How To Fire Up The Export Machine

On Sept. 29, Commerce Secretary Ronald H. Brown will submit to Congress a report on how the U.S. can streamline the maze of rules and regulations that passes for government export policy. Brown's interagency Trade Promotion Coordinating Committee will attempt to distill a coherent set of principles from an amalgam of cold war and post-cold war export controls that no longer make sense in terms of either economics or U.S. security.

Brown's timing couldn't be better. U.S. merchandise imports are growing twice as fast as exports, and the $132 billion trade deficit in goods is at a 51 2-year high. Weak economies in Europe, Japan, and Mexico account for a good chunk, but not all, of that deficit. Washington's own policies are responsible for losses up to $40 billion in exports every year, according to Sizing Up U.S. Export Disincentives, a new book by J. David Richardson, published by the Institute for International Economics. Richardson argues that the U.S. currently enforces export controls on computers and telecommunications equipment even when they are freely available on the international market. Its controls are more sweeping than those of Europe or Japan. The result? The U.S. loses export sales without gaining a scintilla of extra security.

Even when the government tries to promote exports, it fails. There are 19 federal organizations charged with helping exporters, and they mostly protect their individual turf. Even the relatively clear task of export finance is twisted: Some 80% of federal export-finance aid goes to agriculture, which accounts for a mere 10% of the value of all exports.

What must be done? First, create one-stop shopping for export licensing at the Commerce Dept., and streamline the bureaucracy. Second, control only those technologies that are the most sensitive militarily, not "dual-use" technologies that are easily available in commercial markets. Third, direct government financial support to a wider array of exports, particularly those from small and midsize companies. A billion dollars in exports generates about 20,000 good-paying jobs, so $40 billion can create 800,000 very happy families. We're rooting for you, Ron.

Before it's here, it's on the Bloomberg Terminal.