Archive for January, 2011

How Did Germany Keep Position as the World’s Top Exporter for so Long?

Tuesday, January 25th, 2011

Germany surpassed the United States to become the world’s leading exporter in 1992, around the time that Germany joined the European Union as a founding member.  The United States remained the second highest exporter until China surpassed it in 2008.  Germany remained number one until 2009 when China surpassed it to become the world’s top exporter.  Germany exported $1.17 trillion compared to the $1.057 trillion of the United States.  However, China’s exports were $1.2 trillion for 2009.  Germany’s exports fell by 18.4 % from 2008, the largest decline in 60 years, while China’s exports fell only 16 %.

“’This is just one more step by China in attaining economic size commensurate with its population,’ said Arthur Kroeber, managing director of Dragonomics, an economic research firm in Beijing.  Germany has a population of about 80 million, while China’s population is about 1.3 billion.”

If population were a key factor, then at over 300 million in population, the United States would have maintained the number one status until being surpassed by China.  The key question is how did Germany remain number one over the United States for so long and how did they lose this ranking to China?

Germany is the largest national economy in Europe, the fourth largest by nominal GDP in the world, and fifth by GDP in 2008.  The service sector contributes around 70 % of the total GDP, industry 29.1 %, and agriculture 0.9 %.  Germany is relatively poor in raw materials.  Most of the country’s products are in engineering, especially in automobiles, machinery, metals, and chemical goods.  Germany is the leading producer of wind turbines and solar power technology in the world.   Exports account for more than one-third of national output.  Germany is such an export-driven economy that German companies own 35% of the container ships in operation worldwide.

By the Fortune Global 500 ranking of the world’s 500 largest stock market listed companies, 37 are headquartered in Germany.  Well-known global brands are:  Mercedes Benz, BMW, Volkswagen, Audi, Porsche (automobile), Adidas and Puma (clothing and footwear), Bayer and Merck (pharmaceuticals), DHL (logistics), T-Mobile (telecom), Lufthansa (airline), SAP (computer software), Siemens (computer services), and Nivea (personal care).  You may have been as surprised as I was to learn that DHL, T-Mobile, and Nivea are German companies.

With the manufacture of 5.2 million vehicles in 2009 (compared to the U. S. total of 7.9 million), Germany was the world’s fourth largest producer and largest exporter of automobiles.  German automotive companies enjoy an extremely strong position in the so-called premium segment, with a combined world market share of about 90 %.  Germany places five luxury automotive brands among the world’s top global brands for all sectors, more than any other country.  Germany’s reputation for quality precision engineering gives them a competitive advantage in selling high dollar vehicles in foreign countries.  Thus, German automotive products spearhead the high value and growth of Germany’s exports.

Germany is also the world’s leader in mechanical engineering systems analysis and design, holding about 20% of this global market.  This precision engineering expertise gives Germany a competitive advantage in producing machine tools (the tools that make tools and equipment).  For example, Germany has a 58 % market share for producing reciprocating pumps used for drilling and water purification and produces 34 % of packaging and bottling equipment used around the world.

It isn’t just large firms that are market leaders.  Small-to-medium sized manufacturing firms that specialize in technologically advanced niche products are vitally important.  It is estimated that about 1,500 German companies occupy a top three position in their respective market segment worldwide.  In about two thirds of all industry sectors, German companies belong to the top three competitors.

Germany’s tax structure contributes to their success as an exporter and puts a barrier on imports. Germany’s corporate tax rate is 15 %, but they also have a solidarity surcharge (5.5 % of corporate tax) and a trade tax charged by local authorities.  As of 2008, the rate averaged 14 % of profits subject to trade tax.   In addition, all services and products generated in Germany by a business entity are subject to value-added tax (VAT) of 19%. Certain goods and services are exempted from value-added tax by law.  Value-added taxes are added in paid for all along the supply chain, and then are rebated for exports.  A VAT is added at the border to imports as a balancing trade strategy to discourage imports.

