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Doubling Exports Will Require More than Scrap and Waste

The administration has put forth a goal of doubling U.S. in the next five years. It’s a tall order, especially considering the state of some potentially major export markets.

Look at China. In his latest book, “The Betrayal of American Prosperity” Clyde Prestowitz makes the incorrect assertion that while China’s number one export to the United States is computers and electronics, the top U.S. export to China is waste paper and scrap metal. [Clarification: Prestowitz is wrong; we weren't clear enough on the point]

But behind the top line number, But the United States sells more than waste and scrap to China. In 2008, America sold $ 11 billion worth of computer and electronic products (the number one U.S. export to China) and $ 8.56 billion worth of chemicals to the Chinese.

Looking further afield, Brazil and India, as well as China (the so-called BICs countries), will play a major role in any future U.S. export growth. A recent Brookings study estimated that middle-class consumption in these three nations, which was approximately 8.4 percent of the global middle class spending in 2009, could reach 26 percent by 2020. Based on the latest IMF forecast, the BIC countries are expected to account for about a fifth of the global gross domestic product this year, surpassing the United States for the first time.

The U.S. still manufactures a range of advanced goods that the rest of the world wants, including aircraft, electrical machinery, and chemicals. U.S. exports to Brazil, India, and China more than doubled in size, in real terms, between 2003 and 2008. Chemicals and transportation equipment dominate U.S. exports to these countries. 12.4 percent of U.S. exports of chemicals went to the BICs markets in 2008.

The U.S. metropolitan areas that produce these goods and services are well-positioned to take advantage of the growth of these countries. For example, the nation’s ten largest metropolitan area producers of computer and electronics concentrate more than 75 percent of all U.S. production in this industry. Western metro areas, such as Portland, Ore., San Jose, Los Angeles, and San Francisco, are well positioned for computer exports to China.

Ultimately, U.S. exports begin at home. For the United States to “ride” the BICs wave, we need more than the federal government acting internationally to level the playing field in currency and trade agreements. We need a connection between federal policies and metropolitan areas, the places where the nuts and bolts of exporting occur, to make exports work. U.S. exporters need as much as help as they can get.