Exports: It's business, not government

Exports were mentioned in U.S. President Barack Obama’s State of the Union address. Such U.S. presidential attention tends to be very special. However, there was virtually no focus on what needs to be done and how goals can be achieved. 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 need to have global priority. In the 10 years from 2000 to 2009, U.S. exports grew by about 50%. 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.

Americans generally are quite good in working their way up to a leadership position. But since the 1980s, 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. Exports not only help an economy, but also allow 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 managers 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, sometimes of the two-faced Janus type. 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. But a greater flow of goods to Asia will likely raise shipping prices. 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. But there needs to be much more. For example, given that China will need thousands of airplanes in the next decades, why not sign Boeing up for a much larger portion?

During the past 40 years, the largest U.S. trade growth was in imports - 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. Our trading partners need to accept, that exports and imports do not happen in a vacuum. They are linked, and their desire for market preservation requires their interest in a strong U.S. economy, enhanced by U.S. exports. 

History is characterized by non-linearity – not everything always keeps going the same way. Discontinuities and structural breaks herald new directions. Government attention to exports and imports needs to be streamlined and given a new priority. Just as ambassadors know to track and support policies abroad, trade need to become a new key concern for many. One could even envision an “export impact statement” for new regulations. We need a national export vision responsive to and expansive of U.S. capabilities. At this time, an American export avalanche may well happen in the long term, but only due to the new pioneers in business. 
 
Michael Czinkota teaches international business and marketing at Georgetown University and the University of Birmingham in the UK. He served in trade policy positions during the Reagan and Bush administrations.

 


 

 

 

  • 0

    paulinusa

    It all sounds good but what of an axample like this:

    "For example, given that China will need thousands of airplanes in the next decades, why not sign Boeing up for a much larger portion?"

    Boeing WILL sell aircraft to China but guess what? China is trying it's hand at building it's own commercial aircraft. And in the "What were they thinking?" catagory, GE is about to begin sharing some of their most important sircraft engine manufacturing secrets with China, all to increase future access to China's markets. Short term benefits, long term big mistake. And that example isn't limited to the US, other western companies(also Japan) are taking that path.

  • 0

    elbudamexicano

    The Japanese just got screwed royally by CHINA! The Chinese wanted a new SHINKANSEN, high speed bullet train, the French, the Japanese, Koreans, Germans etc...all tried to woo the rich Chinese, Japan got the contract with 1 very BIG condition, handing over ALL THE SECRETS to their technology over to the greedy Chinese. Last year when Obama was asking the world for nice bullet trains to be built in the USA, CHINA came out of no where with a great shiny train, 100% copy of the JAPANESE bullet train but at a very, very CHEAP price, so maybe Japan will learn not to be stupid and hand over their engineering secrets to the Chinese etc...

  • 0

    seaforte03

    US firms are lazy. They wait for the US Gov trade commissions a la Adm Perry to bully, beg, coerce foreign countries into awarding mega contracts instead of doing good old fashioned legwork. Over the past 10 years, as the mandated project owner, I've passed several leads to both Japanese and US firms - the Japanese firms - although sneaky, circumventing our non-circumvention agreements (their loss) acted and occasionally won small portions of these mega contracts (≥USD 800 million). The US firms - non-responsive. We still contact US firms as a matter of courtesy - but focus more on serious foreign competitors such as EU, Japan, Singapore, Australia, etc. As a general policy, we don't CHASE companies to PAY them.

  • 0

    jruaustralia

    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.

    'Korea' was mentioned seven times during OBAMA's SOTU '11-- which of course was something. 'China' was uttered thrice.

    I think it's smart for the US Prez to increase America's friends in the region and the world.

  • 0

    oberst

    The Chinese wanted a new SHINKANSEN, high speed bullet train, the French, the Japanese, Koreans, Germans etc...all tried to woo the rich Chinese, Japan got the contract with 1 very BIG condition, handing over ALL THE SECRETS to their technology over to the greedy Chinese.......................................

    I call that smart, not greedy. Couldn't learn that kind of business instinct in any MBA program.

  • 0

    jruaustralia

    I call that smart, not greedy. Couldn't learn that kind of business instinct in any MBA program.

    So what if the Americans awarded its high-speed contracts (or part of it) to Chinese contractors on the condition that they too hand over all their secrets to the USA huh?

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