I had heard a rumor that one of the factors in Germany’s success is that they don’t tax revenue on exports, but was unable to confirm this by diligent research.  I did learn that Germany practices a “national jurisdiction” on taxes wherein they tax national consumption in contrast to the “unitary jurisdiction” of the United States wherein companies are taxed on revenues from worldwide sales (with a deduction for taxes paid to foreign countries).  This taxing practice may be the source of the rumor or the source may be confusing it with the value-added taxes that are rebated for exports.

In a June 28, 2010, economist Ian Fletcher, commented, “Germany, like the U. S., is nominally a free-trading country.  The difference is that while the U. S. genuinely believes n free trade, Germany quietly follows a contrary tradition that goes back to the 19th-century Germany economist Friedrich List… So despite Germany’s nominal policy of free trade, in reality a huge key to its trading success is a vast and half-hidden thicket of de facto non-tariff trade barriers.”

Fletcher, in turn quotes from a report by the Heritage Foundation:  “Non-tariff barriers reflected in EU and German policy include agricultural and manufacturing subsidies, quotas, import restrictions and bans for some good and services, market access restrictions in some services sectors, non-transparent and restrictive regulations and standards, and inconsistent regulatory and customs administration among EU members.”

Another opinion of Germany’s export success as reported in The New York Times, is “the roots of Germany’s export-driven success reach back to the painful restructuring under the previous government of Chancellor Gerhard Schröder.  By paring unemployment benefits, easing rules for hiring and firing, and management and labor’s working together to keep a lid on wages, ensured that it could again export its way to growth with competitive, nimble companies producing the cars and machine tools the world’s economies – emerging and developed alike – demanded.”

The same article reported that Germany’s Chancellor Angela Merkel resisted the use of government stimulus spending that the United States and some European partners used to handle the recession.  Instead of extending unemployment benefits like the United States has done several times since the recession began, Germany “extended the “Kurzarbeit” or “short work” program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions.  At its peak in May 2009, roughly 1.5 million workers were enrolled in the program,” and the Organization for Economic Cooperation and Development estimated that   “more than 200,000 jobs may have been saved as a result.”

As a result, Germany’s unemployment rate at the height of the global recession was 9.0% in contrast to the 10.2% of the United States.  The German jobless rate in October 2010 was down to 7.0% in contrast to the 9.6% of the United States.  Germany is one of the few economies experiencing a solid recovery and one of the even fewer economies without a substantial deficit crisis on its hands.  Germany’s exports surged month by month in 2010, but year-end data hasn’t been released yet.

Numerous manufacturers in Germany see China as a key driver in their recovery from the global financial and economic crisis.  In July 2010 , Chancellor Merkel took the heads of major German corporations with her on a four-day visit to China.  As a result Siemens signed a contract worth $3.5 billion (2.7u billion euro) with Shanghai Electric Power General Equipment to develop steam and gas turbines.  Daimler signed a contract worth 6.35 billion yuan (720 million euro) with Beiqi Foton Motor to build trucks.

Even small-to-medium manufacturers are benefiting from increased exports to China.  Nobilia, a mid-size manufacturer of prefab kitchens “made in Germany,” is selling its kitchens to construction companies building huge housing projects in China.  Company spokeswoman Sonja Diemann said, “These are big projects with 1,000-plus apartment units.  There is a growing group of consumers who have money, seek quality products and know that Germany has a good reputation in manufacturing.”

German trade with China has grown from $41 billion in 2001 to $91 billion dollars in 2009, and now represents 5% of German trade.  Germany’s exports to China in 2009 accounted for $36 billion, a 7% increase over 2008.  However, Chinese exports to Germany accounted for $55 billion, and Germany has been running a trade deficit with China since 2005.  It shows that even with the addition of a VAT on imports and other non-tariff trade barriers, Germans are increasingly buying the cheaper consumer goods that China is flooding onto the world market.

