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IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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United States International Trade Commission (USITC)

(Investigation No. 332-509, USITC Publication 4169, July 2010)

 

SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs) EXPORT LESS THAN EUROPEAN SMEs; INSUFFICIENT FINANCING, COMPLEX REGULATIONS, TRANSPORTATION COSTS AMONG TOP BARRIERS TO U.S. SME EXPORTING [15 July 2010]

http://usitc.gov/press_room/news_release/2010/er0715hh1.htm

or

http://usitc.gov/publications/332/pub4169.pdf

[full-text, 314 pages]

 

ABSTRACT

This report examines the extent and composition of U.S. exports by small and

medium-sized enterprises (SMEs) and factors that may disproportionately

impede U.S. SME exports. It compares the exporting activities of SMEs in the

United States with those of SMEs in the European Union (EU); describes barriers

and costs associated with exporting, as reported by U.S. SMEs; and identifies the

benefits to U.S. SMEs from improvements to the exporting environment resulting

from free trade agreements (FTAs) and other trading arrangements.

 

The U.S. market is more integrated than Europe’s, and U.S. firms that export

tend to be larger than EU firms that export. This helps to explain one of the

Commission’s findings: that estimated exports by SME manufacturing firms in

the EU in 2005 amounted to approximately $231–$275 billion in value (about 31

percent of total EU exports), compared to the $65 billion in exports (about 13

percent of total U.S. exports) made by similarly defined U.S. SMEs. The study

found that while there is little difference between U.S. and EU agencies in

granting medium- and long-term export credits, the United States provides a

wider range of support for pre-export financing and short-term credit than is

generally available in EU countries. On the other hand, SMEs in the EU appear

to have access to more sources and a higher level of assistance in foreign markets

than U.S. SMEs do, as well as more financial support for participating in

international trade fairs.

 

The barriers to exporting that were noted as the most important by U.S. SMEs at

the Commission’s public hearings and in written submissions and interviews for

this investigation were similar to those that have already been identified by the

Organisation for Economic Co-operation and Development. These included

insufficient access to finance, complex and sometimes nontransparent domestic

and foreign regulations, rising and unpredictable transportation costs, the small

scale of SME production, tariff and nontariff barriers, time-consuming foreign

customs procedures, language and cultural differences, and lack of knowledge of

foreign markets.

 

U.S. SMEs identified numerous improvements to the exporting environment

associated with U.S. FTAs and other trading arrangements, such as mutual

recognition agreements, bilateral investment treaties, trade and investment

framework agreements, and World Trade Organization agreements. These

improvements include tariff reductions, reduction or elimination of nontariff

barriers, better market access, easier interactions with customs, trade facilitation,

intellectual property protection, a more efficient and transparent regulatory

environment, and dispute resolution mechanisms.

 

Highlights of the report follow.

 

•The share of SMEs in U.S. manufacturing activity and total U.S. exports is smaller than the share of SMEs in EU manufacturing activity and exports. One reason for this is that the U.S. market is more integrated than Europe's and, as a result, the United States has larger firms.

 

•There is little difference between U.S. and EU agencies in granting medium- and long-term export credits; however, the United States provides a wider range of support for pre-export financing and short-term credit than is generally available in EU countries. On the other hand, SMEs from the EU appear to have access to more sources and a higher level of assistance in foreign markets than U.S SMEs do, as well as more financial support for participating in international trade.

 

•According to U.S. SMEs, the top barriers to exporting include: insufficient access to finance, complex and sometimes nontransparent domestic and foreign regulations, rising and unpredictable transportation costs, the small scale of SME production, tariff and nontariff barriers, time consuming foreign customs procedures, language and cultural differences, and lack of knowledge of foreign markets.

 

•SMEs identified numerous improvements to the exporting environment associated with U.S. FTAs and other trading arrangements, such as mutual recognition agreements, bilateral investment treaties, trade and investment framework agreements, and World Trade Organization agreements. These improvements include reduced tariffs and nontariff barriers, better market access, easier interaction with customs, trade facilitation, intellectual property protection, a more efficient and transparent regulatory environment, and stronger dispute resolution mechanisms.

 

•U.S. SMEs have developed a number of strategies to overcome some of the domestic and foreign barriers to exporting they identified. These include combining resources with other firms in the same industry, working with larger companies, brokers, or agents, and taking advantage of U.S. federal and state government support programs.

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Institute for Workplace Studies 
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