#76 Will there be a US Export Avalanche?

Exports were mentioned repeatedly in President Obama’s  State of the Union address. Such U.S. presidential focus is very special and hasn’t happened since the “Export Now” campaign in Reagan days. Though exports have no party affiliation –the policies leading to them do.

The U.S. economy needs a boost. Though the world may count on the U.S. import locomotive, this time around, U.S. exports have global priority. In the ten years from 2000 – 2009, U.S. exports grew by about 50 percent. The President’s goal to double U.S. exports by 2014 requires twice the increase in half the time. It’s hard to generate trade momentum that quickly. But it can be done.

Americans generally are quite good in working their way up to a leadership position. But since the 1980’s, ongoing large and growing trade deficits have undermined its economic foundation. Just as one thinks about America as a nation of open skies and new opportunities, exports must become a national objective. Export not only help an economy, but also allows the sharing of quality, choices and lower prices with the world.

Conditions and preparation matter.  A company in Israel or Liechtenstein never questions whether or not to export. Their small home market makes exports a condition of survival. The literature calls those firms “born global”. German exports in 2009 were $ 13,670 for every man, woman, and child, while for the United States they were only $ 3,238. U.S. firms tend to focus on the substantial opportunities at home. But they need to recognize the export imperative as well.

U.S. consumers are wealthy and interested, and Americans are willing to give outsiders a chance. They enjoy trying a new product early and to exercise their right and capability to choose. This desire and capacity to innovate needs to be translated into the design and export of new goods and services.

Historically, U.S. trade policy has not been very helpful to exporters. Congress typically intervened by restricting, rather than liberalizing trade flows. Concerns mostly focused on helping other nations get their feet back on the ground. Now American firms need some better track shoes.

Today, exporters face new conditions. Technology has reduced global distance. The cultural diversity of America overcomes psychological distances between countries. Immigration brings expertise and encourages new business activities abroad. Increased knowledge reduces the burden of foreignness when going international.

Trade imbalances generate new export opportunities. For example, the U.S. trade deficit makes it much cheaper to ship a container to Asia, than to bring one from there into the U.S.   A lower dollar makes it easier to export, but also reduces U.S. purchasing power. There is little benefit to exporting if one receives little in return.

There is new interest in U.S. international business performance. The Korean Free Trade Agreement, the renewed negotiations with nations in international forums such as the World Trade Organization, and the just announced deal between the United States and China for $ 45 billion of U.S. exports provide impetus.

During the past forty years, the largest U.S. trade growth was in the import arena – that’s where the money was. For those looking to international markets today and tomorrow, the shoe is on the other foot – the exporters will have it. Now it is the U.S.’ turn to export – both a challenge and obligation to U.S. firms and government.  At the same time, trade distorting subsidies need to be curtailed. Exports need to be the result of capability and responsiveness to international needs.

History is characterized by non-linearity – not everything always keeps going the same way. Discontinuities and structural breaks herald new directions. There may well be a U.S. export avalanche and the world needs to get ready for it. This is a unique opportunity for bipartisanship and cooperation by the President and a Republican House. Voters will want to see now, how words are translated into action. Government support of exports needs to be streamlined and attain a new priority. Just as ambassadors know to track and support policies abroad, exports need to become a new key concern for many. One could even envision an ‘export impact statement’ for new regulations. For budget hawks it’s worth remembering that export promotion is an investment rather than an expenditure, which, if done right, earns powerful ongoing returns.

(Reposted from Michael Czinkota’s blog at http://michaelczinkota.com with permission by the author. Prof. Michael Czinkota teaches international business and marketing at Georgetown University and the University of Birmingham in the U.K.  He served in trade policy positions during the Reagan and Bush administrations.)

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