If even Germany has a trade deficit with China and can’t fend off the Chinese juggernaut on trade of consumer products, who can?  This is a question that the economists of Germany and the United States must carefully consider.  One answer is ending the so-called “free trade” coalition as advocated by Ian Fletcher in his book, Free Trade Doesn’t Work, What Should Replace it and Why.  One thing I do know, the negotiation of more “free trade” agreements that provide an unfair playing field for developed countries is not the answer.

National Export Initiative – Part Three – Success Stories

Tuesday, January 18th, 2011

Before the National Export Initiative is fully implemented, it is worthwhile to examine the stories of companies that have already been successful at exporting their products, even to China.

SnowPure is a leader in high-technology Electrodeionization (EDI) with it ElectropureTM brand.   The original company was founded in 1979 by Harry O’Hare as HOH Water Technology, went “public” in 1987 and was renamed Electropure in Inc. in 1996, also public.)  After a management buyout in 2005, it became SnowPure LLC, a privately held company, with Michael Snow, Ph.D. as President.  The company broadened its water technologies to include ZapwaterTM, EDI, ExcelllionTM ion-exchange membranes, DC power supplies, flow switches, and instrumentation for high purity systems, and innovative ultraviolet (UV) products.  SnowPure does not sell systems and does not sell to end-users.  SnowPure’s mission is to provide water purification technology components to system integrators.

SnowPure opened its first sales office in China in 2006, and formed SnowPure International in Hong Kong in 2008.  SnowPure released its new Electropure EXC EDI at the Aquatech China show in January 2009.  SnowPure’s percentage of sales that are exported is close to 85 percent.  Their percentage of exports increased in 2010 compared to 2008 and 2009 because their total revenue increased even though their USA sales decreased.

When asked how SnowPure achieved this success in exporting, Michael Snow said, “It was by being in the right place at the right time with a product that was needed by industry.  Companies trust U. S. technology, service, and support.  It was done with zero advocacy and zero export financing (not without trying though).  The U. S. Department of Commerce has been very

forthcoming with introductions, though little business has come from these.  One thing that USDOC and the Secretary of Commerce promote is the Export Import Bank.  The ExIm receivables insurance is good so far and is administered privately, but we haven’t had any claims, so I don’t know if it works.  They also promote ExIm as export financing but this is a not true for small businesses.  It must go through the banks and is so onerous in the administration and reporting that Wells Fargo and California Bank & Trust, for example, have very high minimums for participation; I need $200-300k for working capital for exports, so there is no program for us.”

Michael added that he hasn’t experienced any trade barriers for his products, and they have found exporting easy.   He said, “Having export receivables insurance has helped us with allowing credit without the cost and hassle and risk of letters of credit.  We do this through ExIm Bank, and it costs about 0.36%.

Paulson Manufacturing has been providing protective equipment for various industries worldwide since 1947.  Specializing in face protection, the family owned and operated business delivers quality products and innovation for industrial, fire and rescue, and tactical and ballistic verification testing applications.  All of their products are manufactured in America at a five-acre facility in Temecula, California.

Roy Paulson, President, said, “Paulson Manufacturing has seen sales increase up to 25% due to international exports. Not only are we able to capitalize on the export market, we are able to facilitate stronger sales for our OEM customers because of our exclusively designed products, which allow them a stronger international market share as well. With increasing sales, we are able to hire more employees, both temporary and permanent.”

Mr. Paulson added, “As the recession hit worldwide, our sales fell roughly 10% in 2008.   We had worked diligently with our international distributors in successfully obtaining orders from military and police agencies; however, these assets were frozen and the orders lay dormant. In these instances, it has been a waiting game; since then, we have seen our export sales increase at about 4% a year.

Paulson added, “In some instances, our experience has proven in order to stay competitive and creative in the overseas market, custom products must be engineered to suit the customers need.  Each country has its own standards and specifications.  In order to pull our market share, we needed to provide a product that would meet these requirements.  One example would be our body shields, used by police and military and our ArcShields, used in electrical safety.

