Knee Deep In The Hoopla
I want to like Barack Obama, I really do. But his administration simply does not have a trade policy. He and his minions are making a game of appearing to have a trade policy, but I’m not seeing substance behind what passes for “policy” statements. Have you read the executive order issued Thursday for the National Export Initiative? I didn’t think so. Here’s the full text. It won’t take you long to read it, as there isn’t much there. There has been lots of positive comment, but I don’t think the commentators read it either. It is as if the White House was saying: “Move along, there is nothing to see here”. And most fell for it.
The executive order establishes an Export Promotion Cabinet to be chaired by the Secretary of Commerce with membership from every department or agency that thinks it has a stake in the trade game. Guess what? Almost every administration in memory has had some sort of export promotion session, chaired by the Secretary of Commerce, that includes virtually every agency or department interested in trade. It doesn’t take an executive order to do this, nor was one needed this time. It is all window-dressing.
This is just like announcing that the United States is suddenly enamored of the Trans Pacific Partnership and will now think about it. The Bush II administration made the same announcement, but that has been forgotten. Likewise, Obama has now embraced the FTAs with Korea, Panama and Colombia – but not enough to actually ask the Senate to implement them. Where is the news here? There isn’t any, but politicians thrive on the hoopla.
Exports Live? More Like Export Shibai. (Photo: Ashley Sullivan, Mattox Photography)
President Obama announced the signing of the executive order in his speech at the Export-Import Bank Thursday morning, so let’s take a look at what he said to see if it gives any glimpses of substance. The first half of the speech is good pro-export rhetoric. Can’t disagree with it, but let’s see where he is heading. He then announces the Export Promotion Cabinet, and that he is “re-launching” the President’s Export Council. The PEC has been around in various forms for a couple of generations and has dutifully filed reports to weigh down bookshelves and spoken nicely to presidents. It is generally made up of CEOs of major corporations and, indeed, President Obama has appointed the CEOs of Boeing and Xerox as the new chair and vice-chair. Such companies have little need or wish for government assistance in exporting, though they will happily take money (ExIm Bank wasn’t known as Boeing’s Bank for nothing, though it has improved). My point is that new permanent growth in American exports is more likely to come from small and medium-sized firms that could really use a hand to get started. They apparently haven’t been invited to Obama’s export party.
I began to get excited when Obama said: “Some of the biggest factors limiting a firm’s decisions to export are the high upfront costs of establishing a foothold in a new market, and the ability of the customers in that market to finance the purchase of their products.” Now we’re getting somewhere, I thought. But then he went on to announce an expanded financing facility at ExIm Bank. This does NOT address up-front costs. Financing the sale comes several steps through the export process, and Obama has blithely stepped right over the real up-front costs: the high price of launching and maintaining a foreign marketing effort. Foreign customers don’t just magically appear, so the Administration needs to address how to go about finding and keeping those customers. Even if customer financing proves to be the big problem, the program is to be implemented through the same banks that have not been providing credit to SME exporters all along.
The President proposes one-stop shops across the country composed of Commerce, SBA, Agriculture, ExIm and the tiny Trade Development Agency. I hope he is aware that SBA and Commerce have an existing network of domestic offices, and that meshing these organizations’ efforts in the past has proven a dismal failure. There may be something to be learned from their clash of cultures. Then he mentions the old standby of public private partnerships, which have a marvelously mixed record. I conjure a glimmer of hope for the Administration’s review of export controls, knowing that Gary Locke’s heart is in the right place. I will give Obama credit for his budget proposal, which would go part way towards restoring the cuts made to federal export promotion budgets over the past several administrations. The rest of the speech is same-old, same-old.
We have a word for this in Hawaii: shibai. I am sure that the President knows the term from his days at Punahou. The word came into our local vernacular with the arrival of Japanese immigrants more than a century ago. The original meaning is “a play” or “dramatic performance”, but it has come to have a more derogatory meaning when applied to politics, more of a sham designed to delude the voter or a scam to defraud the consumer. Shibai would appear to apply to President Obama’s trade policy.
