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Assistant Secretary of Commerce Nicole Y. Lamb-Hale
Manufacturing and Services
"The National Export Initiative – Doubling Exports in Five Years"
BAFT-IFSA 20th Annual International Trade Conference
Friday, November 5, 2010
New York, New York
As prepared for delivery
Introduction
I'm very pleased to have been invited to BAFT-IFSA’s 20th Annual Conference on International Trade – to be here with the people who make sure that U.S. exporters have the financing they need to keep our exports flowing around the world.
I have three goals this morning: 1. to tell you of the Obama Administration’s National Export Initiative, 2. to make sure you know what we are doing at the International Trade Administration to help U.S. exporters; and 3. to look for more ways that we can work together to increase the competitiveness of America’s exporters.
As you know, we are now seeing signs of improvements in the economy, which is growing at a rate of 2.4 percent as of the second quarter of this year, compared to a year ago.
The numbers are heading in the right direction, but they are still not where we want them. We still have the challenge of achieving sustainable growth for our economy and creating jobs. Expanding international trade and opening markets for U.S. firms is one of our best options for redirecting the American economy and it is one of the key missions of the International Trade Administration.
We, as a nation, have often not put as much focus on trade in the past because so much of our growth has been domestic-based. The share of our nation’s gross domestic product generated by exports is slightly more than 12 percent -- way below Canada’s 29 percent and Germany’s 41 percent.
In 2008, U.S. exports supported more than 10 million full- and part-time jobs. Imagine what our economic position and our unemployment rate would be if we could only double the share of exports as a percent of GDP in this decade.
Exports and trade were accelerating before the economic downturn that began in December 2007. Exports as a percentage of GDP in 2008 reached the highest levels since 1929. The upward growth of trade in an expanding global market holds great opportunities for U.S. businesses and cities and regions whose leaders are thinking strategically about the future growth of their local companies.
Growth in the world economy will be more and more driven by nations seeking to improve their standards of living – generating demand for goods and services that will increase over time. A new global middle class is emerging and creating new global markets for our goods and services. By implication, U.S. companies will have greater prospects for success by seeking export opportunities.
Another way to think about this opportunity is that 95 percent of the world’s consumers live outside the United States. We must appreciate these implications – especially because workers in companies that export tend to earn higher wages – as much as 18 percent in some industries.
And one of the reasons I am so pleased to be here this morning is that the members of BAFT-IFSA will play a very important role in ensuring this growth.
Introducing the National Export Initiative
Exporting is good for American business, good for American workers and good for American jobs. That is why President Obama set the goal of doubling U.S. exports in five years and that is why the Obama Administration is committed to working with U.S. companies to help ensure that American-made goods and services succeed in the global market.
Put simply, when America exports, America prospers. At a time when Americans are saving more and consuming less, exports can help to create the jobs needed to bring unemployment down and help to assure a strong and durable recovery.
Yes, the President’s goal is ambitious. Exports would need to grow from $1.57 trillion in 2009 to $3.14 trillion by 2015. We believe that while it is achievable, it can only happened if America’s companies, farmers and small and medium-sized enterprises – the engines of economic growth – receive the information and and support they need as they seek opportunities outside our borders.
With that backdrop, I’d like to tell you what the Department of Commerce and my unit, Manufacturing and Services, are doing to expand exports.
Intro to Manufacturing and Services
My division, Manufacturing and Services, or MAS, is uniquely positioned to play a leadership role in enhancing U.S. global competitiveness.
We employ over 200 industry experts and economists who understand, monitor and advise policy makers on these industries that comprise over 90 percent of the U.S. economy.
Under my leadership, Manufacturing and Services follows a three-pronged approach, which I've called “The 3 Cs”: to convene, to collaborate, and to connect.
We convene experts both inside and outside of the federal government to work toward solutions to the problems faced by U.S. industry.
We collaborate with agencies across the federal government, and with state and local governments to develop solutions that will sustain and increase the global competitiveness of U.S. industry.
And we connect industry to the resources and tools available in the federal government to forge a path to sustainable, highly-skilled jobs for the 21st century economy.
By using the “3-C’s” we at Commerce are helping U.S. firms expand exports by increasing access to trade finance, identifying market access opportunities, participating in trade promotion events, enforcing existing agreements, advocating for equal opportunities, and enhancing public-private partnerships.
Increase Access to Trade Finance
One of the key components for the success of any export program is ensuring the availability of trade credit. We know that increasing the availability of export financing is a critical issue for all U.S. exporters and international financial institutions like BAFT-IFSA.
You provide the “greese for the export engine” - the trade credit that enables exporters to obtain working capital and loans. You provide the capital that supports foreign buyers purchasing U.S. goods and services, and you provide insurance to exporters wanting to mitigate foreign commercial and political risk.