Greece is a great example of a body shield modification. We redesigned our body shield to meet the Greece police specifications, sent the shield for testing, and received our European Certifications that were required. We won the tender with the help of our distributor who worked diligently with the authorities. This hard work from both sides has led to a great success of reoccurring orders.

The Paulson Arc Shield is a safety product used by electricians as required by the NFPA-70E Standard. This unique item did not have an export market because there were no standards in the foreign countries that required the use of our item.  With this product, we approached the market from two directions:

1. We initiated and helped to fund a study in Europe that defined the use and application of the ArcShield. This study was the combined effort of a respected University and other agencies vested in worker safety. We continued our efforts by working with the proper committees to define the need and awareness of the electrical safety standards in the United States and to develop new rules in Europe regarding safety rules and Personal Protective Equipment (PPE). This has now resulted in language, standards and test methods that will open the European market to many products from the United States, including our own.

2. The second method was to sell the electrical safety equipment where the individual companies could understand that these products would reduce risk and save money over the long term. One example that can be used is China where there are no rules or safety standards that require the use of our product; however, with sales and education efforts we have developed good repeat business in the Chinese market.”

When asked what changes in trade policies or export regulations would help increase their exports, Paulson said, “The rules and regulations and export control rules were a very big challenge for us. We ran into all of the difficulties with the export control rules that primarily affect products that have dual use application for military or for police.  I made a relatively early determination that I wanted to work on changing those rules because the rules are too difficult for American business.”

SPX Global LLC is a leading company in providing solar powered water systems throughout the globe.  SPX mobile systems provide a rapidly deployed, fully independent solution to support the basic needs of rural villages, developing communities, and disaster relief operations throughout the globe.

SPX solar powered water filtration systems operate independent of electrical infrastructure and provide an easy to operate and cost effective solution to deliver potable water to those people who do not have clean water or a reliable water infrastructure.  SPX ultrafiltration UF) reverse osmosis (RO) and Agriculture water delivery AG) systems are enabling delivery of clean water throughout the globe.  In 2009, SPX successfully delivered 325 Solar Powered Ultra Filtration Water systems to Iraq.

Cory Cunningham, President, Sustainable Industries, ran all the operations for the SPX Global LLC in 2010.  Sustainable Industries (SI) was formed to sell directly to DoD/federal/state entities under the Service Disabled Veteran rating and export contracts for SPX are a joint effort of SPX/SI.   Cunningham said, “Direct procured exports to Iraq were about $250,000 in 2010, and he managed the production and export of approximately $19.8 million in 2010.”    This was a significant increase over 2009, when they produced and exported about $15 million.  He said that they were able to achieve this success in exporting through his personal relationships developed with Iraqi companies and government officials.  The key was that Iraq values first-world (U. S.) manufacturing.

In answer to the question about what changes in trade policies or export regulations would help increase exports, Cunningham listed:  “Small business loans that are easier to obtain; Subsidized manufacturing for small business, i.e. helping with rent and payroll to reduce risks for small businesses; Stronger government support of all sized businesses; Focus on clean technology that actually provides sustainable solutions and real job growth; Tighter regulations on ARRA/Buy USA products requiring USA certificate of origin, which would create jobs for U. S. workers vs. in other countries with lower/subsidized labor costs.”

Since 1961, Gamma Scientific Inc. has offered the world’s most comprehensive selection of precision light measurement instruments, such as high-accuracy photometers and spectroradiometers to integrating spheres and NIST-traceable light source.  Gamma Scientific also uses its extensive light measurement expertise to manufacture custom light-measurement for unique customer applications such as production control, government testing, and avionics.

Gamma utilizes international sales agencies in Canada, China, Europe, and Japan.  Their sales to Asia increased by nine percent, and sales in Europe increased seven percent from 2008 through 2010, which helped to mitigate the decrease in sales in North America during the same period.  Their overall sales have increased 500 percent in the last ten years since starting an aggressive plan to expand exports.

