Published on Forbes.com
Written by Daniel Runde
If one were to design an agency specifically for the Trump Administration, you would have created the U.S. Trade and Development Agency (USTDA). USTDA generates $85 in U.S. exports for every $1 spent on their programs. Last year alone, USTDA generated $12 billion in export value and supported nearly 66,000 jobs largely in manufacturing in the United States. All the U.S. taxpayer monies spent through USTDA stay in the U.S. USTDA helps to level the playing field for U.S. firms looking to expand internationally, all while encouraging companies to “buy American, hire American.” The Trump Administration should look at USTDA as an opportunity, not as misspent tax dollars.
USTDA does three things: 1) cost share on American experts who carry out critical “feasibility studies,” 2) carry out “reverse trade missions” which bring foreign companies with check books to the U.S. to meet potential vendors (e.g. a medium sized U.S. soda can manufacturer in Missouri or GE’s power turbine manufacturing in South Carolina), and 3) provide training to developing country government procurement buyers.
The last point deserves a little more detail: procurement officers in developing countries have very little training, and what little training they do receive is around a “low bid” system. In the last 10 years, which country has become the lowest cost producer of many big-ticket items and infrastructure? China. For American firms to compete, government procurement buyers in developing countries need to understand complex concepts such as “life cycle costs” and understand the value of new technologies associated with cutting edge American products and services. In this light, it is imperative for U.S. interests to spend foreign aid dollars on something as boring as training for developing country government procurement officers.
As time goes on, the Trump Administration should recognize the value of USTDA. If this happens they should grow USTDA, not end it. However, the Trump Administration’s leaked budget proposal lists USTDA as one of 19 agencies they propose eliminating. In contrast, Congress recently passed a Continuing Resolution with a 25 percent budget increase for USTDA –a clear signal that Congress sees USTDA as an agency worth supporting even if the Administration isn’t there yet.
The most common critiques of USTDA are that it is duplicative, ineffective, and that it serves as “corporate welfare.” The criticism that the agency is “duplicative” stem from USTDA’s name (it has “trade” and “development” in its title and surely there are other agencies that do “trade” and “development” or “export support”).
The claim that USTDA serves as “corporate welfare” is a fundamental misunderstanding of both “welfare” and the international business climate. USTDA creates a level playing field for U.S. businesses around the world – especially in countries where that playing field would otherwise be completely uneven. It does not cut “sweet heart” deals with U.S. companies. One example, is Rudi Roeslein’s company, Roeslein & Associates, who worked with USTDA on a project in Nigeria that supported job creation in Red Bud, Illinois.
The future success of U.S. manufacturers is tied to the success of emerging markets in Africa, Southeast Asia, and Latin America. America’s top firms’ futures are tied to the success of these countries. For example, GE, which employs over 100,000 US workers, conducts 70 percent of its business overseas. This is flipped form 1982 when 80 percent of the company’s revenue was generated from sales within the United States.
As middle-income countries move away from traditional aid, they are looking toward trade partnerships with countries like the United States. The growing number of middle-income countries further underscores USTDA’s value to the U.S. As we transition from traditional foreign aid relationships with developing countries we can start selling them America’s highest quality goods and services instead. President Trump loves a great deal and USTDA is a bargain for the American people. The Trump Administration will see the value of USTDA as a unique creator or American jobs, productivity, and prosperity.