US National Export Initiative:

An Expert's View about Trade Policy and Regulations in the United States

Last updated: 5 Apr 2011

US National Export Initiative: features and implications


•The National Export Initiative (NEI), a plan unveiled in the 2010 State of the Union address by the US President, is an ambitious effort that aims to double American exports over the next five years and support two million jobs in the US.
• The NEI has five components, namely improving advocacy and trade promotion efforts; increasing access to export financing; removing trade barriers; enforcing US trade rules to ensure trade partners live up to their obligations; and promoting strong, sustainable and balanced growth.
•In 2010, US exports grew strongly by 17% from the 2009 level. A revival of external demand aside, promotional efforts taken by the US also played a part in facilitating overseas sales. A series of intensified efforts will further be made to lift exports.
•Hong Kong is well poised to facilitate US companies seeking to increase exports to the Asian region, especially the Chinese mainland. Hong Kong is most attractive to US companies with its ability to bridge the East and the West.
•In order to encourage more US companies to tap the growing Asian market, the Hong Kong Trade Development Council, in cooperation with the US Foreign Commercial Service, has rolled out the Pacific Bridge Initiative, a structured programme to help US companies export to Asia.
•The NEI certainly has a positive effect on US exports to Hong Kong and the mainland. According to US statistics, only a scant 1% of the US’s 30 million companies are now engaged in export business. There is thus great potential for US exports to penetrate into the Asian region.

Background to NEI

The National Export Initiative (NEI), a plan unveiled in the 2010 State of the Union address by the US President, is an ambitious effort that aims to double American exports over the next five years and support two million jobs in the US. This is the first time the US has developed a government-wide export-promotion strategy with focused attention from the US president and his cabinet. The NEI has five broad components. These components include (1) improving advocacy and trade promotion efforts; (2) increasing access to export financing; (3) removing barriers to trade; (4) enforcing US trade rules to ensure trade partners live up to their obligations; and (5) pursuing policies to promote strong, sustainable and balanced growth.

The NEI was formally established by means of an executive order issued by the president in March 2010. The order created an Export Promotion Cabinet (EPC) consisting of the heads of various federal departments and agencies with trade functions, who have been tasked with developing and co-ordinating the implementation of the NEI, and must ensure that export promotion activities are given top-level priority and incorporated in a broad array of government programmes. These officials include the US trade representative (USTR), the director of the Office of Management and Budget, the national security advisor, the assistant to the president for economic policy, the chair of the Council of Economic Advisers, and the heads of the Small Business Administration, the Export-Import Bank of the United States (Ex-Im Bank), the Overseas Private Investment Corporation, the US Trade and Development Agency (USTDA), and the departments of State, Treasury, Agriculture, Commerce and Labor.

The NEI forms part of a broader strategy by the Obama administration that seeks to reduce the marked dependence of the US economy on domestic consumption, which currently accounts for roughly 70% of US GDP, while increasing the share held by exports (currently below 13%) and domestic investment (currently at 14%). The administration believes that increasing total exports and the exports-to-GDP ratio will foster strong, sustainable economic growth and support millions of additional well-paying jobs at a time of high unemployment and economic uncertainty.

While most US sectors have considerable export potential, the administration believes that some industry sectors have greater potential than others and intends to focus its efforts on these sectors, which include renewable energy; civil nuclear power, smart grid and advanced vehicle technologies; health care technology, biotechnology and medical devices; and agricultural production. The administration will also intensify its export promotion activities in support of the US services sector, including financial (banking, securities and insurance), telecommunications, computer, energy, environmental, express delivery, distribution, audiovisual, construction, professional (architecture, engineering, accounting and legal), health care, education, and travel and tourism services.

Recent NEI achievements

The US President’s goal of doubling exports over five years is rather ambitious, as it would require exports to expand from US$1.57 trillion in 2009 to an all-time high of US$3.14 trillion by end-2014. In 2010, exports grew strongly by around 17% from the 2009 level. Looking ahead, exports would still have to grow at an annual average of over 14% during 2011-2014 to achieve the US$3.14 trillion target by end-2014. This is quite a lofty goal considering that US exports have never in the past grown at a rate of 14% per year or higher during four consecutive years, although exports did increase for five straight years during 2004-2008 at an average of more than 12% per year, which is the first time that has happened in recent recorded history.

If anything, a revival of external demand aside, the promotional efforts taken by the US administration also played a part in facilitating overseas sales in 2010. The September 2010 report of the EPC highlights relevant actions taken during the first eight to nine months of 2010 to promote the NEI. Some of these actions are summarised below.

Trade missions and US trade shows: The Department of Commerce (DOC) has co-ordinated some 20 trade missions in 25 countries with more than 250 companies participating, and has recruited nearly 8,800 foreign buyers to visit major trade shows in the US. This includes a first cabinet-level business development mission to Hong Kong and the Chinese mainland in May 2010 to promote exports of leading US technologies related to clean energy, energy efficiency and electric energy storage, transmission and distribution. The objectives of that mission included (1) assisting US companies already doing business on the mainland to increase their business there; (2) facilitating the entrance of US companies that are experienced exporters to the mainland market for the first time; (3) providing advocacy for US companies interested in participating in major projects; and (4) supplying information on US government trade financing and technical assistance programmes through the participation of representatives from the USTDA and the Ex-Im Bank.

Efforts to eliminate trade barriers: The US has addressed 50 different trade barriers in 33 markets, and initiated action on behalf of US exporters and investors in 120 different cases. This includes a March 2010 agreement with the mainland to reopen the Chinese market to US pork and pork variety meats.  China banned imports of US pork and pork products in April 2009 due to concerns over the transmission of the H1N1 influenza A virus. The US also successfully resolved several outstanding issues with the US-South Korea Free Trade Agreement, which is now likely to be ratified by Congress during the first half of this year, and could increase US goods exports by about US$10 billion to US$11 billion. The implementation of this FTA is significant for Hong Kong and mainland exporters because it is expected to boost the price competitiveness of a range of products where South Korea competes with China for US sales, including certain cotton and man-made fibre clothing and certain electronic products.

Stepped up enforcement of trade rules: The US achieved an important victory in August 2010 when the World Trade Organization (WTO) ruled against the EU in a case involving the duty treatment of certain high-technology products. Of particular relevance to China are two WTO dispute settlement cases filed by the US in September 2010 involving (1) the imposition of antidumping and countervailing duties on certain specialty steel from the US; and (2) certain discriminatory practices against US suppliers of electronic payment services. In addition, the USTR filed a third case in December 2010 involving certain alleged subsidies provided by the mainland to domestic wind power equipment manufacturers.

Promotion of balanced global economic growth: The US is promoting strong, sustainable and balanced growth in the global economy through its collaboration with G-20 members. Efforts in this regard focus on reducing the preponderance of US consumption as an engine of global growth, while stimulating domestic demand in markets like China, Japan, Germany and India. The US considers that one of the keys to this rebalancing process will be the extent to which Chinese authorities agree to adopt policies that stimulate domestic consumption, allow the value of the RMB to be determined by market forces and reduce China’s trade surplus. In the main, the US administration is looking to undertake this process through multilateral channels like the International Monetary Fund (IMF) and the G-20 as well as bi-lateral mechanisms like the US-China Strategic and Economic Dialogue (S&ED) and the Joint Commission on Commerce and Trade (JCCT).

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Posted: 05 April 2011, last updated 5 April 2011

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