Richard Austin, President, said, “We focused on Korea as a country starting in 1998, and it has paid off.   We started marketing to China ten years ago, and I have made many personal trips to China to support our Chinese sales agency’s efforts.  Our major competitors are in Germany, and they have greater market share.  We had to go through a qualification process with customers in China, and we had to give up margins to compete against German products.  The strength of the Euro compared to the dollar has helped us be more competitive and increase market share in the last two years.”

Austin was the only one of the presidents interviewed that thought the Korea Free Trade Agreement would be beneficial.  Austin said, “Korea has high tariffs on our type of products, and the tariffs would drop with the Korea FTA and help increase our exporting to Korea.”

There are some common factors that played a key roll in these four examples of companies that are successfully exporting their products, even to Asia.  They are:

  • A specific marketing plan to export their products
  • Technology of products that meet needs in other countries
  • Personal commitment and involvement by president of company
  • Use of sales agencies and distributors
  • Taking advantage of connections

These examples show that the most important ways the National Export Initiative plan could help is through enhancing connections through the trade promotion component of trade missions and reverse trade missions and increasing export credit and financing.  If the NEI plan fulfills all of the priorities that are identified in it, exports should increase.  Only time will tell whether or not the goal of doubling exports in five years can be achieved.  We can only hope this goal will be achieved to help American manufacturers succeed and grow.

National Export Initiative – Part Two “Will it Work”

Tuesday, January 11th, 2011

The National Export Initiative goal of doubling exports in five years is laudable, but the question is whether the plan to achieve the goal will work.

In 2009, the U. S. exported $1.57 trillion worth of goods and services, while importing $1.95 trillion.  Imports of crude oil totaled $189 billion, which was equal to about half of the trade deficit.  Manufactured products only represented 31 percent of U. S. exports, while services represented 69 percent.  The overall annual trade deficit for 2010 is estimated at $502 billion, up 34 percent from the $374.9 billion for 2009.

The biggest problem is that the United States is no longer the manufacturing source for consumer and household goods and commodities that it once was.  American brands such as IBM, General Electric, and Maytag were known worldwide for their quality and innovation.  These types of products are now being made in Asia, mostly in China, and imported by the United States and other countries for their consumers to buy rather than being manufactured in the United States for export worldwide.

The last time the United States ran a trade surplus was in 1975 when President Gerald Ford was in the White House.  Most presidents since then have tried to increase exports and get us back to at least a trade balance, but they haven’t succeeded, and the trade deficit has gone from bad to worse, especially with China.  Can the U. S. get other countries to go along with our plan to double exports?

Roger Simmermaker, author of How Americans Can Buy American, doesn’t think so.  In his “Buy American Mention of the Week” of April 14, 2010, he said, “We cannot expect other countries to surrender their markets to us simply because we have stupidly surrendered our market to them…We’ve been giving foreign producers production-cost advantages over our own producers for at least 35 years now, and we can’t expect them to start ‘playing nice’ with us and let us invade their markets to the tune of doubling our exports.”

Ian Fletcher, author of Free Trade Doesn’t Work, What Should Replace it and Why, comments, “The fraudulence of the administration’s initiative is obvious from its proposal that America improve its trade position by signing yet more trade agreements.  America’s past trade agreements, from NAFTA on down, have produced larger deficits for the U. S. not smaller ones.  These agreements are really offshoring agreements designed to make it easier for American corporations to produce abroad for the American market.  As long as America persists in trying to play by free-trade rules (honored only on paper) while foreign nations play the 400-year old game of mercantilism, this will remain true.  The administration is setting itself up for a huge embarrassment when the results of this initiative become visible a few years from now.”

In my article of June 2010, “Do Trade Agreement Create Manufacturing Jobs?” I pointed out that we lost about a half a million manufacturing jobs between 1994 (when NAFTA was ratified) and 1999.  In addition, we lost another 5.5 million jobs since the year 2000 when China was granted Most Favored Nation status paving the way for China’s accession to the World Trade Organization in December 2000.  My conclusion in this article was that trade agreements create manufacturing jobs, but not necessarily in the United States.  They create higher-paying manufacturing jobs in the countries of our trading partners.

