The partnership between the U.S. Commerce Department and ports has contributed to record exports, but not in the way envisioned when a memorandum of understanding was signed in 2011 with the American Association of Port Authorities to collaborate on export promotion.
The department’s International Trade Administration now views ports as part of a broader, more holistic approach towards engaging communities and businesses to pursue export markets, rather than the primary disseminator of information about the export process, overseas opportunities and available federal resources, Michael Masserman, executive director for export policy, promotion and strategy, said during a June 14 press briefing on export developments hosted by the National Foreign Trade Council.
“We’re still very much focused on ports themselves, but within a metro context,” he said.
In the early stages of implementing the Obama administration’s National Export Initiative, the International Trade Administration sought the collaboration with AAPA to take advantage of port authorities’ expertise in foreign trade and overseas contacts. Officials viewed ports as good conduits to businesses with a domestic sales concentration because of their extensive overseas contacts, understanding of foreign markets and ability to provide in-house or third-party guidance on logistics, insurance, finance and regulatory requirements associated with cross-border trade. The idea was to develop best practices for ports to improve export promotion. The effort was modeled on the Port of Los Angeles’ Trade Connect program, which acts as a matchmaker and counselor to U.S. companies new to the export process.
Soon after, ITA joined forces with the Brookings Institution on a Metro Export Initiative (MEI) to help metropolitan areas create export plans tailored to the strengths and goals of each community. The strategy draws on the capabilities of chambers of commerce, non-profit groups, universities, financial institutions, regional economic development authorities, airports and others working in a coordinated fashion. The goal is to encourage local officials, who typically focus on helping local firms grow domestically, to make export promotion a routine part of their development work and help them educate firms on how to acquire export capabilities.
Ports are a core component of MEIs in cities such as Charleston, S.C., and Tampa, Fla., specifically getting the word out about available resources to companies beginning to export to one or two countries, Masserman said.
According to Brookings, 90 percent of exports emanate from metropolitan areas. Eleven metro areas had exports of $25 billion or more in 2011 and another 150 exported more than $1 billion apiece.
There are three components to the MEI: taking inventory of all the assets in and around a city that can help drive exports, a process which takes about six months; developing a plan to help local leaders organize those assets, as well as those of the federal government, into an export promotion program; and then executing the plan.
Twelve cities, including Los Angeles and Syracuse, N.Y., currently have MEI programs and more are anticipated to start in the near future, Francisco J. Sánchez, Commerce’s undersecretary for international trade, said. The rollout has been a bit slower than officials suggested last summer.
“Our partnership with the Brookings Institute is really about changing the fabric of economic development so as they (officials) are thinking about workforce readiness, infrastructure, education and global competitiveness, that they really are deliberate about looking at export opportunities and making sure the companies in their community are able to leverage the resources that they have, both on the state, federal and local level,” Masserman said.
Officials in Portland, Ore., for example, conducted a market assessment and learned that many businesses should be exporting, but didn’t know where to get help or how to start. They brought in local reporters to educate them about the importance of exporting and introduced them to some small businesses, which has led to a steady stream of articles about export successes and created a buzz among companies about resources at their fingertips, he said.
Portland is also actively promoting the region’s strengths in computer electronics and clean technology services.
Leaders in Minneapolis, Masserman added, realized the number of medical and pharmaceutical companies in the region constituted a health care and wellness cluster that includes every piece of the supply chain to support those services, and the local expertise was in high demand around the world.
The Commerce officials said MEI has helped the Obama administration make progress on the NEI (National Export Initiative), but it is too early to quantify how much it has helped grow overseas sales.
The United States is on track to meet one of President Obama’s goals for the NEI by 2015 – creating 2.1 million jobs – but will need some luck to double exports from $1.6 billion to $3.2 billion by then, Sanchez said.
Job creation has topped 1.3 million since the beginning of 2010, but the trade number was always a stretch goal, he said.
The immediate spurt of trade following the recession was due to pent up demand and not sustainable, but Sanchez and analysts say setting an outer target is still worthwhile to help speed up economic recovery.
In 2010, U.S. exports of goods and services surged almost 17 percent to $1.83 trillion. A year later, the United States set a record with $2.1 trillion in exports, an annual increase of 14.5 percent. Last year, exports grew to $2.2 trillion, but the rate of growth slowed to 4.8 percent.
During the first quarter, U.S. exports totaled $555 billion, the highest quarterly total on record despite facing economic headwinds from the recession in the European Union and slower growth rates in the developing world, according to the Commerce Department. The slow growth rate has carried over from last year, however.
Exports are flourishing in some sectors. Manufacturing exports have grown almost 50 percent since the start of the NEI and exports for autos and auto parts have jumped 80 percent during the period, government statistics show. Last year, the United States set a record for agricultural exports with $145.4 billion worth of food and feed sold overseas while weathering one of the worst droughts on records. The United States has a trade surplus of $38 billion in agriculture. The country also grew its trade surplus in services, which includes tourism, by $20 billion to $650 billion.
In 2012, the United States set export records with 20 countries, including Canada, Mexico, Brazil, Russia, India, China and South Africa, Masserman said. Between 2009 and 2012, exports to the BRIC countries have increased 60 percent. In 2012, exports to China reached $110 billion.
Sub-Saharan Africa is also being targeted for economic development and trade by the Obama administration. The region has six of the 10 fastest growing economies in the world and the International Monetary Fund predicts 5 percent to 6 percent growth there for the foreseeable future.
Nearly 10 million American jobs are supported by exports, which ITA promotes by conducting trade missions, providing market research to companies, and identifying potential clients in other countries. Obama administration officials are also pursuing ambitious free trade agreements with a block of 11 other Pacific Rim nations and the European Union. Finalized deals are expected to open markets for U.S. companies by reducing tariff and non-tariff barriers to trade with regions of the world that account for huge portions of global economic activity.
About half of U.S. exports go to markets where the United States has free trade agreements and growth in those regions tends to be twice as fast as exports to the rest of the world. Masserman said once the Trans-Pacific Partnership and EU trade agreements are finalized the United States will have 65 percent of the world covered under trade deals.
The NEI is unique because of the attention the Obama administration has placed on getting other agencies besides ITA to make export promotion a priority. A Trade Promotion Coordinating Committee for 20 years has had responsibility for organizing executive branch export activities, but Commerce officials note previous export promotion has been a part-time activity by some agencies instead of the full-time priority across the federal government that it is now.
Under Masserman’s leadership, the Trade Promotion Coordinating Committee meets more regularly and is more effective, Sanchez said. – Eric Kulisch
Washington Notebook: U.S. export strategy leverages power of cities
