U.S. Won’t Reach Goal of Doubling Exports by 2015, Report Says
A report issued recently by the Wells Fargo Securities Group finds it highly unlikely the U.S. will be able to double its exports by the end of 2014, which is the goal of the Obama administration’s National Export Initiative. The report asserts that there is little the U.S. can do to further increase exports in the short term but says proposed free trade agreements with Europe and Asia may help in the long term.
U.S. exports would have had to increase by 15% every year for five years to achieve the NEI goal, which the report states “would be unprecedented.” Instead, after a sharp increase in the aftermath of the global recession, U.S. export growth has slowed, reaching only 3.5% in 2012 and on pace for 2% in 2013. In total, the report states, U.S. real exports have risen only 30% since the first quarter of 2009, and export growth for 2014 and 2015 is estimated at only 7%.
Further, the report states, “there is not much that American policymakers can do” to push these figures higher. The reason is that export growth is largely dependent on economic growth in the rest of the world and the real value of the dollar and the federal government has little influence in either area at the moment.
Over the longer term, the report identifies developing Asia and other advanced economies as presenting the best opportunities for increasing U.S. exports. The value of U.S. exports to developing Asia rose 50% from 2009 to 2012, and if that pace continues and the U.S. “can deepen its trade ties with the region” then it “could make a more meaningful contribution to U.S. export growth in the years ahead.” The biggest opportunity, however, appears to be in other advanced economies (including the individual countries of the European Union, but excluding Canada and Mexico), which currently account for 57% of other countries’ exports but only 35% of U.S. exports.
As a result, the report states, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership “may be useful vehicles for achieving stronger export growth.” However, given the time it generally takes to successfully conclude these types of negotiations, “it will be years” before any such benefits are seen. In the meantime, the report concludes, “U.S. export growth will continue to limp along if, as we expect, economic growth in the rest of the world remains lackluster.”