Statement Royce "U.S. Export Promotion Strategy"
Washington,
Apr 24, 2008 -
Today's hearing is on our "Export Promotion Strategy." The Commerce Department's Inspector General has found that the many U.S. agencies tasked with promoting exports aren't coordinating well. I'm not surprised that 18 or so government agencies aren't coordinating well; I'd be surprised if they were.
More basically, I question the worthiness of many of these efforts. The Chairman moved an Overseas Private Investment Corporation reauthorization bill last year. He improved OPIC, without question, but to me, OPIC's essential mission remains misguided. The Congressional Research Service has reported that there is little evidence to "support claims that subsidizing exports or overseas investment offers a positive net gain in jobs to the U.S. economy."
The Agriculture Department's Market Access Program underwrites foreign advertising and other marketing for U.S. agribusiness. At a time of record prices for wheat, does a wheat trade group really warrant a $2 million government grant to promote wheat abroad? The Wine Institute received over $8 million last year to pay for foreign journalists to do wine-tastings in California, among other activities.
Looking at the "national export strategy," the GAO found: "The focus of the national export strategies continues to change from year to year with little evaluation of previous years' effectiveness." Is that a surprise? The burden of proof should be on these agencies to prove that they have unique abilities to pick the best countries and markets to focus on -- that they offer value-added. Yet their accomplishments are heavy on anecdotes, and near impossible to quantify. In 2005, over 51,000 companies exported goods from Californian locations. I'd guess relatively few found U.S. government export promotion services to be important. I’ve seen enough of government not to expect much from a national export strategy.
The national export strategy is on the mark on one point: its emphasis on free trade agreements. You can't sell the goods if they’re taxed out or otherwise boxed-out of foreign markets, whatever the Ex-Im Bank or the Trade and Development Agency might do. On the other hand, U.S. exports to countries with which we've struck trade agreements jump dramatically -- Jordan: 92 percent; Singapore: 42 percent; and Chile: 150 percent.
Unfortunately, this Congress has knee jerk opposed trade agreements. Consider Colombia. Earlier this year, this Congress passed legislation allowing most all Colombian exports to enter the U.S. market tax-free. Yet the Majority two weeks ago shot down an agreement on the table that would force Colombia to reduce substantially its taxes on U.S. goods. So U.S. exports will remain far less competitive than they should be in Colombia. Opponents must answer a simple question: "What's wrong with a two-way street for American businesses?"
Rejecting the Colombian agreement alone won't have large economic consequences. Our trade with Colombia is relatively small. But the Majority's opposition to the Korea trade agreement --which would add an estimated $10-12 billion to our GDP each year-- and its opposition to trade in general is a great concern at a time when U.S. exporters have been described as "lifesavers" in these tough economic times, and leading U.S. companies are generating over half of their sales abroad. The world, and certainly Korea, will move ahead without us; Korea will do deals with China, Japan, and the EU, to our detriment. So let's give U.S. companies, many facing road blocks abroad, greater access to markets, not less. By far, that's the best export promotion strategy we have.
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