However, only one of the eight priorities of the National Export Initiative plan promotes free trade agreements.  I believe that the other seven priorities have merit and are worth pursuing.  Although I’m skeptical about the ability of the plan to double exports in five years when we are fighting against the predatory mercantilism of countries such as China, India, and Japan, it is well worth pursuing these other priorities to improve the ratio of exports to imports as much as possible.

The National Export Initiative report states that progress has been made in the first nine months towards the five-year goal.  “Exports in the first six months of this year were 18 percent higher than exports in the first six months of 2009 … exports have contributed more than one percentage point to GDP growth (at an annual rate) in each of the four quarters of recovery and have contributed over 1.5 percentage points to growth in the last year.”

Some examples of contributions to this progress are:

  • The Department of Commerce has coordinated and unprecedented advocacy on behalf of U. S. exporters by coordinating 20 trade missions I 25 countries with more than 250 companies participating.
  • Commerce recruited nearly 8,800 foreign buyers to visit major U. S. trade shows in the United States, facilitating over $660 million in export successes since January 2010.
  • The Small Business Administration has identified more than 2,000 potential exporters on the Central Contracting Registration to target for export promotion outreach.
  • The Export-Import Bank increased its loan approvals by nearly 20 percent in fiscal 2010, from $18.3 billion to $21.5 billion.

Leila Aridi Afas, Director, Export Promotion, U. S. Trade and Development Agency, kindly provided me with some success stories from the U. S. Trade and Development Agency (USTDA) 2010 Annual Report.  I was given permission to reprint a couple of the stories in this article:

USTDA Brings Broadband Access to Africa

As a direct result of USTDA’s investment in the visit of a ministerial-level delegation to the United States and a regional ICT conference, over $400 million in U.S. equipment and services exports were utilized by African project managers to bring broadband communications to Africa. Without an undersea fiber-optic cable system, countries in the region relied on costly and scarce satellite links, which could not meet increasing demand for broadband communications services.

USTDA’s multi-year effort to support the development of an undersea fiber-optic cable linking East Africa with communication hubs around the world proved successful when a group of African ministers visited the United States, as part of a USTDA-funded program, and convinced potential financiers, including Sithe Global and the Overseas Private Investment Corporation, that fiber-optic cable connecting East Africa to the rest of the world could be commercially attractive.

In June 2009, SEACOM became operational offering 1.2 terabytes per second of capacity to enable high definition TV, peer-to-peer networks, IPTV, and high-speed internet access. The 13,700 km cable links South Africa, Mozambique, Tanzania, Kenya and Djibouti with India and Egypt. “The system, which was designed and installed using Tyco Telecommunications’ state-of-the-art technology, will undoubtedly provide businesses and citizens in South and East Africa alike with the capabilities they need to communicate with the rest of the world and participate in the global marketplace,” said Debbie Brask, Managing Director of Project Management for Tyco Telecommunications.

As described by SEACOM’s Chief Executive Officer Brian Herlihy, USTDA’s multi-year effort was critical to SEACOM’s launch. “The impetus for the cable project is directly attributable to Sithe Global’s participation at the half-day briefing sponsored by the USTDA visit.”

Reverse Trade Mission Connects U.S. Companies with Sales Opportunities in Brazil’s Rail Sector

USTDA played a pivotal role in the sale of 55 General Electric locomotives, which were manufactured in Grove City and Erie, PA, to MRS Logística, a Brazilian rail company.  By sponsoring a reverse trade mission for 10 delegates from the Brazilian rail sector to the United States, USTDA provided a forum for procurement decision makers to examine U.S. capabilities in the area of railroad rehabilitation and modernization.

The visit was prompted by the interest of Brazilian rail companies in making significant upgrades to their rolling stock, communications and signaling systems, track and other infrastructure. Based on these needs, the itinerary was structured to inform U.S. companies about export opportunities in the Brazilian rail sector and to facilitate direct contact with key decision makers.

