Commerce Secretary Locke on the New U.S. Exports and Jobs Push

Commerce Secretary Gary LockeCommerce Secretary Gary Locke on Thursday outlined an ambitious plan -- called the National Export Initiative -- that aims to double U.S. exports to $2 trillion by 2015. And it expects to create 2 million new American jobs. In an exclusive interview with DailyFinance Thursday morning, Locke stressed that "the key to our economic prosperity is to export more. While there are rosy signs of economic recovery," he says President Obama won't be satisfied "until every American who wants a job can get a job."First highlighted in the president's State of the Union address, Obama said the plan would help struggling farmers and small businesses distribute more of their goods and add millions of jobs to the depressed U.S. labor market.

"We have to seek new markets aggressively, just as our competitors are," Obama said when he announced the National Export Initiative. "If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. But realizing those benefits also means enforcing those agreements so our trading partners play by the rules."

The announcement comes at a critical time for U.S. workers and small businesses alike. Employers burned by hard economic times have faced tightening credit conditions and slashed millions of jobs since the start of the recession, hiking the unemployment rate to an alarming 10%. And the cuts keep coming, including a couple of mass layoffs in just the past few weeks at Verizon (VZ) and Walmart's (WMT) Sam's Club. The bad news gets even worse for workers since very few companies -- big or small -- are actually hiring.

Exports Have to Grow Faster Than Imports

Noting on Tuesday that "65% of all new jobs in the last decade" were made possible by small businesses, Obama proposed a $30 billion TARP program to boost lending at community banks. While both the export plan and the TARP program are viewed as strategies that have the potential to add jobs, just how many remains to be seen.

One Washington Times analysis suggests that "Just as more earnings only boost wealth if they exceed or grow faster than spending, more exports only create more jobs on net -- the only way to reduce unemployment -- if they exceed or grow faster than imports. In other words, doubling exports won't create jobs if imports double along with them."

Small businesses aren't the only ones that will benefit from the initiative. Help is also being added for the farming community as well, including an additional $54 million for the Department of Agriculture to enhance its export-promotion activities, including:
  • More technical assistance to help farmers selling specialty crops
  • More promotions in foreign countries extolling U.S. commodities
  • More direct assistance to farmers to develop new foreign markets and to increase market share in existing markets.
U.S. exports are on rise, surging 18.1% in the fourth quarter, but Locke says in order for the program to be a success, businesses have to be educated on opportunities overseas, access to credit must be improved and the U.S. must continue rigorous enforcement of international trade laws to remove barriers that prevent U.S. firms from getting access to foreign markets.

Opening up to more emerging markets like China, India and Brazil will be key to getting the program off the ground. On, China, relations with the U.S. have been on an uneasy path for months. Most recently, China was upset about a $6.4 billion defense systems deal between the U.S. and Taiwan. Friction has remained between the Mainland and the island since a civil war allowed Taiwan to separate from China more than half a century ago.

The U.S. and China have also traded barbs about product quality on goods ranging from tires to chickens to cars. Just a few weeks ago, the two nations sparred over Google's threat to pull out of China. But as two of the biggest economies in the world, it behooves both China and the U.S. to work things out.

Locke says "the volume of trade between the two countries has grown exponentially over the last 30 years." He notes that for any relationships that grow in size, stature and complexity there will always be some disagreements, but says the good thing is that "we have formal mechanisms by which we are able to resolve those disputes."

Locke, who is Chinese-American, has a plenty of experience working to strengthen China relations. During his governorship in Washington State, he was able to boost economic ties with China. And in a couple of months, he'll lead the Obama administration's first Cabinet-level trade mission when he visits China and Indonesia in May.

But moving past China, it will also be interesting to see whether stalled accords negotiated by the Bush administration with countries like Panama, South Korea and Colombia will get the green light.

Full-Speed Ahead

Locke says that "this is the first time the United States will have a government-wide export-promotion strategy with focused attention from the president and his Cabinet." And the administration plans to move quickly to get things off the ground. In March, it'll launch a 12-month program to help create jobs in America by:
  • Identifying new markets for existing U.S. exporters
  • Increasing the number of foreign buyers at U.S. trade shows
  • Working with private sector partners to increase exporting through market development cooperator grant program
  • Getting more clean energy companies involved in promising new markets.

American firms that want to participate in the initiative are asked to call 1-800-USA-TRADE.

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