Goal of Doubling U.S. Exports
The Bureau of Economic Analysis reported that the U.S. trade balance widened somewhat in January, with the country importing $46.3 billion more than it exported. While exports of goods and services continue to rise, import growth is outstripping it right now. To illustrate this, exports increased from $144.7 to $167.7 billion between January 2010 and January 2011; whereas, imports rose from $179.4 to $214.1 billion over the same time period. Ideally, we would like to have our net exports expand, which would provide a source for more jobs, economic development, and competitiveness. It was just a couple years ago, in fact, that U.S. export growth helped to lift up our economy, buoyed by favorable exchange rates and increases in domestic quality and productivity. We would like to see that happen again.
The President has said that he wants to double U.S. exports by 2015, creating the National Export Initiative (NEI) by Executive Order 13534. In the NEI’s report issued in September 2010, the Export Promotion Cabinet says that to “maintain robust growth, the world will need to rely less on U.S. consumption – and we will need to sell more to the rest of the world.” To achieve the goal of exporting $3.1 trillion of goods and services by 2015, the Administration plans to focus on five areas:
- Improving overall trade promotion of U.S. goods and services abroad
- Increasing access to export financing, especially for small businesses
- Removing barriers to trade
- Enforcing existing trade rules
- Promoting “strong, sustainable, and balanced growth” globally
Some of these components are more challenging than others, but highlighting the importance of this initiative, it was singled out in the FY 2012 budget for continued financial support and a large number of Cabinet-level officials and their staffs have been devoted to this cause for much of the past year. (When I was at the U.S. Small Business Administration last year, I attended several meetings on the topic, particularly focused on measuring small business goals and outcomes.)
As U.S. Trade Representative Ron Kirk said at his March 9 Senate Finance Committee hearing testimony, “The NEI’s success will require a vigorous trade policy that opens markets and creates commercial opportunities for American firms.” The Obama Administration renegotiated parts of the Korea free trade agreement last year, and it awaits Senate confirmation. The agreement seems likely to pass with bipartisan support, especially given changes in it to mollify labor and automotive concerns. Also pending Senate approval are free trade agreements with Columbia and Panama, which might be more contentious. In addition to seeking changes which might ease concerns with the current agreements, the U.S. is currently negotiating with Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam on the Trans-Pacific Partnership Agreement, a regional trade agreement highlighting the economic importance of the Asian-Pacific region for American exports.
Of course, increased opportunities – especially for small businesses – will mean finding ways of reducing administrative and financing hurdles. The Commerce Department and SBA help provide counseling and other services through a wide network of Export Assistance Centers, both domestically and overseas. Another excellent resource is the Small Business Exporters Association. In addition, both the Export-Import Bank and SBA provide lending programs to help facilitate trade, with small businesses a key focus. On March 10, the House Financial Services Committee heard testimony from four businesses which were able to flourish due to assistance from Ex-Im Bank. In addition to recommending reauthorization of the bank, they also suggested improvement to the bank’s systems, particularly a desire for better coordination between federal agencies and greater streamlining of the loan process for small firms.
As the nation prepares to stress the importance of exports even more, there will be countless entrepreneurs who will venture into international trade for the first time. We should all wish them well in these endeavors. If we are able to double our exports by 2015, the payoff economically could be significant. The NEI report states that exports supported 10 million jobs in 2008, which was roughly 13 percent of GDP. Moreover, it says, “Americans working for firms that export earn more than 15 percent more than similar workers at firms that do not export.”