Exporting Round-UpMarch 4, 2015
In this latest Exporting Round-up, NSBA and its international trade arm, the Small Business Exporters Association (SBEA) discuss efforts to renew Trade Promotion Authority (TPA), formerly known as “fast-track authority,” the latest trade numbers, efforts to reauthorize Export-Import Bank of the U.S. (Ex-Im Bank) and other export-related updates.
Push to Renew Trade Promotion Authority
President Obama called for TPA to be reauthorized in July 2013, and again in his 2015 State of the Union address to help facilitate the negotiations of the Trans-Pacific Partnership (TPP)—a trade agreement currently being considered among 12 countries in the Asia-Pacific region, and the Transatlantic Trade and Investment Partnership (T-TIP)—a pact underway between the U.S. and the European Union. TPA was last renewed in 2002, enacted under the Trade Act of 2002, and expired in 2007.
The White House is stepping up its efforts to bolster bipartisan support for fast track authority, by reaching out to lawmakers—particularly Democratic leaders— who have expressed opposition to granting the president the power to negotiate trade pacts. Swift action to renew the measure will jump-start the President’s aggressive trade agenda, which he is hoping to complete before he leaves office in Jan. 2017, opening markets to U.S. goods and boosting job creation and economic growth.
Despite the overall volatility on Capitol Hill, Republican leaders and the president have found common ground in the hopes of passing major trade legislation this year. However, bringing Democrats on board has proven to be an uphill battle for the White House, as some Democrats have been more cautious and have expressed concern about the lack of congressional involvement in the free trade negotiations. Others oppose granting the president TPA authority over concerns with currency manipulation, transparency, and the long-term impacts on U.S. businesses and workers.
Senate Finance Committee Chairman Orrin Hatch (R-Utah) is currently working on a bill to grant TPA authority to the president with Ranking Member Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Paul Ryan (R-Wis.). It will likely be similar to legislation introduced last Congress by former House Ways and Means Committee Chairman Dave Camp (R-Mich.) and former Senate Finance Committee Chairman Max Baucus (D-Mont.), which reauthorized TPA for four years, with an option for a three- year extension. The New Democrat Coalition, a 46-member group of House Democrats lead by Chairman Rep. Ron Kind (D-Wis.), support the president’s trade agenda and may serve a pivotal role in garnering enough votes for such as bill to pass the House.
Ex-Im Bank Update
Ex- Bank operates under a renewable charter – it was last reauthorized in September, extending its current charter through June 30, 2015. Last month, Rep. Stephen Fincher (R-Tenn.) introduced the NSBA/SBEA-supported bill, Reform Exports and Expand the American Economy Act (H.R. 597) which would reauthorize Ex-Im for five years along with a number of reforms to strengthen the Bank’s transparency and accountability while fostering job-growth. The bill has the support of 58 cosponsors.
On Feb. 13, during the House Financial Services Committee’s markup of the president’s Fiscal Year (FY) 2016 budget request, three Democrats on the committee including Ranking Member Maxine Waters (D-Calif.) and Reps. Gwen Moore (D-Wis.) and Denny Heck (D-Wash.) offered the amendment that would have required the panel to consider reauthorization of the Bank. While Democrats have been mostly in favor of the Bank’s renewal, strong opposition remains among Republicans, especially by the committee Chairman Jeb Hensarling (R-Texas) who has long been vocal in his opposition to the Bank, and goal of ending its current charter. As expected, the amendment was defeated largely along party lines, by a 22-32 vote.
