Tuesday, August 2, 2011
Analyst in International Trade and Finance
Ian F. Fergusson
Specialist in International Trade and Finance
Wayne M. Morrison
Specialist in Asian Trade and Finance
M. Angeles Villarreal
Specialist in International Trade and Finance
For many years, the U.S. government has played an active role in promoting U.S. commercial exports of goods and services by administering various forms of export assistance through federal government agencies. Congress has had a long-standing interest in the effectiveness and efficiency of federal export promotion activities and may exercise export promotion authority in a number of ways, including through oversight, authorization, and funding roles.
The recent global economic downturn has renewed congressional interest in U.S. government efforts to expand U.S. exports levels. In addition, in 2010, President Obama introduced a National Export Initiative (NEI), a strategy for doubling U.S. exports by 2015 to generate U.S. jobs. The NEI’s key components are to: (1) improve advocacy and trade promotion efforts on behalf of U.S. exporters; (2) increase access to export financing; (3) reinforce efforts to remove barriers to trade, such as through free trade agreements (FTAs); (4) enforce trade rules; and (5) pursue policies to promote strong, sustainable, and balanced global economic growth. The NEI also contains a focus on expanding specific U.S. exports, such as exports from small businesses.
The growing interest in federal export promotion raises a number of issues for the 112th Congress. One debate involves export promotion definitions. Based on varying views, activities that constitute export promotion can range from direct forms of export assistance (such as commercial advocacy or export financing) to broader forms (such as negotiating FTAs). Although the main goal of export promotion policy generally is to boost U.S. exports, policymakers may use export promotion to advance other goals, such as macroeconomic, economic sector-specific, or international trade policy goals, and may differ on how to prioritize such goals.
From an economic perspective, much of the debate over export promotion involves whether some market failure actually has occurred, and whether government intervention can produce net benefits for the economy as a whole. Opponents of export promotion programs dispute that significant market failures have occurred, and warn that government intervention may interfere with efficient operation of the market. Although export promotion might increase the ability of certain U.S. firms to export, a combination of macroeconomic and other factors may determine the overall level of U.S. exports. Another aspect to the economic debate is the existence of foreign countries’ export promotion programs. Supporters of export promotion often argue that such policies are needed to offset the effects of similar programs used by foreign governments.
Congressional debate on the effectiveness of U.S. export promotion has grown with the introduction of the NEI. Many argue that providing export assistance to U.S. firms would be of limited help if such firms faced significant tariff and non-tariff trade barriers and poor protection of intellectual property rights overseas. Thus, it is argued that efforts to ensure foreign compliance with existing trade agreements and the negotiation of new FTAs should be part of a strategy to boost U.S. exports. Others argue that more can be done to address U.S. barriers to exports, such as U.S. export controls on dual-use products, which some contend may be too restrictive and may put U.S. exporters at a disadvantage vis-à-vis foreign competitors. Finally, many argue that greater efforts should be made to induce countries with high savings and relatively low consumption and that are heavily dependent on exporting for their economic growth to implement policies that would make private consumption the engine of future economic growth, which would enhance their demand for U.S. goods and services. The NEI also has drawn greater attention to whether the trade policy structure and organization of the federal government is suited to boosting U.S. exports and supporting U.S. jobs effectively and efficiently.
Date of Report: July 21, 2011
Number of Pages: 33
Order Number: R41929
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