Blog - January 2010

The Office of the U.S. Trade Representative and the U.S. International Trade Commission (USITC) will hold a public hearing to investigate small- and medium-sized enterprises export activities on Tuesday, February 9. The hearing in Courtroom A of the USITC Building at 500 E Street SW will specifically investigate "Small and Medium-Sized Enterprises: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms" and "Small and Medium-Sized Enterprises: Characteristics and Performance."

USITC will also hold two field hearings in St. Louis, Missouri on Wednesday, March 10 at 9:30 a.m., and in Portland, Oregon on Friday, March 12 at 9:30 a.m. For details on these hearings, visit the USITC website here.

Ambassador Kirk requested an investigation by the USITC to better understand how many of America's small- and medium-sized enterprises export now, their role in generating employment and economic activity in the U.S., and how increased trading opportunities might benefit these businesses and their workers.

The first report, "Small- and Medium-Sized Enterprises: Overview of Participation in U.S. Exports," was published on January 19, 2010, leading up to USTR's January 21 conference "Jobs on Main Street, Customers Around the World: A Positive Trade Agenda for U.S. Small- and Medium-Sized Enterprises" and a week-long intensive focus on exporting opportunities and challenges for small-and medium-sized enterprises.

USITC will product two more reports for USTR this year on the topics covered in the February 9 hearing and subsequent field hearings.

United States Trade Representative Ron Kirk spoke on Thursday morning to attendees of the Black Enterprise Wal-Mart Economic Forum in Washington, DC.

In his remarks, Ambassador Kirk reviewed President Barack Obama's comments on trade in Wednesday night's State of the Union address, and talked about USTR's efforts to support American job creation through trade policy that increases U.S. exports.

You can view the President's remarks on trade here.

President Obama focused on job creation in his State of the Union speech last night, highlighting an initiative on increasing American exports to support good jobs here at home. USTR is working hard to reduce trade barriers around the world so that America's businesses can sell more of their products in the global marketplace.

Read excerpts from a Reuters article about this effort below, and read the full article here.

"President Barack Obama on Wednesday launched a drive to double U.S. exports over the next five years in a move that reaches out to business groups and Republicans who have criticized his inaction on trade.

"We need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America," Obama said.

"So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America," Obama said.

...

To accomplish that goal, Obama announced a "National Export Initiative" to help farmers and small businesses sell more of their goods overseas, and also promised to reform export controls that high-tech manufacturers say are out of date."

On Tuesday, Ambassador Kirk and USTR staff met with Ford Motor Company CEO Alan MuLally. Also in the meeting were Deputy USTR Demetrios Marantis, Assistant USTR for Small Business, Market Access and Industrial Competitiveness Jim Sanford, Assistant USTR for Japan, Korea, and APEC Affairs Wendy Cutler, and Lisa Garcia, Assistant USTR for Intergovernmental Affairs and Public Engagement.

At their first meeting, Ambassador Kirk and Mr. MuLally discussed how USTR and U.S. manufacturers like Ford can work together to rebuild the economy and to support jobs at home by getting more quality U.S. cars into existing, as well as new and emerging markets.

Ambassador Kirk welcomed the news that Ford will bring nearly 1200 new jobs and significant investment to the Chicago region with its plans for the next generation Explorer SUV, and committed to continue USTR's work to open foreign markets to this and other American-made vehicles. They also discussed outstanding issues with regard to autos and the pending US-Korea Free Trade Agreement.

Trade policy can be an innovative tool to help grow America's economy. And in the midst of the current economic recovery, Americans need a trade policy that is focused on creating well-paying jobs. President Obama and Ambassador Kirk are working hard to make sure that trade benefits American workers and families.

At a town hall in Elyria, Ohio on January 22, President Obama talked about how increasing exports by just one percent would create hundreds and thousands of jobs. Watch the video below on how the Obama Administration is working to create jobs through trade.

This week, USTR policy offices continued efforts to examine how trade policy can be more responsive to small- and medium-sized businesses - to help them increase their exports to the world and hire more workers here at home.

• The World Trade Organization (WTO) and Multilateral Affairs Office joined the Small Business, Market Access, and Industrial Competitiveness Office and the Trade and Development Office today in meeting with association/company reps in three key industrial goods sectors - chemicals, electrical/electronics, med devices - in light of the relatively large role of small- and medium-sized businesses in these sectors and active USTR market access negotiations/initiatives in these sectors (e.g., DDA, APEC dialogues, GSP, etc). They discussed how various initiatives can assist smaller exporters as they tackle foreign markets. Initiatives of the WTO and Multilateral Affairs Office include, for example, efforts at the WTO to reduce trade barriers and improve transparency abroad through negotiation with countries wishing to accede to the WTO; efforts in the WTO Doha Round negotiations to reduce non-tariff barriers; efforts in the WTO committee responsible for standards and technical regulations to facilitate small- and medium-sized businesses participation in setting standards; and trade facilitation efforts at the WTO and in bilateral and regional negotiations to streamline and improve the transparency of the customs regimes of our trading partners, in order to reduce the costs of border delays and to help simplify the requirements smaller exporters face.