Ex-Im Bank’s 2014 Annual Report includes some key statistics for fiscal year (FY) 2014, and the Bank’s FY 2014 Financial Report, updates on key programs and initiatives as well as stories of Ex-Im Bank customers. In FY 2014, Ex-Im Bank approved $20.5 billion in total authorizations, supporting an estimated $27.5 billion in U.S. export sales, as well as approximately 164,000 American jobs in communities across the country. Approximately t 90 percent of FY 2014 transactions directly supported U.S. small businesses. Nearly $14 billion – more than 68 percent – of Ex-Im Bank reauthorizations supported U.S. exports to emerging markets, where commercial banks are often more reluctant to lend. In October, Ex-Im announced that it transferred $675 million in deficit-reducing receipts to the U.S. Treasury’s General Fund for FY 2014. In each of the last two years Ex-Im Bank sent nearly $1 billion to the U.S. Treasury, and over the last two decades, Ex-Im Bank has generated a surplus of more than$7 billion for U.S. taxpayers.
FY 2014 Exporting Data
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, released their fiscal year (FY) 2014 export data. For FY 2014, the BEA reports that U.S. exports of goods and services reached a record of $2.345 trillion, which represents a 2.9 percent increase and set a record for the fifth year in a row. Last December, the U.S. exported $194.9 billion of goods and services, down $1.5 billion from November’s $196.4 billion exports total. December imports were $241.4 billion, up $5.3 billion from November.
The December increase in the goods and services deficit reflected an increase in the goods deficit of $6.9 billion to $66.0 billion and an increase in the services surplus of $0.1 billion to $19.5 billion.
For 2014, the goods and services deficit was $505.0 billion, up $28.7 billion or 6.0 percent from 2013. Exports were $2,345.4 billion in 2014, up $65.2 billion or 2.9 percent from 2013. Imports were $2,850.5 billion in 2014, up $93.9 billion or 3.4 percent from 2013.
The 2014 increase in the goods and services deficit reflected an increase in the goods deficit of $35.2 billion or 5.0 percent to $736.8 billion and an increase in the services surplus of $6.5 billion or 2.9 percent to $231.8 billion.
As a percentage of U.S. gross domestic product, the goods and services deficit was 2.9 percent in 2014, up from 2.8 percent in 2013.
U.S. Challenges China’s Export Subsidy Program
On Feb. 11, the U.S. Trade Representative (USTR) Michael Froman released a statement announcing that the U.S. has filed a dispute with the World Trade Organization (WTO) against China’s extensive export subsidy program. Under this export subsidy program, known as the “Demonstration Bases-Common Service Platform,” China appears to be providing free and discounted services, grants and other incentives to manufacturers and producers across seven economic sectors and dozens of other sectors throughout China that are harmful to U.S. workers and businesses.
According to the USTR, it is estimated that over the last three years, China provided almost $1 billion in discounted or free export services to Chinese companies. The USTR said the enforcement action the U.S. is taking against China aims to level the playing field for U.S. businesses and workers in those specific sectors. Previously, the U.S. brought a similar WTO challenge against China regarding its auto sector which, after requesting consultations on those subsidies issues, was apparent that China’s subsidy program had illegally expanded to other industries. Should the U.S. and China not be able to reach a mutually agreed upon solution through the first step in the WTO dispute settlement process, consultations, then the U.S. may request the establishment of a WTO dispute settlement panel.
OPIC Announces Nationwide Schedule for Small Business Workshops
On Feb. 19, the Overseas Private Investment Corporation (OPIC) announced the 2015 schedule for its Expanding Horizons event, the agency’s trademark series of traveling workshops designed to help U.S. small businesses grow and expand to developing countries worldwide. The upcoming workshops will take place on May 7 in Detroit, Michigan and on June 16 in Long Beach, California. Additional workshops are planned for the fall in Boston, Massachusetts and Nashville, Tennessee.
The day-long workshops will offer information and answer questions about the programs and resources provided by the OPIC to help U.S. small businesses gain access to emerging global markets. Featured speakers include senior federal government representatives from OPIC, the U.S. Trade Development Agency, the Small Business Administration, the Export-Import Bank of the U.S., and the U.S. Department of Commerce. In addition to networking, participants will have the opportunity to arrange one-on-one meetings with OPIC and other government officials. To learn more visit www.OPICevents.com.