Six Ways to Double Exports

1/27/2015
During his 2010 State of the Union address, President Barack Obama declared, "We will double our exports over the next five years, an increase that will support two million jobs in America."

An ambitious goal, this initiative eventually became known as the National Export Initiative (NEI). 

Now, five years later, we can see how the NEI fared.

While there is little doubt that overall exports have increased dramatically in the past five years – up by about 57 percent over 2009 levels – it is equally clear that the doubling goal has been missed.

Clothes, shoes, yarns and fabrics saw comparable results. Exports of those items rose from about $17 billion in 2009 to just under $25 billion for the year ending October 2014, a 46 percent increase. To have doubled, exports in those products should have hit $34 billion. The chart below provides additional detail on each product grouping.

U.S. Apparel-Footwear-Textile Exports 2009-2014*

 

Actual U.S. Dollars, January 12, 2015

 

 

 

2009

2014*

% Change 09-14

 

In Actual Dollars

 

 

Apparel

$3,945,276,947

$6,041,007,549

53.1%

Footwear

$430,963,847

$594,967,966

38.1%

Yarn

$3,455,384,187

$5,221,612,945

51.1%

Fabric

$6,354,357,767

$9,190,931,086

44.6%

Made-Ups

$2,832,440,128

$3,772,349,555

33.2%

TOTAL

$17,018,422,876

$24,820,869,101

45.8%

Note: 2014* = The 12 months ending November 30, 2014 (Most Current Data Available).

Sources: Data on this site have been compiled from tariff and trade data from the U.S. Department of Commerce and the U.S. International Trade Commission.


To be fair, a 46 percent increase over five years is a pretty good result. But more could have been done.

In his 2015 State of the Union address, President Obama again touted the importance of exports and their role in job creation in the United States. As we look to promote exports, here are six simple strategies that can bring about even bigger gains during the next five years.

Pass Trade Promotion Authority (TPA) – Although the President is negotiating two free trade agreements (FTAs) that seek to open new export markets, he lacks the authority to close these agreements and bring them to a quick vote in Congress. Renewal of TPA, which also sets negotiating parameters, can help bring those agreements across the finish line and enable the United States to create and benefit from additional trade liberalization efforts. With other countries rapidly negotiating trade agreements with each other, the lack of TPA means U.S. exporters are shut out of those initiatives. The record of TPA, which was last approved in 2002, speaks for itself. During the five years it was in force, the Bush Administration negotiated 11 agreements with 16 countries.  Exports to those countries grew at a faster pace than exports to the rest of the world.   

Negotiate trade agreements that actually promote exports – Trade agreements work only when they are tailored to industries' needs. In the Trans Pacific Partnership (TPP), for example, the United States has an opportunity to eliminate a persistent tariff rate quota that has kept U.S. made leather footwear out of Japan. The TPP and a companion trade agreement with Europe may also bring about increased opportunities for U.S. made apparel, and U.S. yarns and fabrics, in top export markets. But these opportunities will only occur if the rules of origin are flexible enough to accommodate the global supply chains that dominate the textile, apparel and footwear industries.

Renew successful programs – Some of the gains of the past five years will be lost if the programs on which they are based are not renewed. A special fabric export matching program in Nicaragua, which supports $109 million in U.S. fabric exports and 1,000 U.S. textile jobs, was allowed to expire last month. Those gains will quickly unravel if the program is not extended. Likewise, a pair of provisions in previous U.S. FTAs that support U.S. hosiery exports through flexible input rules for gimped and nylon filament yarns are in danger of being excluded from the TPP. Doing so will only dampen U.S. hosiery export opportunities.

Correct failing programs – Conversely, some existing trade programs have shown that they do not work.  The so-called Earned Import Allowance Program (EIAP) with the Dominican Republic, for example, has floundered because overly tight trade rules have discouraged companies from using the program. U.S. fabric exports to the Dominican Republic are down by 8.6 percent since the program's inception, even though it was designed to promote such exports. Just as we need to recognize and embrace success, we need to recognize and move away from failure. Programs like the EIAP need to be fixed so they can operate as successful export platforms.

Embrace new ideas – Change, especially in the fashion industry, is swift and constant. U.S. trade policy needs to keep pace if it hopes to support our future exports. One innovative concept that would promote textile exports would modify the existing 9802 program, which reduces duties for imports made with U.S. components, so apparel imports that contain U.S. yarn content could qualify for duty breaks. Another approach would permit current FTAs to share inputs through cross agreement cumulation, fostering demand for U.S. threads, yarns, and fabrics by stimulating apparel production in those partner countries.

Fix the port mess – It makes no sense to talk about expanding exports when there is so much uncertainty over the West Coast ports. We can't grow exports (or engage in any trade for that matter) if the ports are effectively shut down. The lack of a long-term labor contract has created, and then exacerbated, massive cargo backlogs. And this year's troubles are only the most recent in a long line of issues that have plagued West and East Coast ports.  While the recent appointment of a mediator may lead to resolution of this year's contract dispute, we need longer-term solutions. 


Steve Lamar is executive vice president and Nate Herman is vice president of international trade of the American Apparel & Footwear Association. Previously, Steve and Nate worked at the International Trade Administration where they helped U.S. companies develop export markets.
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