The vast majority of this credit is and will continue to be provided by institutions from the private sector such as yours. However, as you know, government trade finance agencies such as the Ex-Im Bank, and SBA can step in to fill market gaps, providing support when there is greater real or perceived risk.
Importantly, over the past two years, private sector financing gaps for U.S. exporters widened considerably. Critically, Ex-Im Bank has responded aggressively to fill this gap.
In fiscal 2010, which ended last month, Ex-Im financing totaled a record $24.5 billion, supported an estimated $33 billion in export sales and 227,000 U.S. jobs.
My division collaborates directly with Ex-Im Bank in their efforts to make more credit available. We are committed to increasing outreach to exporters, foreign buyers and bankers to build awareness of Government assistance, and making it easier for exporters and other customers to use Government credit programs by streamlining applications and internal processes.
Working in cooperation with Ex-Im Bank and SBA, the Department of Commerce arranged for over a dozen half-day export finance seminars across the county, focusing on new-to-export SMEs and those who face challenges in accessing capital for export transactions.
In fact, I am told that the idea to hold these conferences grew out of discussions that RJ Donovan, my director for financial services, had with many people in this room during your conference in California, and which turned into full-day regional trade finance conferences in Miami (200 participants) last year and in Cleveland (100 participants) last summer.
These events are great opportunities for local exporters to meet one-on-one with trade finance providers. Indeed, we do something a bit different. Usually we arrange them so that following a full morning of “how to” discussions, we actually hold matchmaking sessions so that you can meet new exporters.
Upcoming conferences are scheduled for Pittsburgh (November 19) and Philadelphia (December 8), and future events are also planned for other areas most hard-hit by the recession.
Identifying and Addressing Market Access Opportunities
Another very important component of the NEI calls for us to to identify export opportunities in key markets that can be expanded rapidly. I know that my colleague Christine Bliss was here yesterday and provided some specifics on these issues but I will briefly elaborate on how we are contributing.
Take Korea for example. The Korean FTA (KORUS) would increase goods exports by an estimated $10-11 billion, which would support an estimated 70,000 jobs. Korea is the second-largest services market for the United States in Asia, following Japan. However, even though U.S. financial services companies have made major investments in Korea, it remains a challenging market because of complex regulatory procedures and other non-tariff barriers.
To address these issues, the U.S.-Korea FTA includes possibly the strongest ever chapter for financial services. Some have called it the “gold standard” by which other FTAs might be judged. It will create a more level playing field for U.S. financial services companies in Korea and establish a more competitive market environment, which we expect will generate significant new business and benefits for financial services firms.
Specifically, U.S. firms will have the right to full ownership of a financial institution in Korea, including the establishment of branch banks, insurance companies, and asset managers. Financial services companies will have the right to supply cross-border a specified list of financial services and to regionally integrate their data processing operations.
The gains from the agreement could significantly exceed this estimate when reductions in non-tariff barriers and increases in services exports are included. Not only would BAFT-IFSA members gain from increased access to the Korean financial services market, they would also gain through the success of their trade finance exporting clients.
Korea is one example. We are deeply committed to opening the markets that matter most for U.S. financial services companies. We consult with governments and ministries on the benefits and commitments to liberalize and facilitate the development of their financial sectors. Through advocacy and trade diplomacy we also work on behalf of individual U.S. banks to persuade governments to provide equal access and honor trade commitments.
We understand the importance of explaining to our foreign counterparts how U.S. financial institutions can bring to their countries the industries’ best practices and expertise, promote technology transfer, and improve domestic prudential supervision.
With USTR and Treasury, we are working to provide greater access to the Chinese financial sector for U.S. companies. Through direct consultation, participation in high-level government and industry forums such as the Joint Commission on Commerce and Trade (JCCT) and the Strategic Economic Dialogue, we are working to ensure fair and equal access for U.S. financial services firms.
In addition to our extensive trade diplomacy in China, we are also engaged in opening the Indian market to U.S. financial companies. Our message is: allowing foreign capital to enter domestic financial markets increases the availability of funds, improves the availability of credit increases liquidity and lowers the cost of capital, thereby stimulating investment and economic growth.
We continue to consult and work with the Indian government on the transition of India’s banking sector toward the private sector. We remain committed in our efforts aimed at the efficient and fair approval of banking licenses for U.S. banks and financial services companies.
Be assured that the Department of Commerce, USTR and other U.S. government agencies are dedicated to furthering these trade agreements and opening key markets for U.S. exporters and the financial services community.
Focusing on Trade Promotion
While improving market access is critical, trade promotion is another key component of our strategy and I encourage you to think of ways that trade promotion can help the banking industry.
