The Obama Administration Improves US Export Policies
On May 10, data released by the U.S. Commerce Department showed that the total value of U.S. exports in April was $182.9 billion and imports were [valued at] $233 billion; the trade balance deficit was $50.1 billion — a decrease of 4.9 percent. Between January and April, U.S. exports increased by 9.1 percent — indicating that the Obama administration is gradually realizing its “plan of doubling U.S. exports in five years.”
On March 11, 2010, Obama signed Executive Order No. 13534, which declared the implementation of the National Export Initiative and proposed the strategic target of “the plan of doubling U.S. exports in five years,” which involves doubling U.S. exports and creating 2 million jobs domestically over the next five years. It is safe to say that the National Export Initiative has achieved its initial goal in the last two years. According to the U.S. Commerce Department’s data, U.S. exports in 2011 hit a historic high, reaching $2.1 trillion — an increase of 33.5 percent compared to $1.57 trillion in 2009. The increase created 1.2 million jobs. Following such a trend, it is promising that the National Export Initiative’s strategic target will be realized in three years, since theoretically, the “plan of doubling exports in five years” can be achieved if exports increase by 15 percent annually. In the past two years, the average expansion rate of American exports has reached 15.6 percent; in addition, the new jobs that have been created have helped realize 60 percent of the goal set by the [five year] plan.
The question is: How did the Obama administration achieve such accomplishments? The answers behind its success are a series of measures that the Obama administration took to tackle economic challenges such as the high unemployment rate and high deficit.
First, the Obama administration promoted “commercial diplomacy” and provided “one-stop” services — assisting corporations with marketing their products. Officials from the Commerce Department as well as U.S. ambassadors in other countries took the roles of “salesperson” and “consultant” for American exports, which therefore provided comprehensive assistance for corporations developing a foreign market and expanding their exports. On one hand, the U.S. sends trade delegates to promote and market U.S. products in different countries and seek export opportunities. On the other hand, the U.S. invites foreign buyers to attend U.S. trade expos and encourages U.S. corporations to attend international trade expos where U.S. sales representatives can directly meet with foreign buyers, thus creating more opportunities. In addition, [the Obama administration] enthusiastically promotes “one-stop” services—coordinating between U.S. import and export banks, small business bureaus, the Department of Agriculture and the U.S. Trade and Development Agency to establish “one-stop” service centers in the U.S. and 250 U.S. embassies around the world. The goal was to help U.S. corporations rapidly launch and expand their businesses in new economies.
Second, the Obama administration increased capital for trade and assisted companies with the development of new businesses. Increasing trade capital is key to U.S. exports because [banks fear] the risks involved with big business transactions. This makes private companies, especially those of small sizes, have a difficult time acquiring capital and developing new businesses. Therefore through trade and capital investment corporations like the Export-Import Bank of the U.S., the Obama administration adopted multiple measures to help companies acquire capital and provide comprehensive services for medium and small export companies. First, it offered various loan types through current loan platforms and other innovative financial tools. Second, it expanded the scope of services for exporters, foreign buyers and other trade organizations — establishing an awareness of government assistance. Third, it increased the conveniences of getting government loans for exporters and other clients through improved efficiency in applications and internal processes. For instance, the Export-Import Bank of the U.S. acquired $32 billion of capital in 2011, an increase of 34 percent. Among that, 85 percent was capital prepared for medium and small-sized companies.
Third, the Obama administration reduced trade barriers and helped U.S. firms open up their markets. On one hand, the U.S. improved global, regional and bilateral negotiations and free trade agreement negotiations to lower or eliminate foreign trade barriers. Firstly, it continuously pushed forward the World Trade Organization Doha negotiations, which helped U.S. agriculture, merchandise and service exports develop a larger and freer international market. Second, it proactively promoted the negotiation of the Trans-Pacific Partnership, which expanded the U.S.’ market access to several of the most dynamic economies in the Asia Pacific region. For example on Feb. 7, the U.S. and Japan held the first official negotiation with respect to the Trans-Pacific Partnership. Third, it solved the remaining problems in the bilateral free trade negotiations between some important trade partners, such as Korea, Panama and Columbia. In addition, it promoted bilateral negotiations with China, Russia and other important trade partners in order to increase exports to these countries. On the other hand, they greatly reformed the export control system of U.S. strategic and high-tech industries under the premise that American security is not affected. Reducing barriers for high-tech product exports therefore enhanced the competitiveness of key American industries, which will consequently increase their market shares.
