Beyond Our Means
Just 1% of U.S. businesses are in the
export game while 73% of purchasing power lies beyond our
borders. Talk about market potential! (So what’s
Governments from the United States to Nepal are pinning
their hopes on exports to lift their foundering economies out
of the global recession and create new jobs at home. A World
Bank study on export promotion found that each dollar increase
on export promotion brought a 40-fold increase in exports. With
a 9% worldwide drop in exports in 2009, even a modest increase
could translate into big gains for economies.
In his 2010 State of the Union Address, President Obama
pledged to double U.S. exports of goods and services during the
next five years—a mission, he said, which will
“boost economic growth and support millions of American
U.S. exports account for nearly 7% of the nation’s
total employment, or 10.3 million jobs, and more than one in
four manufacturing jobs. Yet only 1% of U.S. companies export.
Despite its vast industry, the U.S. is not an exporting nation.
It has relied heavily on local consumption for growth, but the
new economic reality calls for a change in direction.
Beyond U.S. borders lies 73% of the world’s purchasing
power, 87% of its economic growth and 95% of its consumers. The
untapped potential of exports, particularly to China and India,
is simply tremendous. Government investment in export promotion
can help tap into that potential.
There’s a lot of buzz around SMEs—no, not those
cute, blue, French cartoon-book characters the Smurfs, but
“small and medium enterprises.” U.S. SMEs derive
12% of their revenue from exports, according to a CompTIA
study. Exports are growing faster than domestic sales.
So why are only 1% of U.S. businesses exporting? Some SMEs
just don’t have products that are a good fit for export.
The other top reasons include lack of resources, lack of
expertise, distribution channel challenges, poor return on
investment, and cost to export.
With a lot riding on the president’s promise to double
exports, the administration has launched an ambitious new
program aimed at addressing the reasons why companies shy away
from the exporting game.
The National Export Initiative (NEI) is designed to help
U.S. firms, particularly SMEs, expand sales of their goods and
services abroad. The NEI has a five-pronged strategy: Create a
cabinet-level focus on exports, expand export financing,
prioritize government advocacy on behalf of U.S. companies,
provide new resources to businesses seeking to export, and
ensure a level playing field for U.S. exporters in global
Among the key initiatives:
- Financing is key for any
business looking to expand. The Export-Import Bank is
expanding its small-business program and has created a new
facility to provide up to $2 billion a year in trade and
finance to SMEs. Ex-Im is also upping its financing by 50% to
help support exporting.
- Launching a new public-private
partnership will engage private service companies
along the export supply chain. They will work together with
the government to provide education and networking
opportunities for small- and medium-sized businesses on all
aspects of exporting. These service businesses (e.g.,
insurance and express delivery firms), understand that, if
their clients’ exports grow, their business will
- Increasing trade missions
will bring firms in direct contact with export opportunities.
U.S. embassies are creating business liaisons and a travel
program, sending ambassadors around the country talking about
export opportunities in their assigned countries.
- Expanding resources
provides money for businesses that want to expand exports but
don’t have the knowledge, experience or finances to do
it. President Obama has proposed increasing funding for
export promotion programs by $134 million for FY2011. The
money would pay for the hiring of more than 325 trade experts
to advise potential exporters.
- Creating a one-stop source
will promote exports. Government agencies will collaborate to
provide a comprehensive toolkit of services ranging from
financing options to export counseling to market access
information through export assistance centers in the U.S. and
- Opening new markets will
broaden sales. The U.S. will continue to push for new market
access in the WTO Doha round and free trade agreements.
The insurance industry can benefit from these exports
initiatives. At a time when worldwide demand for insurance has
dropped, an increase in exports could boost demand for
Brokers are in a unique position to encourage clients to
grow their exports. You can start by directing your clients to
government and private resources. Many countries offer programs
for SMEs. In the U.S., companies can find a wealth of free
information at www.export.gov, which is the
government’s export promotion and finance portal. The
one-stop shopping site provides information on financing,
regulations and the nuts and bolts of how to start and expand
By familiarizing yourself with the resources available,
brokers can provide clients with one more valuable service.
Kemper is The Council’s vice
president of Industry Affairs.