California Company Leaders Talk Export Business with President Obama

(Editor’s Note: The President’s Export Council serves as the principal national advisory committee on international trade. A number of council members are also members of the Los Angeles County business organization BizFed.  Last week, BizFed members attended a meeting with the president and other administration officials to discuss exports and trade. BizFed CEO Tracy Rafter reports on the meeting with the president.)

At the President’s Export Council meeting at the White House last week, President Obama noted a steady increase in U.S. exports during his term is “one of the biggest bright spots” in the nation’s economy. In the past four years, U.S. exports have grown from $1.84 trillion to $2.2 trillion today. That equates to the creation of more than 20,000 U.S. jobs. And it is clear that California companies are playing a critical role in this economic engine – with even more potential in the future.

BizFed member Gene Hale, chair of the Greater Los Angeles African American Chamber – who leads the Export Council’s Small & Medium-Size Business Engagement Subcommittee – and I met directly with the President and his key Cabinet secretaries at last week’s meeting. Other BizFed member companies on the Council include Disney’s Bob Iger, Boeing’s Jim McNerney, and AES Corp.’s Andres Gluski.

Highlights of Council news included:

• The U.S. is on track to break an annual export record for the third consecutive year.
• Transportation Secretary Foxx emphasized his efforts to address “multi-modal” goods-movement needs, including U.S. ports – noting the Panama Canal widening is expected to lead to a doubling of exports around the globe in 12 years.
• Tapping U.S. shale reserves are a key focus – mentioned by the President, Energy Secretary Ernest Moniz, and others. (to reduce our U.S. dependence on oil imports)
• Every $1Billion in exports = 5,000 U.S. jobs
• U.S. tourism (international visitors to the U.S.) is a significant and growing sector
• Trans-Pacific Partnership Agreement negotiations are a continuing priority – along with renewed attention to boosting trade with European countries via the Trans-Atlantic Trade and Investment Partnership.

The Council unanimously adopted eight letters of recommendation to send to the President on how to further increase job-creation by boosting exports:

• Trade Promotion Authority
• Priorities for the Ninth World Trade Organization Ministerial Conference
• Localization Barriers to Trade and Investment
• Intellectual Property Protections in the Trans-Pacific Partnership Agreement
• Expansion of the Information Technology Agreement
• Global Procurement Initiative: Understanding Best Value
• De Minimis Reform
• Export Control Reform

Read the letters here.

Last week’s meeting was just the latest for the high-level private-sector Council appointed by the President as the principal national advisory committee on international trade. The Council has worked vigorously over the past three years to develop recommendations to the President on critical changes needed to help U.S. companies increase export capacity and access to overseas markets and meet his National Export Initiative goal of doubling U.S. exports by 2015 (to $3+ trillion). The PEC has sent 32 letters of recommendation to the President since 2010. (Read all of the letters here. )

The Administration and all of its Cabinet Secretaries have prioritized these recommendations and significant changes have occurred in everything from intellectual property rights, free trade agreements and export control reform to additional resources for small/medium-sized businesses, easing visa barriers and streamlining of export financing. In particular, for companies, www.export.gov has become a vast “one-stop-shop” portal to help.

For California, all of these changes are crucial, as we are the second-largest exporting state in the country (Texas is first) – and our infrastructure already well-supports exporting.

And it is clear, from the past three years, that helping to increase U.S. companies’ access to overseas markets is critical to 21^st century growth:

• Companies involved in exporting goods and services grow on average two times faster than those who only do business in the US.
• Nearly 95% of the world’s customers lie outside the United States.
• Developing countries will drive the growth of the world’s consumption in the future. Over half of the world’s population lives in urban areas and the U.N. forecasts that will rise to 70 percent by 2050. This urbanized population will increasingly have more purchasing power and demand more specialized goods and services.
• Export intensive industries pay higher wages. In an analysis of 94 of the largest 100 metropolitan areas, for every $1 billion in exports of a metro area industry, workers in that industry earn roughly 1 to 2 percent higher wages.
• Census and ITA data show U.S. exporting SMEs outperform their nonexporting SME counterparts by several measures: higher total revenues, faster total revenue growth, and higher labor productivity.
• Exporting SME manufacturers in 2009 had more than twice the total revenue of their nonexporting counterparts.
• Exporters had revenue growth of 37 percent between 2005 and 2009, while total revenue declined by 7 percent for nonexporting SME manufacturers over the same period.
• Services SME exporters had nearly four times as much total revenue per firm as services SME nonexporters and that total revenue per firm earned by these exporters grew faster than the total revenue per firm earned by non-exporters between 2002 and 2007.
• Labor productivity in 2007 – revenue per employee – was more than twice as high for services SME exporters as for their nonexporting counterparts
• While SMEs account for generally 99 percent of the 27 million employer and nonemployer private nonfarm businesses in the United States – roughly half of all non-farm GDP – they account for only about 30 percent of merchandise exports between 1997 and 2007.
• That was still, however, a $306.6 BILLION market.

Exporting clearly makes sense for U.S. companies – and is already creating much needed jobs in our country. The President’s Export Council’s recent recommendations will serve to further this effort and boost California firm’s capacity to engage in this 21^st century economy.