Pragmatism will pay

There are cheaper ways of creating jobs than throwing money at the problem through the New Growth Path. The government should simply open up the feedback processes so that the hurdles are removed. This could save the taxpayer billions. Typically, an idea would be to impose an export duty on materials such as steel — as and where appropriate.

Currently the domestic price on steel is much higher than the export price, due to what is referred to as import parity pricing. Regardless of whether the domestic price of steel is now based on a basket of international prices set in London or import parity, it is well above the export price, with downstream repercussions. This export price is only available to industry for adding value to "blue water" zones set down by the rolled steel producers.

Whereas export steel is readily available to industry (by an administered export assistance scheme), there is no such assistance when it comes to protecting local markets against the import of foreign goods that could well be manufactured locally. This is crazy. Consequently, local factories can often export products yet not be able to compete against imports because of this two-tier pricing system administered by the mills. Further, no such "blue water" assistance is available for added value exports into Africa. Consequently, African export markets are needlessly lost to finished goods from China.

Whereas Iscor was supportive of local industry and protective of its domestic customers, this has not been the case since it was sold to a foreign competitor by the current government. The only way to force local steel mills into patriotically supporting local industry would be by imposing export duties to the extent of the difference between the export and domestic price of steel in cases where such damage to local industry can be proven.

The judicious implementation or threat thereof of introducing export duties on iron ore, steel scrap and steel such as wire rod and sheet may go a long way in reviving the fortunes of downstream industry, creating hundreds if not thousands of jobs. Further, it would materially improve the efficiency and competitiveness of the economy at no cost to the taxpayer.

Much of the industrial capacity already exists. Pragmatism might be a lot more rewarding than notions of a developmental state.

U.S. Chamber Urges Reauthorization of Export-Import Bank | The ...

By Stefanie Westerman

Last Friday, the U.S. Chamber joined with 15 other associations to send a letter to House Financial Services Committee Chairman Spencer Bachus and his fellow committee members urging them to support H.R. 2072, the Securing American Jobs Through Exports Act of 2011, which will reauthorize the Export-Import Bank of the United States (Ex-Im Bank). It reads in part:

This bill is the result of a bipartisan effort by both the Committee and Subcommittee leadership of the House Financial Services Committee to craft a bill that will help grow and sustain U.S. exports and U.S. jobs, which is the mandate of the Ex-Im Bank. As the Bank’s Charter expires on September 30th, it is imperative that this bill move forward swiftly.

On Wednesday, the Committee will meet to mark up H.R. 2072.

The Ex-Im Bank enables U.S. companies — large and small — to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy. For Fiscal Year 2010, Ex-Im supported an estimated $33 billion in export sales, and 227,000 U.S. jobs at over 3,300 companies.

In today’s era of tight budgets, it is worth remembering that Ex-Im is a self sustaining, independent agency operating at no cost to the taxpayer. In fact, Ex-Im has actually earned (above all cost and loss reserves) $4.5 billion for taxpayers since 1992.

In this context, if the United States is to double exports within five years, it should increase its liability loan cap. The U.S. Chamber supports H.R. 2072 inclusion of an increased lending limit to keep up with future export sales, upgrading and modernizing the information technology (IT) system, and increasing due diligence on defaults.

In addition, Ex-Im Bank is currently saddled with onerous conditions relating to the U.S. content of exports it supports. Mechanistic and simplistic calculations of U.S. content limit the ability of the bank to make more trade finance available. H.R. 2072 will create a process for facilitating a discussion to modernize the Bank’s eligibility requirements. This process will enable all stakeholders to participate and will encourage the Bank to take into account the reality of our innovative economy while continuing its strong support for manufacturing jobs.

As the U.S. economy hopefully gathers strength in the months ahead, Ex-Im Bank will play a leading role as the U.S. works to double exports in five years and create new jobs at home. The U.S. Chamber of Commerce urges Congress to support H.R. 2072 and to secure swift reauthorization of the Export-Import Bank of the United States.

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