Speeches

Thank you. I am excited to be in LA. I greatly appreciate the opportunity to speak at this event. I would like to thank the Los Angeles Area Chamber of Commerce, the California Centers for International Development, the Ports of Los Angeles and Long Beach, and the LA Regional Export Council. Today's event would not happen without your leadership and partnership with the U.S. Department of Commerce.
I was invited here today to help roll-out the Spanish version of the Commerce Department's Trade Finance Guide, discuss the importance of trade, and join the celebration of World Trade Week. Of course, many of you already know about the importance of trade, so please allow me to try to put it in a context you may not have heard before.

As a coastal port city with great intermodal transportation hubs, the city of Los Angeles is well positioned to engage in trade and pave the way for Californian exports into the global economy. Buyers in your top export markets of Mexico, Canada, China, Japan and South Korea clearly recognize California's and LA's trade strengths in sectors such as computers, electronics, transportation equipment, and agriculture. In fact, your city's deep cross-cultural skill sets and your emphasis on public-private partnerships in support of trade can help raise prosperity for all Americans as you facilitate imports into the United States.

As you may know, approximately half of US merchandise imports are raw materials, capital goods, and industrial products used by US manufacturers to produce goods domestically. The other half is finished consumer goods.

I mention LA's role in US imports because trade is a two way process and indeed some of the greatest economic gains our country can secure is through the “import half of the trade” proposition. Raw materials or inputs can help preserve American competitiveness. Imports can also mean greater choice or better prices for American consumers and businesses. I think it is important to mention the benefits of imports because we often overlook them. However, the reality is that if you want to export, it means you also have to import. Both go hand in hand. National income is enhanced through both types of economic engagement.

My remarks here today are my professional opinions. I am a political appointee of the President. I am an independent Board member of the Export-Import Bank of the US. There are five members of the Board, each of us report to the President, and all of us have our own opinions as we collectively serve the President and the US taxpayer in fulfilling the mission of the Export-Import Bank of the US. One should not ascribe my views to my fellow Board members.

Now, let me take up the topic of the Trade Finance Guide. The guide spans 14 themes in an easy-to-understand narrative with visual aids. It was developed in partnership with FCIB, several USG agencies, including my own, as well as the International Factoring Association, the Association of Trade & Forfaiting in the Americas, and BAFT-IFSA. With some 300,000 copies distributed, it has become one of the most popular export assistance resources published by the Commerce Department. First published in 2007, with updates in 2008 and 2012, the guide is currently in its 3rd edition and 2013 marks a major milestone. This month, fresh off the press, the Commerce Department published a Spanish version to help U.S. SMEs expand their global presence, especially in Mexico and Latin America.

When ranked by total number of Hispanic and Latino-owned businesses, Los Angeles ranks 5th in the US. Hence, the LA Chamber is wonderful venue to celebrate this milestone. Let me give a special shout-out to the California Centers for International Trade Development. Thank you for working with FCIB and the Commerce Department's Minority Business Development Agency to make this Spanish version of the guide a reality. Many hands make light work. Within the International Trade Administration at the Commerce Department, Yuki Fujiyama, and his principal, Paul Thanos of the Office of Financial Services Industries, spearheaded the effort for the guide translation. It takes persistence, hard work, and leadership, even in the federal government, to arrive at this point. All of us in the trade finance professional community owe them a debt of gratitude for helping make this milestone happen. Trabaje bueno! Bien hecho! Why is the translation of this guide so important? I think many of you have heard President Obama say that 95% of the world's population lives outside our borders. Some of you may be aware of the National Export Initiative, or NEI as it is known. The NEI is a call to action by President Obama and constitutes an important US government initiative. The goal is for America's private sector to double US exports to more than $3 trillion by 2014. It is not a panacea to all our challenges as a nation, but it is a critical strategic component. And all of you are a vital part of a partnership that can help us realize this goal.

A critical task for America is how we leverage the prosperity beyond our borders, upgrade our nation's capabilities to trade, and persuade Americans to look abroad for opportunity. Of the U.S.'s 30 million companies, only 1% or 280,000 companies export, and of those who do, 58% export to only one market. As a nation, we can and we must do better.

To get more Americans engaged in trade, we are going to have to win over large contingents of American small and medium sized enterprises, including the Spanish speaking ones. We have a sales and marketing task before us with thousands of small businesses, some perfectly capable of exporting but not ready yet, others only exporting to one market. How can we do that? What is our sales pitch?

