Exports form an important part of any economy of any country in the world. For several years, the United States is considered as one of the global economic super houses. Much of the commercial success in the United States has been attributed to its leading role in matters of international trade and more specifically regarding its export market. Nevertheless, the country has experienced an economic downturn in the recent years as a result of increasing competition from other global powers (Harrison, 2012).  The competitiveness of the United States in the international market has been hard hit in the past few years and thus making it a major area of concern.  It is paramount to point out that the United States can only address her economic problems by understanding the issue of competitiveness and how it affects her prosperity.  Competitiveness is an important concept that has been widely misunderstood with dangerous consequences for political discourse, policy, and corporate choices that are all too evident today.

For instance, the U.S can be classified as a competitive location based on the fact that most companies operating in the US markets can compete successfully in the global markets and at the same time support the high and rising living standards for the average American population. It is imperative to note that competitiveness refers to the ability of a location to be of benefit to both the companies and citizens.  It should be pointed out that lower American wages are not essential to US competitiveness as is also the case with a cheaper dollar. In fact, a weak currency leads to expensive imports and reduced costs of exports thus having a significant impact on the overall competitiveness.  In essence, the United States’ competitiveness will be defined by a location that favors both the companies and the American population (Workman, 2016).  . Whether a nation is competitive hinges instead on its long-run productivity—that is, the value of goods and services produced per unit of human, capital, and natural resources.

Competitiveness and productivity go hand in hand.  It should be noted that America’s growth rate in labor productivity was strong relative to that of other advanced economies in the 1990s and early 2000s (Workman, 2016). However, the trend has been in a downward trend especially prior and after the economic recession of 2008 (Workman, 2016). Productivity has been sustained since the crisis to a large extent by rising unemployment and falling workforce participation, ominous signs for U.S. competitiveness (Workman, 2016).

Timeline of U.S. Export Competitiveness

The United States is recognized as one of the oldest countries involved in international trade. Over the years, the country has been regarded among the leading exporter in the world. In fact, the United States is classified as the second largest export economy in the world as also the 5th most complex economy in the globe.  It is important to note that the United States exported oil as early as in 1913where it sold her oil to most countries including Japan.  Apart from oil, the US has also been in a leading position as far as export of refined petroleum, cars, planes, helicopters, automobiles, Medicare products and computers just to mention a few. Most of the US trading destinations include México, Canada, China, Japan, and Germany (Workman, 2016).  It is also worth noting that the United States has also exported machines, electronics, vehicles, oils, medical equipment and organic chemicals to other Asian and African countries thus making America a leading exporter for several decades.

For instance, the country’s export market accounts for a significant percentage of the country’s total output.  For example, in 2015, machines, engines and pumps represented the highest proportion in the export market. They accounted for 13.7% of the total exports and amounted to US$205.8 billion. Electronic equipment shipped during the same period amounted to $169.8 billion which represented 11.3% of the total exports. Vehicles, oil, and medical equipment followed at 8.7%, 8.4%, and 5.5% respectively.  Pharmaceuticals and organic chemical were the last in the export market and accounted for 3.1% and 2.6% in that order. From these statistics, aircraft and spacecraft was the fastest growing export sector, which registered a 49.4% increase from 2011-2015. Pharmaceuticals and the electronic equipment manufactured in the United States also registered a significant improvement during the same period(Workman, 2016). In 2014, the United States exported $1.45 trillion and imported $2.19trillion thus recording a negative trade balance of approximately $731 billion. It is nevertheless prudent to note that oil exports during the same period declined drastically by 18.7%.

Besides the drop in different categories of export products, the American export market has also made a significant loss to its international market share. For instance, research has indicated a downward trend in the America’s export market in the Asian continent since 2009. The manufacturing sector has been hard hit by this trend and makes it necessary for policymakers and other involved parties to be proactive and deal with the issue as soon as possible. From the available statistics, the US export merchandise to her 13 leading Asian trading partners, except China, grew by only 37% between 2009 to 2013 (Harrison, 2012). The US export to the rest of the world increased by only 52%. On the other hand, the Chinese exports to these regions grew by whopping 85% during the same period. The latest statistics indicates that the total exports from the United States increased by 0.6% to $189.9 billion as of September 2016, reaching the highest value since July of 2015. Exports of goods went up $0.6 billion to $126.1 billion, boosted by industrial supplies and materials as well as consumer goods (“United States Exports | 1950-2016 | Data | Chart | Calendar | Forecast”, 2016). During the same period, the sale of food, feeds, and beverages decreased to $1.7 billion. The service sector, as well as travel, also registered a significant increase in the recent years. Exports in the United States averaged 50,448.90 USD Million from 1950 until 2016, reaching an all-time high of 200,236 USD Million in October of 2014 and a record low of 772 USD Million in March of 1950 (“United States Exports | 1950-2016 | Data | Chart | Calendar | Forecast”, 2016).

