“Increasing the export of American products and services to global markets can help revive the fortunes of U.S. companies, spur future economic growth and support jobs here at home. This initiative will correct an economic blind spot that has allowed other countries to chip away at U.S. international competitiveness.” –Commerce Secretary Gary Locke, from remarks concerning the new National Exports Initiative given at a National Press Club luncheon Feb. 4, 2010
If you want to roll your eyes at the new National Export Initiative or “NEI” proposed by President Obama during his State of the Union speech a few weeks ago, be my guest – for you have good cause to do so. Getting broader federal government support for U.S. trade exports is nothing new – something Commerce Secretary Gary Locke, in charge of getting the NEI up and running, fully understands.
“There have, of course, been previous endeavors by the government to elevate the importance of exports,” he explained during a recent luncheon at the National Press Club to lay out the “what” and “why” of the NEI.
“But what sets this effort apart is that this is the first time the U.S. will have a government-wide export-promotion strategy with focused attention from the president and his Cabinet,” Locke (at right) said. “Because for all of America's economic strengths, we stand out among developed nations as one of the few whose government does not have a focused, comprehensive and agile export strategy.”
Why does any of this matter for truckers? I’ll sum it up in two words: more freight. That’s because more exports translates into more raw materials being delivered to factories and more finished goods being hauled to ports.
The NEI aims to double American exports over the next five years – a pretty ambitious goal, if I say so myself. Total U.S. exports at the end of 2009 stood at $1.55 trillion, according to the Commerce Department – a decrease of 15% from 2008, with the trade deficit for the year standing at $381 billion as total U.S. imports numbered $1.93 trillion. Doubling U.S. exports, then, would not only help erase our trade deficit and increase demand for freight services, but create a lot of jobs, too – some two million more, according to the Commerce Department’s analysis.
“The real American economy demands increasing volumes of trade if it is to continue to grow,” according to a broad study conducted by the American Association of State Highway and Transportation Officials (AASHTO). “The economic sectors that remain robust will require far more trade and travel per unit of output than was required 30 years ago."
AASHTO’s research stressed that the longtime “Western” focus of the global economy is shifting permanently in many ways. Instead of European countries and the U.S. dominating the world economy, Asia is now the dominate force – for decades to come. Not only will Asia produce more exports which America will want to buy, but Asia also will have the world’s fastest-growing consumer population—which American producers will want to reach, AASHTO noted.
But the only way to get American products to those consumers and to get Asian imports to America is by ocean shipping – so port capacity and, just as importantly, the highway and rail connections into those ports will be under increasing and unrelenting pressure, the group said.
That may not be completely true now, due to the so-called “Great Recession” affecting the world, but that trade pressure will no doubt reassert itself as the globe’s economies start down the recovery path.
AASHTO, for one, predicted that imports and exports together would provide 35% of the U.S. gross domestic product [GDP] by 2020 and 60% in 2030 – up from a mere 13% in 1990 and 26% in 2000. Will that still happen? It remains to be seen – but the NEI is supposed to be one way to help insure that U.S. exports stay on that rising glide path.
“While the U.S. is a major exporter, we are underperforming,” noted Commerce Secretary Locke. “U.S. exports as a percentage of GDP are still well below nearly all of our major economic competitors. Today, less than 1% of America’s 30 million companies export—a percentage that is also significantly lower than all other developed countries. And of U.S. companies that do export, 58% export to only one country.”
In this increasingly interconnected world—where 95% of consumers reside outside our borders—these are opportunities American companies cannot afford to miss, Locke stressed.
That’s where the NEI comes in, he explained, focused on three key goals:
• A more robust effort by the U.S. government effort to expand 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.
• Improving access to credit with a focus on small- and medium-sized businesses that want to export.
• 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.
The NEI also creates an “Export Promotion Cabinet,” reporting directly to the President, made up of personnel from agencies that can contribute to the export effort, including: 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.
Within 180 days, all of the agencies in the Export Cabinet will be responsible for submitting a coordinated, detailed plan to the president about how they will collectively enhance U.S. exports – and that clock started ticking a few weeks ago.
“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,” said Locke. “This is an area where the Commerce Department’s International Trade Administration (ITA) will be escalating its already substantial efforts.”
As part of the NEI, the president’s 2011 budget is requesting a 20% increase in funding for ITA – totaling $78 million. Locke said that money would be used to hire 328 additional trade experts—mostly in foreign countries—to advocate and find customers for U.S. companies, allowing its Commercial Service to assist more than 23,000 clients to increase export sales in 2011.
The ITA, by the by, has a global network of trade specialists posted in 109 U.S. cities and at 128 U.S. embassies and consulates in 77 countries. As part of the NEI effort, the agency plans to: put a special focus on increasing the number of small- and medium-sized businesses exporting to more than one market by 50% over the next five years; to increase their presence in emerging high-growth markets like China, India and Brazil; and to develop a comprehensive strategy to identify market opportunities in fast-growing sectors like environmental goods and services, renewable energy, healthcare and biotechnology
In the next month, ITA is also set to launch a one-year program to help create jobs in America by: Identifying new markets for existing U.S. exporters; Increasing the number of foreign buyers to U.S. trade shows; Working with private sector partners to increase exporting through our market development cooperator grant program; and getting more clean energy companies involved in promising new markets.
It all sounds good, for sure – but what does it all translate into out in the real world? Locke shared this example: In April 2009, General Electric requested U.S. government support for its campaign to provide the Kuwaiti Ministry of Electricity and Water with a combined cycle power plant. At stake: a $2.6 billion contract being battled over by GE and European companies.
“Commerce Department staff, working in Kuwait with their colleagues in the U.S. Embassy, began an intense round of engagement with their local Kuwaiti contacts on behalf of GE – ultimately involving 20 embassy meetings, dozens of e-mails and about 50 phone calls,” Locke related.
Following those efforts, GE signed a contract to provide a 2,000-megawatt power plant in Subiya, Kuwait on Sept. 14 last year. “What's crucial is that this plant will contain approximately $1.1 billion in American export content, which according to GE, will provide business for 240 suppliers located in 24 states,” said Locke – and its these kinds success stories he hopes the NEI might foster in the future.
I stress the word MIGHT here, however; it’s an ambitious effort, no doubt, but the federal government has tried similar initiatives before without much success.
Yet there’s also a lot at stake, too: Exports support nearly 10 million jobs in America and almost seven million jobs in manufacturing—and for every $1 billion in exports, 6,250 manufacturing jobs are created or supported. That’s outside of the freight demand export volumes create as well; the kind of demand that generates miles for truckers. So let’s hope the NEI gets some legs and sees some success; for truckers stand to benefit if it does.