This is the accessible text file for GAO report number GAO-09-480T 
entitled 'International Trade: Effective Export Programs Can Help In 
Achieving U.S. Economic Goals' which was released on March 17, 2009.

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 


Before the Subcommittee on Commerce, Trade, and Consumer Protection, 
Committee on Energy and Commerce, House of Representatives: 

United States Government Accountability Office: 

For Release on Delivery: 
Expected at 10:00 a.m. EDT:
Tuesday, March 17, 2009: 

International Trade: 

Effective Export Programs Can Help In Achieving U.S. Economic Goals: 

Statement of Loren Yager, Director:
International Affairs and Trade: 


[End of section] 

Mr. Chairman and Members of the Subcommittee: 

Thank you for the opportunity to appear today before the Subcommittee 
to provide our perspective on the role of exports in the U.S. economy. 
As Congress responds to the rapid deterioration in the U.S. economy, it 
must consider the full range of tools available to further growth and 
create new jobs for U.S. workers. Some of these tools are related to 
promoting exports, which can have broad benefits to the U.S. economy. 
Today, I will lay out some observations regarding export promotion 
challenges from a range of work that we have conducted for Congress 
over recent years. 

In my statement today, I will provide some background information 
concerning the ways in which exports can enhance U.S. economic output, 
and I will summarize some of the work we have conducted to address 
congressional interest in promoting the growth of exports and improving 
export promotion programs. 

My remarks are based on a variety of reports and testimonies we have 
issued on a range of international trade issues over the past 4 years. 
We conducted this work in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 


Exports, and trade more broadly, contribute to the U.S. economy in a 
variety of ways. Trade enables the United States to achieve a higher 
standard of living through producing and exporting goods and services 
that are produced here relatively efficiently, and importing goods and 
services that are produced here relatively inefficiently. An indication 
of this is that firms engaged in the international marketplace tend to 
exhibit higher rates of productivity growth and pay higher wages and 
benefits to their workers than domestically oriented firms of the same 

U.S. exports of manufactured goods grew from $730 billion in 2004 to 
$1.1 trillion in 2008. U.S. exports of non-manufactured products grew 
from $89 billion in 2004 to $178 billion in 2008. These exports have 
come from every state. For example, in 2008 Illinois exported $49 
billion worth of manufactured goods and $5 billion in non-manufactured 
goods. Similarly, California exported $127 billion in manufactured 
goods and $18 billion in non-manufactured goods, of which nearly $8 
billion were agricultural products. 

In addition to the longer-term benefits of trade and exports, exports 
can serve as a countercyclical force for the U.S. economy, 
strengthening the economy when other parts of it are relatively weaker. 
For a number of years, as the United States increasingly imported more 
than we exported, the U.S. economy was an engine of growth for other 
nations. In contrast, when the U.S. economy slowed in 2007 and much of 
2008, U.S. economic growth was boosted by an improving trade balance. 
With strong global demand for U.S. goods and services, increases in net 
exports (exports minus imports) accounted for over half of U.S. 
economic growth in the past 2 years. Unfortunately, when U.S. trading 
partners are also experiencing economic downturns, as we are currently 
seeing, the potential for trade to continue to serve as a 
countercyclical force is diminished. 

GAO Has Addressed Longstanding Concerns about Challenges to Achieving 
Economic Benefits through Export Promotion: 

Congress has expressed longstanding concerns regarding several aspects 
of U.S. export promotion efforts, especially regarding interagency 
coordination, meeting the needs of small businesses, and effectively 
enforcing trade agreements. We have addressed these concerns by 
reviewing and providing recommendations on a wide range of U.S. 
policies and programs that have the potential to increase U.S. exports. 
Effective export promotion policies are always important, but are of 
particular interest in the current environment. My statement today will 
address three policy areas: (1) coordinating export promotion programs; 
(2) effectively meeting the needs of small businesses; and (3) 
monitoring and enforcing trade agreements to broaden U.S. access to 
foreign markets. 

