26 October 1994
Source: The Wall Street Journal By Peter A. Bowe
Twenty-five years ago, my company, a large U.S. dredge builder, signed a big export contract with a U.S. multinational corporation for its operations in Dutch Guyana. All seemed well until Prince Bernhard of the Netherlands suggested to our customer that it might be prudent to buy from our Dutch competitor instead. The prince reminded the U.S. company that local tax policies were up for review shortly. Our customer got the message, canceled our order and bought a Dutch dredge. While that kind of governmental support seems heavy-handed, it proved the effectiveness of export advocacy.
The U.S. government has taken decades to learn that lesson, but it is now prepared to support American exporters aggressively, as has been the norm for our foreign industrialized competitors. The administration has developed the National Export Strategy, the most coherent and effective program in years to create jobs through increased exports. The NES focuses on financing, advocacy and a coordination of efforts by all the agencies involved, such as the Export-Import Bank, the Overseas Private Investment Corp., and the Trade and Development Agency.
Export advocacy is a new concept to many U.S. agencies. I'll never forget asking a senior Commerce Department official some years ago to speak to a foreign government about our interest in a large pending contract. Though we were the only U.S. company involved, he flatly refused, saying if he advocated for one company, he'd have to do the same for others. By contrast, our foreign competitors have enjoyed intercession at the prime ministerial level.
While we don't expect President Clinton to get involved in our potential contracts, the support of cabinet members that is now available can frequently put us on equal footing with our foreign competitors. Commerce has even formed an Advocacy Office to make sure that companies like mine don't lose out on projects when foreign governments exert pressure on behalf of national favorites.
We just won a $10 million order from the Vietnamese government attributable in large part to coordinated advocacy by the State, Commerce and Transportation departments. After a bidder from the Netherlands got a boost when the Dutch transportation minister asked his Vietnamese counterpart to buy Dutch, we asked for similar support. It took the three departments less than a week to review our case and to communicate on behalf of us with the Vietnamese minister. Their letters put us back in the running, enabling us to succeed based on normal commercial factors like quality and price. The results? Dozens of jobs at our factory and at our vendors' plants, too. Commerce Secretary Ron Brown has credited U.S. advocacy for American success on 70 export projects valued at $17 billion over the past 18 months.
Some critics have charged that the Commerce Department pleads the cases of heavy Democratic contributors, but my company's $l,500 donation to the Democratic National Committee was most unlikely to have been the reason for the government's advocacy. Besides, there is a lot more to the NES than advocacy. Underpinning the NES is the realization that manufactured exports require financing and a commitment to respond in kind when countries such is Germany, France and Japan propose concessionary financing terms to developing countries tied to the purchase of products from the lending country.
Until the NES was adopted, the Ex-Im Bank frequently waited until there was firm evidence in the form of a contract award to a foreign competitor before agreeing that there was special financing involved and making a reactive loan offer. Obviously that's too late. Now the Ex-Im Bank matches such financing based on a much lower level of evidence. One such loan offer by the Ex-Im Bank, together with strong advocacy from the U.S. Embassy, has enabled us to succeed on a large project in Indonesia, where we previously lost a similar contract three years ago.
While the more aggressive U.S. financing policy is welcome, it's still a defensive policy against our competitors' offensive strategy. For example, several German ministries, including Finance and Foreign Affairs, meet twice a year with Indonesian officials to determine which Indonesian projects could benefit from German industrial exports and special financing. The resulting government-to-government protocols give German exporters a big advantage on the most attractive projects. The Japanese, French, Italians, Dutch and others do the same thing with many developing countries.
A recent survey by the U.S. Small Business Exporters Association shows how much ground the NES has to regain: Over the five-year period before the NES, Japanese and German programs supported a five to 10 times larger share of exports than U.S. programs did. Only the most competitive American companies and aggressive (but reactive) U.S. government Support can overcome these obstacles.
Thus all American exporters must delight in Secretary Brown's words, delivered while he was in China recently on a trade mission, to the effect that the American objective should be not just a level playing field but one tilted in favor of American companies. And why not? Certainly the goal of other industrialized countries is to give their exporters every advantage possible.