WASHINGTON and DES MOINES, Iowa – Two major trade deals are in the works, and the Obama Administration believes exports are the future for America’s small rural businesses.
95 percent of the world’s consumers are outside of the United States, but only one percent of American companies export to them. That’s according to USDA Secretary Tom Vilsack, who says that’s a key statistic underpinning the ongoing regional Made in Rural America forums, the goal of which is to get small rural businesses away from the belief that exports are the territory of large companies, and into the mindset of “‘Hey, I can do this,'” according to Vilsack. “‘I can expand my market opportunities dramatically, and it’s not as difficult as I might think.’ There is technical assistance, there are resources available through a variety of federal programs, and we just want to make sure people understand what those programs are and hopefully, encourage many, many more companies; agribusiness companies and other manufacturing companies to consider the export opportunity.”
Vilsack says the Made in Rural America initiative hopes to torpedo the myth that the export business is difficult. He says there’s no shortage of help on the federal level; it’s just that not many businesses are taking advantage of it.
“[Business owners] can converse with folks at USDA, or folks at the [U.S.] Small Business Administration,” says Vilsack, “to get advice as to how they could get started in the export business; how they could identify a potential market; how they could work through the inspection and certification programs, and the permitting requirements, which are not as complicated and difficult as it might seem; and how they might be able to work with an entity like the Export-Import Bank to secure a guarantee of payment [within 30 days] for product that is sold.”
The Export-Import Bank is the U.S. export credit agency, responsible for securing payment from foreign entities and ensuring that American businesses have the wherewithal to continue to do business overseas. Vilsack says financial concerns as they relate to exports aren’t uncommon.
“Sometimes when you think about selling overseas,” Vilsack says, “you think ‘Well, what happens if I don’t get paid? How do I go about trying to collect on the contract?’ The Export-Import bank will take that risk away from you, they’ll take that concern away. They’ll basically ensure that you get payment within 30 days, and then they’ll go and do whatever has to be done to collect in the other country.”
Trade deals will create markets for exports
The timing is ideal, with two massive trade deals in the cards. One such deal is the Trans-Pacific Partnership (TPP), a multilateral agreement still in the works between eleven other Pacific Rim Nations. Vilsack says the goal there is to eliminate tariff and non-tariff trade barriers alike.
“When you talk about a Trans-Pacific Partnership (the TPP), you’re talking about opening up opportunities to literally hundreds of millions of new customers. By breaking those barriers down; by opening up markets; by creating a freer flow of trade, it’s going to benefit the consumers in those countries, it’s going to benefit obviously the companies here in the United States, and jobs can be created. Wealth can be created. At the same time, I think it creates opportunities for our producers in particular, our farmers and ranchers, to extend the record-breaking exports that we’ve seen recently, by dramatically increasing market opportunity.”
The other trade deal is the bilateral Trans-Atlantic Trade and Investment Partnership (T-TIP) with the European Union. Vilsack says the U.S. does have European inroads, but believes eliminating trade barriers will open that market even further.
A personal appeal
Vilsack says there’s another reason it’s a good time for small, rural businesses to enter the export market.
“In order for us to grow the economy here in this country,” he says, “in order for us to continue to support and create a strong middle class, you need good-paying jobs. And good-paying jobs can come from a variety of sources, but one of the most traditional and most effective ways is by bringing wealth from some other country into this country, to create that oppotunity and to support that opportunity, and that’s what exports are all about. We’ve certainly seen that the last couple of years with agriculture. Agricultural trade has been at record levels, and because of that, farm income has been at record levels. So, there is a direct correlation between income, profit and job creation as a result of exports.”
Vilsack’s not just cheerleading. This week he’s headed to Europe to personally drive home the message of just how important agricultural trade is to heads of state in the European Union. At a stop in Luxembourg City, Luxembourg, Vilsack will make a plea to the agriculture ministers of all 28 EU member states that they work with trade negotiators to assemble an ambitious package for the ongoing T-TIP talks. Vilsack is also scheduled to visit agricultural leaders in Brussels, Paris, and Dublin.
According to USDA, nearly one third of U.S. economic growth has been due to exports since Vilsack’s term as USDA secretary began in 2009. Over the past five years, agricultural exports have been at record levels each year, notably in fiscal year 2013, in which they reached $140.9 billion dollars, and according to USDA, helped to support nearly one million American jobs. Between 2009 and 2013, total U.S. agricultural exports were valued at $619 billion.
The next Made in Rural America forum will be held July 18 near Memphis, Tennessee.