Coordination of Export Promotion Efforts Can Help Maximize Benefits 
from Agency Activities: 

The Trade Promotion Coordinating Committee (TPCC) is charged with 
providing a unifying interagency framework to coordinate U.S. export 
promotion activities and develop a government-wide strategic plan. TPCC 
member agencies provide a wide range of export promotion activities, 
including the Department of Commerce's advice and advocacy to 
businesses during the export process, the Department of Agriculture's 
financing for promotional activities, and the Export-Import Bank's (Ex- 
Im) loan guarantees for foreign buyers of U.S. exports. According to 
the TPCC's 2008 National Export Strategy, nine member agencies had 
about $1.3 billion in budget authority for export promotion programs in 
fiscal year 2008.[Footnote 1] Two agencies accounted for more than 
three quarters of the reported total export promotion budget-- 
Agriculture with $644 million and Commerce with $339 million, followed 
by the Department of State with $184 million. Other agencies can play 
significant roles in export promotion, despite their smaller budget 
authorities. Ex-Im, for example, has recently requested no budget 
authority, projecting that the fees it collects will offset its costs. 
Nonetheless, in fiscal year 2008, Ex-Im authorized $14.4 billion in 
loans, guarantees, and export-credit insurance to support U.S. exports. 

One of the longstanding congressional concerns we have addressed is a 
lack of effective coordination of trade promotion activities. We have 
reviewed the TPCC several times since its inception and we testified in 
2006 that the TPCC had made progress over time in improving 
coordination.[Footnote 2] However, we also testified that its National 
Export Strategy continued to provide limited information on agencies' 
goals and progress relative to broad national priorities. Examples of 
positive steps we reported on across TPCC member agencies included 
improvements in interagency training and joint outreach to better serve 
small business. We further noted that the strategies did not review 
agencies' allocation of resources in relation to government-wide export 
promotion priorities. We note now that the 2008 National Export 
Strategy contains information regarding the status of priority 
initiatives identified in the prior year's annual report. It also 
contains information on individual TPCC member agencies' export 
promotion strategies and results. However, the strategy still lacks an 
overall review of agencies' allocation of resources relative to 
government-wide export promotion priorities. 

Broadening Trade Benefits by Increasing Small Business Exports Is a 
Trade Priority: 

Promoting exports by small businesses has been a perennial priority in 
the National Export Strategy. In addition, USTR's 2009 Trade Policy 
Agenda calls for using trade and commercial policies to help small and 
medium businesses become more effective competitors and exporters in 
the global marketplace. While many small businesses export, it is 
widely recognized that they face a number of challenges in exporting. 
[Footnote 3] For example, small businesses typically do not have 
overseas offices and may not have much knowledge regarding foreign 
markets. Export promotion agencies have developed various goals with 
respect to their small business assistance, and in some cases Congress 
has mandated specific requirements for supporting small businesses. 

My remarks will focus on our findings regarding Ex-Im's efforts to 
address congressional mandates regarding its small business financing. 
Since the 1980s, Congress has required that Ex-Im, which provides 
loans, loan guarantees, and insurance to finance U.S. exports, make 
available a certain percentage of its export financing for small 
business. Since 2002, Congress has required that share be at least 20 
percent. Moreover, in Ex-Im's 2006 reauthorization, Congress directed 
Ex-Im to establish performance standards for assessing its small 
business financing efforts, including activities directed at businesses 
owned by socially and economically disadvantaged individuals and women. 

We identified two types of challenges in monitoring Ex-Im's support for 
small businesses: 

* Developing effective performance measures. We found that Ex-Im had 
developed performance standards for assessing its small business 
financing efforts in most, although not all, of the areas specified by 
Congress, ranging from providing excellent customer service to 
increasing outreach.[Footnote 4] We also found that some measures for 
monitoring progress against the standards lacked targets and 
timeframes, and that Ex-Im was just beginning to compile and use the 
small business information it was collecting to improve operations. GAO 
made several recommendations to Ex-Im for improving its performance 
standards and Ex-Im agreed to take steps to address them. 

* Maintaining reliable data and reporting. In 2006, we found weaknesses 
in Ex-Im's data and data systems for tracking small business financing 
and made recommendations for improvement; Ex-Im has taken steps to 
address those weaknesses.[Footnote 5] One notable improvement has been 
the introduction of "Ex-Im Online," an interactive, web-based process 
that allows exporters, brokers, and financial institutions to transact 
with Ex-Im electronically. This contributed to more timely and accurate 
information on Ex-Im's financing, and thus a greater level of 
confidence in Ex-Im's reporting on its efforts relative to 
congressional goals. 

Trade Agreements Need to Be Effectively Monitored and Enforced to 
Ensure U.S. Companies Can Benefit: 

A top trade priority for the United States is opening foreign markets 
for U.S. goods and services by ensuring that U.S. trading partners 
comply with existing trade agreements. These agreements have addressed 
traditional barriers to trade such as tariffs, as well as other 
obstacles ranging from weak intellectual property protection to 
selective enforcement of agricultural inspection requirements. As a 
result, monitoring and enforcing these agreements--which number in the 
hundreds and cover the vast majority of U.S. exports--is a key 
responsibility for U.S. government agencies. 

