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National Exports Initiative Remarks

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AS PREPARED FOR DELIVERY

Thursday, February 4, 2010

CONTACT OFFICE OF PUBLIC AFFAIRS

202-482-4883

Secretary of Commerce Gary Locke
National Exports Initiative Remarks
Washington, D.C.

Release

Thank you all for coming today.

In last week’s State of the Union address, President Obama announced a series of new proposals that will help put Americans back to work and our nation on a path to sustainable economic growth.

A key element in helping to meet that goal is a new National Export Initiative, which aims to double American exports over the next five years and support two million jobs here at home.

There have, of course, been previous endeavors by the government to elevate the importance of exports.

But what sets this effort apart is that this is the first time the United States will have a government-wide export-promotion strategy with focused attention from the president and his Cabinet.

This initiative will correct an economic blind spot that has allowed other countries to chip away at America’s international competitiveness.

Because for all of America's economic strengths, we stand out among developed nations as one of the few whose government does not have a focused, comprehensive and agile export strategy.

At a time when traditional drivers of U.S. economic growth like consumer and business spending are strained, we simply must elevate exports as a key part of our economic recovery efforts.

That’s exactly what the NEI does, and I’m here today to tell you how.

First, the NEI is going to provide more funding for export promotion and more coordination between government agencies.

Second, the NEI will ensure that commercial advocacy objectives get government-wide support and that we do a more effective job of advocating for U.S. products in our interactions with foreign businesses, farmers and foreign officials.

And finally, the Initiative will create an Export Promotion Cabinet reporting to the president that will consist of top leaders from the Commerce, Treasury and State Departments, the Department of Agriculture, the Export-Import Bank, the office of the United States Trade Representative and the Small Business Administration.

To put it another way: Prior to the NEI, export promotion may have been a “some of the time” focus for many U.S. cabinet agencies and departments.

The NEI makes it an “all-the-time focus.”

Within 180 days, all of the agencies in the Export Cabinet will be responsible for submitting a coordinated, detailed plan to the president about how they will collectively enhance United States exports.

The NEI’s mandate is broad, and it involves addressing key issues that affect the ability of U.S. businesses to export.

Here are some of the steps we will be taking to improve our export promotion performance:

Number one is a more robust effort by this administration to expand its trade advocacy in all its forms. That means

  • Educating U.S. companies about opportunities overseas,
  • Directly connecting them with new customers, and
  • Advocating more forcefully for their interests

Number two is improving access to credit in the wake of the financial crisis, especially for small- and medium-sized businesses that want to export.

Number three is continuing the rigorous enforcement of international trade laws to help remove barriers that prevent U.S. companies from getting open and fair access to foreign markets.

Before I detail the specifics of those efforts, it’s helpful to talk about why President Obama has put exports front and center in his administration’s plans to rebuild America’s economy.

Today, far too many Americans are having trouble doing what we’ve typically taken for granted—paying the mortgage, sending our children to college or saving for retirement.

The fundamental American assumption that our lives will be better than our parents’ and our children’s lives better still, has been shaken.

In the last decade, most families have seen their wages stagnate or decline. And that remains true even if you stop measuring in 2007, before this recession began.

Meanwhile, these same families have seen the costs of life's necessities like health care and tuition skyrocket—in the case of health care, up 155 percent since 1990.

It is time to get back to the basics that helped this country build the strongest middle class in history.

From the advent of the phone, to the automobile, to new drug therapies and the Internet, America’s strength has always been its peoples’ ability to create and sell products and services that help others around the world lead healthier, wealthier and more productive lives.

Even amid the last decade’s speculative mania, exports have remained an integral part of our economy. Last year, they accounted for 11 percent of our GDP, which is almost three times as much as just 50 years ago.

Exports support nearly 10 million jobs in America and almost seven million jobs in manufacturing—and manufacturing jobs pay on average 15 percent more than the average wage.

And for every $1 billion in exports, 6,250 manufacturing jobs are created or supported.

But while the U.S. is a major exporter, we are underperforming.

U.S. exports as a percentage of GDP are still well below nearly all of our major economic competitors.

Today, less than one percent of America’s 30 million companies export—a percentage that is also significantly lower than all other developed countries. And of U.S. companies that do export, 58 percent export to only one country.

With our increasingly interconnected world—where 95 percent of consumers reside outside our borders—these are opportunities American companies cannot afford to miss.

I believe the National Export Initiative will help our companies seize this opportunity, and I’d like to further explain the key areas where this initiative will have the most impact.

In this globalized economy, companies from every corner of the world are competing like never before for business in foreign markets, especially in emerging economies like China, India and Brazil.

American companies need advocates on the ground that will fight for their interests.

That means leading trade missions and working to educate companies in the United States about opportunities abroad.

