We do a lot of hand-wringing in the United States, particularly in Michigan, about our nation's troubled manufacturing sector. Often the lamentations are sprinkled with invective about predatory trade practices or cheap labor in China, Japan, India, Mexico or all of the above. But in this case, the primary enemy is us. Let's talk about exports. The U.S. government spends twice as much money promoting agricultural exports to other nations as we do promoting exports of our manufactured goods, even though the value of U.S. manufacturing exports is 10 times that of agricultural exports. In other words, we give the manufacturer about one-twentieth of the export assistance that we do to the farmer, per dollar sold. Little wonder, then, that the United States ranks dead last among the world's 15 largest manufacturing nations in a measurement called "export intensity," the proportion of a nation's manufactured goods that are sold abroad. On average, the export intensity of the top 15 manufacturing nations is 2.2 times that of the United States. Among the export-intensity leaders -- Taiwan, Germany, France and Canada -- the ratio is more than triple ours. Former Michigan Gov. John Engler, who now heads the National Association of Manufacturers, said last week that "if we could simply get exports up to the world average ... we could eliminate the trade deficit," the Wall Street Journal reported. So why don't we do more to boost manufacturing exports? Complacency, mostly. America was the biggest, most affluent, most productive economy in the world for so long, many manufacturers saw no need to hustle their wares abroad. But today, U.S. consumers aren't spending so freely. Global competition is fierce, and studies show that active exporters are more innovative than the stay-at-home crowd. So we need to get serious about exports. That means dialing back U.S. constraints on exports, such as cumbersome licensing requirements that date to Cold War security issues, as U.S. Commerce Secretary Gary Locke proposed last week and NAM supported. Corporate income tax rates, research and development credits and other tax issues need revisiting with the aim of boosting U.S. export competitiveness. This is not a partisan or ideological issue. It's common sense. Engler was a proud Republican partisan during his days in elective office, but Frank Vargo, NAM's vice president of international economic affairs, freely praises the approach of the new Democratic administration of Barack Obama to export issues so far. "I worked in the Commerce Department for 30 years under 18 different Commerce secretaries," Vargo told me, "and I've seen more interest in exporting on the part of this administration than in a long time. "They really get it. They don't have a concrete plan or strategy in place yet, but they get the importance." BY TOM WALSH |
Thursday, October 8, 2009
U.S. needs to boost its exports
