorism, mounting concern emerged over "weapons of mass destruction," which the United States claimed were being stockpiled by Iraqi dictator Saddam Hussein. A team of UN weapons inspectors led by Hans Blix searched a number of sites in Iraq, but failed to uncover any substantial evidence of chemical or biological weapons. However, U.S. intelligence provided by Secretary of State Colin Powell suggested that these weapons did exist. Eventually, the UN Security Council issued UN Resolution 1441, which instructed Iraq to disarm or face serious consequences.

When Iraq failed to comply with this resolution, the UN similarly failed to act or support U.S. military action. As Mortimer B. Zuckerman explained in the April 21, 2003 issue of U.S. News & World Report, while China, France, and Russia—all permanent members of the UN Security Council—gave their endorsement of Resolution 1441, they "refused to give it effect when Iraq breached its material obligations." Labeling the UN's past behavior concerning Iraq as "execrable," Zuckerman remarked that "For a dozen years, France, Russia, and China sought to weaken inspections for banned Iraqi weapons. This pattern continued right up until the commencement of war." Ultimately, the United States proceeded with Operation Iraqi Freedom, its initiative to attack Iraq and disband Hussein's regime. This successful military action was taken despite opposition from many other nations. This especially was true of Europeans countries, which have exerted a great deal of effort in recent years to seek peaceful resolutions and avoid war.

Many observers argued that the United States' decision to attack Iraq undermined the UN's credibility as an international peacekeeping organization. Others debated about its future role in international affairs. A number of experts predicted that the UN would revert to focusing primarily on humanitarian causes, such as providing healthcare services, assistance to refugees, and disaster relief in nations like Asia and Africa. However, one thing remained clear: the United States would need assistance from the UN to rebuild Iraq following the war, and possibly to deal with other looming international challenges. As Andrew C. Schneider said in the March 19, 2003 issue of Kiplinger Business Forecasts, the United States' decision to bypass the UN meant it would "have far less scope for building global alliances to combat future security threats. This is sure to complicate [President] Bush's aim of reforming Iraq, stamping out global terrorism and containing other 'axis of evil' states such as North Korea and Iran."

By late May of 2003, significant international attention was focused on rebuilding Iraq. The UN Security Council voted 14 to 0 to lift trade sanctions that had been in place over Iraq for some 13 years. This opened a market for U.S. commodities like cereal, corn, and rice that some analysts valued at $100 million. In addition, Country ViewsWire explained that the vote led to the creation of the Development Fund for Iraq, which was "designed to take the place of the UN in managing Iraq's oil revenues as well as managing frozen Iraqi financial assets held abroad." This effectively gave great power to the United States and the United Kingdom to control different aspects of Iraq's economy, especially its oil industry.

Further Reading

"America's New I-Word." Economist, 6 November 1999.

Crock, Stan. "Cooperative Models for the 21st Century; The World Still Needs the U.N. and NATO, but New Security Threats Mean New International Organizations Are Also Required." Business Week Online, 20 March 2003.

A Diplomat's Handbook of International Law and Practice, Boston: Martin Nihoff Publications, 1989.

Freymann. "Is U.S. Feeding Mouths That Will Bite Us?" San Antonio Business Journal, 19 Sept 1999.

"Irrelevant, Illegitimate or Indispensable?—The United Nations and Iraq." The Economist, 22 February 2003.

Richelson, Jeffrey T. "Uncertain Damage." Bulletin of the Atomic Scientists, September/October 1999.

Schneider, Andrew C. "U.S.-UN Rift Over Iraq to Have Lasting Impact." Kiplinger Business Forecasts, 19 March 2003.

Segal, Gerald. "Does China Matter?" Foreign Affairs, September/October 1999.

"Time to Modernize the U.N. and N.A.T.O." Time, 24 February 2003.

"UN Trade Sanctions Against Iraq." The Kiplinger Agricultural Letter, 2 May 2003.

"The United Nations' Political Relevance." The Kiplinger Letter, 21 March 2003.

"World Economy and Trade: International Trade Agreements." Peace Research Abstracts Journal, August 1999.

"World Politics: UN Endorses US and UK Control in Iraq." Country ViewsWire, 22 May 2003.

Zuckerman, Mortimer B. "Shape Up or Step Aside." U.S. News & World Report, 21 April 2003.

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