Exporting Round-Up

April 17, 2013

pic-ex-im-exportsExporting and various trade policies impacting exporting have been front-and-center in recent weeks. Among the top exporting news is: a new report from the U.S. Small Business Administration Office of Advocacy on the how the Great Recession impacted small exporters; several initiatives from the U.S. Export-Import Bank including the announcement of their new “U.S. Global Business Solutions” initiative, their Board of Directors and a content review of certain financial transactions; a review of the U.S.-Korea Free Trade Agreement; and new data on U.S. exporting, including state exporting numbers.

The Great Recession and Small Exporters

Recently, the U.S. Small Business Administration Office of Advocacy released a new report entitled, “The Impact of Credit Availability on Small Business Exporters” which examines how the Great Recession impacted small exporters and their ability to garner financing. NSBA data over the past five years shows that, overall, small businesses are more able to garner capital today than they have been in the last four years.

Among the key findings in the Advocacy report:

  • Small firm share of exports declines in response to deterioration in bank health and the adverse impact is greater for exporters in industries that rely more on external finance.
  • The adverse effects of deterioration in bank health (including capital, liquidity, and nonperforming loan ratios) appear concentrated among exporting firms with fewer than 100 employees.
  • Deterioration in large bank health within a state, measured by the capital ratio and nonperforming loan ratio, has stronger adverse effects on the exports of SMEs than on larger firms.

In suggesting recommendations to address the issue, the report calls for: improving the overall health of the U.S. banking system; encouraging the Consumer Financial Protection Bureau to examine the constraints on banks and FICO scores to improve credit and lending to small business exporters; and increasing assistance from the U.S. Export Assistance Centers, SBA, Export-Import Bank and various other federal programs. The report also calls for a focus on assistance to firms with fewer than 20 employees.

Please click here for more details.

U.S. Export-Import Bank Updates

At the kickoff of the 2013 Export-Import (Ex-Im) Bank’s Annual Conference, the Ex-Im announced that it will participate in an interagency initiative called U.S. Global Business Solutions. The program—announced on Wednesday, April 3—hopes to promote, advance, and develop small-business exporting by expanding the base of financial institutions and service providers that facilitate exports, adding an anticipated 250 trade-finance sources by December 2015

Ex-Im Bank has partnered with five other government agencies to launch the initiative, including the U.S. Small Business Administration (SBA), the U.S. Department of Agriculture, the International Trade Administration (a Bureau within the U.S. Dept. of Commerce), the U.S. Trade and Development Agency (USTDA), and the Overseas Private Investment Corporation (OPIC).

The intent of U.S. Global Business Solutions is to ‘bundle’ trade-finance products for lenders and exporters, with the primary goal of adding 50,000 small businesses to the exporter base by 2017.

Please click here for more details.

By law, the Bank’s Board of Directors must have at least three of its five members to approve transactions. Currently, Ex-Im Bank Chairman and President Fred P. Hochberg, whose formal term ended on Jan. 20, 2013, is currently leading the Bank under a six-month extension. Additionally, Director and Vice Chair Wanda Felton and Director Larry Walther are also continuing to serve under a similar extension. The extensions allowed under the Bank’s charter will expire, at the latest, in July. If three of the five positions go unfilled, the Bank’s business will grind to a halt.

NSBA and its international trade arm, the Small Business Exporters Association (SBEA) recently signed onto a letter to the White House urging President Barack Obama to move swiftly on nominations for the Export Import (Ex-Im) Bank’s Board of Directors. In response, President Obama announced his nomination for Chairman Hochberg to serve a second term at Ex-Im Bank on March 21. His confirmation now awaits action by the Senate Committee on Banking, Housing and Urban Affairs. Ex-Im Bank needs his stable leadership to ensure the Bank maintains its track record of continuous improvements, fiscal responsibility and effective export promotion.

Finally, Ex-Im Bank has launched, as required by the Export Import Bank of the United States (Ex-Im) Reauthorization Act of 2012, a review of the Bank’s current domestic content policy for Medium- and Long-Term (MLT) transactions. The content policy is the proxy/tool the Bank uses to connect its activity to jobs. For most of the past 20 years, the exporting community has maintained that the content policy is the most important issue affecting Ex-Im’s competiveness and is now considered out of date with the ever growing globalization of the supply chain.

In order to capture and identify actions that could increase U.S. jobs associated with Ex-Im support, senior staff of the Ex-Im Bank’s Policy Analysis Division met with nine members of the Small Business Exporters Association (SBEA) on Feb. 20. Those members discussed possible ways to expand the content policy to sectors/transactions that are not currently eligible and ways to adjust the content policy that encourages an incentive for U.S. exporters to increase its use of small business sub-suppliers, among other issues.

U.S.-Korea Free Trade Agreement

The U.S. Trade Representative has requested the U.S. International Trade Commission (USITC) conduct a study of the U.S.  Korea Free Trade Agreement (KORUS) and its impact on small- and medium-sized enterprises. Under the KORUS, a working group has been set up to develop ways for SMEs—specifically, U.S. firms with less than 500 employees, regardless of revenue—to take advantage of export opportunities created by the Agreement. The USITC s investigation is intended to assist in understanding the impact of KORUS on U.S. SMEs since it took effect in March 2012.

The USITC investigation will be conducted over approximately the next several weeks. They are seeking assistance and information from any parties with an interest in exports to Korea by U.S. SMEs, including specific firms with any experience in this trade, industry associations, and your own organization.

For more details, please click here.

New Exporting Data

U.S. Deputy Secretary of Commerce Rebecca Blank recently unveiled new state export data which shows that 29 states set new records for export sales in 2012. In total, 35 states achieved merchandise export growth in 2012, and 20 of those states experienced growth of at least five percent or more.

Total merchandise exports from all 50 states helped contribute to the record-setting value of goods and services exports in 2012, which reached $2.2 trillion. Nationally, jobs supported by exports increased to 9.8 million in 2012, up 1.3 million since 2009. Eleven states achieved double-digit export growth in 2012, including: New Mexico (+42 percent); Arkansas (+36 percent); Nevada (+28 percent); North Dakota (+26 percent); West Virginia (+26 percent); Washington (+17 percent); Wyoming (+17 percent); Louisiana (+15 percent); Michigan (+12 percent); Colorado (+11 percent); and Kentucky (+10 percent.)

Collectively, the U.S. Department of Commerce’s Census Bureau and the Bureau of Economic Analysis (BEA) recently announced that overall U.S. exports in January 2013 increased to $184.5 billion from December’s total exports of $186.6 billion, a drop of $2.2 billion. Further driving growth in the overall trade deficit was the jump in imports from $224.8 billion in December 2012 to $228.9 billion in January 2013—a $4.1 billion increase.

This has resulted in a total goods and services trade deficit of $44.4 billion, up from $38.1 billion in December 2013. This recent negative movement isn’t necessarily indicative of a broader problem, however. When compared with this time last year, the overall trade deficit has decreased $7.8 billion. Furthermore, overall exports were up $5.8 billion (3.3 percent) over the last year while imports decreased at a slower rate ($2 billion or 0.9 percent) in the same time period.

For the three months ending in January 2013, the average trade deficit was $43.6 billion, down notably from the same period one year ago when, in the three months ending in January 2012, the average trade deficit was $50.2.

Please click here for more details from BEA.