Building a U.S. Export Economy: Creating a New Mind-Set

To continue building on the last week’s “U.S. Must Focus on Exports” article , which called for U.S. businesses and government to systematically address export development, this week’s post presents discussions by the experts of the Wall Street Journal CEO Council on what needs to be done to stimulate comprehensive export effort on a national scale.

Recommendations offered below are very much in line with our views.  As our contribution to  this valiant effort of helping to effect massive changes in our nation’s export mind-set,  international business skill development, financial infrastructure and legal reform, Fluent In Foreign has been scaling up its proprietary D.I.C.E. & Finance methodology to help businesses

Develop their international operations,

manage and Insure international risks,

protect their intellectual property and Comply with export and anti-corruption regulations,

Educate their workforce on the intricacies of doing business abroad and prepare qualified trade and development specialists.

Finally, our platform provides a comprehensive portfolio of  Financing tools, which greatly simplify international expansion and allow companies to grow their foreign sales while minimizing risks of non-payment.

Please enjoy the article below and if you have any questions on how your organization can benefit from the D.I.C.E. &  Finance approach, please feel free to write to me at agordin@broadstreetcap.com

By DAVID WESSEL, The Wall Street Journal   November, 21st, 2011

The U.S. faces a tremendous trade gap. What can Washington and the private sector do to fire up the export engines?

The Wall Street Journal’s David Wessel moderated the task-force discussion on the topic. Here are edited excerpts of the presentation of its priorities to the CEO Council.

Think Local

DAVID WESSEL: We had a very good discussion about the obvious need for the U.S. to strengthen its exports of goods and services if we’re going to rebalance the world economy.

Journal Report

CEOlogo

BUILDING A U.S. EXPORT ECONOMY CO-CHAIRS

Ellen Kullman, Chairman and CEO, DuPont Co.

Francisco D’Souza, President and CEO, Cognizant Technology Solutions

SUBJECT EXPERT

Deborah Wince-Smith, President and CEO, Council on Competitiveness

FRANCISCO D’SOUZA: Only 1% of U.S. firms today are exporters. In a sense, U.S. firms have never had the export muscle—or to the extent that they had it, that muscle has atrophied over time.

The first recommendation is creating a mind-set within U.S. businesses of the importance of exports and really moving away from the notion that all products and services are created equal. Products need to be tailored for local markets, and U.S. firms need to engage deeply in local markets around the world if they would like to be net exporters.

They should also encourage workers, U.S. citizens, to go spend time around the world. We felt that was necessary in order to truly be able to participate in the local market.

Finally, there was a feeling in the group that small and medium-size businesses particularly in the U.S. just don’t have the resources and capability to understand the nuances of local markets around the world. Government can play a role there, to create a support structure and an ecosystem to assist small and medium-size businesses to get their products and services into markets around the world.

[KULLMAN]Ralph Alswang for The Wall Street Journal‘The level playing field of a territorial tax system would…help expand exports’: Ellen Kullman

ELLEN KULLMAN: The second recommendation is what the U.S. government can do in helping expand trade and hence exports. Two areas that we focused on were intellectual property and transparent trade practices.

Intellectual property, counterfeiting, enforcement are big issues around the world. It is something that we spend a tremendous amount of resources on in my company. Our exports are lower because we are constantly being knocked off by counterfeiters in various countries. There’s a lot that can be done, whether it’s through the World Trade Organization, trade agreements or investment treaties, to level that playing field and get a standard around intellectual-property protection and enforcement.

The Top Four Recommendations

1. GLOBALIZE ATTITUDES OF U.S. BUSINESS

To ensure growth, U.S. businesses should recognize the importance of developing foreign markets, including locally based products and services. They should set targets and goals for increasing participation in foreign markets and encourage more U.S. nationals to live abroad for a period. Government can help by providing support and education to smaller and medium-size businesses to increase their exports.

2. INTELLECTUAL PROPERTY PROTECTIONS/TRANSPARENT TRADE PRACTICES

A key to enhancing U.S. exports is to develop consistent international standards—and international enforcement—for protection of intellectual property through investment treaties, trade agreements, the World Trade Organization and law-enforcement cooperation. A U.S. priority should be to encourage partners such as Brazil, Russia, India and China to comply with government-procurement rules and to initiate a global investment framework to create more transparency and consistency.

3. CREATE GLOBALLY COMPETITIVE TAX SYSTEM

The U.S. should replace its current world-wide tax system with a territorial system to encourage companies to invest repatriated earnings into long-term investment. The U.S. should also lower the statutory corporate tax rate to globally competitive rates, and create certainty around the R&D tax credit.

4. IMPROVE HUMAN CAPITAL

From K-12 through college and advanced-degree programs, the U.S. must improve the skills of workers to aid in export growth. This includes the promotion of technical careers for young people. The U.S. should also encourage the immigration of the best and brightest from around the world.

The second area is transparent trade practices. Government procurement roles come into play there. Do other governments have transparency when it comes to making their purchases, and should that level playing field be there? That creates more opportunities for companies in the United States to participate there.

The next recommendation we talked about was the U.S. tax system, which creates a disadvantage for U.S. companies that operate on a global basis. We need to have comprehensive tax reform. My competitors, many of your competitors, are increasingly global or foreign and operate under a very different tax regime—a territorial regime.

If we could create one in the United States, that would help U.S. companies bring their offshore earnings back, hopefully to invest in U.S. manufacturing. We believe that is a much more competitive system globally for our companies. We could argue what the rate should be, but it needs to be lower than today. That’s something that we think has to be benchmarked globally.

And the complexities have to either go away or we have to create certainty around them. For instance, the R&D tax credit is one that we struggle with. This time last year, it wasn’t clear that we were going to get the R&D tax credit for the year 2010. How can we make decisions on what jobs that tax credit could help create or investments we could make if every year it is discussed and decided whether it comes in?

We believe that certainty and the level playing field of a territorial system would go a long way to allow us to compete in the world. We do believe that will help expand exports.

The Human Touch
[DSOUZA]Ralph Alswang for The Wall Street Journal‘U.S. firms need to engage deeply in local markets around the world’: Francisco D’Souza

MR. D’SOUZA: The last recommendation is the issue of human capital. It became clear that where we can be most successful in exports is in high-value, complex manufacturing, high-value goods and services.

The raw material many times behind that is talented people to create these high-value goods and services. We felt that there’s a need to look at the whole human-capital chain, starting from K-through-12 education. We need to reform that and create more of an emphasis on STEMs—science, technology, engineering and mathematics—careers.

On the other side, we need to look at reshaping the U.S. immigration system to allow the best and the brightest to come to the United States, build their careers and their lives here.

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

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