Trade Agreements: Path to Prosperity

 

 Mergen_Ashley

 

By Ashley E. Mergen
Senior Manager, International IP Policy
Global Intellectual Property Center | U.S. Chamber of Commerce

 

With the all the hysteria flying left and right in this election cycle, it’s no wonder folks are second-guessing why the U.S. even pursues free trade agreements. But the overheated rhetoric of presidential campaigns is obfuscating what really is at stake- American competitiveness.

The United States is already among the most open markets in the world – and has been since the end of World War II. That openness has honed the edge of American competitiveness and helped stem the price inflation that fuels inequality. Trade agreements are a tool to ensure that U.S. products and services have the same fair and non-discriminatory access to international markets.

As the leader of the free world, the U.S. has worked to shape the rules of the road in the international economy. Free trade agreements are one of the most effective mechanisms for doing so. The alternative to U.S. free trade agreements is a global economy shaped by others who don’t have America’s interests at heart.  The world is not sitting still: The World Trade Organization counts 419 trade agreements in force around the world, while the United States is party to only 20.

It’s true that 21st century trade deals like the Trans-Pacific Partnership (TPP) Agreement and Transatlantic Trade and Investment Partnership (TTIP) are growing even more complex, especially as they tackle emerging and critical issues like intellectual property rights in digital trade or biopharmaceuticals.

But knowledge-intensive trade isn’t limited to big corporations or scientists curing cancer. It is also providing a significant platform for entrepreneurial women to connect with previously untapped markets.Take Lolita Healy, who after obtaining her first copyright at the age of 12 built a multi-million dollar empire painting designs on glassware, eventually selling 14 million products around the world. Lolita is just one example of the 40 million Americans who are employed by the creative and knowledge-intensive industries. The U.S. Department of Commerce has found that they represent over a quarter of all jobs in the economy, driving 60% of total U.S. exports.

The best part is, there are Lolita’s everywhere- from Michigan to Malaysia or Pennsylvania to Peru. This year’s International IP Index from the U.S. Chamber of Commerce estimated that economies which espouse meaningful and robust IP rights also enjoy more access to venture capital, more foreign direct investment, more R&D expenditure, more growth in high-value jobs, the list goes on…

Trade agreements like the TPP and TTIP continue this path to prosperity by ensuring innovation — the very cornerstone of the business community — remains protected as we expand markets abroad. So before you buy into the hype, take a look behind the curtain and see how trade really puts our innovators front and center on the world’s stage.

Small and Medium-Sized Companies in the Focus of Exporting News

Small and medium-sized exporting companies had several reasons for good spirit in the last couple of weeks – especially Trans-Pacific Partnership and Export-Import Bank supporters.

The final agreement on Trans-Pacific Partnership (TPP) got a substantial coverage across the news, as it is the largest regional trade accord in history. As covered a few weeks ago, it encompasses USA together with 11 Pacific Rim nations and addresses many complex issues – from reducing tariffs and quotas, to imposing rigorous environmental, labor and intellectual property standards on partners, easing cross-border data flows, establishing an investor-state dispute settlement mechanism, to free trade in services, and imposing competitive neutrality on state-operated businesses.

There is one particularly important area, which deserves a separate attention – focus of TPP on small and medium-sized enterprises (SMEs).

Last week, National Small Business Association hosted a webinar where Andrew Quin, Deputy Assistant U.S. Trade Representative for Southeast Asia and the Pacific, among other described new chapter of the TPP deal focused on SMEs. The chapter aims to tide together all different elements that benefit SMEs and he highlighted 2 major areas:

  1. Creation of dedicated website for SME exporters by every member country. The websites should pull out all provisions which are particularly relevant to SMEs such as customs, taxation or intellectual property protection topics to make it better understandable and easier to follow in day-to-day exporting trade deals.
  1. Creation of SME committee to continue consultations with SMEs and collect feedback on what works, if benefits are being generated, and on how to continue maximizing benefits to SMEs. The committee will consist of government representatives, however promises to take inputs from SMEs on private sector provisions.

