SMBs Not Benefiting from U.S. Export Business

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The North American Free Trade Agreement has become a bit of a whipping boy of late, as I blogged recently, with Democratic presidential candidates Hillary Clinton and Barack Obama criticizing it on the campaign trail.


Presumptive Republican nominee John McCain, in contrast, reiterated his support for NAFTA during a campaign stop in economically depressed Ohio, reports The New York Times. Education and training programs in technology can help the U.S. energize its economy, McCain told supporters, while manufacturing jobs may never come back.


At a recent trade summit in New Orleans, President Bush not only defended NAFTA but pushed for passage of a trade agreement with Colombia that would lift tariffs on a variety of U.S. products, reports The Boston Globe. In fact, Bush hopes to push through similar agreements with Panama and South Korea, although he faces opposition from Democrats in Congress, according to the article.


Despite the controversy over NAFTA, there has been recent rapid growth in American exports -- though due mostly to a declining dollar rather than any trade policies. Yet SMBs, which play such a large role in the U.S. economy, enjoy few if any benefits from the increase, according to a strategy+business article.


The credit crunch is hitting SMBs especially hard, and they are struggling to provide goods and services that will appeal to non-Western countries -- a significant challenge even for huge companies like Google, as I blogged back in October.


Though the Clinton administration made some political changes that eased trade restrictions on SMBs and the private sector responded with SMB-friendly forms of trade finance such as export insurance, support has waned in recent years, according to strategy+business. Much of the problem lies with the hodgepodge of government agencies tasked with overseeing trade activities. strategy+business quotes J. David Richardson, an economics professor at Syracuse University and author of "Sizing Up U.S. Export Disincentives":

We really have a passive view of what it takes to keep our firms as active exporters. We feel they should take care of themselves.

Also, post-9/11 security concerns have restricted the flow of exports such as high-speed supercomputers, information security, sensors and avionics.

Some suggestions offered in the strategy+business article:

  • Streamline agencies involved in export advisory and financing activities. An example: Combine the Small Business Administration, OPIC, the Export--Import Bank and other organizations into a single institution, perhaps under the umbrella of the Commerce Department, that can funnel working capital and export subsidies to SMBs.
  • Reevaluate technology export controls in light of the slowing economy. Restrictions on many technologies that have applications in civilian as well as military sectors could be eased to boost exports.