To small and medium enterprise leaders, we must convince them that exports will help lower overhead costs, achieve economies of scale, add or maintain jobs, and reduce risks by not solely relying on domestic sales. In addition, we must communicate that margins on export sales can often be better.

In our conversations with business owners or investors, we must persuade them that firms engaged in exports typically are more profitable, more stable, and pay as much as 10-15% more on average to their employees. Moreover, such firms are more successful because they are playing offense around the world, not simply defense in their home market.

And as we make the case, we need to candidly address how exporting can entail more risk and will require developing some skillsets that they have not yet acquired. But that message can be coupled with information about the tools available to them to manage this risk as well as the services out there that they can leverage to do exporting well.

A motivating rationale for translating this guide was to reach more Spanish speaking American entrepreneurs and to help them learn how to manage the risks of international trade.

The most recent data from the U.S. Census Bureau shows that there are more than 2 million Hispanic and Latino-owned small businesses across the country. These businesses generated over $345.2 billion in sales (as estimated in 2007). And because these firms share language commonalities, cultural affinity, and connections to other countries, they can become successful exporters if simply given the right tools. And we know once they do get started, they are likely to be successful.

Given where Latin America is today compared to two decades ago, it is the opportune moment to have this guide ready to assist Spanish speaking Americans all across the country. Remember, on average, inflation was triple digit levels in Latin America, but now it is below 10% (7% in 2010). Foreign debt as a percentage of GDP was 28%, now 10%. Per capita income was $5,200, now $11,200. It is also a different Latin American trade landscape compared to two decades ago. The average custom tariff has dropped from 45% to 9%.

What does this mean? It means economic growth, stability, and prosperity are on the rise. It means a growing middle class throughout Latin America. It means a larger potential market for US exports. I would add also that US exporters can benefit from Latin America's favorable propensity to buy US goods. The United States exports three times more goods to Latin America than to China.

Now, if you will permit me, please allow me to give a bit of a public service message for Ex-Im. As some of you may know, we are the official Export Credit Agency of US government. The agency is self-sustaining meaning it does not require a taxpayer appropriation of resources. Fees are charged to cover its administrative and program expenses. Reserves are set aside to cover the losses should it incur a default on its financing activities.

The Bank's mission is to support jobs in the US by facilitating exports of US goods and services. We do this by offering trade finance products in the form of insurance, loan guarantees, and direct lending that span a spectrum of pre and post export needs (covering both exporters and buyers).

Our purpose is twofold. First, the Bank seeks to ensure a level playing field for US exports in the global market place (attempting to make sure that buyer decisions are based on price and quality, not state sponsored financing). We know that American companies can effectively compete on cost, on value, on quality and the reliability of their products.

Second, the Bank aims to provide trade finance services that private sector lenders are unable or unwilling to provide. A key part of our operations is not to compete with the private sector credit providers but to simply fill gaps or remove barriers to exports that the market does not fulfill.

Ex-Im has supported many exports and businesses across the state of California, including the Los Angeles area. In the county of Los Angeles alone, we have supported nearly $3 billion in exports from over 240 companies during the last five years. If we look at the five counties of Southern California, Ex-Im products have assisted over five hundred companies with $17 billion in US export sales. And while I think this is significant, I believe there is still more potential. Let me recognize David Josephson, a colleague of mine, who leads the West Coast office from here in LA. He heads a dedicated team of Ex-Im personnel and partners servicing the needs of your area. Ex-Im is an organization with less than 500 people. It accomplishes its mission in part through active partnerships with banks, brokers, and both city and state partners that help provide understanding and customer reach to potential users of Ex-Im products. Let me express my appreciation to those banks and brokers here in the audience today.

To close, let me say it has been a deep honor to speak at the Los Angeles Area Chamber of Commerce that over 80 years ago spurred a national movement to commemorate international trade leading to today's World Trade Week. For decades your work in international trade has created a model for other cities around the country. I wish you continued success in the years ahead. I hope you can ally with the Commerce Department and others and distribute the Spanish version of the Trade Finance Guide. Given technology today and how all of our family, friends, co-workers and professional communities are wired together in a virtual world, I hope you can help the Spanish speaking version of the guide “go viral.”

And by the way, please put in a good word about Ex-Im. We may be able to combine our mission with needs of Hispanic and Latino-owned small businesses across the state of California. Thank you.