During the reverse trade mission, the delegates traveled to Pennsylvania for site tours, including one to the GE Transportation diesel engine manufacturing plant in Grove City.  GE’s transportation business recognized the importance of this initial contact leading up to its sales activity to MRS Logística.  “The visit by the Brazilian rail officials helped us to establish the lasting contacts necessary to tap into an important emerging market.  We look forward to building on these relationships for many years to come,” said Robert Parisi, General Manager of International Locomotives and Modernizations at GE Transportation.

The USTDA report states, “This past year, the Agency identified over $2 billion in U. S. exports that were directly attributable to USTDA-funded activities.”  By following the priorities in the National Export Initiative, the successes of this Agency should be even greater in the next few years.

This topic will be continued in a Part Three article focusing on the stories of a few San Diego companies that export products and what could be done to help them be more successful.  In the meantime, manufacturers should look at the Department of Commerce website ( to locate an Export Assistance Center to assist them with entering the global marketplace by exporting or contact the World Trade Centers Association to locate the nearest World Trade Center at

National Export Initiative – Part One What is it and what are its goals?

Tuesday, January 4th, 2011

On March 11, 2010, President Obama established the Export Promotion Cabinet by Executive Order 13534 and tasked them with a plan to achieve the goal of doubling U. S. exports in five years that he had stated in his 2010 State of the Union address.

Sixteen representatives from the Secretary of State down to the Director of the United States Trade and Development Agency were appointed to this Cabinet, but the final report, released on September 15, 2010, was the product of an intensive six-month collaboration between this Cabinet and the 20 federal agencies that make up the Trade Promotion Coordinating Committee (TPCC).  In addition, the TPCC Secretariat reviewed over 175 responses to a Federal Register notice requesting input to the National Export Initiative (NEI) from small, medium, and large businesses; trade associations; academia; labor unions; and state and local governments.

In 2008, U. S. exports represented records levels of GDP (12.7 percent) and supported over 10 million jobs (6.9 percent of fully employed workers).  This was the highest percentage level of GDP since the beginning of World War I in 1914 and marked the high point of a 70-year trend that began in the early 1930s.  However, exports fell from $1.8 trillion in 2008 to $1.57 trillion in 2009 during the recession.

The report states:  “The National Export Initiative (NEI) is a key component of the President’s plan to help the United States transition form the legacy of the most severe financial and economic crisis in generations to a sustained recovery …The NEI’s goal of doubling exports over five years is ambitious.  Exports need to grow from $1.57 trillion in 2009 to $3.14 trillion by 2015.”

The NEI has five components:  improve advocacy and trade promotion, increase access to export financing, remove barriers to trade, enforce current trade rules, and promote strong, sustainable, and balanced growth.

The NEI Executive Order identified eight priorities for the plan, and the Export Promotion Cabinet developed recommendations to address each of these priorities, which cover all five components, cut across many Federal Government agencies, and focus on areas where concerted Federal Government efforts can help lift exports.  The following are recommendations for each priority:

Priority 1:  Exports by Small and Medium-Sized Enterprises (SMEs) – advocacy, promotion and export financing component

  1. Help identify SMEs that can begin or expand exporting through a national campaign to increase SME awareness of export opportunities and U. S. Government resources.
  2. Prepare SMEs to export successfully by increasing training opportunities for both SMEs and SME counselors.
  3. Connect SMEs to export opportunities by expanding access to programs and events that can unite U. S. sellers and foreign buyers.
  4. Once SMEs have export opportunities, support them with a number of initiatives, including improving awareness of export finance programs.

Priority 2:  Federal Export Assistance – trade promotion component

  1. Create more opportunities for U. S. sellers to meet directly wit foreign buyers by bringing more foreign buyer delegations to U. S. trade shows and encourage more U. S. companies to participate in major international trade shows.
  2. Improve cooperation between TPCC agencies to encourage U. S. green technology companies to export by matching foreign buyers with U. S. producers.