But it’s also the U.S. government pounding the pavement alongside U.S. companies to drum up business.

For example, even large U.S. companies with well-developed contacts in foreign countries are finding that procurement decisions are increasingly being impacted by political factors. With massive infrastructure projects planned all over the world, this represents billions of dollars in potential business.

Let me provide a quick example of U.S. government advocacy done right.

In April 2009, General Electric requested U.S. government support for its campaign to provide the Kuwaiti Ministry of Electricity and Water with a combined cycle power plant.

At stake was a $2.6 billion contract that GE was battling for with European competitors.

Commerce Department staff, working in Kuwait with their colleagues in the U.S. Embassy, began an intense round of engagement with their local Kuwaiti contacts on behalf of GE; that ultimately involved Commerce convening some 20 embassy meetings, dozens of e-mails and about 50 phone calls.

Following these efforts, on September 14, GE signed a contract to provide a 2,000-megawatt power plant in Subiya, Kuwait.

What's crucial is that this plant will contain approximately $1.1 billion in American export content, which according to GE, will provide business for 240 suppliers located in 24 states.

We need to see a lot more success stories like this one, and the National Export Initiative will help by giving senior American officials traveling abroad a second job description:

Advocate and salesperson for U.S. companies and products.

Of course, GE is a major multinational corporation, and their challenges are different from those of small- and medium-sized companies.

Many American companies don't export, or export less than they should, because they simply don't have the resources to identify promising new markets or the necessary contacts in foreign countries.

This is an area where the Commerce Department’s International Trade Administration (or ITA) will be escalating its already substantial efforts.

ITA has a global network of trade specialists posted in 109 U.S. cities and at 128 U.S. embassies and consulates in 77 countries.

As part of the NEI, the president’s 2011 budget is requesting a 20 percent increase for ITA – totaling $78 million.

With that, ITA plans to bring on as many as 328 trade experts—mostly in foreign countries—to advocate and find customers for U.S. companies, allowing its Commercial Service to assist more than 23,000 clients to begin or grow their export sales in 2011.

The budget also will allow ITA to:

  • Put a special focus on increasing the number of small- and medium-sized businesses exporting to more than one market by 50 percent over the next five years.
  • To increase their presence in emerging high-growth markets like China, India and Brazil;
  • And to develop a comprehensive strategy to identify market opportunities in fast-growing sectors like environmental goods and services, renewable energy, healthcare and biotechnology

But ITA isn’t waiting for extra funds in 2011 to step on the gas.

In the next month, they are set to launch a 12-month program to help create jobs in America by:

  • Identifying new markets for existing U.S. exporters;
  • Increasing the number of foreign buyers to U.S. trade shows;
  • Working with private sector partners to increase exporting through our market development cooperator grant program; and
  • By getting more clean energy companies involved in promising new markets.

ITA also will be putting more emphasis on programs that have a track record of success. . . like their Gold Key Matching Service, where our Commercial Service staff go out and find foreign buyers and distributors for American-made products.

If you’re an American firm and you want to sell your goods or services abroad, all you need to do is pick up the phone and call 1-800-USA-TRADE.

Commerce Department experts will then:

  • Conduct an international search to find potential agents or distributors for your unique business;
  • Contact potential overseas business partners; and
  • Work with you to design and implement a market entry or expansion strategy.

Think of it as match-making for exporters. We'll keep searching for partners and customers for you until you find the right fit.

Gold Key is just one of the many services offered by the International Trade Administration—and like many of ITA’s efforts, they are going to be focused on the small- and medium-size businesses that represent the biggest source of untapped export potential in the United States.

Last year, ITA helped nearly 5,600 companies increase their exports and 85 percent of those were small- and medium-size businesses.

And a new Commerce Department initiative in 2010 will enable ITA to connect with even more of these businesses.

In the coming months, we’ll be launching a virtual CommerceConnect Web site, which will serve as a portal for businesses to access the full array of Commerce Department and other federal government services available to them.

For small business owners, many of whom aren’t close to an International Trade office, or who previously didn't think they had the time or resources to partner with the federal government, this will be a particularly valuable tool.

All of Commerce’s export promotion work will be buttressed by the Department of Agriculture redoubling its efforts to help American farmers and ranchers sell abroad.

The president has proposed an additional $54 million for the Department of Agriculture to enhance its export promotion activities.

That will mean:

  • More technical assistance to help farmers selling specialty crops;
  • More foreign country promotions extolling U.S. commodities; and
  • More direct assistance to farmers to develop new foreign markets and to increase market share in existing markets.

And helping American farmers sell more simply equals more jobs.

American agricultural exports totaled almost $97 billion last year, which represented 9 percent of the goods the U.S. ships abroad. This activity supports about a million jobs.

