Small businesses are the driving force in job creation and economic activity
by Laurel J. Delaney
Small- and medium-sized companies account for almost 97 percent of U.S. exporters, but they represent only about 30 percent of the total export value of U.S. goods. With 80 percent of global demand now outside of the United States, it is expected there will be $40 billion to $50 billion worth of export opportunity for the United States within five years.
The White House also sees value in boosting exports. The Obama Administration is pushing to get fast-track trade, also called Trade Promotion Authority (TPA), through Congress. Fast-track trade would make it easier for President Obama to negotiate pacts with other countries, which should also help exports expand, creating more opportunities for any size businesses to grow. Why is this important? Because, as Democrats and Republicans alike will I hope agree, free trade agreements (FTAs) improve foreign market access for exporters, promote economic growth and create jobs.
The trade agreements being worked on now—Transatlantic Trade and Investment Partnership (T-TIP) and Trans-Pacific Partnership (TPP)—account for 65 percent of the world’s goods and services trade and would account for 69 percent of U.S. goods exports. The absence of FTAs can cause hurdles for a small-business owner entering into a new overseas market.
With TPA, the United States will be able to easily pursue trade agreements that support and create U.S. jobs while helping American manufacturers, service providers, entrepreneurs, small businesses, farmers and ranchers increase U.S. exports and compete in a highly competitive, digital global economy. TPA will open up access to millions of consumers around the world, bring down foreign barriers to U.S. products and services and boost innovation in the U.S. by better protecting intellectual property that is exported.
According to U.S. Secretary of Commerce Penny Pritzker in announcing the next phase of the National Export Initiative, “the United States has had four straight record-breaking years of exports. We hit an all-time high of $2.3 trillion dollars last year —up $700 billion from 2009. Nearly one-third of our economic growth since mid-2009 has been driven by exports. Nearly 30,000 businesses have started exporting for the first time.”
Further, the International Monetary Fund forecasts that nearly 87 percent of the world economic growth during the next five years will take place outside of the United States.
The explosion of US small businesses—more than 28 million—engaging in the world economy in the last few years is largely attributable to the Internet, the ultimate platform by which businesses can innovate through personalization and export around the world. This transition has taken place as businesses have sought new ways to grow and tap into the more than 96 percent of the world’s consumers and 73 percent of the world’s purchasing power that lies outside the United States. Surprisingly, less than 1 percent of these small businesses and individuals operate in the U.S. export marketplace, even though the amount of exporters has grown faster than the amount of nonexporters in terms of both goods sold and employment.
Whether you operate a business the size of Boeing or as a one woman-international shop and don’t want to be beaten by competitors, exporting is an absolute must for building and sustaining a successful future. Fast-track trade will get us there sooner and, if nurtured correctly, will enable thousands, if not millions, of businesses to grow into something absolutely amazing. That’s something Americans can all be proud to share overseas.
Ms. Delaney is the publisher of The Global Small Business Blog and the author of “Exporting: The Definitive Guide to Selling Abroad Profitably” (Apress 2013).