The White House Pitches Exports

Combine President Obama’s export pronouncements in his State of the Union speech, and his 2011 budget for export promotion, and the trade community has something to celebrate.

In his Jan. 27 address to Congress, the president pledged, “We will double our exports over the next five years, an increase that will support 2 million jobs in America.”

To do it, the administration would launch a national export initiative to help small businesses and farmers increase exports, and reform an antiquated export control system.

The president’s 2011 budget proposal, released Feb. 1, includes a 21 percent increase for Department of Commerce export promotion programs.

“I’m thrilled,” said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers. “This is the biggest increase I’ve seen in decades. It’s clear the president is putting his money where his mouth is.”

He said Commerce’s three offices responsible for export promotion could receive $320 million, up from $261 million. “This will really allow them to expand their programs,” Vargo said. “The export promotion programs have been starved for a lot of years.”

Beyond job creation, the ambitious goal raises numerous supply chain questions. The U.S. now imports just less than twice what it exports, so ocean and air carriers deploy equipment with that head-haul in mind — and price it accordingly. But exports, which are predominantly low-value industrial goods as well as agricultural products, must contend with frequent, and increasingly frustrating, equipment shortages, especially in the Midwest. Further, international carriers place a lower priority on export freight because it yields less for their bottom lines.

NAM has been pushing for years to get more funding for manufacturers. In comparison, the U.S. Department of Agriculture gets twice the funding to promote agricultural exports, even though they’re worth about one-tenth of exported manufactured goods.

“The California prune growers association gets more money for market development than all of manufacturing does,” Vargo said. “The White House Office of Management and Budget has held for years that export promotion for the Commerce Department should be on a full cost-recovery basis. You help a company; they should pay for the cost of the service they receive. The Agriculture Department doesn’t do that. Whether they have a different OMB than Commerce has to report to, I don’t know.”