On May 19, I testified at a hearing titled “Trade Promotion Agencies and U.S. Foreign Policy,” which was held by the House Foreign Affairs Subcommitee on Terrorism, Nonproliferation, and Trade. The subject agencies were the Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC), and the U.S. Trade and Development Agency (USTDA). The focus of my remarks, which follow, was on Ex-Im and the myth that exports are the benefits of trade.
Good morning, Chairman Poe, Ranking Member Keating, and members of the subcommittee. I am Dan Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Thank you for the invitation to share my views with you today concerning “Trade Promotion Agencies and U.S. Foreign Policy.” The views I express are my own and should not be construed as representing any official positions of the Cato Institute.
To the extent that today’s hearing will help clarify some of these issues and prompt a serious effort to reform and retire some of the redundant, distortionary, and, frankly, scandal-prone agencies among the panoply of federal offerings, I am pleased to be of assistance.
U.S. trade promotion agencies are in the business of promoting exports, not trade in the more inclusive sense. That is worth noting because despite some of the wrongheaded mercantilist assumptions undergirding U.S. trade policy—that exports are good and imports are bad—the fact is that the real benefits of trade are transmitted through imports, not through exports.
In keeping with the conventional wisdom, in January 2010 President Obama set a national goal of doubling U.S. exports in five years. Prominent in the plan was a larger role for government in promoting exports, including expanded nonmarket lending programs to finance export activity, an increase in the number of the Commerce Department’s foreign outposts to promote U.S. business, and an increase in federal agency-chaperoned marketing trips.