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Budget 2012: Invest in Exports to Compete

Efforts to boost U.S. competitiveness feature prominently in the administration’s FY 2012 budget.  Significantly, the proposal expands the nation’s export playbook because growing exports requires more than trade and currency policy tweaks. Exporting companies need an efficient transportation system to ship their goods abroad, effective innovation, education, and workforce development policies to increase the quality of exported goods and services, and extensive export financing and trade services to maintain and expand their reach to markets across the world.

The president maintains his commitment to the National Export Initiative announced last year on several fronts:

  • Funding for trade-related agencies (the International Trade Agency, the Export Import Bank, the U.S. Trade and Development Agency) is maintained or increased for FY 2012. The administration reiterates its support of the Korea free trade agreement, a vital step in opening more markets for U.S. businesses.
  • Innovations in transportation policy such as creating a National Infrastructure Bank or Race to the Top-like competitions for state transportation agencies are intended to better connect transportation investments to the economy. In a country without a national freight strategy, these are forays into a transportation policy that supports exporters and the productive part of the economy.
  • The Manufacturing Extension Partnership Program would receive a 14 percent increase in funding for FY 2012. This is the main federal program providing support services to U.S. manufacturing businesses to grow through internal expansion and exports.
  • Reforms in workforce development, such as the creation of a $ 380 million competitive Workforce Innovation Fund and the expansion of the use of work-sharing, would also help exporters. The work-sharing mechanism, or short work, has been touted as a major contributor to the rapid recovery of German economy, helping companies such as Siemens and Trumpf avoid layoffs during the recession.

A few programs related to trade were zeroed out or cut, most for good reasons. For example, the administration reduced the funds available to the Emergency Steel Loan Guarantee pro­gram by $43 million, an unnecessary price support for U.S. steel producers in times of price gains for steel products. An eliminated program, the $ 16 million Trade Adjustment Assistance for Firms (TAAF) program will be offset by the doubling of the Trade Adjustment Assistance Program in the Department of Labor (proposed to increase to $ 1.28 billion) and new Trade Adjust­ment Assistance Community College and Career Training Grants.

In these fiscally challenging times, the administration should find new ways to leverage export promotion efforts in states and metros around the country. This would create both a broader effort and a clearer division of labor among the federal government, states, metros, and the private sector. This should be a matter of coordination and specialization, and not create overlap and unnecessary burdens.

If the United States is to meet its export goals, a federalist competitiveness agenda, with the federal budget more connected with the efforts on the ground, will be necessary.