Export Driven?

We’re a year into the National Export Initiative’s five-year plan to double U.S. exports. We’re also some 16 months from the next national election, but when you read the headlines, all the talk in Washington is about how to frame deficit reduction, whether taxes should be cut, whether the Trade Adjustment Assistance program does its job and whether sacred cow programs should be revised.

All of that, combined with other distractions, has stymied passage of free trade agreements with South Korea, Panama and Colombia — agreements that could promote economic growth.

It’s all about politics, or, perhaps more to the point, money. If Washington truly were acting toward the economic good, all three trade pacts would have been approved long ago.

Is the National Export Initiative relevant to solving the economic dilemma? Absolutely. Study after study shows jobs tied to international trade pay higher wages than other jobs — 15 percent higher for those who work for exporting companies, according to Commerce Secretary Gary Locke’s “Report to the President on the National Export Initiative.”

So where do we stand with the NEI and its push to double exports in the five years to 2014? There are, Locke acknowledges, many hurdles to exporting successfully, some domestic, some not. On the domestic side, for example, there is the lack of readily available information about exporting and market research, limited export financing, and strong competition from foreign companies and foreign governments.

All countries have vested interests. In Korea, farmers opposed the proposed FTA over concerns about U.S. beef exports. In the U.S., labor unions objected to the FTA, saying the Koreans haven’t granted enough concessions in opening their automobile market.

The NEI offers a coordinated U.S. effort to identify and overcome trade barriers. What the typical exporter means in overcoming trade barriers, however, is often quite different than what the government means. For the government, “trade barriers” typically mean unfair trade practices, and there are plenty of those. But for the private sector, it typically means, “I can’t figure out where to sell my products, how to ensure I am dealing with honest parties and how I get paid.”

To the credit of those overseeing the NEI, the program has adopted the trade’s definition by acknowledging the information gap needs to be overcome, and there are times when the government is the best vehicle to accomplish that.

The NEI has five components: advocacy and trade promotion; export financing; removal of trade barriers; enforcement of trade rules; and promotion of strong, sustainable and balanced growth. The number of trade missions is growing, the Small Business Administration and the Export-Import Bank are expanding outreach programs, and the U.S. has made its presence felt internationally, with many countries coordinating their actions to keep the world from sliding into financial depression.

International traders also welcome the progress on export license reform. In the end, some changes will require congressional action, but, in a pleasant change from the past, regulators empowered to carry out the intended reforms — creating a single control list, a single primary enforcement agency, a single IT system and a single licensing agency — are taking the task seriously.

A June report updating the NEI contained some harsh truths for most Americans. “Over 95 percent of the world’s consumers live outside U.S. borders,” it said. “A new middle class is emerging in once-developing nations, which will increase the consumption of goods and services worldwide. More than 1 billion new consumers worldwide will enter the middle class during the next 15 years.”

But what has the U.S. government done lately? There are some positive steps: The International Trade Administration and the SBA refined their registration process so they are better able to figure out an applicant’s level of knowledge and needs. The ITA also developed an online free trade agreement tool that allows a search for classification of a product (see http://export.gov/FTA/ftatarifftool/index.asp).

Although electronic tools that help traders identify their products are always welcome, figuring out how to qualify your product under an FTA is still the lawyer/consultant full employment act! There are so many general rules, exceptions and complications that it’s folly to think you can solve the information hurdle regarding FTAs with such a program.

To its credit, the NEI team recognizes the importance of services to the U.S. economy and is trying to figure out how best to measure services and support their export. Similarly, the NEI team recognizes certain advocacy issues should be dealt with at the highest levels, so there is a process to allow the most critical ones to be referred to the White House National Security Staff.

The June report also is noteworthy for its focus on infrastructure. In addition to pointing out the shortage of empty containers, the report proposes a top-down review of export infrastructure, identification of weaknesses and chokepoints, identification of export infrastructure corridors, prioritization of projects, securing adequate funding and working with exporters to address long-term needs.

So, exporters, what do you need to allow you to expand your markets? There’s no telling what the landscape will look like after the 2012 election, so now is the time to speak up. Where do you need help?

Susan Kohn Ross is an international trade attorney with Mitchell Silberberg & Knupp in Los Angeles. Contact her at skr@msk.com.
 

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