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Nov 07

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GE’s Immelt Says U.S. Not Trying Hard Enough to Promote Exports – Is He Right?

Last month, GE’s Jeff Immelt told a Thomson Reuters event in New York that, as a nation, the U.S. is not trying hard enough to promote U.S. exports and win business overseas.  He held out Germany as an example of a country who goes ‘all out’ in supporting its companies’ efforts to sell more overseas, noting that, unlike the U.S., Chancellor Angela Merkel regularly takes German CEOs with her on diplomatic visits.

Yes, Germany is the export-champion of the world, but does this mean that Mr. Immelt is correct – should the U.S. government being doing more?

To help answer this question, below is a quick tour of some of the U.S. government efforts to support exports.

#1: Business missions

It turns out that Chancellor Merkel is not the only one taking groups of CEOs around the world to promote exports.  In 2010, the Department of Commerce (DOC) organized 36 trade missions to 34 countries.  All in all, 344 companies accompanied senior U.S. government officials around the world.  In just the past 6 weeks, the DOC’s Under Secretary for International Trade, Francisco Sánchez, has led two business missions: in September, he took 19 clean energy companies to Mexico and in mid-October he led U.S. biotechnology companies to China and Hong Kong.

#2: Export promotion architecture

Beyond the headline VIP trade missions, the U.S. Commercial Service is the government’s official day-to-day trade promotion arm.  Currently, it has over 100 offices in the U.S. and over 120 offices located in U.S. Embassies and Consulates in 75 countries around the world dedicated to increasing U.S. exports.  Unlike some other government services which rank up there with a visit to the dentist, the Commercial Service strives to be ‘client-focused’ with 88% of their clients in 2010 saying they were ‘satisfied’ or ‘very satisfied’.  And their numbers look good too – in 2010, the Commercial Service facilitated over $34 billion in U.S. exports, a 76% increase over 2009.

#3:  State-level support

To help lessen the persistent strains on state budgets, in September, states received $30 million in federal grants to provide export assistance to small businesses.  The financing is part of the State Trade and Export Promotion Program (STEP Program), a 3-year federally-funded pilot trade and export initiative.  While each state has their own objectives, the grants are mainly designed to support companies who want to participate in foreign trade missions or trade shows, to help defray costs for foreign market sales trips, and to develop international marketing materials.

#4: Financing

Companies can also get help with financing their export expansion efforts.  The Export-Import Bank (Ex-Im Bank) is the export credit agency of the United States.  In general, the Bank fills in the gaps in private-sector financing by assuming credit and country risks that may be too high for private banks.  In 2010, the Bank provided $24.5 billion in loans, guarantees, and export-credit insurance supporting over $34 billion in U.S. exports worldwide.  While Ex-Im operates in about 175 countries, its target markets are Brazil, Colombia, India, Indonesia, Mexico, Nigeria, South Africa, Turkey and Vietnam.

Looking at just these four initiatives, is Mr. Immelt correct – does more need to be done?  Is Germany out-classing the U.S. in its support for business?  While there is always room for improvement, this quick circuit of government support for exports indicates that Mr. Immelt may not have done his homework.

That said, perhaps it’s the question that’s off-the-mark.  Germany’s status as a champion exporter has more to do with its overall economic model and the fact that exports are the foundation of its economy.  And, while both the U.S. and Germany support their countries’ exporters, they can only do so much.  In the end, it’s the competitiveness of the companies’ products and services coupled with their desire and persistence to be successful exporters that determines their fortune in international markets.

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