• Also today, the Assistant U.S. Trade Representative for African Affairs Florie Liser chaired a roundtable discussion on trade opportunities for small- and medium-sized businesses in Africa. The roundtable was hosted by the Prince George's County, Maryland Africa Trade Office (ATO) and was part of USTR's week of events on improving trade policy for America's small- and medium-sized businesses. The roundtable was attended by small- and medium-sized businesses that are either already doing business in Africa or that are interested in doing business in Africa, so that they could discuss their issues, concerns, success and challenges. She informed the group about USTR's efforts to boost small- and medium-sized businesses trade and sought their input in developing new ways that USTR can support SMEs in strengthening their trade and investment with Africa. Watch for information on a podcast from this event.

• The Office of China Affairs met with representatives of the U.S. China Business Council on January 20 to discuss the experiences of small- and medium-sized enterprises in exporting to and investing in China and what USTR can extrapolate from their successes and challenges to promote trade for similar companies in the future. On January 21, the Office of China Affairs met with the U.S. Chamber of Commerce's Asia Department and TradeRoots, the national trade education program dedicated to raising public awareness about international trade. They discussed existing programs that support small- and medium-sized enterprises in exporting to China and explored possible areas of greater coordination as USTR looks to expand its trade promotion efforts in support of these crucial drivers of economic growth in the U.S. economy.

• USTR's Office of Intellectual Property and Innovation hosted a lunch today on international copyright issues facing small- and medium-sized businesses. At the lunch, negotiators from various offices at USTR heard from representatives of labor unions and trade associations belonging to the Copyright Alliance. They described international copyright issues affecting small business persons such as photographers, musicians, special effects artists, and designers of software apps for mobile devices. The discussion that followed highlighted the international opportunities and challenges associated with new technologies and the Internet, the challenges of measuring the contributions by IP-intensive SMEs to international trade, and how the U.S. trade agenda can advance SME interests in the copyright field.

• The Assistant U.S. Trade Representative for Environment and Natural Resources Mark Linscott and Deputy Assistant U.S. Trade Representative Jennifer Prescott led a roundtable discussion today on "Green trade, SMEs and Supply Chains," hosted by the National Foreign Trade Council (NFTC). Both large and small companies and associations were represented. Tim Richards of General Electric (GE) described GE as an "aggregator of technology" as well as an innovator in its own right. GE relies on thousands of SMEs as both direct and indirect suppliers to its wind and gas turbine businesses, in particular. Mr. Richards urged USTR and other U.S. government agencies to streamline its advocacy and finance programs for clean energy and small- and medium-sized businesses. He also advocated strongly in favor of an agreement to free trade in environmental goods and services, even if such an agreement had to be built incrementally, starting with climate-friendly goods and expanding its product scope and member participation over time.
  
  Dawn Kristoff Champney of the Wastewater Equipment Manufacturers Association (WWEMA) talked about the importance of strong environmental regulatory regimes, IPR protection, financing and incentives, and free trade to the waste water treatment industry, which is dominated by small- and medium-sized businesses. She also emphasized that the United States must lead by example to show how open markets drive innovation and create jobs here at home, and made reference to her members' experience in Chile, which is their largest growth market in Latin America since the implementation of the U.S.-Chile Free Trade Agreement. Several participants noted that SMEs do business in markets that are easiest to navigate, and in this regard, several companies - ranging from large multinational like GE to small companies like Syngest - spoke of growing concern about protectionist policies emerging in China. They urged USTR and other agencies to continue to press for removal of barriers to the Chinese market in bilateral and multilateral fora. This marked the first in a series of discussions to help USTR better understand and integrate SME-related interests into our trade and environment policy initiatives.

Keep watching the USTR blog for more events to boost American job creation by helping small- and medium-sized enterprises sell their goods and services to the world.

Ambassador Kirk is currently hosting a USTR Conference event "Jobs on Main Street, Customers Around the World: A Positive Trade Agenda for US Small- and Medium-Sized Enterprises."

Ambassador Kirk spoke at the conference about how USTR is working to help small- and medium-sized businesses expand their exports in the global marketplace through a robust trade policy agenda.

"I know that many of you in this room are small- or medium-sized business owners yourselves. Critical enterprises like yours - from multigenerational family operations to brand-new start-up companies - are the backbone of the American economy. Today, there are nearly 30 million small- and medium-sized businesses of every kind. And during the last 15 years, those businesses have generated almost two-thirds of all new employment. But even among these star job creators, one kind of business shines brightest: businesses that export grow faster, add jobs faster, and pay higher wages."

