The February push by President Obama for a “unified federal trade budget” to help American exporters could help more businesses sell more goods to China.
Increased American trade assistance through the US Export-Import bank would be a direct result of the initiative.
A central part of the plan is an effort to establish equitable international standards for government financing of private exporters. The US and China agreed in February to cooperatively develop a set of “guidelines” for export financing through government-backed export credit agencies, or ECAs.
The guidelines are expected to be agreed upon by 2014. The goal of the guidelines that the US and Chinese Exim banks are working out would be to equalize regulations for both countries, leveling the international playing field.
This is good news for American small businesses that are considering or are already exporting to foreign markets. ECAs act as intermediaries between the government and private exporters. Stronger government investment in ECAs will help US exporters establish themselves in foreign markets.
Guidelines agreed to by the US and Chinese governments should reduce any artificial assistance and therefore make competition in the international market more closely resemble domestic competition. ECAs are a standard part of developing export businesses in a national economy, but can distort international markets. As international markets are balanced by regulating government investment in ECAs, private exporters become increasingly confident that their work will become profitable and sustainable.