The United States export market is controlled by different arms of the government that control the country’s foreign policy. The Office of Foreign Asset Control (“OFAC”) at the Department of the Treasury administers full financial and economic sanctions against individual nations consistent with Unites States’ foreign policy and national security objectives. These sanctions, which can be either comprehensive or limited, are authorized by, among others, the Trading With Enemy Act (“TWEA”) and IEEPA, and currently affect transactions with and investments in a number of countries including: North Korea, Iran, Russia, Sudan, Syria, Cuba, Burma (Myanmar), Zimbabwe, Belarus, and Yemen. The implementing regulations are found at 31 Code of Federal Regulations, beginning with Part 501 and continuing through Part 598 (“U.S. Exports, Competitiveness, and the Export-Import Bank of the United States | EXIM.gov”, 2016). No export licenses for either civilian or military items destined for any of these nations are issued by Commerce or State, and U.S. companies must ensure that none of its products or technology are re-exported, diverted, or otherwise transferred to end-users in these countries. Further, trade sanction policy continues to evolve based on U.S. foreign policy

The U.S. export control landscape is governed by two primary regulatory frameworks: the International Traffic in Arms Regulations (“ITAR”) administered by the Department of State and the Export Administration Regulations (“EAR”) administered by the Department of Commerce(“The Arms Trade Treaty – UNODA”, 2016). Other national laws and regulations further control and limit the foreign sale of U.S.-origin goods, including the trade embargo programs managed by the Department of the Treasury,1 and special programs such as exports covered by the Enhanced Proliferation Control Initiative (“EPCI”).2 The ITAR and the EAR are nevertheless the foundations of the U.S. export control regime.

The ITAR, promulgated pursuant to section 38 of the Arms Export Control Act (“AECA”),3 and administered by the Directorate of Defense Trade Controls (“DDTC”) at the State Department regulates the manufacture, temporary import and export of defense articles, and the export of defense services and technical data appurtenant to defense articles and defense services.4. The U.S. export control regime is fundamentally based on rigorous self-classification procedures, which place the onus on U.S. exporters to determine whether a given commodity or technology is subject to ITAR controls (Fergusson & Kerr, 2011). ITAR, Part 121 contains the United States Munitions List (“USML” or “Munitions List”), which is comprised of 21 categories of defense articles.1 These range in nature from Category I “Firearms, Close Assault Weapons and Combat Shotguns” to Category IV “Launch Vehicles, Guided Missiles, Ballistic Missiles Rockets, Torpedoes, Bombs and Mines.”2 Historically, whether a product, technology or related data was ITAR-controlled depended on whether it fell under one of the broadly worded USML categories.3 As explained above, however, the government has recently promulgated and implemented rules revising portions of the ITAR(“The Arms Trade Treaty – UNODA”, 2016). Under the reformed system, applied and applicable to categories VI, VII, VIII, XIII, XVII, XIX, XX, and XXI, whether a commodity,3.50 technical data, or software is ITAR-controlled hinges on a multi-step analysis, beginning with whether the merchandise, technical data, or software is identified under the revised USML.3.70.

Competitiveness Issues

It will be self-defeating if we assume that America does not have competitiveness issues. The United States is classified amongst the leading countries as far as the recipient of foreign direct investment is concerned.  However, the growth in inbound FDI has slowed in the recent years compared to other nations with equal powers. This together with the negative balance of payment is a clear indication that America is having competitive issues. Although U.S. exports rose during the past decade, America’s share of world exports has declined substantially and in virtually all areas. Germany and China are said to have had a robust export market in the recent years. For instance, the export market for the United States grew by only 3% from January 2014 to May of the same year (Globerman, 2014). During the same period, the Chinese exports markets registered a 9% growth. Competitive issues have arisen as a result of African and Asian countries shifting their alliance to China.  For instance, Chinese exports to these Asian markets of $707 billion in 2013 dwarfed U.S. exports of just $259 billion.

It is prudent to note that the challenging business environment experienced in the United States has been as a result of changes in the world economy as well as failures within America itself.  Modern technology has also made it possible to integrate more countries in the global supply chains. Decline in America’s skilled workforce has also made a significant contribution to the slowing export markets(Mandel, n.d.).  For instance,   most American organizations are forced to outsource IT experts mainly from China and India, and this has had adverse impacts on her competitiveness.

Besides the external forces affecting the America’s competitiveness in the global market, internal government failures have also contributed significantly to this menace.  American leaders are large to blame as focus on news cycle and the next election at the expense of the required structures and policies required promoting the long-term productivity(Harrison, 2012). This is contrary to India, China, Russia and the EU nations that have worked tirelessly to promote their exports. The US has failed to put in place structures that can speed up the economy recovery process as it has been in China, India, and other EU members. For example, the unusual taxing system to companies on foreign income has made it wise for these businesses moving offshore and more American companies holding a substantial amount of money abroad rather than repatriate it (Factors affecting U.S. international competitiveness, 1992). The US government also lacks the building blocks of long-run productivity. Increased debt levels and failure of the government to fund education, research and development have made it difficult for American firms and individuals to remain competitive (Harrison, 2012).  This has made an immense contribution to the shrinking American competitiveness in the global front.  With such emerging powers in top gear, the future of the US export market may be in jeopardy in coming years.

