Doubling Exports: Not So Easy As Planned
Remember the plan to double exports as a way to rebuild the US economy? The New York Times has analyzed the progress so far, with mixed results, and highlights the many barriers to achieving the goals of the National Export Initiative (emphasis mine):
Opening access to foreign markets, especially the fast-growing developing countries in Asia and South America, remains a politically touchy matter that will require the cooperation of Congress. A free-trade agreement with South Korea that was negotiated under President George W. Bush and that has been endorsed by Mr. Obama still awaits Congressional ratification, as do agreements with Colombia and Panama, and important issues remain unresolved in each.
Even more critical, by some measures, is the rising strength of the dollar, which increases the cost of American goods and makes them less competitive. The dollar has risen in value relative to the euro and the pound and remains overvalued, in the view of many economists, against China’s renminbi.
“When the dollar does get excessively valued relative to other currencies, exports don’t grow, period,” said Franklin J. Vargo, a former Commerce Department official who is the vice president for international economic affairs of the National Association of Manufacturers.
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Exports in the first four months of 2010 have increased by 17 % versus the same period in 2009. Imports, however, are growing even faster. In May, the trade deficit in goods and services was $42.3 billion, up from $24.9 billion a year earlier.
Another problem for US manufacturers looking to pump up their exports is the difficulty in decoding tariff rates and exporting to countries with high tariffs. One major apparel manufacturer, urged officials to make it easier for exporters to find accurate data on tariff rates.
Exporters often struggle with the complex rules and documentation required by foreign governments. Additionally, each country to which they export has its own set of regulations. Exporters sometimes resort to simply overpaying “just to be safe,” resulting in loss of potential revenue. Other exporters face delays, resubmitting their documentation and payments, or pay unnecessary fines when they don’t follow the import regulations exactly.
Exporting your product into a country with high import tariffs also puts a damper on growth- your products won’t sell when they’re significantly more expensive than the competitors. For example, a wine industry expert says, “The single most restrictive barrier to wine exports remains the high import tariffs of most of the major markets buying U.S. wine today.”
Read more about the barriers to increasing exports at the New York Times: Hurdles Deter Obama’s Pledge to Double Exports.
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