Can U. S. Exports be Doubled in Five Years?
Nicole Lamb-Hale, Assistant Secretary of Commerce for Manufacturing and Services, would say “yes” if manufacturers diversify their sales in multiple markets and take advantage of the Department of Commerce’s International Trade Administration programs to help them.
At the “Pathway to Manufacturing Prosperity” Conference held last week by Industry Week and New Equipment Digest, she said, “While the U. S. is a major exporter, we are underperforming. Currently, fewer than 1% of American’s 30 million companies export outside the U. S. There’s great potential for improvement.”
Before charging American manufacturers with “underperforming,” Assistant Secretary Lamb-Hale would do well to acquaint herself with her own Department’s Foreign Trade Regulations administered by the Bureau of Industry and Security (BIS).
After attending a Trade Compliance Update put on by the San Diego World Trade Center in April, I learned how complicated it can be to determine whether or not you need an export license. Many commercial products are categorized as EAR99 or NLR – No License Required. The problem is that American companies used to lead the world in exporting commercial products and now China leads the world, and the U. S. imports these products instead of exporting them.
Whether or not you need an export license is determined by what you are exporting, to which country you are exporting, and for what will your item be used. There are ten categories and five product groups in the Export Control Classification Number system of the Commerce Control List. The term “Dual Use” distinguishes items that can be used both in military and other strategic uses and in civilian applications. It can be especially difficult and time consuming to get an export license for “dual use” items.
A recent “Critical Technology Assessment” conducted by the Bureau of Industry and Security found that the American precision machine tool industry is losing out to foreign competitors. American machine tool companies face a competitive disadvantage because five-axis CNC machine tools are classified as “dual use” and require an export license. There are now 20 companies in China that produce five-axis machines and 22 in Taiwan. None of these companies have to deal with the types of export restrictions facing American companies. From 2004 to 2007, the BIS issued licenses for the sale of 148 machines, but only 34 were sold and delivered. One company reported that it lost a sale because it took seven months to obtain an export license to sell a machine to a Chinese company. It doesn’t make sense that there are such tight export regulations on exporting machine tools to China when a Chinese company can easily export one of their machines to U. S. companies.
American manufacturers already face trade barriers and import restrictions from other countries in the so-called “free market.” The U. S. government shouldn’t be making it even more difficult to compete in the global marketplace by making it difficult and time consuming to get an export license.
The National Association of Manufacturers was assigned the task of coming up with a list of Export Control Modernization Rules under the National Export Initiative announced by President Obama in his State of the Union address in January. We can hope their recommended rule changes will be adopted.
In the meantime, manufacturers should look at the Department of Commerce website (www.export.gov) 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 http://world.wtca.org. As an example, the San Diego World Trade Center is putting on an “Ignite exports” one-day conference on June 10th to help companies build profits through international sales.