Since January, the Commerce Department has coordinated an unprecedented 20 trade missions in 25 countries with more than 250 companies participating. These trade missions have resulted in an expected $2 billion in increased exports.
We have also recruited nearly 8,800 foreign buyers to visit major U.S. trade shows here in the United States, facilitating over $660 million in export successes since January 2010. These “International Buyer Program” events match exporters with foreign buyers, here in the U.S., so that they don’t have to travel overseas.
While we have not held a financial services-focused trade mission, it is something that we would be pleased to consider if you think it would be valuable. I would ask you to think about the benefits of trade promotion, perhaps a trade mission to a key market – and to let us know what might make sense for BAFT-IFSA members.
Advocating for Equal Opportunities
We are also strongly advocating for trade opportunities. Advocacy assistance promotes U.S. exports, supports U.S. employment and increases global market share for U.S. businesses. In many cases, advocacy counters foreign government support and political pressure, thus "Leveling the Playing Field" for U.S. companies.
Advocacy encourages transparency, promotes fair treatment of U.S. companies and addresses bribery and corruption in tender processes.
Our “Advocacy Center,” has coordinated assistance for U.S. firms competing for international contracts and other U.S. export opportunities -- supporting an estimated $11.8 billion in export content, and an estimated 70,000 jobs.
Advocacy can take many forms. If you are competing for an overseas procurement, and a foreign competitor is receiving high level support from their government, our Advocacy might be able to help. This assistance could come in the form of a letter from our Ambassador at post, bilateral meetings during an official visit to help support your efforts, perhaps even a letter of support from the Secretary of Commerce.
Keep our ability to advocate for you in mind, especially if your institution is interested in expanding into new markets and runs up against issues that we can take directly to a foreign government and thus help “level the playing field” for you.
Public-Private Partnerships
As I have mentioned, trade finance partnerships are key for the success of the NEI and ITA’s Strategic Partnership Program is an excellent example of how we can work together to deepen our outreach efforts to exporters.
Through our Commercial Service, we are dedicated to increasing the number and scope of public-private partnerships to reach more and more firms, especially SMEs.
To broaden and deepen the U.S. exporter base, our Strategic Partnership Program is leveraging partnerships with trade associations and private corporations. These partners include several banks, some of who are here today. Through these innovative public-private partnerships, we are making companies that might not know about our programs aware of our trade promotion and finance resources, and we are letting them know of global business opportunities.
We appreciate the support of BAFT-IFSA members in making critical programs such as the Strategic Partnership Program a success. Just think, if we can get the bulk of U.S. exporter, who mostly export to only one country – to export to two, we will be well on our way toward meeting the President’s goal.
Enforcement of Existing Agreements
Lastly, enforcing trade obligations is a critical component of the NEI. As we try to open new markets, we must ensure that our exporters have the opportunities they were promised in prior agreements. Robust enforcement is both a short-term and long-term priority and an effective way for the Federal Government to help increase exports.
We are committed to redoubling our efforts to rigorously monitor and enforce existing FTAs to help ensure a level playing field for U.S. exporters.
In 2010 the Commerce Department’s Trade Agreements Compliance Program has successfully addressed 50 different barriers to trade affecting U.S. businesses in 33 different markets, and has initiated action on behalf of U.S. exporters and investors in 120 different cases.
In some priority markets we use “dialogues” through high level government meetings such as the China Strategic and Economic Dialogue or the Joint Commission on Commerce and Trade forum, and the India Trade Policy Forum.
For others we also depend or rely on high level interactions between business leaders through dialogues such as the U.S. Brazil CEO Forum. These dialogues and working groups are important tools for ensuring a level playing field for U.S. exporters and service providers.
At Commerce we will continue to work hard within the Administration to enforce existing U.S. trade laws, such as the antidumping and countervailing duty laws, as well as other trade obligations under our trade agreements.
Conclusion
To conclude, through focused trade promotion, identifying and communicating market opportunities, focusing on trade finance, negotiating for trade agreements and greater market access, advocacy, enforcement and the establishment of strong public/private partnerships, I am confident that we can meet the Presidents’s export goal.
But we can’t do this without you and the contributions of BAFT-IFSA members. So please remember, as you work to expand markets for financial services and provide for trade finance for America’s exporters, that we at Commerce are hard at work and very much want to hear from you.
If there are issues affecting the availability of trade finance, I want to hear about them. If you are not able to break into a key market, bring it to our attention. As you know, the Commerce Department is not a regulator. That means as I said at the outset, we can CONVENE, COLLABORATE AND CONNECT – bringing your issues to the table.
Let me know how we can work more closely together.
Thank you for inviting me. I hope that you enjoy the rest of your conference.
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