During the conference, Ambassador Kirk announced the designation of an Assistant United States Trade Representative (AUSTR) for Small Business, Market Access, and Industrial Competitiveness. The position will be filled by Jim Sanford, who now adds responsibility for small business issues to his existing portfolio and previous title of AUSTR for Market Access and Industrial Competitiveness. You can read more about the position and Jim Sanford here.

As part of an ongoing USTR-wide effort to help America's small- and medium-sized businesses export to the world and grow well-paying jobs here at home, policy teams at USTR are stepping up their focus this week on making trade policy more responsive to these smaller businesses - businesses that are big engines of job growth. Here's just a sample of USTR's team activities in support of small- and medium-sized enterprises:

On the first day of this week of intensive focus by USTR on exporting opportunities and challenges for small-and medium-sized enterprises, USTR's Office of the Americas met with the Council of the Americas to discuss how USTR and the Council can collaborate to focus our trade policy efforts to help America's small- and medium-sized businesses create more jobs at home by exporting more in the Western Hemisphere.

On Tuesday, USTR and the Council discussed opportunities and challenges for U.S. small- and medium-sized businesses exporting to the Americas. Consistent with the information released in the first International Trade Commission (ITC) Report on small- and medium-sized businesses that day, they discussed the success of some small- and medium-sized businesses in exporting to higher income destinations and in developing niche markets due to cultural affinities with the region, but noted that further information is needed on how small- and medium-sized businesses contribute to export supply chain in the Americas. They also discussed areas in which U.S. small- and medium-sized businesses exporting to the Americas could take greater advantage of export opportunities, such as the importance of developing foreign contacts.

They also discussed how they could work together with our trading partners to enhance dialogue under our free trade commissions and other trade and investment dialogues in the Western Hemisphere on small- and medium-sized businesses. USTR and the Council also agreed to work together to enhance information exchange on international trade and small- and medium-sized businesses.

Last week, on January 11, the Southeast Asia and Pacific office met with members of the International Trade Advisory Committee on small- and medium-sized enterprises to discuss how best to obtain input from these American businesses in order to ensure that their interests are addressed in Trans-Pacific Partnership negotiations. On January 15, the Southeast Asia and Pacific office met with staff of TradeRoots, the Chamber of Commerce group charged with working with America's small- and medium-sized enterprises to build public awareness about opportunities in international trade, to obtain updates on their activities and to explore opportunities to coordinate our outreach efforts nationally as we seek input from smaller exporters on Asia-Pacific trade initiatives, particularly the Trans-Pacific Partnership.

Keep watching the USTR blog this week for more events to boost American job creation by helping small- and medium-sized enterprises sell their goods and services to the world.

On Tuesday, January 19, 2010, the U.S. International Trade Commission (USITC) released the results of a USTR-requested investigation on the exporting activity of America's small- and medium-sized enterprises (SMEs) - U.S. businesses with 500 or fewer employees. USTR requested this investigation, and two subsequent studies, to bolster our ability to make trade policy responsive to American small- and medium-sized businesses that want to export their products around the world, and to grow well-paying American jobs here at home. This week's Trade Spotlight focuses on the wealth of information to be found in this first USITC report, and what USTR can do to help American SMEs create jobs on Main Street, by finding customers around the world.

The first of three USTR-requested reports from the USITC, entitled "Small and Medium-Sized Enterprises: Overview of Participation in U.S. Imports," is the most comprehensive analysis to date of US SME export participation. You can view the full report here. It consolidates data from the Census Bureau, other branches of Commerce, the SBA, the USDA, and other US and international institutions, and provides USTR with a comprehensive picture of US SME export participation, including areas where SMEs are already active exporters.

This is not yet a complete picture; USITC indicates that it has not yet been able to quantify SME exports through intermediaries, such as their supply-chain contribution to large firm exporters (i.e., indirect exporting by SMEs by sourcing the exports of large firms). Moreover, the ITC found the available data on services sector exporters to be inadequate for an authoritative accounting. The third report that USTR expects to receive from the Commission should provide additional insight into the service sector.

What this report does tell us is that a new focus on making U.S. trade policy more responsive to SMEs is the right call when it comes to a jobs-focused export strategy. SMEs play a crucial role in job creation; during the last two decades, SMEs have accounted for almost 65 percent of new jobs created in the US. Overall they account for half of non-farm US employment. Almost 80 percent of SME employment is within the services sector, compared with 85 percent in larger companies. Firms providing professional, scientific, and technical services account for a larger share of services sector employment within SMEs than in larger firms. SMEs are leaders in minority and foreign-born employment and opportunity. Small and medium employer firms are more likely to be minority-owned and to employ a foreign-born person than larger firms. 11.6 percent of all employer SMEs are minority owned.

