Top 5 Issues for 2015 in International Affairs

In their 2015 State of the State speeches, Governors across the country will spotlight the importance of states remaining globally competitive—creating opportunity for state exports and attracting new investment from international partners. Year on year states are increasing their international engagement, attracting investment and students from abroad and looking to export everything, everywhere. Exports have proven to be a catalyst to sustainable growth and jobs for small firms. A recent study by the International Trade Commission (ITC) found companies that exported grew by 37 percent, while non-exporting firms declined by 7 percent from 2005 to 2009.

2015 will be a big year for the national trade agenda as the Administration pushes forward with the Trans-Pacific Partnership (TPP), a deal with 11 nations that together account for 40% of global economic activity. The Transatlantic Trade and Investment Partnership has further to go in negotiations but both the United States Trade Representative and European Union negotiators are positive a deal can be struck that would give enhanced access for US exporters to 28 countries. States that better understand how international trade deals impact them will be better prepared to take advantage of new opportunities and tackle challenges that may come with changes in regulatory standards.  

Export Promotion Programs

Despite exports being the bright spot of U.S. economic recovery, only 1 percent of small businesses are exporting, describing their greatest barrier as lack of information or understanding. State international trade agencies are on the front lines steering companies through the export promotion process, from identifying opportunity in foreign markets to assisting companies with export control compliance. Exporting companies create good jobs and boost state economies. To support this trend, state governments need to invest in programs that create an environment for small business export success. Better coordination with the federal government on export promotion also is essential to limit duplicative services and streamline the overall exporting process. In 2015, states will be looking to Congress for renewal and full funding of the State Trade and Export Promotion Program, a state-managed federal matching grant that directly supports business exports.

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Attracting Foreign Direct Investment

The contributions to the U.S. economy by subsidiaries of foreign companies were nearly double that of U.S. companies in 2013. Foreign direct investment is a proven catalyst for economic growth and states are leading the charge attracting international partners across the globe. Global trends show the U.S. share of foreign direct investment stock is facing tough competition from other regions, particularly the European Union and developing nations. States will be looking to pursue policies that offer a better business climate to attract more foreign investors.

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International Trade Agreements

The U.S. is negotiating major agreements with the Trans-Pacific and European Union regions. On completion, these agreements will provide enhanced access to 39 new markets. States will be readying themselves for this opportunity by providing resources to exporters and preparing for challenges that may arise as a result of the trade deals. For example, states should thoroughly explore the implications of enhanced access to procurement markets—an area of state competence that cannot be negotiated at the federal level.

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Trade Facilitation

U.S. companies are exporting more goods than ever before, and this trend is growing exponentially. The U.S. Customs and Border Protection agency, however, is ill equipped to handle the surge of exports. Inefficient border procedures can add 15 percent to the cost of traded products. With more than 28 percent of U.S. gross domestic product tied to trade, states will be tackling the issues that add uncertainty and unnecessary barriers to trade, such as border wait times.

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Higher Education Internationalization

States have recognized that increased international exposure can contribute to economic growth and increased opportunity to attract trade and foreign investment. While international education has traditionally been a focus of higher education institutions and national efforts, several states are formalizing their approach to attract foreign students and encourage foreign exchange in strategic economic and workforce development plans. This is a growth area for states in an increasingly competitive field. According to the Institute of International Education, 820,000 foreign students enrolled in U.S. institutions in 2013; that’s a 40 percent increase since 2001.

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