Inside World Trade

Government looks to exports to create jobs

 

By Frances Allday

In his State of the Union message, the president called for a new initiative to double exports within the next five years. He said that an increase in exports will create a new source for jobs and thus stimulate the economy. Indeed, exporting does create jobs in shipping and production of goods, but the number of jobs and the length of time to create them is uncertain. The Deppartment of Commerce says that less than one percent of U.S. companies export. But Rochelle Lipsitz, acting Assistant Secretary for Trade Promotion, believes that “increasing this number, even by a small percentage, could have a big impact on the U.S. economy."

The International Trade Administration (ITA) says that exports declined from 2008 to 2009, but that "on a monthly basis, November represents the seventh consecutive month that goods and services exports have increased." Figures for December of 2009 have not been reported yet. The trade deficit remains, however, with imports exceeding exports for the past year.

The largest export markets for U.S. goods through November 2009 were Canada ($186.5 billion), Mexico ($117.2 billion), China ($61.2 billion), Japan ($46.2 billion), and the United Kingdom ($42.0 billion). The top export products were machinery, electronics, vehicles, and aircraft parts.

Critics of the administration's efforts to rely on exports to stimulate the economy point out that many businesses are not suited for exporting their goods. Andrew Wilson writes in the American Spectator: "What makes the president think that thousands and thousands of companies across the land would want to rebalance their businesses in such a way as to put substantially more emphasis on serving customers outside the United States, and less on serving customers inside the United States? If the point is to create U.S. jobs at the expense of jobs in other countries, then the president must be intent on starting or bringing us to the brink of some sort of a trade war."

There is a maze of U.S. regulations and foreign trade requirements that businesses must navigate to enter the export market. Language, customs, and business practices of other countries are often barriers to expediting sales and finding markets for products. For this reason the ITA has set up a special website, www.export.gov, to help businesses understand the exporting process. It also offers information as to what marketing opportunities are available in other countries and what to expect when doing business in them. U.S. companies encountering trade barriers abroad can file a complaint with the ITA to get help in resolving the problem. Some common problems, according to the ITA, are: copyright and trademark infringement, customs procedures not uniformly applied, lack of competitive bidding, foreign government subsidies for domestic suppliers, burdensome requirements not applied to domestic manufacturers, influence pedaling, bribery, and corruption by foreign officials.

Some exporters will be required to get a license to conduct a certain type of export transaction. Which agency issues the license will depend on the product to be exported. Licensing the export of nuclear materials is done by the Nuclear Regulatory Commission. The Department of Energy regulates the export of natural gas and electric power. The U.S. Drug Enforcement Administration regulates the export of controlled substances and precursor chemicals. The USDA guides exporters in exporting meat, poultry, and egg products, including packaging, labeling and other special conditions. The U.S. government also requires that "in certain situations involving national security, foreign policy, short-supply, nuclear non-proliferation, missile technology, chemical and biological weapons, regional stability, crime control, or terrorist concerns" a dual export license be obtained. It states: "The license requirements are dependent upon an item's technical characteristics, the destination, the end-use, the end-user, and other activities of the end-user."

Will the national initiative for exports be enough to encourage small businesses and farmers to sell their goods overseas? Of course it will depend on how profitable the foreign market is for any given business. The government is eager to promote exporting and will go to great lengths to accommodate businesses who want to enter the global markets. There are proposals to eliminate some of the export regulations that are considered burdensome to exporters. The American Association of Exporters and Importers says that reform of the "Cold War-era export control system" is needed before there can be a substantial increase in exports. Such reform is supported by manufacturers who want to be more competitive in the global market. Job creation from exports, they say, will come from business, not the government.

Frances Allday was a specialist in international trade with the federal government.