SMEs in trade are a big plus for good jobs in America. SME exporters increase employment faster and pay higher wages than non-exporting SME firms. SMEs that export are more skill and capital intensive than those that do not. They deliver on these inputs by demonstrating higher productivity that supports better wages and helps competitiveness.

However, SMEs still are not exporting as actively as larger firms. As a share of their overall business, large US firms are getting three times the value from foreign trade that SMEs are. Overall, exports accounted for only 3.8 percent of SME GDP in 2004. The ITC suggests that many SMEs cannot as easily afford the costs of entering foreign markets, including business risks such as those created by government policies. Based on this information, USTR has a clear mission to achieve in concert with our partner agencies across the government: to help reduce risks, increase opportunities, and lower costs for American SMEs who want to sell their goods and services worldwide.

The time is ripe for this initiative. Technological advances (such as the Internet) and government programs are now opening the door to a larger export role for SMEs. In 2008, the National Association of Manufacturers found that 13 percent of its SME manufacturers now derive at least 25% of their sales from exports, more than triple the share of firms in 2001.

SMEs are key drivers of innovation, which will be a key to a sustainable US recovery, and increased trade can help the SMEs to take advantage of their innovations. Studies show that SMEs produce more patents of significance per employee than big firms. So trade can allow these SMEs to recover their innovation costs over a bigger market and speed innovation by learning how to do multiple adaptations to diverse markets

The largest markets for SME merchandise exporters were with NAFTA partners Canada and Mexico (just like their large firm counterparts). These markets accounted for more than 30 percent of SME merchandise exports. USTR has already agreed with Canada and Mexico to increase our work on further facilitating SME trade.

SME merchandise exporters engage more actively with higher-income small markets--including Hong Kong, Switzerland, Australia, and Israel--than they do to emerging markets like China and India, where uncertainty about government policies may serve as barriers. Trade policies aimed at reducing risks in emerging markets can help US SMEs expand.

The principal SME exports were computers and electrical products, machinery, and chemicals; they also have significant apparel and wood exports. There are still significant non-tariff barriers to these products in wealthy countries and substantial tariffs on these products in many developing markets. We can address these obstacles through trade policy as well.

Though manufacturers account for almost three quarters of total US merchandise exports, trade by wholesalers is growing fast. Whereas manufacturer exporters are overwhelmingly large firms, SMEs account for 57 percent of wholesaler and other non-manufacturer merchandise exports. This type of trade more than doubled between 1997 and 2007, and can be encouraged further through the development of smart trade policy.

There's more in the USITC report on services trade by SMEs, and that information will be enhanced by subsequent USTR-requested investigations. For now, this initial report is a great start that bolsters USTR's understanding of small- and medium-sized business exporting today, how those exports contribute to job creation here at home - and how USTR can help both to grow.

As 2010 begins, and Americans look forward to a new year, USTR is taking a look at how trade can help the economic recovery. This week's trade spotlight is on the current state of trade.

While the economic recession affected global trade in 2008 and early 2009, the United States is showing signs of recovery and economic growth.

However, a closer look at the history of trade illustrates a strong and growing global marketplace. Between 1980 and 2008, trade's share of global GDP rose from 21 percent to 32 percent. Over the same period, global trade grew 6.5 percent annually - nearly double overall global economic growth. In the United States, trade contributed to strong economic growth as more Americans opened shop in the global marketplace, creating jobs and generating prosperity across the country.

From 2008 to 2009, the International Monetary Fund estimates that global trade fell by 12 percent, a result of the global economic recession. In particular, the volume of U.S. international trade in goods and services declined sharply between spring 2008 and spring 2009, falling by 17 percent as the U.S. economy overall contracted.

As America works towards a full economic recovery, export-oriented growth can be a pillar of opportunity. In the third quarter of 2008, with signs of recovery on the horizon, U.S. exports jumped nearly 18 percent, contributing to the first positive quarter of economic growth since the recession began. In fact, exports accounted for over 80 percent of that positive growth.

For instance, Clipper Wind, headquartered in Carpinteria, California, will sell wind turbines, towers, blades and related equipment for use in the construction and operation of a wind farm in Oaxaca, Mexico. This sale, made possible by the Export-Import Bank, will keep 80 workers on payroll in a regional office in Cedar Rapids, Iowa. In Georgia, Suniva - a manufacturer of solar cells and modules - has recently expanded their sales in India, allowing the company to expand and build a plan in Michigan, creating 500 jobs in Saginaw.

Over the next two years, the Organization for Economic Cooperation and Development projects that U.S. exports will continue to increase as the global economy recovers.

Throughout 2010, USTR will nurture that growth by working to create more opportunities for Americans to succeed in the global marketplace - by further opening trade with China, by negotiating the Trans-Pacific Partnership, by moving forward with the Doha round of negotiations, and so much more.