These jobs are both on the farm and off, in urban and rural communities, across many communities and professions. And every $1 billion in agricultural exports supports over 9,000 jobs and generates an additional $1.4 billion in economic activity.

As we work to connect our exporters to more customers abroad, it’s also crucial to address the second priority issue we tackle under the NEI, and that is access to credit.

Although our financial system has weathered the crisis of 2009, lending is still restricted, especially for small businesses.

As part of the National Export Initiative, the president has called upon the Export-Import Bank—which provides critical financing to U.S. companies when private banks are unwilling or unable—to increase its financing available for small- and medium-size businesses from $4 billion to $6 billion over the next year.

During the last three months alone, the bank has authorized $1 billion in small business financings and added 112 new small business clients—many of whom were first-time exporters—that are selling everything from nanotechnology-based cosmetics to date palm trees to sophisticated polymers to 45 countries around the world.

To make businesses better aware of these funding opportunities for their international sales, Export-Import is going to expand its work with banking and brokerage partners, grow its road show program to 16 cities, and deepen its partnership with the Small Business Administration so their field staffs are better versed in their offerings.

And Export-Import’s increased activity will dovetail with theadministration’s other credit expansion efforts, including President Obama’s recent proposal to redirect $30 billion in repaid TARP loans to boost lending to small businesses.

Finally, the National Export Initiative is going to sharpen the government's focus on the barriers that prevent U.S. companies from getting free and fair access to foreign markets.

The Office of the United States Trade Representative is working towards an ambitious and balanced Doha Round that provides our exporters new market access opportunities.

And USTR is going to be opening markets in key growth areas such as Asia with the Trans Pacific Partnership (TPP)—an agreement that could set a new standard for trade agreements with strong labor, environmental and market access standards.

At the same time, USTR will improve enforcement of existing international trade law and address the outstanding concerns we have with pending free trade agreements.

The United States is the most open major economy in the world. . .

. . . And that’s not going to change!

But that commitment is coupled with an ongoing focus to ensure the competitiveness of U.S. companies in foreign markets.

Free trade only works in a system of rules where all parties live up to their obligations.

The United States is committed to a rules-based trading system where the American people – and the Congress – can feel confident that when we sign an agreement that gives foreign countries the privilege of free and fair access to our domestic market, we are treated the same in their countries.

That means:

  • Enforcing our trade laws;
  • Combating unfair tariff and non-tariff barriers; and
  • Cracking down on practices that blatantly harm U.S. companies, like the theft of our intellectual property.

Despite America's remarkable dependence on innovation for future growth, the current system for protecting U.S. intellectual property is fraying at the seams.

Every year, American companies in fields as diverse as energy, technology, entertainment and pharmaceuticals lose between $200 billion-$250 billion to counterfeiting and piracy.

This theft is especially damaging for U.S. companies selling abroad, as more than 50 percent of our exports depend on some form of intellectual property like software or complex technology.

And that is why our partners at USTR are committed to remedying this problem and actively pursuing IP enforcement.

As I said at the top today, this National Export Initiative drives ambitious goals: a doubling of exports in five years supporting two million jobs.

The broad scope of the NEI and the urgency of its mission demand that we scale up our activities quickly. I am confident we have the infrastructure to do it.

When I came to Commerce, my goal was to improve interagency cooperation on export promotion. To that end, we revitalized the Trade Promotion Coordinating Committee, which in many ways had been ignored in recent years.

The coordinating committee brings together 20 federal agencies and departments to work on export expansion efforts, and it will now help operationalize at the staff level, the goals laid out in the National Export Initiative.

In fact, we've already got Cabinet-level working groups addressing many of the issues I discussed today.

For all the different economic challenges we’re facing, though, our ultimate goal with the Export Initiative is pretty simple.

We want to help write more export success stories like the one we saw from a company called Air Tractor in Wichita Falls, Texas.

Working with the Export-Import Bank and the Commerce Department’s Export Assistance Center in Fort Worth—Air Tractor relied on growing foreign sales to not only survive but thrive in the midst of last year's recession.

Over the last decade, the company has seen its exports grow from 10 to 45 percent of its business. And they’ve doubled their workforce from 100 to 200.

This small company in a rural area of Texas is now selling its crop-dusters and firefighting aircraft to countries like Spain, Brazil and Australia. And along the way, they’ve relied on the Export-Import Bank to provide financing for their customers that private sector banks would not. To date, Export-Import has assisted with the completion of some 70 deals.

Now if Air Tractor can do this, there's no reason that thousands of other companies across America can't do the same. They can grow their sales abroad, create new jobs here in America and get our economy moving.

And the message I want to send to all these companies that are struggling to find customers, or to hire new people, or to increase the hours of their workers is this:

Look abroad. There are opportunities there. And the National Export Initiative is a clear signal that the Obama administration is committed to helping you find it.

Thank you.