Priority 3:  Trade Missions trade promotion component

  1. Increase the number of trade and reverse trade missions, including missions led by senior U. S. government officials.
  2. Improve coordination with state government trade offices and national trade associations.

Priority 4:  Commercial Advocacy – trade promotion component

Leverage multiple agencies assistance in the advocacy process and extend outreach efforts to make more U. S. companies aware of the Federal Government’s advocacy program.

Priority 5:  Increasing Export Credit – export financing

  1. Make more credit available through existing credit platforms and new products.
  2. Increase outreach to exporters, foreign buyers bankers, and other entities in order to build awareness of Government assistance.
  3. Make it easier for exporters and other customers to use Government credit programs by streamlining applications and internal processes.

Priority 6:  Macroeconomic Rebalancing – strong, sustainable, and more balanced global growth

In the short term, the U. S. and its G-20 partners must work to ensure that the global economy shifts smoothly to more diversified sources of economic growth.  Over the long term, shifts in the composition of economic growth in our trading partners will also be crucial to U. S. export growth.  Actions to reduce surpluses and stimulate domestic demand for imports will be required by a broad range of countries.

Priority 7:  Reducing Barriers to Trade – removing trade barriers and enforcing trade obligations components

  1. Conclude an ambitious, balanced, and successful WTO Doha Round that achieves meaningful new market access in agriculture, goods, and services.
  2. Conclude the Trans-Pacific Partnership (TPP) Agreement to expand access to key markets in the Asia-Pacific region,
  3. Resolve remaining issues with pending FTAs, such as the United States – Korea FTA.
  4. Address foreign trade barriers – especially significant non-tariff barriers – through use of a wide range of U. S. trade policy tools.
  5. Use robust monitoring and enforcement of WTO trade rules and other U. S. trade agreements.

Priority 8:  Export Promotion of Services – advocacy and trade promotion components

  1. Build on the activities and initiatives outlined in Priorities 1 – 7 with enhanced focus on the services sector since it accounts for nearly70 percent of U. S. GDP.
  2. Ensure better data and measurement of the services economy to inform commercial decision-making and policy planning.
  3. Continue to assess and focus on key growth sectors and emerging markets such as China, India, and Brazil; increasing the number of foreign visitors to the U. S.
  4. Better coordinate services export promotion efforts.

There are four general themes that apply to all of the priorities and recommendations in order to achieve the goal of doubling the U. S. exports in five years:

  1. Strengthen interagency information sharing and coordination.
  2. Leverage and enhance technology to reach potential exporters and provide U. S. businesses with the tools necessary to export successfully.
  3. Leverage combined efforts of State and local governments and public-private partnerships.
  4. Have united goals for TPCC member agencies to support the NEI’s implementation

The plan admits that the Federal Government alone cannot succeed in this initiative; its ultimate success will be determined by the success of U. S. companies selling their goods and services internationally.  A continued dialogue with the business community will be required to help ensure that the NEI is addressing their export challenges.

On December 7, 2010, U. S. Energy Secretary Steven Chu announced the establishment of the Renewable Energy and Energy Efficiency Export Initiative as part of its National Export Initiative and Trade Promotion Coordinating Committee.  “Expanding U. S. clean technology exports is a crucial step to ensuring America’s economic competitiveness in the years ahead,” said Secretary Chu.  “The initiatives we are announcing today will provide us with a better understanding of the global clean energy marketplace and help boost U. S. exports.”

The Initiative is divided into two parts:  (a) an assessment of the current competitiveness of U. S. renewable energy and energy efficient goods and services and (b) an action plan of new commitments that facilitate private sector efforts to significantly increase U. S. renewable energy and energy efficient exports within five years.  As part of the Initiative, the Administration created, a web portal that consolidates information on government-sponsored export promotion programs.

The next article will examine whether or not the plan will work to achieve the stated goal.