With unemployment at record levels and a lackluster economy in dire need of jump start, it is encouraging to see the Obama Administration beginning to focus attention on international trade policy. Last Thursday, the President’s United States Trade Representative (USTR) and chief international trade spokesman, Ron Kirk, presented a plan to raise the profile of small and medium-size businesses in U.S. trade policy. According the USTR, small and medium-size businesses have accounted for two-thirds of all new employment over the past 15 years.
While the details of this plan are thin, Kirk’s office reportedly will join forces with the Small Business Administration, Commerce Department and Export-Import Bank in an effort to give small businesses easier access to government assistance and help spur exports.
According to figures cited by the USTR, out of some 30 million small and medium-size firms in the United States, only one percent sells abroad. Currently, smaller U.S. companies account for 97 percent of exporting companies, but make up only 30 percent of total U.S. goods sold abroad.
At the plan’s unveiling, Kirk added that President Obama aims to double those amounts, while another Administration official stated that, “Creating jobs is a national priority for the Obama administration, and we know that taking advantage of every opportunity to increase U.S. exports is critical to achieving this goal.”
Those are laudable goals and welcome news. Entrepreneurship and innovation are cornerstones of our economic stability and adaptability. Moreover, when companies of any size are spurred to freely trade more goods and services, jobs and economic growth are created. That is precisely why the Administration should also be supporting three pending free trade agreements (FTAs) with Colombia, Panama and South Korea, held over from the Bush Administration.
Regrettably, and in spite of the policy initiative announced last Thursday, the positive impact on smaller companies that would follow from the implementation of arrangements like the Columbia, Panama and South Korea agreements is not resonating with the Obama Administration. For more than a year, the President and Congress have allowed these FTAs to languish unapproved.
Yet, according to the U.S. Chamber of Commerce, more than 15,000 U.S. companies export their products to Colombia and Panama. Of this total, 82 percent were small and medium-size companies. In 2005, these companies exported nearly $2.5 billion worth of merchandise to Colombia and Panama—about 37 percent of all U.S. exports to these countries, and well above the 30 percent share of U.S. exports that our smaller companies contribute globally and cited by the USTR. Additionally, as reported by the U.S.-Korea Business Council, small and medium-size companies exported $9.5 billion worth of merchandise to Korea in 2006, representing some 32 percent of all U.S. exports to Korea that year.
Not only would implementation of the stalled agreements eliminate the barriers that prevent all American business from enjoying the full benefit of our trading partners’ export opportunities, it would open doors to new opportunities for smaller U.S. companies in markets already favored by such firms. Since the Administration clearly wants to enhance the profile of smaller U.S. businesses in the formulation of its trade policy, the pending FTAs would seem like a natural place to begin implementing such a plan.
The longer these agreements are delayed, the more our economy is harmed. Each offers unique benefit to the U.S. economy, and all clearly would enhance U.S. national economic security while creating thousands of new American jobs. When it comes to trade policy, it is time for a little less conversation, and a little more action from the Obama Administration.
John C Kalitka is an international trade attorney, advisor and analyst working in Washington, DC.
