National Export Initiative
President Obama proposed a new National Export Initiative in his State of the Union address, but left it to Secretary of Commerce Gary Locke to give the details, which he did Thursday to the National Press Club in Washington. The speech is worth a read if you are an American exporter or an American SME thinking about giving foreign markets a try. Locke’s rhetoric is good, but there are some actual dollars here, too, that can do a world of good for U.S. exports.
Try the Gold Key
Let’s look at the money first. The President’s budget proposal for fiscal 2011 contains an additional $78 million that will go to Locke’s Commerce Department for expanded export promotion. That’s good – as far as it goes. Commerce’s main tool for export promotion is the U.S. Commercial Service (my old employer), which has been budgetarily challenged ever since the Reagan Administration. Secretary Locke says the budget increase, which is a significant 20% increase, could let the CS hire as many as 328 people worldwide. That’s great, but it only begins the recovery from the number of positions left unfilled or people let go during the past decade of budget cuts.
The increase won’t even get the Commercial Service back to where it was ten years ago. That, of course, assumes that the Service receives all the money, which it won’t. First, the President’s request has to wend its way through Congress, where anything can happen. The amount could be increased or decreased. Once the money finds the front entrance to the Commerce Department, it then has to avoid the talons of other parts of the Department that will claim they need export promotion funds, too. The money still isn’t out of danger once it arrives at the Commercial Service. The Department of State has been especially avaricious about raising the “rent” they charge other agencies for using space at American Embassies, particularly if they know that the agency has just gotten a decent budget. The Commercial Service will be in State’s sights. But some of it will get spent to help exporters, and that is great news.
The Department of Agriculture (primarily the Foreign Agricultural Service) stands to receive an increase of $54 million, though they face much the same hurdles as the Commercial Service in getting it. So, out of a total increase of $132 million in the nation’s export promotion budget, Agriculture is slated to get 41%. No offense to my friends at FAS, but they are a far smaller agency than the Commercial Service, and Agriculture has historically received more export promotion funds than has Commerce, reflecting the strength of the farm lobby in Washington. Agriculture accounts for only 9% of American exports. The agency responsible for helping the other 91% only gets 59% of the new money. Go figure.
Don’t get me wrong. The added funding is great, but it is not as great as it first appears. We’re talking less than the 2009 price for a single F-22 fighter. Locke’s plans for applying this paltry sum are sound. I can’t argue against export education for companies, lobbying to help them make export sales, or connecting them with new customers. Locke highlighted the Commercial Service’s Gold Key Program, which puts U.S. companies into meetings with potential buyers overseas, eliminating the need to make cold calls in a foreign market. A wonderfully effective service. Locke said the right words about increasing credit availability for SMEs through the Export-Import Bank. Can’t argue with that.
I am skeptical about the new Export Promotion Cabinet. While I would certainly like to see exports regularly addressed at the Cabinet level, I suspect that the first meetings will maximize the press hoopla – and then we will never hear about it again. I hope I am wrong. While Secretary Locke says that the already existing Trade Promotion Coordinating Committee has been “revitalized”, raising from the dead might be more appropriate. The TPCC has been around since 1993, chaired by the Secretary of Commerce and composed of the same agencies that will now be in the Export Promotion Cabinet. It was always hard to notice that the TPCC actually did anything, but its participants were sub-cabinet and the new outfit is supposed to be at the Cabinet level. We’ll see if they fare any better. I’m keeping my fingers crossed.
February 17th, 2010 at 11:11 am
The NEI plans are ambitious, to say the least. What concerns me is that there is such a heavy emphasis on business development (328 new Commercial Service staff as one example) and lip service to the financing component. The bottleneck in the current system, without the additional CS resources, is Ex-Im and the SBA. Less than 35 underwriters at Ex-Im are engaged in approving roughly 10,000 transactions (authorizations, waivers and Special Buyer Credit Limits) annually – all manually. To add additional sales people without boosting underwriting staff is akin to UPS increasing their sales force, but neglecting to have the trucks and planes on hand to deliver the goods!
February 17th, 2010 at 11:30 am
You’re right, John. I hadn’t realized the situation at ExIm was that dire, but I’m not surprised either. They seem to be using SBA to approve smaller transactions, but I don’t much about the workload that either agency has.