Fourth, the Obama administration strengthened the enforcement of trade rules to ensure "fair trade" and protect the U.S. domestic market. Initially, it strengthened the enforcement of the World Trade Organization trade rules and U.S. trade agreements. For instance, it strengthened the enforcement of sanitation standards as well as plant and veterinary inspection standards, which ensured that U.S. agricultural products enjoy "fair competition." Another example is the use of the 337 clauses and other measures that increased the protection of American intellectual properties. Obama believes that creativity and originality are a unique wealth of U.S. and the root of U.S. prosperity — it is even more important in the 21st century. The only way to prevent U.S. intellectual properties from being stolen and to ensure “fair competition" is to use the 337 clauses and similar ways to build up protections. Third, they protected their domestic market by utilizing trade subsidies with anti-subsidy, anti-dumping and anti-safeguard measures of the “two against and two protection.” For example on March 20, 2012, the U.S. Commerce Department announced the final results of anti-dumping and countervailing investigations concerning galvanized steel wire from China. The Chinese enterprises involved were penalized by paying 194 to 235 percent of the anti-dumping duties and 19 to 223 percent of the countervailing duty.
Fifth, under the commitment to maintaining balanced growth of world economy, the U.S. also aimed to create a favorable foreign environment for the expansion of exports. A strong, sustainable and balanced growth of the global economy is a prerequisite for U.S. export expansion. The economic growth of trading partners is a key factor governing U.S. export expansion in the next five years. Therefore on one hand, the U.S. government, through coordination and cooperation among the G-20 members, the platform of the G-20 summit and bilateral meetings with the government heads to strengthen international economic cooperation between the governments, jointly committed to global economic recovery and ensured the steady growth of the global economy. On the other hand, the U.S. urges trading partners to restructure their economic system. It urges countries with trade surpluses to take measures to stimulate their domestic demand and expand their imports — especially its largest trading partner, China, which has a trade surplus. The U.S. constantly puts pressure on the Yuan exchange rate. For example, at the Hawaii Asia-Pacific Economic Cooperation meeting in Nov. 2011, Obama again said: “Most economists estimate that the renminbi is undervalued by 20 to 25 percent. … There has been slight improvement over the last year … but it hasn't been enough. … China needs to further accelerate the appreciation.” [Editor’s note: Instead of “China needs to further accelerate the appreciation,” the actual quote was “It is time for them to go ahead and move toward a market based system for their currency.”]
On March 11, 2010, Obama signed Executive Order No. 13534, which declared the implementation of the National Export Initiative and proposed the strategic target of “the plan of doubling U.S. exports in five years,” which involves doubling U.S. exports and creating 2 million jobs domestically over the next five years. It is safe to say that the National Export Initiative has achieved its initial goal in the last two years. According to the U.S. Commerce Department’s data, U.S. exports in 2011 hit a historic high, reaching $2.1 trillion — an increase of 33.5 percent compared to $1.57 trillion in 2009. The increase created 1.2 million jobs. Following such a trend, it is promising that the National Export Initiative’s strategic target will be realized in three years, since theoretically, the “plan of doubling exports in five years” can be achieved if exports increase by 15 percent annually. In the past two years, the average expansion rate of American exports has reached 15.6 percent; in addition, the new jobs that have been created have helped realize 60 percent of the goal set by the [five year] plan.
The question is: How did the Obama administration achieve such accomplishments? The answers behind its success are a series of measures that the Obama administration took to tackle economic challenges such as the high unemployment rate and high deficit.
First, the Obama administration promoted “commercial diplomacy” and provided “one-stop” services — assisting corporations with marketing their products. Officials from the Commerce Department as well as U.S. ambassadors in other countries took the roles of “salesperson” and “consultant” for American exports, which therefore provided comprehensive assistance for corporations developing a foreign market and expanding their exports. On one hand, the U.S. sends trade delegates to promote and market U.S. products in different countries and seek export opportunities. On the other hand, the U.S. invites foreign buyers to attend U.S. trade expos and encourages U.S. corporations to attend international trade expos where U.S. sales representatives can directly meet with foreign buyers, thus creating more opportunities. In addition, [the Obama administration] enthusiastically promotes “one-stop” services—coordinating between U.S. import and export banks, small business bureaus, the Department of Agriculture and the U.S. Trade and Development Agency to establish “one-stop” service centers in the U.S. and 250 U.S. embassies around the world. The goal was to help U.S. corporations rapidly launch and expand their businesses in new economies.
