CPSC Chairman Elliot F. Kaye shares the history and the current performance of US exports worldwide in relation to the influence of fluctuation in US dollar, manufacturing and Hong Kong
biz.hk: Can you tell us about the background of US exports?
Kaye: Historically, the United States has been an underperformer when it comes to exports. 97 percent of the Western companies do not export at all. Of those companies that do, only 58 percent export to one market, which tend to be one of our border nations – Canada or Mexico. It was very understandable because we had a dynamic market historically.
After the financial crisis, however, I think there was a recognition that we are going to get our economy back. If we were going to create jobs and do it purely by focusing on domestic market alone, it was not going to be sufficient. Our president realized that and launched the National Export Initiative, with the goal of doubling exports in five years. Since then, we’ve had five record years of export growth. In fact, US had the highest level of exports in over 20 years. Those exports created or sponsored more than 13 million jobs in the United States. Companies that export actually pay better than companies that don’t export. They often pay in excess of 18 percent on average of their wages. So exporting is central to American companies’ growth prospects.
biz.hk: How does CPSC do in promoting ore US exports?
Kaye: We work with other countries in number of ways. We have representatives in Foreign Commerce at over 75 embassies around the world. We also have Congress Department officials at our US Exported Assistant Centers in over a hundred cities in the United States. Both of those are meant to connect us to both the American companies and to foreign markets to help them better export as well as increase foreign direct investment in the United States. They are our sales force, connecting the Commerce Department with the clients and opportunities.
biz.hk: How is foreign direct investment?
Kaye: The United States government never had a whole of government effort to attract foreign direct investment. The president realized that there was an important opportunity to attract investment into the United States and this is why he launched the Select USA Program in 2013. The first summit had around 650 participants. Our second summit [was held] this year on March 23rd and 24th in the DC Area. [There were] 2,500 participants from different markets and every state in the United States.
biz.hk: Why do you think the United States represents the best investment destination in the world?
Kaye: It is the transparency of doing business in our system: rule of law. We have many of the broadest and deepest financial markets. We have now an increasing attractive cost of energy globally, and have perhaps the best university system that trains people around the world. We have all the pieces in the puzzle. As a former banker, I saw how there were hot emerging market investments over the years. But what we have seen over the past five years is that many of those markets have become more difficult and more problematic. So if you are looking into investment, one of the things you want is stability. You will find that in the United States more than perhaps any other markets in the world. Also, we believe that we have the best and most talented workforce in the world. The combination of all those things makes US the preeminent investment destination.
biz.hk: What is your view on the lower cost advantage and the influence of fluctuation in US dollar?
Kaye: It’s going to have an impact on exports. In the case of strengthening dollars, it for sure will make our products and services expensive to international consumers. However, we continue to see demand in US products and services remain strong. In 2014, we exceeded 2.3 trillion dollars in exports when dollars were strong by then. That is a record. But we need to focus on making trade agreements. Frankly, we are going to have a little bit of wind in our face, as it relates to exports given the strengthening dollars. So that’s why we do everything we can to help our American companies export more effectively around the world by making trade agreements. The decreasing price of oil has a profound impact on economies around the world. With respect to our economy, the decreasing cost of gasoline is putting real money to the American consumers’ pockets in estimates of six or seven hundred dollars per year on average. That’s the money that the American consumers can spend and grow our economy.
Also, given the diverse strengths in our economy versus the economies in other countries, we expect our economy to grow roughly three percent a year whereas a number of economies are shrinking because of their dependence on oil. That’s going to have an impact on the ability for American companies to export because a lot of markets that have historically grown more quickly are now suffering some real contraction.
biz.hk: What is the current state of US manufacturing?
Kaye: We are going through a bit of manufacturing Renaissance in the United States. So the competitive advantages are: we have the best products and services made by the best workers. One of the things you are seeing is how technology is playing such an important part that manufacturing revival and obviously being a leader in technology globally. So I’m very bullish on manufacturing in the United States. It has been a strong component of the recovery we’ve seen.
biz.hk: Do you have any core message to the business communities in Hong Kong?
Kaye: I do want to underscore the importance of Hong Kong as a trade partner in our deep appreciation for the economic relationship we have with Hong Kong. There are roughly 1,400 US businesses with physical presence here in Hong Kong so it’s extraordinary important. Our economies are so interrelated. I recently read that Hong Kong was rated by the Heritage Foundation as the number one in the world for economic freedom and press freedom. It is a dynamic hub that is not just a gateway to China, but a gateway to Asia and to the rest of the world. I am pleased to recognize the important economic relationship and friendship we have with Hong Kong.