New to Market Initiative
I thought I was the only one not praising President Obama for his National Export Initiative, so I was relieved to see the criticism leveled at the NEI by David Speer, CEO of Illinois Tool Works, in the Financial Times last week. It’s not that the NEI is a bad thing – it’s not – it is just that it is largely ineffectual.
The most effective thing about the NEI is the added funding it gives the Commerce and Agriculture departments to promote U.S. products in foreign markets. This goes part way to restoring the massive cuts to the U.S. Commercial Service that they have endured over decades. The rest of the NEI has nice rhetoric, but that is mostly all it is. Headlines were made out of Obama resurrecting the President’s Export Council and his creation of an Export Promotion Cabinet. Similar things have been done by earlier administrations and few of them are remembered. The Administration’s new-found interest in the Trans-Pacific Partnership is interesting and laudable, even if we already have free trade agreements with most of the TPP’s current members, from whom there is not much more to be gained.
Listen to your chairman, Mr. President
Regular readers of Business Beyond the Reef are more than aware of my views about the Obama Administration’s refusal to implement existing FTAs or negotiate new ones. I was happy to see that Boeing’s CEO, Jim McNerney, is pressing the White House to push now to pass the South Korea, Colombia and Panama FTAs. McNerney was named in March to chair the new President’s Export Council, created as part of the NEI. It would be nice if the President would listen to his own Council, wouldn’t it?
The Administration tries to sell the NEI by saying that it will create or preserve two million American jobs, which is pleasant to hear during a jobless recovery. But exactly how is the NEI going to get that done? Mr. Speer says it won’t be through America’s industrial companies, of which his firm is a prime example. While our politicians like to say that the NEI will bring jobs back to the United States, Speer argues that we must look at the reasons why manufacturing operations have moved overseas in the first place: generally not because of lower costs, but to be closer to their customers. If that is the case, the NEI will have no impact on large company decision-making and thus no effect on jobs. I’m not sure I go that far. Exports do create jobs, though often among the service companies that move the goods, rather than among the manufacturers.
The one creative approach I see under the NEI is a decision made at staff levels in the U.S. Commercial Service to focus their efforts on helping companies that presently sell in only one or a few foreign markets to enter new markets. These aren’t the big companies, like Illinois Tool or Boeing, but small companies that have a bit of experience but haven’t fully exploited their export potential. In other words, these are the companies who can most likely grow exports quickly and create at least some of those jobs that the NEI touts. The vast majority of America’s small exporters sell to only one customer in one foreign market, typically Canada or Mexico. Now’s the time to get them moving out.
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The U.S. Department of Commerce is looking for your views and ideas for how to implement the National Export Initiative. Here’s what they are looking for:
Specifically, we are interested in input from exporters, other private businesses, trade associations, academia, non-governmental organizations, and other interested parties regarding:
1. identification of Federal government programs or regulations that impede the ability of U.S. companies to export;
2. effective foreign trade promotion programs and activities that could inform U.S. Federal government program development;
3. identification of the most (or least) effective Federal government programs that support U.S. exports, including specific experiences with such Federal government programs;
4. steps that the Federal government could take to improve its programs to support U.S. exports; and
5. more generally, how the Federal government could better help U.S. businesses export.
This link is to the federal register announcement, which tells you how you may respond.