Findings

It is crystal clear that there is a downward trend in the US share of world merchandise trade in the recent years. The country’s balance of trade has been a deficit and hence necessitating proactive steps to ensure that the United States becomes competitive again. Although the country’s productivity has not had a major decline, the United States has failed to convert its productivity to competitiveness in the global market (Mandel, n.d.). On the other hand, emerging economies such as China has become a serious challenge to the US dominance in the international market. The Chinese government has put in place an economic strategy that offers the country an upper hand as far as the export market is concerned. This explains why the Chinese have acquired most markets in African and Asian countries at the expense of the United States (“Growing Concerns About Future U.S. Competitiveness – Center for American Progress”, 2016). On the other hand, the United States foreign policy, dysfunctional tax code and over protectionist approach have had adverse impacts on the US competitiveness in the export market.

In a nutshell, the US export market competitiveness is a major challenge to the economy of the United States. It is, therefore, prudent for policymakers and the government to take some proactive measures to ensure that the United States reclaims its lost glory. It is high time that America takes action rather than despair. The United States is founded on profound strengths, developed institution, and systems that are difficult to replicate (Workman, 2016). It is on these strengths that American should rely on its much-needed revival. For instance, the Americans should use their system of higher education and entrepreneurial community to improve their productivity. Increased investment in R&D is critical tools to enhance productivity. America’s firms are among the most ably managed in the world, and its capital markets remain the most vibrant despite the financial crisis. Besides, the government must also relook some of its foreign policy and monetary policies within the country to ensure they improve competitiveness. For instance, it is the high time the Americans relook at their tax system and wage structures to ensure that local firms can compete with their international counterparts (“Winning the Future Through Exports”, 2016). The manufacturing sector must also be promoted if America needs to be on the global map regarding exports. In essence, the US economy remains strong in many ways and the slight decline in competitiveness can be corrected with persistence and strategic approach.

References

Das, B. (2007). Impact of Foreign Direct Investment on the Export Performance of India, China and Malaysia. Asia-Pacific Journal Of Management Research And Innovation, 3(1), 107-114. http://dx.doi.org/10.1177/097324700700300109

Factors affecting U.S. international competitiveness. (1992) (1st ed.). Washington.

Fergusson, I. & Kerr, P. (2011). The U.S. export control system and the President’s reform initiative (1st ed.). [Washington, D.C.?]: Congressional Research Service.

Globerman, S. (2014). Regulation and the international competitiveness of US-based companies. Competitiveness Review, 24(5), 378-392. http://dx.doi.org/10.1108/cr-11-2012-0026

Growing Concerns About Future U.S. Competitiveness – Center for American Progress. (2016). Americanprogress.org. Retrieved 18 November 2016, from https://www.americanprogress.org/issues/economy/reports/2011/05/09/9697/growing-concerns-about-future-u-s-competitiveness/

Harrison, M. (2012). The Looming Challenge to U.S. Competitiveness. CFA Digest, 42(2), 35-36. http://dx.doi.org/10.2469/dig.v42.n2.49

Mandel, B. Why is the U.S. Share of World Merchandise Exports Shrinking?. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.2000961

Poterba, J. (2002). Recent Developments in and Future Prospects for Public Economics. The American Economist, 46(2), 20-30. http://dx.doi.org/10.1177/056943450204600202

Rosenfeld, S. (1997). Exports, competitiveness, and synergy in appalachian industry clusters (1st ed.). [Place of publication not identified]: Diane Pub Co.

The Arms Trade Treaty – UNODA. (2016). Un.org. Retrieved 17 November 2016, from http://www.un.org/disarmament/ATT/

The Decline of U.S. Export Competitiveness for Manufactures and Its Consequences for the World Economic Order | MAPI. (2016). Mapi.net. Retrieved 18 November 2016, from https://www.mapi.net/forecasts-data/decline-us-export-competitiveness-manufactures-and-its-consequences-world-economic

U.S. Exports, Competitiveness, and the Export-Import Bank of the United States | EXIM.gov. (2016). Exim.gov. Retrieved 18 November 2016, from http://www.exim.gov/news/archives/speeches/us-exports-competitiveness-and-export-import-bank-united-states

US aerospace and defense export competitiveness | Deloitte US | Aerospace & Defense Industry. (2016). Deloitte United States. Retrieved 18 November 2016, from https://www2.deloitte.com/us/en/pages/manufacturing/articles/us-aerospace-defense-export-competitiveness.html

United States Exports | 1950-2016 | Data | Chart | Calendar | Forecast. (2016). Tradingeconomics.com. Retrieved 17 November 2016, from http://www.tradingeconomics.com/united-states/exports

Winning the Future Through Exports. (2016). Trade.gov. Retrieved 18 November 2016, from http://www.trade.gov/publications/ita-newsletter/0711/winning-future-through-exports.asp

Workman, D. (2016). United States Top 10 Exports. World’s Top Exports. Retrieved 17 November 2016, from http://www.worldstopexports.com/united-states-top-10-exports/

Do you need an Original High Quality Academic Custom Essay?