Ed. Note: This post is cross-posted at the U.S. Small Business Administration's (SBA) blog. You can read the original post here.
During his State of the Union address, President Obama noted that “21st-century businesses, including small businesses, need to sell more American products overseas. … 95 percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities.”
It’s time to take action to help more entrepreneurs reach new markets for their goods and services.
As a country, we’re finishing a fifth-straight record-breaking year on exports, despite a stronger dollar. Increases in U.S. exports have generated nearly one-third of our overall economic growth and supported 1.6 million new jobs. Last year, the U.S. exported a record $2.3 trillion dollars of goods and services, an all-time high.
One out of every five American jobs is tied to exports. These jobs generally pay better, nearly 20 percent better. Passing new trade agreements would be critical to our smaller exporters, which don’t have offshore affiliates to help them overcome trade barriers and gain market access. Trade promotion opens doors for small businesses that would otherwise remain closed.
In his State of the Union, the President called for Trade Promotion Authority. TPA establishes clear procedures for the consideration of trade agreements and reaffirms that U.S. negotiators have the support of Congress when we fight for the interests of U.S. small businesses. TPA hasn't been updated in over a decade. It’s time.
We understand there are tough negotiations ahead – both with our international partners and with the leaders in Congress. The support of the business community and American entrepreneurs is going to be critical to resolving some of the disagreements that have stalled action in the past.
President Obama is pushing two major trade agreements that would open up new markets for our small business exporters, the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP). These deals would ease restrictions with key Asian, European and Western economies while preserving critical labor protections and safeguarding our natural environment. TPP and T-TIP are the first trade promotion agreements to incorporate a chapter dedicated to small- and medium-sized enterprises.
By 2030, more than 2 billion Asian consumers are expected to join the global middle class. In 15 years, the Asian market is projected to be six times larger than the American market. If we’re going to maintain our global economic leadership as a nation, our businesses must sell to these consumers.
TPP is how we’ll secure that market access. It would eliminate or reduce tariffs, which is crucial, because a tariff of just a few percent can mean the difference between success and failure for a small business. TPP would cut red tape and address costly customs delays at the border, as well as reduce some of the complex regulations that make it cost-prohibitive for many small businesses to export.
TPP would also help small businesses that are part of global supply chains. Companies that make components that go into finished products sold abroad benefit from trade agreements, even if they are not technically considered exporters. Additionally, service providers such as accountants, engineers, and environmental consultants benefit by gaining new business to help their exporting clients grow.
Under President Obama, SBA has supported $6.6 billion in small business export financing – more than under any other President. We guarantee 90 percent of export loans (working capital, line of credit, or fixed-asset financing) on amounts up to $5 million. We also have an expedited approval process on export loans under a half-million dollars.
If you’re an entrepreneur looking to expand your customer base, there’s never been a better time to think globally before acting locally. Consult a U.S. Export Assistance Center to learn how take your company international today.