Broadening the U.S. Export Base
In an era of falling barriers to international trade, federal policies and programs to encourage exporting will be required to engage non-exporters and infrequent exporters in the global economy, says the newly released 2006 National Exporting Strategy.
The latest report on the administration’s trade promotion policies, the 2006 National Export Strategy, was released in August by Secretary of Commerce Carlos M. Gutierrez, the chairman of the Trade Promotion Coordinating Committee.
In his opening message to the report, Secretary Gutierrez notes that “falling trade barriers have made the conduct of international business simpler, less costly, and less risky than ever. There have never been fewer barriers to success in the global marketplace.”
A Connected World
Evidence of this increased ease of doing business is plentiful, according to the report. Tariff barriers have come down across the board because of successive rounds of global and bilateral trade agreements. Because of the successful negotiation of multilateral and bilateral agreements on a wide range of issues, such as services and intellectual property, many non-tariff barriers are also starting to fall.
The technological and physical infrastructure of the world has also worked to make trade easier. The Internet, enhanced telephone services and infrastructure, and other communications and transportation advances have reduced the separation between exporter and importer to the click of a mouse.
U.S. Export Performance
One of the seeming paradoxes noted by the report is that while exporting has become easier by virtue of those falling barriers, U.S business participation in the global economy has been flattening in recent years. The number of U.S. companies exporting increased by only 8.5 percent from 1997 (213,664 exporters) to 2004 (231,736 exporters), after nearly doubling from 1992 (112,854) to 1997. Of those companies, nearly two-thirds sell to only one foreign market.
(Story continues below.)
|Department of Commerce, “Chart 7, Number of U.S. Companies Exporting, 1992 and 1997–2004,” National Export Strategy (2006).
|Note: Data are not available for 1992-1996
Source: U.S. Department of Commerce, Bureau of the Census
“U.S. companies are not exporting at the rate we would like to see,” noted Gutierrez.
According to the report, a likely explanation for these trends is the exclusive focus of many companies on U.S. consumers. This focus is understandable given the favorable business climate in the United States. The first quarter of 2006 marked the 12th consecutive quarter of growth in gross domestic product, with 3.5 percent growth in 2005. Between 2000 and 2005, 2 million jobs were created. U.S. productivity also grew at an average annual rate of 1.9 percent, which is significantly ahead of comparable industrial countries in the G7.
Many companies would take a look at foreign markets if they had the right information. According to a 2002 survey conducted by the University of North Carolina’s Kenan Institute of Private Enterprise (“Report Card on Trade II”), nearly a third of non-exporters expressed interest in exporting and cited information on markets, customers, and export procedures as the areas in which they needed the most help. An additional challenge pointed out in the report is that “the perceptions of risk and uncertainty among many potential exporters have not kept up with the realities of a more prosperous and open global marketplace.”
Encouraging Non-Exporters and Infrequent Exporters
The task for federal agencies involved in export promotion is clear: “The United States must promote greater awareness of exporting opportunities and the availability of public and private assistance for managing the uncertainties of foreign trade.”
The federal government alone, however, does not have all the resources, staff, expertise, or communication channels needed to wage such a broad-based promotional campaign. The main point of the 2006 National Export Strategy—and its key recommendation —is that the federal government needs to develop broader and deeper partnerships with the private sector, as well as with state and local governments, to promote international trade and to engage more non-exporters and infrequent exporters.
Partnerships to Promote Exporting
Several such partnership initiatives undertaken by federal agencies are detailed in the report. For example, the U.S. and Foreign Commercial Service, a unit of the International Trade Administration, has already formed alliances with Federal Express, PNC Bank, eBay, and others to promote its services to new exporters. (See related article in the May 2006 issue of International Trade Update.)
The Overseas Private Investment Corporation also has several innovative programs, such as the Partners Program and the Enterprise Development Network. Successful partnership programs at other agencies, such as the U.S. Small Business Administration, the Export–Import Bank of the United States, and the U.S. Department of Agriculture, are also detailed in the report.
In his introduction to the report, Secretary Gutierrez remarked that “changing business attitudes on trade will require a new focus on promotion.” This challenge is one that both the government and the private sector will have to undertake in unison.
|About the Trade Promotion Coordinating Committee
The National Export Strategy report has been issued annually since 1993 and is compiled by the Trade Promotion Coordinating Committee (TPCC). The TPCC is an interagency task force created by the Export Enhancement Act of 1992 and is composed of 19 federal agencies. The TPCC is responsible for coordinating the export promotion and financing programs of the U.S. government, as well as for developing a strategic plan for implementing such programs. The secretary of commerce chairs the committee.
Copies of the 2006 National Export Strategy can be downloaded at trade.gov. Printed copies are available for purchase from the Superintendent of Documents at tel.: (866) 512-1800; www.gpoaccess.gov. Ask for publication number 003-009-00735-6.