All of the above claims to suggest that TPP is more beneficial to SMEs than any previous trade agreement. Mr. Quin also reassured that TPP will not have any impact on Minority-Owned Small Businesses set aside programs (including the one WOSB program for women).

Another topic that came out after few weeks is the reauthorization of Export-Import Bank (EXIM). As Mr. Quin stated, it is a separate initiative but important piece to allow a full benefit of TPP. EXIM is providing loans, guarantees, and insurance to U.S. exporters and has made SMEs exports the top category supported last year (source) when $10.7 billion of total $27.5 billion worth of U.S. exports went to U.S. small businesses.

EXIM

Many SMEs publicly supported EXIM reauthorization, and they all have now a hope that it might be successful after all. A rare procedural move brought EXIM to the House floor and got a surprising support in the 313-118 vote to renew, including from 127 Republicans.

However, now the supporters will have to secure passage in the Senate but they seem to have a chance through its attachment to another vehicle, such as legislation to renew highway funding (source).

Overall, current news seem to suggest that it is a good time to be an exporter and according to the latest annual report Profile of U.S. Importing and Exporting Companies released by Census Bureau, many SMEs have already realized that as they accounted for 98 percent of the number of U.S. exporters in 2013 and $471 billion in known value of goods exports.

The Trans-Pacific Partnership Trade Deal

TPPOctober 5, 2015 will be remembered as a day when the United States and other 11 Pacific Rim nations reached final agreement on the largest regional trade accord in history – the conclusion of the Trans-Pacific Partnership (TPP.) The countries form a group with an annual gross domestic product of nearly $28 trillion that represents roughly 40 percent of global G.D.P. and one-third of world trade, which reflects enormity of the deal.

TPP addresses many complex issues from reducing tariffs and quotas, to imposing rigorous Environmental, Labor and Intellectual Property Standards on partners, easing cross-border data flows, establishing an investor-state dispute settlement mechanism, to free trade in services, and imposing competitive neutrality on state-operated businesses.

Together with the U.S. members are Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, Chile, Brunei, Singapore, and New Zealand. Geography would suggest for China to be member as well but though it has expressed interest in talks, it is not among founding countries (causing different speculations and interpretations).

The deal now needs the approval of lawmakers in member countries, including the U.S. Congress where it is expected to be under thorough scrutiny. Public debate is also weighting all pros and cons. Supporters say it will unlock opportunities for exporters but opponents see the partnership as a continuous way of sending manufacturing jobs to low-wage nations.

Similarly to congressional battle in 1993 for NAFTA partnership passage (234 to 200 votes in the House, and 61 to 38 in the Senate), president Obama is expected to face challenges while making it one of his final goals in the office. Similar difficulties are expected in Canada while the process should be straightforward in Japan or Singapore.

TPP is written to ease adoption by additional Asian nations (South Korea is already pressing for swift acceptance), and to provide a potential template to other initiatives underway, like the Transatlantic Trade and Investment Partnership (source NY Times).

Tune to our special webinar with International Trade Administration on December 17 to find out more about the TPP and how it is targeting small businesses.

For additional information on TPP, continue here.

WIPP Signs Strategic Partnership with International Trade Administration on Exporting Initiatives

img_0179Earlier today, WIPP joined Assistant Secretary Jadotte at the U.S. Department of Commerce to announce a new partnership to increase awareness about exporting in the U.S. business community. Women Impacting Public Policy’s (WIPP) new strategic partnership with Commerce’s International Trade Administration (ITA) will focus on providing education and resources to help small- and medium-sized women-owned businesses succeed in the global marketplace.

Signed this morning, the Memorandum of Agreement explains that, ITA and WIPP will work together on marketing, education programs, and events leveraging our organizations’ expertise to help make U.S. businesses more export savvy. WIPP recently developed Export NOW, a step-by-step program which guides participants — current and new exporters — through the steps to enter new growing markets or to expand their export reach. We’ll also partner with ITA on our Export Now program. Joint activities may include building awareness through outreach at trade shows, collaborative press and digital communications, and online registration for resource support.

