Doubling Exports

In the State of the Union speech President Obama set a goal of doubling American exports by 2015. To begin the effort to meet this goal the Commerce Department is launching a National Export Initiative (NEI) to work on getting this done.

The National Export Initiative is focused on three key areas:

1. A more robust effort by this administration to expand its trade advocacy in all its forms, especially for small- and medium-sized enterprises. This effort includes educating U.S. companies about opportunities overseas, directly connecting them with new customers and advocating more forcefully for their interests.

2. Improving access to credit with a focus on small- and medium-sized businesses that want to export.

3. Continuing the rigorous enforcement of international trade laws to help remove barriers that prevent U.S. companies from getting free and fair access to foreign markets.

A key part of the Initiative is the Export Promotion Cabinet. This group includes the Commerce, State and Treasury Departments, the U.S. Trade Representative, the Small Business Administration, the Export Import Bank and the U.S. Department of Agriculture and reports to the president. Each must come up with a detailed plan for increasing exports and submit it within 180 days. The plans will then be integrated into the NEI.

The Exim Bank will boost financing for small and medium-sized exporters from $4 billion to $6 billion in the next year. This year's budget proposal asks for $80 million in added funding for the Commerce Department's International Trade Administration, letting ITA hire up to 328 trade experts to help U.S. companies begin or grow their export sales in 2011. These trade experts will be actively promoting American products to other countries. Commerce Secretary Locke, announcing this initiative, said,

Many American companies don’t export, or export less than they should, because they simply don’t have the resources to identify promising new markets or the necessary contacts in foreign countries. The National Export Initiative will funnel $132 million to the Department of Commerce’s International Trade Administration (ITA), and the US Department of Agriculture to educate U.S. farmers and businesses about opportunities overseas and directly connect them with new customers.

Left unspoken is how the Obama administration will handle the biggest barrier to exports: China's currency imbalance. In How best to boost U.S. exports? C. Fred Bergsten of the Peterson Institute writes,

“Every increase of 1 percent in the dollar, averaged against other major currencies, reduces our exports by about $20 billion annually and destroys about 150,000 jobs.”

Paul Krugman recently calculated the job loss just from the currency imbalance to be 1.4 million American jobs, but Peterson's statement that 1 percent = 150K jobs indicates the job loss could be much higher than that.. Finding a way to address this currency imbalance will go a very long way toward meeting the goal of doubline exports. But this requires China to give up the advantage so it is a tough problem. (And if the dollar falls against China's currency it makes American companies cheaper to buy, introducing a new can of worms.)

There are other "barriers to selling" in many countries, especially China. With a clear statement that trade agreements can only work when the rules are enforced, the administration will be fighting violations of trade agreements as they did by imposing tariffs on Chinese tires, steel grating, and pipe. Enforcing agreements is not "protectionism," but the mindset of giving in every time the charge is leveled has to be overcome.

The administration will be fighting "unfair tariff and non-tariff barriers and addressing practices that blatantly harm U.S. companies." To solve tariff and other barriers in countries where we do not have trade agreements, the administration will begin process of negotiating agreements. This does not have to mean the new agreements will wipe out American jobs and the bargaining position of working people, as past agreements have done. These agreements will hopefully be negotiated with wages, workers, jobs and environmental protections first in mind. NAFTA, for example, was initially negotiated by the first Bush administration, leaving Clinton to work to get it passed.

The administration will also examine whether to reduce export controls on products that might be used against us, including encryption software. Conservatives propose selling part of our nuclear weapons inventory to oil-rich countries in the Middle East to help trigger the apocalypse, bringing the return of the Lord. (Not really. Just testing if anyone's reading this.)

I have one question that I will be looking into: do "financial services" count as exports for the purposes of this initiative? So much of the "economic growth" in the later 90's and especially the Uh Oh's were really "financialization" transactions that existed on paper only. The last thing we need is to meet the goal of increasing exports by exporting more Wall Street nonsense.

This is only a brief introduction. I will be writing more about Doubling Exports.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future