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Making U.S. Exports Work for Job Creation

3 Steps We Must Take

SOURCE: AP/Rich Pedroncelli

A pallet with bags of California rice for shipping is moved at the Farmers' Rice Cooperative warehouse in West Sacramento, California. Agricultural exports products like rice have been a bright spot in the struggling U.S. economy.

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The ongoing national debate over how to create enough jobs for 14 million unemployed Americans has largely left out the important role of exports in curbing our nation’s unemployment crisis. But the goods and services we sell to other nations account for 12.5 percent of our economy and directly support 9.2 million, or 7 percent, of American jobs. Policymakers would do well to recognize just how important U.S. exports are to restoring our nation’s global economic competitiveness and a prosperous middle class.

Exports, in short, must be part of the solution to create enough jobs and put millions of hardworking, middle-class Americans back to work. President Barack Obama’s National Export Initiative to double American exports from $1.57 trillion in 2009 to $3.14 trillion by 2015 is a step in the right direction. But three complementary steps would help leverage exports for job creation more effectively—not just for the next three years but for years to come:

  • First, an export strategy must connect to an economic plan to promote U.S. competitiveness, especially in manufacturing.
  • Second, we must systematically collect information on the full range of activities that other countries are undertaking to promote their exports and be more creative in how we promote our exports overseas.
  • Third, we must cultivate more demand abroad.

Let’s examine each of these in turn.

Develop a more comprehensive economic plan

An export strategy must connect to an economic plan to promote U.S. competitiveness, with manufacturing at its core. An export strategy without a plan to promote our nation’s competitiveness is like a Christmas ornament without a tree.

The Obama administration’s initiatives to support innovation through investments in research, education, and infrastructure, alongside the creation of the White House Office of Manufacturing Policy, are important steps forward. But these initiatives must be coordinated in an economic vision firmly rooted in an understanding of our strengths and weaknesses in different sectors relative to the rest of the world.

We need to examine the competitiveness of the sectors of our economy with the understanding that of 10 major industry groups the largest share of export-supported jobs (36 percent) are in manufacturing. What are other countries buying from us? One successful example is the American aerospace sector, which runs a $58 billion trade surplus and supports well over half a million workers in high-skilled, high-wage jobs.

What are other countries likely to buy in the future? Medical instruments manufacturing is one example of a sector where the United States enjoys a surplus despite an overall high-tech trade deficit. The medical devices sector employs over 300,000 workers, and with aging populations around the world, the demand for these products, and other health care inputs, is likely to rise.

An economic plan should also connect the dots between issues such as export controls and exchange rate policy that are not part of our National Export Initiative but are still relevant to the competitiveness of our exports. Only once we are armed with this information can we craft an export strategy that makes the most of our most promising sectors.

Be more creative in promoting U.S. exports

The United States needs to systematically collect information on the full range of activities that other countries are undertaking to promote their exports, and then explore ways to be more creative beyond deploying standard supply-side measures to promote exports.

According to the 2011 National Export Strategy, the Obama administration “seeks to improve advocacy and trade promotion efforts on behalf of U.S. exporters so that trade missions can introduce the world to American products, and advocacy centers can help U.S. exporters pursue opportunities.” Our government’s trade advocacy and export promotion efforts are largely focused on educating, training, and assisting U.S. businesses, especially small- and medium-sized companies, access information and resources on how and where to export.

But other countries have a less conventional approach to promoting their exports. Foreign governments tend to play a more active role in negotiating deals to boost their exports, while the United States government tends to let businesses sell their own products. China, for example, granted Namibia a low-interest loan that Namibia then used to purchase $55 million worth of Chinese made cargo scanners.

The initial step to crafting more effective export promotion strategies requires knowing what we are up against. A congressionally mandated study akin to the COMPETES Act report that does this analysis would help to this end.

“Just Jobs”

Our export strategy should include an emphasis on “Just Jobs” to supplement macroeconomic rebalancing, removing trade barriers and negotiating new trade agreements. Without a global focus on just jobs—jobs complete with appropriate compensation, social protections, labor rights, and opportunities for economic mobility—promoting broad-based, sustainable economic growth anywhere is just an aspiration. After all, what good is all the market access in the world if consumers in other countries are not gainfully employed and so cannot afford the products and services we want to export?

Our export strategy should explicitly support U.S. government programs to provide technical and other forms of assistance to build stronger labor markets and create just jobs abroad. Our trade agreements should include strong labor provisions and adequate goals for enforcement to prevent any one country from leveraging poor labor practices for economic gain. This makes it vitally important that the Transpacific Partnership—a regional trade agreement currently being negotiated between the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam—include a robust labor chapter.

All of these measures taken together will boost the consumption power of citizens abroad to create new markets for our products and services. To be sure, boosting exports alone will not solve our jobs crisis. But attention to raising exports is a step in the right direction… if we do it well.

Sabina Dewan is Director of Globalization and International Employment at the Center for American Progress.

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