Second, the Obama administration increased capital for trade and assisted companies with the development of new businesses. Increasing trade capital is key to U.S. exports because [banks fear] the risks involved with big business transactions. This makes private companies, especially those of small sizes, have a difficult time acquiring capital and developing new businesses. Therefore through trade and capital investment corporations like the Export-Import Bank of the U.S., the Obama administration adopted multiple measures to help companies acquire capital and provide comprehensive services for medium and small export companies. First, it offered various loan types through current loan platforms and other innovative financial tools. Second, it expanded the scope of services for exporters, foreign buyers and other trade organizations — establishing an awareness of government assistance. Third, it increased the conveniences of getting government loans for exporters and other clients through improved efficiency in applications and internal processes. For instance, the Export-Import Bank of the U.S. acquired $32 billion of capital in 2011, an increase of 34 percent. Among that, 85 percent was capital prepared for medium and small-sized companies.
Third, the Obama administration reduced trade barriers and helped U.S. firms open up their markets. On one hand, the U.S. improved global, regional and bilateral negotiations and free trade agreement negotiations to lower or eliminate foreign trade barriers. Firstly, it continuously pushed forward the World Trade Organization Doha negotiations, which helped U.S. agriculture, merchandise and service exports develop a larger and freer international market. Second, it proactively promoted the negotiation of the Trans-Pacific Partnership, which expanded the U.S.’ market access to several of the most dynamic economies in the Asia Pacific region. For example on Feb. 7, the U.S. and Japan held the first official negotiation with respect to the Trans-Pacific Partnership. Third, it solved the remaining problems in the bilateral free trade negotiations between some important trade partners, such as Korea, Panama and Columbia. In addition, it promoted bilateral negotiations with China, Russia and other important trade partners in order to increase exports to these countries. On the other hand, they greatly reformed the export control system of U.S. strategic and high-tech industries under the premise that American security is not affected. Reducing barriers for high-tech product exports therefore enhanced the competitiveness of key American industries, which will consequently increase their market shares.
Fourth, the Obama administration strengthened the enforcement of trade rules to ensure "fair trade" and protect the U.S. domestic market. Initially, it strengthened the enforcement of the World Trade Organization trade rules and U.S. trade agreements. For instance, it strengthened the enforcement of sanitation standards as well as plant and veterinary inspection standards, which ensured that U.S. agricultural products enjoy "fair competition." Another example is the use of the 337 clauses and other measures that increased the protection of American intellectual properties. Obama believes that creativity and originality are a unique wealth of U.S. and the root of U.S. prosperity — it is even more important in the 21st century. The only way to prevent U.S. intellectual properties from being stolen and to ensure “fair competition" is to use the 337 clauses and similar ways to build up protections. Third, they protected their domestic market by utilizing trade subsidies with anti-subsidy, anti-dumping and anti-safeguard measures of the “two against and two protection.” For example on March 20, 2012, the U.S. Commerce Department announced the final results of anti-dumping and countervailing investigations concerning galvanized steel wire from China. The Chinese enterprises involved were penalized by paying 194 to 235 percent of the anti-dumping duties and 19 to 223 percent of the countervailing duty.
Fifth, under the commitment to maintaining balanced growth of world economy, the U.S. also aimed to create a favorable foreign environment for the expansion of exports. A strong, sustainable and balanced growth of the global economy is a prerequisite for U.S. export expansion. The economic growth of trading partners is a key factor governing U.S. export expansion in the next five years. Therefore on one hand, the U.S. government, through coordination and cooperation among the G-20 members, the platform of the G-20 summit and bilateral meetings with the government heads to strengthen international economic cooperation between the governments, jointly committed to global economic recovery and ensured the steady growth of the global economy. On the other hand, the U.S. urges trading partners to restructure their economic system. It urges countries with trade surpluses to take measures to stimulate their domestic demand and expand their imports — especially its largest trading partner, China, which has a trade surplus. The U.S. constantly puts pressure on the Yuan exchange rate. For example, at the Hawaii Asia-Pacific Economic Cooperation meeting in Nov. 2011, Obama again said: “Most economists estimate that the renminbi is undervalued by 20 to 25 percent. … There has been slight improvement over the last year … but it hasn't been enough. … China needs to further accelerate the appreciation.” [Editor’s note: Instead of “China needs to further accelerate the appreciation,” the actual quote was “It is time for them to go ahead and move toward a market based system for their currency.”]