Under Secretary of Commerce for International Trade
Franklin L. Lavin
TESTIMONY BEFORE HOUSE SMALL BUSINESS
COMMITTEE
Wednesday, April 26, 2006
Mr. Chairman, members of the Committee, it is an honor to appear before
you today. It is my pleasure to talk about the Trade Promotion Coordinating
Committee (TPCC) and how the Federal Government can best help
I would like to discuss two points today. First I would like to provide
you with some perspectives on the
The global trading environment
– how are
The American economy is strong, aided by the President’s pro-growth agenda. Businesses are thriving, investing, and hiring. In 2005, we saw the creation of two million jobs and economic growth of 3.5 percent – 11 consecutive quarters of GDP growth despite the challenges of hurricanes and high energy costs. Leading economic indicators show that the economy will continue to grow in 2006.
Exporters are an important engine of this growth. One in five
manufacturing jobs depends on exports. And jobs linked to exports pay an
estimated 13 to 18 percent more than other
Yet, despite this good news, we should ask ourselves if the
While there are a number of explanations for these trends, a common
reason advanced is that
So the challenge for us is to encourage more
The good news for
Examples of these trends include:
· In the eight rounds
of multilateral trade negotiations since 1947, the average tariffs of
industrial countries have come down from 38.5 percent to just 4 percent. The
major developing countries have also bound most of their tariff rates,
promising to keep customs tariffs under a ceiling.
· Travel abroad by
· Telecommunications
infrastructure investment in low- and middle-income countries has grown from
$60 billion in the 1990 to 1995 period, to almost $300 billion in the 1996 to
2003 period.
· Domestic credit to
the private sector in low- and middle-income countries has grown from 39
percent of GDP in 1990 to 59 percent of GDP in 2003.
These changes are part and parcel of a period of healthy global
economic growth. The International Monetary Fund forecasts that the global
economy will grow in 2006 at more than four percent for the fourth consecutive
year. The last fifteen years have seen the transformation of the Chinese and
Indian economies and the integration of Eastern Europe and the former
What we see, therefore, is that while the
Using partnerships to further boost trade promotion
Given the enormous opportunities for
Why is this critical? By way of illustration, the Commercial Service
counseled over 140,000 American companies last year – a sizable number when you
consider that our figures show that about 232,000
So how to reach them? When you consider the
Federal Government’s ability to contact these firms -- compared to private-sector
· I would like to
highlight one of our partnerships. In 2004, the Commercial Service struck a
partnership with FedEx based on a shared interest in increased outbound
shipment volume, worldwide reach, and an SME client base and customer focus. We
now cooperate on a wide range of
Commercial Service programs and services are now featured in FedEx’s monthly eNewsletter sent to 120,000 FedEx clients. We have participated in more than 110 marketing events with FedEx to showcase the assistance available and 160 smaller international seminars covering a variety of topics important to American exporters. These efforts have significantly expanded the reach of our skilled trade specialists.
Commerce is cultivating partnerships with a wide range of other private sector enterprises.
· The Commercial
Service’s partnership with PNC Bank, begun in 2005, is based on a shared
commitment to assisting firms navigating the uncertainties of foreign markets.
Activities include joint seminars, web-based conferences, and training.
· The Commercial
Service’s latest partnership is with eBay, providing greater visibility for
U.S. Government export promotion programs in this huge marketplace. We expect
this partnership to help government stay in tune with the importance of the
Internet to international transactions.
Going forward, we stand ready to offer the same terms to other interested and qualified companies sharing our goals of export education and trade facilitation.
Commerce is not alone in looking to partnerships to reach more firms.
· OPIC has been an
innovator in changing its operations and programs in order to make them more
accessible to small businesses. It is developing a sophisticated new model for
leveraging private and public partnerships. The Enterprise Development network
will be a strategic alliance among financial institutions, brokers, and law
firms designed to facilitate efficient delivery of OPIC funding to SME
projects.
· Ex-Im Bank’s City-State Partner Program now has 45 city-state
partners in 35 states, including in January 2006, an agreement with
California’s Centers for International Trade Development with 14 offices
throughout the state.
· SBA’s Office of
International Trade works with several large internal and external partners to
reach more companies, including its own network of SBA District Offices, Small
Business Development Centers (often based at universities), and SCORE service.
· The U.S. Department
of Agriculture, Foreign Agricultural Service, also relies upon partners such as
the states themselves, State Regional Trade Groups, the AgTrade
Coalition (consisting of more than 100 associations), and other major groups to
reach out to the private sector.
In the coming year, the TPCC agencies will strengthen current partnering arrangements with the private sector and seek new partners that align government and partner goals targeting various market segments.
At the same time, Federal agencies will continue to work closely with our state and local partners. The multiplier relationships they have established and nurtured for years include organizations like state economic development agencies, city export programs, district export councils, and the like. Our officers stationed in embassies and consulates worldwide work closely with American Chambers of Commerce (AmChams), which provide information on market access issues and commercial opportunities.
These networks, fully established and operating, are working well. For example, state partners are working closely with the Commercial Service to organize trade missions to key markets. But I believe that we can do more, through building a network of private-sector multipliers, to reach potential and current exporters.
In support of our new focus, I have detailed the TPCC Secretariat to the U.S. Commercial Service. Linking the TPCC to the operational unit responsible for our promotional efforts is a good fit given our emphasis on promotion and partnership. This change also addresses the need to continue improving coordination between agencies, particularly in growth markets and with new FTA partners.
While focusing on promotion, we remain committed to coordination
While we see an additional emphasis on promotion and partnerships, the TPCC will continue to be a force for more strategic and effective coordination between the agencies.
TPCC agencies will continue to leverage resources in priority markets. For example, this past fall, Secretary Gutierrez led a trade mission to the CAFTA-DR countries that included twenty U.S. companies (mostly small firms), as well as the heads of the Small Business Administration, Overseas Private Investment Corporation, and the U.S. Trade and Development Agency, and senior officials from Export-Import Bank, the Millennium Challenge Corporation, and the Inter-American Development Bank.
As a follow-up to this trip, agencies have been meeting on priority
projects and trying to ensure that trade mission participants see positive
results. USTDA consultants have traveled to the region and have received
concrete recommendations for projects that support USTDA’s
Central America Trade Integration Initiative. USTDA will follow up on this work
with a trip in June . OPIC and USTR will visit
countries that have implemented the CAFTA-DR agreement this May to announce a
number of investment and technical assistance programs. Ex-Im
Bank will visit the region in June to explore potential projects in the energy
and transportation sectors. The Commercial Service has conducted over twenty
outreach events throughout the
Agencies have also pursued close cooperation regarding trade promotion
opportunities with new FTA partner
In short, the TPCC is now even more vital in reaching