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|Thursday, 17 June 2010 01:01|
In his January 2010 State of the Union address, US President Barack Obama set the goal of doubling America’s exports over the next five years, an increase that he argues will support 2 million American jobs. And then in a March 2010 speech at the Export-Import Bank Conference he went on to outline his “National Export Initiative”.
Does it make sense? Or is it just sweet talking?
There are in fact many things that the US government could do. And at the very least, if Obama's “National Export Initiative” acts to calm down import protectionist pressures, that would also be a good thing. Let’s have a look at what the key points are.
Obama recognized that very few of us are aware of or acknowledge the benefits of trade – “if you ask the average American what trade has offered them, they won’t say that their televisions are cheaper, or productivity is higher. They’d say they’ve seen the plant across town shut down, jobs dry up, communities deteriorate. And you can’t blame them for feeling that way. The fact is other countries haven’t always played by the same set of rules. America hasn’t always enforced our trade rights, or made sure that the benefits of trade are broadly shared. And we haven’t always done enough to help our workers adapt to a changing world.”
Obama believes that boosting our exports is not only a short-term imperative, but it is also critical for America’s long term prosperity. Exports support more than one in five manufacturing jobs, and these jobs pay about 15 percent more than average. Service exports support 2.8 million jobs, and every $1 billion increase in exports supports more than 6,000 additional jobs.
Ninety-five percent of the world’s customers and the world’s fastest-growing markets are outside America’s borders. The US cannot stand on the sidelines – “we still have the most innovative economy in the world”.
The National Export Initiative is a single, comprehensive strategy to promote American exports. In support of the NEI, Obama has created an Export Promotion Cabinet, made up of the Secretaries of State, Treasury, Agriculture, Commerce, and Labor, along with our USTR, our Small Business Administrator, the Export-Import Bank President, and other senior U.S. officials whose work impacts exports. He has also re-launched the President’s Export Council, the principal national advisory committee on international trade made up of private sector representatives.
So what are the key elements in the National Export Initiative?
First, Obama plans to substantially increase access to trade financing for businesses that want to export their goods but just need a boost –- especially small businesses and medium-sized businesses. As we saw with the global financial crisis, SMEs are the first ones hit when there is a credit crunch despite their importance to our economy.
Second, Obama believes that the federal government just hasn’t done a good enough job promoting US business abroad, especially compared with what other countries do. He has recently signed the Travel Promotion Act, a law that will establish active promotion and marketing efforts to encourage foreign citizens to come visit the most dynamic cities, the most entertaining destinations, and the most beautiful natural resources in the world. He and his Cabinet also plan to promote US companies, “the most innovative in the world”.
Third, Obama is unleashing a battery of comprehensive and coordinated efforts to promote new markets and new opportunities for American exporters. Many businesses want to export their products but just don’t have the resources required to identify new markets or set up shop overseas. “We’ll bring together the Ex-Im Bank, the SBA, the Departments of Commerce and Agriculture, and the Trade Development Agency to set up one-stop shops across the country and in our 250 embassies and consulates abroad, to help American businesses gain a foothold in the fastest-growing markets with the most demand.”
Fourth, Obama wants to focus on making sure American companies have free and fair access to those markets. That begins by enforcing existing trade agreements. He wants trade agreements to be as good for workers as it is for businesses, including strong labor and environmental protections.
He is going to aggressively protect America's intellectual property. "Our single greatest asset is the innovation and the ingenuity and creativity of the American people…But it’s only a competitive advantage if our companies know that someone else can’t just steal that idea and duplicate it with cheaper inputs and labor.”
Following the global economic crisis, the G20 agreed on the need to rebalance the world's economies. For too long, America served as the consumer engine for the entire world. But now America is rebalancing. It is now saving more and exporting more.
But that means that everybody has got to rebalance. Countries with external surpluses need to boost consumption and domestic demand. And for China, this means moving to a more market-oriented exchange rate.
Finally, Obama is working to reform the American Export Control System. The U.S. Government controls exports of sensitive equipment, software and technology as a means to promote national security interests and foreign policy objectives. Through the export control system, the U.S. government can effectively: Provide for national security by limiting access to the most sensitive U.S. technology and weapons; Promote regional stability; Take into account human rights considerations; Prevent proliferation of weapons and technologies, including of weapons of mass destruction, to problem end-users and supporters of international terrorism; and Comply with international commitments, i.e. nonproliferation regimes and UN Security Council sanctions and UNSC resolution 1540.
A review of the Export Control System is under way, but Obama already announced two steps: (i) streamlining the process certain companies need to go through to get their products to market -– products with encryption capabilities like cell phone and network storage devices; and (ii) eliminating unnecessary obstacles for exporting products to companies with dual-national and third-country-national employees.
In sum, that’s how Obama is planning to double America’s exports, open up new markets, and level the playing field for American businesses and American workers.
As Obama concluded, "If we combine our creativity, our innovation, and our eternal optimism … we will succeed".
If we are asking ourselves what is America's comparative advantage, it is perhaps these three words -- creativity, innovation and optimism!
Remarks by President Obama at the Export-Import Bank's Annual Conference, 11 March, 2010
ExportControl.org: a resource on non-proliferation export controls