As the U.S. marketplace becomes more competitive than ever, it is crucial for businesses — particularly small- and medium-sized businesses — to engage a broader international market for success. WIPP firmly believes that the products and services provided by women-owned businesses belong not just in American hands, but should reach every consumer around the globe. As a leader in educating businesses on ways to build, develop, and expand their companies, WIPP is perfectly positioned to work in concert with ITA to aid women-owned firms in growing their footprint in the global marketplace via export opportunities.

In 2014, U.S. Secretary of Commerce Penny Pritzker announced the National Export Initiative/NEXT (NEI/NEXT), an expanded and revitalized U.S. export strategy. NEI/NEXT focuses on supporting U.S. businesses of all sizes and economic growth in American communities by making it easier for U.S. companies to access export resources and capitalize on growth opportunities around the world. Our partnership with ITA supports this initiative by educating U.S. women-owned businesses about the benefits of exporting and expanding their exports to additional markets. Companies will learn about public and private sector resources to assist them in going global. WIPP joins several of ITA’s Strategic Partners who have connected more than 1,500 companies to federal export assistance to broaden and deepen the U.S. exporter base.

Explore New Growth Opportunities with Export NOW

If you were hesitating on whether or not to export – here’s the business case for you: U.S. metropolitan areas in 2014 set export highs for the fifth year in a row exceeding $1.44 trillion in goods exports!

As highlighted by U.S. Commerce department: “Today, U.S. businesses are increasingly taking advantage of export opportunities. The data makes it clear. Companies based in the United States that sell their world-class goods to the 96 percent of potential customers who live outside our borders are critical to both the local and national economy. This is evident in today’s release of the 2014 Metropolitan Area Export Overview. The report highlights data on goods exported from U.S. metropolitan areas in 2014. Some of the nation’s most prominent cities are leading in trade and setting new export records.

We will guide you through the process of joining them with an exciting growth opportunity for your Business -> WIPP’s National Export Expansion Education Program. This step-by-step program will lead participants (both current and new exporters) through the steps to enter this growing market, or to expand their export reach.

You don’t have to be big to export – We will help you take a bite of the Export cake
Screen Shot 2015-07-08 at 4.35.07 PM

And Why Export? It’s a big world …

  • 95% of consumers live outside of the U.S.
  • 80% of world economic growth forecasted to occur outside the U.S.
  • $2.3T of U.S. goods and services exported in 2013

… and great Growth Opportunity

  • U.S. exports are in high demand although only 300,000 U.S. companies export – it’s a competitive market
  • Average revenue per firm was $23 M in 2013
  • Exporters report nearly 4 times total revenue per firm
  • Digital technologies enable entrepreneurs to be “micro-multinationals” that sell and source products, services ad ideas across boarders (McKenzie)

In WIPP’s Annual Survey, 38% of all respondents showed interest in our Export NOW program, so here are ours first webinars for entry-level exporters. Stay tuned for our advanced series! Register for first free webinars:

Screen Shot 2015-07-09 at 3.07.25 PMScreen Shot 2015-07-09 at 3.08.25 PM

The program is in partnership with the U.S. Department of Commerce’s International Trade Administration (ITA) and with the Clinton Global Initiative to make Export NOW an official CGI Commitment to Action.

For more information check out our step by step curriculum and get started today.

Growing your export business?

Export NOWIf you are the owner of a small business interested in the exporting opportunities, it’s not easy! Help is on the way for you with the Export NOW program developed by WIPP.   Export NOW is an advanced program designed for exporters to grow and expand their business to new markets.

Program focuses on:

  • Key considerations involved in export such as finance, IP, logistics, technology, etc.
  • Discusses export sales channels with detailed segments on market analysis and building a market plan, including financing requirements and opportunities.

Export NOW will introduce you to the “experts” from both the public and private sectors to inform, educate and coach in its on-line on demand education program and live regional events.

The program is in partnership with the U.S. Department of Commerce’s International Trade Administration (ITA) and with the Clinton Global Initiative to make Export NOW an official CGI Commitment to Action.

For more information check out our step by step curriculum and get started today.

