The Obama administration's efforts to grow small-business exporting, and how Congress could derail them.

Trade and job creation
Dec. 6 2010 11:42 AM

Thinking Small

The Obama administration's efforts to grow small-business exporting, and how Congress could derail them.

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Once potential exporters have been identified, the biggest hurdles are market access and financing. To a lesser degree, the strength of the dollar plays a role—a weaker greenback makes it easier to sell things abroad—but economists are divided on how much the U.S. government can, or should, intervene in this regard. When it comes to market access, big companies set up sales offices in foreign target markets and attend trade shows overseas to sell their wares or meet local distributors who can do the job for them. This is impossibly expensive for many small companies, although the ITA says it's encouraging more small businesses to participate in trade shows. As an alternative, the ITA, as well as state and local governments, promotes trade missions, in which a group of U.S. companies will go to a foreign city and meet with prospective buyers. Sometimes, the ITA hosts a delegation of foreign buyers so they can meet U.S. companies here. State governors and other elected officials also travel abroad and meet with industry leaders to try to persuade them to open production facilities in the United States.

These efforts might sound extensive, but in reality, the United States isn't nearly as aggressive as other countries when it comes to marketing its exporters. "What we keep reminding Congress is we do not spend, compared to our competitor countries, the same amount on trade promotion," says Courtney Gregoire, director of the National Export Initiative. President Barack Obama has asked for an increase in ITA's budget to support the export initiative, but it remains to be seen if a GOP-led House will go along with his request. It doesn't help that trade missions often get characterized as junkets. Solomon Ortiz, a longtime House Democrat from Texas, lost to a Tea Party-backed Republican this year, in part because he couldn't shake questions about the appropriateness of the trade missions he undertook.

The prospect of a new congressional zeal for budget-cutting is also bad news for the Export-Import Bank, which had requested a 25 percent increase in its budget in order to add a dozen field offices around the United States. (Although the Ex-Im generates its own revenue, its budget is approved by Congress.) The Ex-Im Bank extends credit insurance and guarantees to small exporters, stepping in if an overseas buyer fails to pay for a shipment. A fear of not getting paid was among the top three concerns cited by owners in a survey conducted by the National Small Business Association about exporting. In an economy characterized by widespread risk aversion among businesses, the Ex-Im's role has grown. Last year, says Fred Hochberg, chairman and president of the Ex-Im, the bank did around $4.4 billion in small-business insurance and guarantees; this year, it's up to around $5 billion, and the bank is launching a new initiative that's going to expand the services available to small-business exporters.

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Hochberg says a budget overhaul that slashes spending across government programs would be catastrophic in that it would impede small businesses' ability to export and further cool an already tepid recovery. "I obviously would like a more nuanced approach as Congress deliberates." Concern about the deficit is prudent, he says, but the focus has to be on growth for the American economy to stop treading water. "The recovery is still gaining steam—you don't want to choke it off too soon. The deficit will be best handled by putting more people back to work and exporting more."

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Martha C. White is a freelance writer in New York.

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