In a July 9 post, former Labor Secretary Robert Reich warns of a coming trade war and casts a pessimistic light on President Obama's ability to meet the ambitious goals of the National Export Initiative.
Secretary Reich argues that the rising global middle class will not rise quickly enough to compensate for a slowdown in U.S. consumption wrought by the recession. This, he warns, could cause a protectionist backlash by nations unwilling to import more of our goods if we are buying less of theirs.
Reich's argument contradicts the message I've heard from leaders of the world's emerging economies who know that American innovation will help sustain their rapid infrastructure growth.
According to data released yesterday by the Department of Commerce, U.S. exports of goods and services increased by 17.7 percent during the first five months of 2010, compared to the same period last year. If this trend continues, the President will meet his goal of doubling exports in five years. The key: targeting export markets strategically.
At the Export-Import Bank, we're focused on countries that have weathered the global recession and want to grow in areas where U.S. companies have a comparative advantage.
Vietnam is building hundreds of miles of toll roads, and American companies make the world's best intelligent transportation systems. Indonesia and Brazil want to upgrade their rail systems, and we make the best welding equipment and locomotives. Economies in the Mideast, North Africa and Latin America need medical equipment, and we make the best medical devices and health care IT products
Commerce's May data illustrate the potential of an export strategy tailored to countries and sectors that suit our strengths. Over the last year, American exports have increased by 43 percent in Indonesia, 38 percent in Colombia, 37 percent in Brazil, 32 percent in Mexico and 23 percent in India.
In the current fiscal year, Ex-Im has authorized $17.4 billion in transactions to support American exporters. Our financing has supported an estimated 150,000 additional U.S. jobs over that span. This is already the second-largest year in our 76-year history--and it is only July.
While flat U.S. consumer demand creates a unique set of challenges, America's historic reliance on domestic markets puts us in a better position to boost our exports than most. Slightly more than 10 percent of our GDP is generated from exported goods and services. By contrast, exports represent nearly half of Germany's GDP, 30 percent of Great Britain's and 28 percent of China's.
Secretary Reich cites rising global unemployment as an impediment to U.S. export growth. Notably, though, employment has held steady in China, and the IMF predicts marginal gains by the end of 2011. Our trading relationship with Beijing is complicated, but growth opportunities for American exports exist and can be achieved through ongoing diplomacy and outreach.
With a focused strategy, America should be bullish about our export future.