It’s Time to Lift America’s Ban On Crude Oil Exports

oilby Barbara Kasoff, WIPP President

Since the start of the year, a surprising amount of support on both sides of the aisle to remove the ban on crude oil exports has emerged. Is this a sign that we are entering into a new era of bipartisan collaboration, specifically to form an energy agenda that will improve the nation’s security and get our economy moving again? While that still may be a ways off, it is clear this is one issue that could lead to historic collaboration on energy policies that will benefit American economy.

The 4.7 million businesswomen across the country that our coalition represents believe we can help secure the nation’s economic future through sound energy policies. We believe exporting our abundant energy resources must be a key part of that future and supporting an update in our crude oil export policy is the correct course of action and would allow our country to prosper at its full potential.

According to a report released this week by Margo Thorning, senior vice president and chief economist for the American Council for Capital Formation (ACCF), and William Shughart a research director for the Independent Institute and J. Fish Smith Professor in Public Choice at the University of Utah, the economic advantages and geopolitical benefits to lifting the ban on crude are clear.

The paper titled, “The Economic Case for Lifting the Crude Oil Export Ban,” cites the findings from five different studies conducted by various institutions such as IHS, Brookings Institute, the Aspen Institute, ICF International, and Resources for the Future, all of which agree that the case to update this policy is strong. Notably, they all conclude the same three major impacts lifting the ban on crude oil exports would have on the economy and consumers, including: job creation, an increase in U.S. GDP, and a downward pressure on consumer fuel prices.

For example, one of the most recently released studies mentioned in the report – by IHS – estimated that lifting the ban on crude oil exports would generate 390,000-859,000 new jobs annually nationwide and increase U.S. GDP between $86 billion and $170 billion over the next fifteen years.

Senator Lisa Murkowski, Chairwoman of the Senate Committee on Energy and Natural Resources, who has been one of the biggest champions of an examination of various U.S. energy policies, including the ban on crude oil exports, also noted the economic “no brainer” we are facing, stating, ““the economics are clear… lifting the ban on crude oil exports will benefit consumers.”

In addition to the much need economic stimulus from removing the ban, revising the current energy exports policy specifically with regard to crude oil, also extends U.S. geopolitical influence by strengthening our international trade relationships. Foreign allies would gain access to a stable and abundant source of crude oil that would overall create a more secure market.

Women thought leaders like Dr. Margo Thorning and Chairwoman Lisa Murkowski understand that repealing the ban on crude represents a fiscally responsible strategy to allow the U.S. to utilize our growing energy abundance.  Simply put, to quote Murkowski herself, “It’s time to lift America’s ban on crude oil exports.”

A Big STEP for Small Business

by Abby Ware, WIPP Government Relations  

Thinking about exporting, but have no idea where to start? Take a look at the Small Business Administration’s State Trade and Export Promotion (STEP) program. As state governments receive funding from the STEP program in coming months, small businesses will have increased access to emerging trade opportunities and export support initiatives. Utilizing the STEP program is what JM Grain of Great Falls, Montana did when it decided it wanted to export lentils and chickpeas. The STEP grant allowed JM Grain to attend a Gulfood Trade Show in Dubai, exposing the small business to new markets and an estimated $600,000 in additional export sales.

The STEP program is a federally funded pilot program with two objectives: 1) increase the number of U.S. exporting small businesses, and 2) increase export value for small businesses that already export. State governments apply and match the funds with a federal to state ratio of 75% to 25% (65% to 35% for high exporting states). STEP activities are then provided and managed at the local level by state government organizations.

Small businesses in the State of Washington in particular have benefitted from STEP, better equipping Washington to incorporate trade-promoting programs such as Export Voucher. The Export Voucher program provides up to $5,000 to small businesses for export-related expenses for companies that want to export.  Washington has also provided financial counseling and targeted support for women, veteran and minority-owned businesses through STEP funding. More information on Washington’s efforts can be found here.

To see if a state already participates and receives STEP grants, go to this link and talk to them about their small business assistance.  Every state deploys its federal STEP program in different ways, so it is important to contact the office listed on the map.