Rethinking American export policies to help entrepreneurs


- Jay Maharjan

President Obama’s recent decision to re-strategize the export policy is a timely move. The current trade policy is getting obsolete – with the clauses like the one that restricts Radio Shack from exporting electronic gadgets was appropriate in the 70’s when the rest of the world didn’t have the same level of technology and knowledge base. Anymore, it does not make sense and because of policies like this, it is hurting American entrepreneurs. It is time to level the playing field.

Encourage corporations to export

To become a successful exporter you need to understand business landscape of the country that you are exporting to. It involves intricate understanding, rules, regulation and competitive structure in that particular local market. As an American exporter you are at a  disadvantage to start with. The rest of the world knows much more about the United States than you know about them. Obviously, if you are BOEING or GE (who makes parts for Boeing) you wouldn’t have to worry about competition. But, for every other average Joe – you are pretty much on your own. According to the President’s recently formed export council, there are only twelve compliance officers in the entire Department of Commerce to help entrepreneurs to understand foreign export compliance rules and regulation. The commission’s recent effort to bring SBA under Department of commerce and reforming SBA to educate small businesses looking to export might not be the most effective mentorship arrangement based on SBA’s past history.

Tie in exports with creating local jobs

With every eight additional packages mailed via UPS each day, can create one additional job locally. Export model has changed drastically over the last 30 years. The United States was known for moving hardware like Steel, auto and manufacturing goods. Those were the good old days. Now, innovation and creativity rule the day. 80% of the economic output of the United States is in the service arena. Only half of the total service sector exports. With the rapid growth that is taking place in China and in India, service has huge potential to be a scalable exportable model – the new exportable service form could be more in terms of exporting knowledge – selling expertise on training, sales and other service know how those countries like China, India and other developing nations desperately need.

Corporate tax cut for companies that export

The government can play a major role in offering incentives for entrepreneurs to get involved in export business. The US should lower taxes for exporters – at least to the level that is competitive with the OECD level, if not lower. The US should also offer R&D tax credit. Tax cuts should be structured in such a way that entrepreneurs can plan 3-5 years ahead. Uncertainty like the one that we recently had related to not knowing if the Bush’s tax cut would be extended can hurt entrepreneurs immensely – by not getting a chance to forecast multiple year capital horizon.

Learn from Germany

In spite of dismal economy across the EU, Germany is doing something right. I saw the impact firsthand during my recent trip to Europe. Germany is doing extremely well in fostering export entrepreneurs– especially with entrepreneurs who are exporting higher value goods and services. Among other things, while the US is moving away from vocational programs at the High school level, Germany is adapting vocational and entrepreneurial programs strongly and creating a healthy entrepreneurial-ecosystem.

Offer compliance help (at the Department of Commerce level)

Entrepreneurs need help with foreign regulation and compliance procedures. Conducting business and partnering with entrepreneurs in certain parts of the world need additional level of local know-how, persistence, competitiveness and simply need additional raw knowledge.

End of the day, when it comes to export policies, the department of commerce should think like a private corporation. Supplying entrepreneurs with right help, including providing with the data and more importantly useful information based on the data that yields competitive knowledge – would be the key in helping American entrepreneurs and exporters once again to take the strong lead in global commerce.

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8 Responses to “Rethinking American export policies to help entrepreneurs”

  1. Jay Maharjan says:

    left out one more area that entrepreneurs need help from the government – i.e. IPR, protecting intellectual Property rights – Entrepreneurs often fall between the rock and the hard place as businesses have very little leverage over foreign copyright rules, IP abuse.

  2. B Cooper says:

    good point on IPR

  3. Jay Maharjan says:

    China’s IPR Law – coming of age or just the beginning, http://www.uschina.org/public/documents/2010/07/uscbc-aml-webinar-072910.pdf

  4. David Skelsky says:

    big issue! http://www.steptoe.com/publications-newsletter-45.html

  5. Jay Maharjan says:

    agree. china is a wild card and looks like will stay that way for a while, another major challenges could emerge in biomedical IPR.

  6. 4entrepreneur 4entrepreneur says:

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