Doubling Down on Exports

It is not surprising that a U.S. Secretary of Commerce who hails from the most trade dependent state in America would lead the charge to get America to double its exports over the next five years as Obama called for last week in his State of the Union speech.  Today, Gary Locke added detailed cargo to the rhetorical container ship Obama steered into the ocean of politics last week (or, uh, something like that). Locke calls the effort to double our country’s exports the National Export Initiative (NEI).  The NEI will increase funding for export promotion, put more emphasis on advocating for U.S. exporters’ interests overseas and create an Export Promotion Cabinet.   The effort also calls for providing more access to credit for exporters by increasing funding for the Export Import Bank from $4 to $6 billion to be chiefly aimed at small and medium size businesses.

Locke notes that nearly every other country in the world  has more robust export support programs.  This is definitely true.  When your humble Trade Alliance works to promote our region overseas we compete with organizations such as the Hong Kong Trade Development Council which dwarf our state’s international trade efforts.  Other countries are well ahead of the United States in exporting. As Locke says, “U.S. exports as a percentage of GDP are still well below nearly all of our major economic competitors.”

This is the first time I can remember such a prominent and comprehensive effort to bolster exports from the United States. For Washington state and the Puget Sound area, this could be a boon for our economy. Our state already exports more per capita than any other state in the country. It’s true that Boeing planes account for a lot of those exports but it’s also true that these stats don’t count services and software is a service so in many ways our exports are undercounted.

One of the intriguing parts of the plan Locke outlined today was the proposal to increase funding for the International Trade Administration (ITA) of Commerce by 20% or $78 million.  The additional funding will be used to “bring on as many as 328 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 begin or grow their export sales in 2011.” Locke didn’t say whether this additional funding will also be used to provide more free services for U.S. exporters. Currently, when a U.S. company seeks Commercial Service help in a market overseas, they pay for the service. Many other countries provide this assistance to their companies for free.

Locke also took to task countries which force their currency values down to assist their businesses in exporting. We’ll touch on that more in another post.  In the meantime, let’s hope the Obama Administration looks to the Puget Sound region for inspiration and models. After all, our region has been leading the way for the U.S. in exports for many years now.

4 Responses to Doubling Down on Exports

  1. Frank says:

    Initiatives are all well and good, but is there any way to really achieve Obama’s goals of doubling exports other than a massive devaluation of the dollar?

    Not that this would necessarily be a bad thing. In fact, it may be the only way to get us out of our fiscal mess and stabilize housing prices.

  2. samkaplan says:

    Interesting question. In recently talking about the export strategy, Obama referenced currency issues when he said, “one of the challenges that we’ve got to address internationally is currency rates and how they match up.” Many people assumed that was a direct reference to China but over the last 30 years many countries have actively worked to lower their currency against the dollar to help their exports. I’m planning on writing a longer post on the currency issue in relation to our exports. Short answer is I think we probably could increase exports tremendously without a major currency devaluation. Whether we could double exports in five years, I don’t know. The last time we doubled our exports, it took eight years, from 1992 to 2000. It took another eight to double again. Of course, during the financial crisis exports slid back down to 2003 levels (although they have increased throughout much of 2009).

  3. Frank says:

    Thanks for the response. I guess if we’ve backslid to 2003 levels, then he’s picked a pretty good window for a 5-year doubling. The economic recovery itself might take care of most of that over the next few years.

  4. David Pauling says:

    Doubling our exports is a major challenge I agree… but there is a quick way of reducing Wall Street imports… tell America to not buy anything imported on the first day of every month of every year until the end of time… i.e., a monthly reminder that Made in the USA ought to mean something… to every American who doesn’t live on Main Street.

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