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Friday, February 5, 2010

Obama pushes to double exports in 5 years

The United States makes, will the world take?

We’re about to find out as the Obama administration plans an ambitious effort to double U.S. exports over the next five years.

The president mentioned his National Export Initiative during the State of the Union speech last week, and Thursday Commerce Secretary Gary Locke filled in the details.

Obama has requested a 20 percent increase - a total of $78 million - for the 2011 budget of the Commerce Department’s International Trade Administration. Those funds would be used, in part, to hire as many as 328 trade experts to advocate on behalf of U.S. companies.

The president also wants the Export-Import Bank, which finances U.S. companies that export, to increase the financing available to small and medium-size businesses to $6 billion from $4 billion over the next year.

Coming at a time when so many other countries are counting on expanding exports to repair their damaged economies, is this even feasible?

Well, just look at recent history. U.S. exports nearly doubled from $977.5 billion in 2002 to $1.83 trillion in 2008. Most of us never noticed because imports rose from $1.52 trillion to $2.52 trillion over the same span.

Locke said exports accounted for 11 percent of U.S. gross domestic product last year and supported nearly 10 million jobs. Since Washington is now all about jobs, the Obama team projects that doubling exports would create two million jobs.

As we’ve seen when job creation statistics are thrown into any federal spending discussion, it’s anybody’s guess what the actual number might be.

But two Philadelphia-area people involved in exporting certainly think the new emphasis is a good idea.

Linda Conlin, now president of the World Trade Center of Greater Philadelphia, has spent much of her career working on trade. “I think this initiative is great. It’s right in line with what we do for companies in this region,” said Conlin, a former vice chairwoman of the Export-Import Bank in Washington who took her current job in June.

Last year, the World Trade Center provided consulting to about 400 firms in the area, accounting for an $80 million increase in sales, she said.

Gary Biehn, chairman of the business department of White & Williams L.L.P., focuses his law practice on helping firms do business in the Far East. He said domestic-only firms had been seriously challenged with the financial issues of this downturn and many may see exporting as a way to grow their businesses.

Financing, intellectual-property protection, and cultural differences are among the hurdles that businesses looking to export face. Right now, a weak U.S. dollar makes U.S. exports competitive. But that advantage can fade quickly.

The good news is that Washington has had the infrastructure in place for years to promote export activity. “The devil is getting the funding to back up the programs,” Conlin said.

The funding is on order. Asian economies are mending faster than that in the United States. The open question is whether more small and medium-size firms are prepared to risk doing business overseas.
Posted by Mike Armstrong @ 9:21 AM  Permalink | 7 comments
Comments   
  • 0 like this / 0 don't   •   Posted 4:00 PM, 02/05/2010
    This guy in The White House still doesn't get how business works. He can't create demand for products so exactly how is it his lordship is going to double exports? At this point NONE of his forecasts has worked. Unemployment is way beyond 8%. Budget, spending and National debt is way beyond original forecast. Why would anyone believe one word this Marxist says. As for countries he mentioned to up exports - we already have trade agreements with.
    — ScottYaw
  • 0 like this / 0 don't   •   Posted 5:47 PM, 02/05/2010
    So in other words steel yourself against the 'dollar' outrage as it falls in value relative to a basket of developed economic country's currency by about 30% over the next 5 years.
    — Murrayman
  • 0 like this / 0 don't   •   Posted 9:57 AM, 02/06/2010
    No surprise that a community organizer and freshman senator thinks he can just wave his hand and proclaim that exports will rise on his command. All this export money just waiting for the right proclamation. Naive, arrogant, narcissistic, man child. Some people should stick to marches, protests, candle light vigils, and rallys to "change the world". Leave the tough problems to the grownups.
    — E Plebnista
  • Comment removed.
  • 0 like this / 0 don't   •   Posted 9:42 PM, 02/06/2010
    And he raised his hand and issued forth this decree: let it be known I have decided we will double exports and all will be well. And the little people of the media did cheer "all is well" while the great one's other hand throttled the businessmen who would have exported if they could but breath. And he looked out upon the land from his high seat by the foam greek pillar backdrops and he said all is well. The peasents could return to their tasks and raise their voices in praise. For to the blessed benefit of all, the great BO had so decreed and all was now well.
    — Dutch-wayne
  • 0 like this / 0 don't   •   Posted 1:15 PM, 02/07/2010
    Agree with most of the posters here. The Administration has no idea how business works. The government cannot create anything. It can however steal from those who produce and give to those who do not, in the form of "new jobs" that produce nothing; ie, repaving roads, hiring census workers, or the 100,000+ cretins at TSA or Homeland Security. True wealth comes from mining, energy production (coal, oil, natural gas) manufacturing and agriculture. Anything else is just passing around fiat paper currency from one person or business to another - it creates nothing. To double exports the dollar would have to be devalued, thereby making USA products 50% cheaper relative to other currencies. Or Obama could eliminate taxes on all new manufacturing businesses, streamline red tape, streamline the patent process, abolish most OSHA rules, and take other steps necessary to regain our manufacturing base, encourage new products and businesses and start producing like the USA used to. Which do you think he will want? PS- this depression is only going to get worse
    — Joshka
  • 0 like this / 0 don't   •   Posted 2:55 PM, 02/07/2010
    "thereby making USA products 50% cheaper relative to other currencies". Oofa, this is lazy. 50%, huh? How exactly do you make product cheaper relative to other currencies? You mean currencies relative to currencies? What about the law of one price - Purcharing Price Parity (PPP)? No? "The gov't cannot create anything" - clearly the gov't has never funded any productive research (sarcasm). "This depression will only get worse". Well forgetting for a moment we were never in a Depression, how can it get worse when we will soon learn that the recession ended somewhere in the end of 2nd Qtr, beginning of 3rd Qtr '09?
    — Murrayman


7 comments
About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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