Yesterday President Obama delivered a speech fleshing out his National Export Initiative -- the doubling of U.S. exports in the next five years. Longtime and short-time readers of this blog are already aware of my deep skepticism of this idea.
Others at FP, however, observe that it has happened in the past (1981 most recently), so perhaps "Obama's plan to double the number by 2015 does not seem so far-fetched."
So, let's clarify: the possibility of U.S. exports doubling in the next five years is pretty small, but within the realm of the doable. Obama's National Export Initiative will have no appreciable effect on export flows.
The fundamental drivers for U.S. exports are the rate of economic growth of the rest of the world and the exchange rate value of the dollar. If the dollar depreciates in value and the rest of the world experiences high rates of economic growth, then exports will take off. Everything else would generously be described as window dressing.
Let's consider the content of the key parts of Obama's speech to see what I'm saying:
I know the issue of exports and imports, the issue of trade and globalization, have long evoked the passions of a lot of people in this country. I know there are differences of opinion between Democrats and Republicans, between business and labor, about the right approach. But I also know we are at a moment where it is absolutely necessary for us to get beyond those old debates.
Those who would once support every free trade agreement now see that other countries have to play fair and the agreements have to be enforced. Otherwise we're putting America at a profound disadvantage. Those who once would once oppose any trade agreement now understand that there are new markets and new sectors out there that we need to break into if we want our workers to get ahead.
Second of all, could someone, anyone, point to a politician that once opposed trade deals and are now in favor of them? Anyone?
So, what are the components of the National Export Initiative, beyond a couple of interagency committees that will accomplish nothing?
First, we will substantially increase access to trade financing for businesses that want to export their goods but just need a boost –- especially small businesses and medium-sized businesses.
Let's be generous and say that this would make a huge difference (it won't) and that it would really increase exports from this sector. Given that roughly 70% of U.S. exports come from large corporations, this still wouldn't accomplish all that much. Next!!
[T]he United States of America will go to bat for our businesses and our workers....
Going forward, I will be a strong and steady advocate for our workers and our companies abroad.
And this effort will extend throughout my administration. Secretary Locke is issuing guidance to all senior government officials who have foreign counterparts on how they can best promote our exports. Secretary Clinton is mobilizing a commercial diplomacy strategy, directing every one of our embassies to create a senior visitors business liaison who will manage our export advocacy efforts locally, and when our ambassadors return stateside, we’ll ask them to travel the United States to discuss export opportunities in their countries of assignment.
SCENE: A small factory somewhere in Malaysia.
The PLANT MANAGER and his FOREMAN are looking at the assembly line:
FOREMAN: You know, we could really make a better widget if only we had a better-quality thingmabob.
PLANT MANAGER: Well, we could import it from Vietnam, Taiwan, South Korea, Japan....
[Sound of trumpets grows louder. PRESIDENT OBAMA enters the factor on a Segway.]
PRESIDENT OBAMA: Have you thought of buying American? [Obama exits]
[PLANT MANAGER and FOREMAN smack hands on heads]
PLANT MANAGER: Why, of course!! I can't believe we didn't think of importing from the largest economy in thw world!
FOREMAN: I know, it's like, we never even thought of America as a producer of anything!
PLANT MANAGER: Thanks, President Obama!!
Third, we’ll unleash a battery of comprehensive and coordinated efforts to promote new markets and new opportunities for American exporters.
Yawn. See response to point one.
The fourth focuses on making sure American companies have free and fair access to those markets. And that begins by enforcing trade agreements we already have on the books.
As I've said before, this is akin to saying that the budget deficit can be fixed through better tax collection measures by the IRS. It won't accomplish much of anhything.
Of course, new trade agreements might actually expand export opportunities, but the language in the speech on that front contains nothing new.
We’ll also work within the G20 to continue global recovery and growth. Last year, when the G20 met to coordinate the international response to our global economic crisis, we agreed that in order for that growth to continue, we needed to rebalance our economies. For too long, America served as the consumer engine for the entire world. But we’re rebalancing. We are now saving more. And that means that everybody has got to rebalance. Countries with external deficits need to save and export more. Countries with external surpluses need to boost consumption and domestic demand. And as I’ve said before, China moving to a more market-oriented exchange rate will make an essential contribution to that global rebalancing effort.
If there were any concrete policy directives on this front, I would straighten up and put away the snark. Global rebalamcing would have an appreciable impact on exports. Unfortunately, there's nothing in the speech on this topic beyond this paragraph.
[W]e’re going to streamline the process certain companies need to go through to get their products to market -– products with encryption capabilities like cell phone and network storage devices....
[W]e’re going to eliminate unnecessary obstacles for exporting products to companies with dual-national and third-country-national employees.
My reaction to this idea is the same as my reaction to the rest of the list -- these aren't awful policy ideas so much as completely superfluous. None of them wuill have an appreciable effect on exports.
The primary purpose of the National Export Initiative is to function as a political excuse. The White House now has something to point to when critics accuse them of lethargy and/or protectionism on the trade front. That is all.
Did I miss anything?