Congress has expressed longstanding concerns regarding a number of 
issues, of which I will discuss two related issues: 

* Effective monitoring and enforcement of trade agreements. We have 
reported on a variety of issues related to monitoring and enforcing the 
broad range of U.S. trade agreements with a number of countries. 
[Footnote 6] For example, since China's accession to the World Trade 
Organization in 2001, Congress has been keenly interested in the extent 
to which China is complying with its obligations. As a result, we have 
performed a large body of work examining U.S. government efforts to 
oversee China's implementation of its trade obligations. Most recently, 
we reviewed USTR's annual reporting on China's compliance.[Footnote 7] 
Our analysis of these reports identified about 180 compliance issues 
with China, ranging from agriculture policies to China's legal system. 
Of these, we found that USTR had resolved 23 percent, achieved some 
progress on 40 percent, and made no progress on 37 percent. We are also 
in the process of completing a report analyzing the results of free 
trade agreements between the United States and four countries. 

* Sufficiency of agencies' human capital to perform monitoring and 
enforcement responsibilities. We have previously reported that the 
workload for agencies responsible for monitoring and enforcing trade 
agreements has increased significantly and that the agreements they 
monitor and enforce have become more complex.[Footnote 8] Effective 
monitoring and enforcement requires significant expertise--often 
involving staff with expertise in trade policy, the foreign country, 
and the particular industry. However, we have found that trade agencies 
face constraints to developing and accessing necessary expertise. For 
example, after identifying a lack of training for U.S. government staff 
overseas regarding monitoring and enforcing trade agreements, we 
recommended that key trade agencies jointly develop a strategy for 
meeting those training needs to better equip staff to handle 
increasingly complex or technical barriers to U.S. exports. Let me also 
mention that while in China last week, I heard a number of examples of 
situations in which having specialized U.S. government personnel in the 
embassy and consulates can be a great benefit to U.S. firms and their 
ability to serve foreign markets. 

Chairman Rush and Ranking Member Radanovich, this concludes my remarks. 
I appreciate the opportunity to discuss these issues with you today. We 
would be glad to work with the Subcommittee in the future on other 
issues related to foreign commerce. I am happy to answer any questions 
you may have. 

Contact and Acknowledgments: 

For further information about this testimony, please contact me at 
(202) 512-4347 or by e-mail at Celia Thomas (Assistant 
Director), Jason Bair, Adam Cowles, Gezahegne Bekele, Karen Deans, and 
Richard Krashevski made contributions to this testimony. 

[End of section] 


[1] TPCC has 20 member agencies. However, it generally reports in the 
National Export Strategy on the budgets and activities of around 10. 
The 2008 strategy included budget authority information for 9 agencies: 
Departments of Agriculture, Commerce, State, and the Treasury; Ex-Im, 
Overseas Private Investment Corporation, Small Business Administration, 
U.S. Trade and Development Agency, and the Office of the U.S. Trade 

[2] GAO, Export Promotion: Trade Promotion Coordinating Committee's 
Role Remains Limited, [hyperlink,] (Washington, D.C.: April 26, 

[3] According to the 2008 National Export Strategy, 97 percent of firms 
that export are small or medium enterprises. However, a very low 
proportion--less than 1 percent--of U.S. firms export. 

[4] See GAO, Export-Import Bank: Performance Standards for Small 
Business Assistance Are in Place but Ex-Im Is in the Early Stages of 
Measuring Their Effectiveness, [hyperlink,] (Washington, D.C.: Jul. 17, 

[5] See GAO, Export-Import Bank: Changes Would Improve the Reliability 
of Reporting on Small Business Financing, [hyperlink,] (Washington, D.C.: March 3, 
2006) and GAO, Export Promotion: Export-Import Bank has Met Target for 
Small Business Financing Share, [hyperlink,] (Washington, D.C. Jan. 17, 

[6] See, for example, GAO, International Trade: Further Improvements 
Needed to Handle Growing Workload for Monitoring and Enforcing Trade 
Agreements, [hyperlink,] 
(Washington, D.C.: June 30, 2005). 

[7] GAO, U.S.-China Trade: USTR's China Compliance Reports and Plans 
Could Be Improved, [hyperlink,] 
(Washington, D.C.: April 14, 2008). 

[8] [hyperlink,]. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink,]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink,] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 

To Report Fraud, Waste, and Abuse in Federal Programs: 


Web site: [hyperlink,]: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: