Destinaciones Superiores para las Exportaciones de Texas Trade leads from international companies seeking to buy or represent U.S. products The U.S. federal government, state governments, trade associations, exporters’ associations and foreign governments offer low-cost and easily accessible resources to simplify and speed your foreign market research How does the quality of your product or service compare with that of goods already available in your target foreign markets? Is your price competitive in the markets you are considering? Who are your major customers? Qualify Potential Buyers or Representatives Once you locate a potential foreign buyer or representative, the next step is to qualify them by reputation and financial position. First, obtain as much information as possible from the company itself. Here are a few sample questions you will want to ask:• What is the company’s history and what are the qualifications and backgrounds of the principal officers?• Does the company have well trained personnel, facilities and resources to devote to your business?• What is their current sales volume? • How long have they been in this line of business?• What is their banking relationship?• How will they market your product (retail, wholesale or direct)?• Which territories or areas of the target country do they cover?• Do they have other U.S. or foreign clients? Are any of these clients your competitors? It is important to obtain references from several current clients.• What types of customers do they serve?• Do they publish a catalogue?• How effective is their sales force? Benefits of Exporting The United States is the world’s largest exporter, with $1.5 trillion in goods and services exported annually. In 2006, the United States was the top exporter of services and second largest exporter of goods, behind only Germany. However, 95 percent of the world’s consumers live outside of the United States. So if you are selling only domesti-cally, you are reaching just a small share of potential customers. Exporting enables SMEs to diversify their portfolios and insulates them against periods of slower growth in the domestic economy. Free trade agreements have opened in numerous markets including Australia, Canada, Chile, Israel, Jordan, Mexico, and Singapore, as well as Central America. Free trade agreements create more opportunities for U.S. businesses. The Trade Finance Guide is designed to provide U.S. SMEs with the knowledge necessary to grow and become competitive in foreign markets. The influx of foreign tourists is providing revenue to local communities. * Increases sales prospects in under-developed markets which have high capital costs for importers U.S. Small Business Administation
(Agencia Federal para el Desarrollo de la Pequeña Empresa) Thousands of U.S. companies are not aware of export opportunities or the programs available to help them. The challenge is reaching these companies amidst a U.S. business community of 27 million firms. The centerpiece of our National Export Strategy, as presented in the chapter Broadening and Deepening the Base of Exporters, is to engage in partnerships with other service providers to reach more potential exporters. We will strengthen partnerships with American cities and States, with large service corporations that have millions of daily contacts with clients, and with trade associations and other nonprofit organizations that have unique access to potential exporters. For example, EWCP loans will support 100% of supplier costs for an export transaction. The EWCP loans can also be used to even out cash flow when exporters have negotiated longer sales terms and cannot carry the resulting receivables with their own working capital. The EWCP loan can be a short-term loan for a single contract or in the form of a line of credit that supports ongoing export sales for a period of 12 months. SBA’s Role in Export Financing Most banks in the U.S. do not lend against export orders, export receivables or letters of credit. Because of that, some small businesses that export may lack necessary export working capital to support their export sales. That is where an SBA program can make the difference. SBA provides lenders with up to a 90% guaranty on export loans as a credit enhancement, so that participating banks will make export loans that make the necessary export financing available. The SBA delivers its export loan program through a network of SBA Senior International Credit Officers located in U.S. Export Assistance Centers throughout the country. These specialists understand trade finance and are available to explain SBA’s export lending programs, the application process and forms and to guide exporters in selecting appropriate payment methods. They can also link companies to specialists for increasing export sales and managing foreign payment risk. Exporters can apply for EWCP loans in advance of finalizing an export sale or contract. With an approved EWCP loan in place, exporters have greater flexibility in negotiating export payment terms - secure in the assurance that adequate financing will be in place when the export order is won. Key Benefits * Financing for suppliers, inventory or production of export goods * Export working capital during long payment cycles * Financing for stand-by letters of credit used as bid or performance bonds or down payment guarantees * Reserves domestic working capital for the company’s sales within the US * Permits increased global competitiveness through allowing more liberal sales terms * Increases sales prospects in under-developed markets which have high capital costs for importers * Contributes to the growth of export sales * Low fees and quick processing times How to Apply Application is made directly to lenders. Interested businesses are encouraged to contact the SBA staff at a U.S. Export Assistance Centers (USEAC) to discuss whether they are eligible for the EWCP program and whether it is the appropriate tool to meet their export financing needs. The participating lenders review / approve the applications and submit the request to the SBA staff at the USEAC location servicing the exporters’ geographical territory. Eligible Businesses Financing is available for manufacturers, wholesalers, export trading companies and service exporters. EWCP loan borrowers must meet SBA eligibility and size standards (less than 500 employees for manufacturers; less than 100 employees for wholesalers) and have been in business for at least one year. The SBA can waive the one-year in business requirement if the applicant can demonstrate sufficient export expertise and business experience. Eligible Export Transactions The exports being financed must be shipped and titled from the United States; there is no U.S. content requirement for the product being exported. The exports must comply with all U.S. Export Administration Regulations and cannot be shipped to a country where the United States has imposed trade embargos or sanctions. “Indirect” exports to domestic buyers who subsequently export, also qualify for EWCP financing. Loan Amount The maximum EWCP line of credit/loan amount is $2 million. Participating banks receive a 90% SBA guaranty provided that the total SBA guaranteed portion to the borrower does not exceed $1.5 million. In those instances where the SBA guaranteed portion reaches the $1.5 million cap, banks can still get a 90% guaranty thanks to a co-guaranty program between SBA and the Export-Import Bank of the United States (EXIM). Under this program, the bank still submits only one loan application to the SBA and receives a 90% U.S. government guaranty that is backed by both agencies. For the EXIM Bank guaranteed portion, a higher fee may apply. Interest Rate The SBA does not establish or subsidize interest rates on loans. The interest rate can be fixed or variable and is negotiated between the borrower and the participant lender. Collateral The export-related inventory and the receivable generated by the export sales financed with EWCP funds will be considered adequate collateral. The SBA also requires the personal guarantee of owners [20 percent or more ownership. Loan Maturity and SBA Fee EWCP loans are typically issued for one year. The SBA fee for an EWCP loan with a 12-month maturity or less is ¼% (0.25%) assessed on the guaranteed portion of the loan. For example, for a one-year $1 million line of credit with a 90% guaranty [$900,000 guaranteed portion] the guaranty fee is $2,250 [$900,000 x .25%]. The SBA can reissue EWCP loans on an annual basis and the guaranty fee remains ¼%. Open Account Terms and Managing Payment Risk With increasing regularity, foreign buyers are asking for open account terms from their U.S. suppliers. In that situation, small and medium-sized exporters are faced with the prospect of either losing sales to their foreign competitors (who offer terms) or finding a way to balance the increased cash flow strain and the risk of non-payment by the foreign buyer that comes with providing terms. While the SBA EWCP loan can provide cash flow support, it is credit insurance that minimizes the risk of non-payment. Credit insurance is a special insurance product designed to protect a company's trade credit exposure from bad debt loss caused by insolvency, default or political risk. EXIM Bank as well as private sector providers provide credit insurance. The SBA and EXIM Bank have teamed up to provide small businesses that have an EWCP loan with a 25% premium discount on an EXIM Bank Small Business Export Credit insurance policy. TABL E 2 U. S . SME E x p orts to F TA T rad i n g Part n ers , 2 0 0 6 Country SME Export Value ($ millions) SME Share of Total Exports (percent) Australia 4,249 27.3 Bahrain 1 122 35.6 Canada 1 134 20.8 Chile 1,674 28.4 Dominican Republic 2,731 56.0 El Salvador 2, 895 47.5 Guatemala 1,500 47.5 Honduras 1,249 37.7 Israel 3,384 42.3 Jordan 231 44.9 Mexico 32,496 27.5 Morocco 200 23.7 Nicaragua 440 64.6 Singapore 4,304 19.1 FTAs Since 2001 U.S. goods exports to the 11 FTA countries with which agreements entered into force since 2001 are growing faster than exports to the rest of the world. Specifically, U.S. goods exports to the 11 FTA countries have increased 71 percent since 2001, versus 59 percent for exports to the rest of the world over that same time period. Jordan: The United States-Jordan FTA entered into force on December 17, 2001. Since 2001, U.S. merchandise exports to Jordan have increased 153 percent, or by $517 million, reaching $856 million in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the vehicles (1,500 percent), aircraft (679 percent), and aluminum (581 percent) sectors. Chile: The United States-Chile FTA entered into force January 1, 2004. Since 2003, U.S. merchandise exports to Chile have increased 206 percent, or by $5.6 billion, reaching $8.3 billion in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the mineral fuels (2,510 percent), aircraft (1,986 percent), and cereals (349 percent) sectors. Singapore: The United States-Singapore FTA entered into force January 1, 2004. Since 2003, U.S. merchandise exports to Singapore have increased 59 percent, or by $9.7 billion, reaching $26.3 billion in 2007. This growth in U.S. exports has caused the U.S. trade balance with Singapore to improve from a $1.4 billion surplus in 2003 to a $7.9 billion surplus in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the mineral fuels (240 percent), organic chemicals (110 percent), and iron and steel articles (110 percent) sectors. Source: U.S. Department of Commerce, Exporter Database. FREE TRADE AGREEMENTS 41 Australia: The United States-Australia FTA entered into force January 1, 2005. Since 2004, U.S. merchandise exports to Australia have increased 35 percent, or by $5.0 billion, reaching $19.2 billion in 2007. This growth in U.S. exports has caused the U.S. trade balance with Australia to improve from a $6.7 billion surplus in 2004 to a $10.6 billion surplus in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the railway/ traffic signal (130 percent), plastics (62 percent), and pharmaceuticals (50 percent) sectors. Morocco: The United States-Morocco FTA entered into force January 1, 2006. Since 2005, U.S. merchandise exports to Morocco have increased 156 percent, or $818 million, reaching $1.3 billion in 2007. This growth in U.S. exports has caused the U.S. trade balance with Morocco to improve from a $79 million surplus in 2005 to a $733 million surplus in 2007. Of the top exporting sectors by value, some of the fastest export growth over this period occurred in the plastics (1,353 percent), mineral fuels (1,363 percent), and cereals (399 percent) sectors. El Salvador: The CAFTA-DR agreement entered into force between the United States and El Salvador on March 1, 2006. Since 2005, U.S. merchandise exports to El Salvador have increased 25 percent, or by $459 million, reaching $2.3 billion in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the mineral fuels (300 percent), cotton yarns/fabric (74 percent), and electrical machinery/equipment (64 percent) sectors. Nicaragua: The CAFTA-DR agreement entered into force between the United States and Nicaragua on April 1, 2006. Since 2005, U.S. merchandise exports to Nicaragua have increased 42 percent, or by $265 million, reaching $890 million in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the mineral fuels (417 percent), knitted/crocheted fabric (91 percent), and animal or vegetable oils (80 percent) sectors. Honduras: The CAFTA-DR agreement entered into force between the United States and Honduras on April 1, 2006. Since 2005, U.S. merchandise exports to Honduras have increased 37 percent, or by $1.2 billion, reaching $4.5 billion in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the mineral fuels (155 percent), electrical machinery/equipment (69 percent), and manmade fibers (56 percent) sectors. Guatemala: The CAFTA-DR agreement entered into force between the United States and Guatemala on July 1, 2006. Since 2005, U.S. merchandise exports to Guatemala have increased 43 percent, or by $1.2 billion, reaching $4.1 billion in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the mineral fuels (89 percent), cereals (86 percent), and plastics (75 percent) sectors. Bahrain: The United States-Bahrain FTA entered into force on August 1, 2006. Since 2005, U.S. merchandise exports to Bahrain have increased 69 percent, or by $241 million, reaching $591 million in 2007. Of the top exporting sectors by value, the fastest export growth over this period occurred in the mineral fuels (2,152 percent), iron and steel articles (1,017 percent), and precious stones and metals (350 percent) sectors. Dominican Republic: The CAFTA-DR agreement entered into force between the United States and the Dominican Republic on March 1, 2007. Since 2006, U.S. merchandise exports to the Dominican Republic have increased 14 percent, or by $734 million, reaching $6.1 billion in 2007. Of the top exporting sectors by value, the fastest export growth over this period Congressionally Approved Agreements Awaiting Entry into Force Peru: The United States and Peru signed the United States-Peru Trade Promotion Agreement (U.S.-Peru TPA) on April 12, 2006 and a protocol of amendment on June 24, 2007. The Peruvian Congress ratified the agreement in June 2006 and the protocol of amendment in June 2007. After overwhelming House and Senate votes on legislation approving the agreement, President Bush signed the U.S.-Peru TPA Implementation Act on December 14, 2007. Since the Andean Trade Preference Act was first enacted in 1991, Peru has enjoyed duty-free access to the U.S. market. The U.S.-Peru TPA will give U.S. exporters equivalent access to the Peruvian market. In 2007, U.S.-Peru trade totaled over $9.4 billion dollars. When the agreement enters into force, 80 percent of U.S. exports of consumer and industrial goods to Peru will enter duty-free immediately, with remaining tariffs phased out over 10 years. Additionally, nearly 90 percent of current agricultural trade will receive duty-free treatment, and tariffs on other agricultural products will be eliminated over time, most within five to 15 years. Costa Rica: The CAFTA-DR is now in force for all signatories to the agreement except Costa Rica. The people of Costa Rica approved the CAFTA-DR in a national referendum in October 2007. Entry into force is pending adoption of necessary implementing legislation and regulations by Costa Rica. Oman: The United States signed a free trade agreement with Oman on January 19, 2006. President Bush signed legislation approving the agreement on September 26, 2006, following Congressional action. Oman continues to work on its implementing legislation. In 2007, U.S. goods exported to Oman totaled $1.1 billion. FTAs Requiring Congressional Approval As a group, pending FTAs with Colombia, Panama, and South Korea represent access for U.S. companies to nearly 100 million customers. These agreements also promote America’s strategic and other interests. Colombia: The Bush Administration sent legislation regarding the United States-Colombia Trade Promotion Agreement to Congress for approval on April 8, 2008; Congress has not yet considered the legislation. Colombia is our fourth-largest trading partner in Latin America and is the largest market for U.S. agriculture exports in South and Central America, as well as in the Caribbean. Over 90 percent of U.S. imports from Colombia now enter our country duty-free. Currently, no U.S. agricultural exports enjoy duty-free entry into the Colombian market. In fact, U.S. exports to Colombia face duties as high as 35 percent in the case of industrial and consumer goods, and much higher for many agricultural products. Under the agreement, all of Colombia’s tariffs would go to zero. Upon entry into force, the agreement will immediately eliminate tariffs on more than 80 percent of American exports of industrial and consumer goods, and on more than half of U.S. agricultural exports. In addition, the agreement would allow trade in remanufactured products and eliminate other significant barriers to U.S. exports, such as Colombia’s price bands on agricultural products. U.S. Congressional approval and entry into force of the Colombia free trade agreement will create favorable conditions and incentives to support sustained real growth, create more jobs, and attract new investment in Colombia. This agreement also will help bolster the Government of Colombia’s policies promoting greater openness, transparency, and accountability, and further strengthen Colombia’s democratic institutions and the rule of law. Panama: In 2007, Panama and the United States exchanged around $4 billion worth of goods—nearly two times more than just four years ago. Panama is one of the fastest-growing economies in Central America, with a growth rate of more than eight percent last year. The United States and Panama signed the United States-Panama Trade Promotion Agreement (U.S.-Panama TPA) on June 28, 2007. When this agreement enters into force, duties on nearly 88 percent of U.S. consumer and industrial exports to Panama and on more than 60 percent of U.S. agricultural products will be eliminated immediately. The agreement will create opportunities for U.S. businesses to participate in the Panama Canal expansion project. It will also provide new market access for U.S. service suppliers, including in Panama’s key financial services sector. South Korea: The United States-Korea Free Trade Agreement (KORUS FTA) is the most commercially significant bilateral free trade agreement the United States has concluded in the past 15 years. South Korea is already our seventh-largest goods trading partner, with $82 billion in bilateral trade in 2007. The KORUS FTA will open a country with a $1 trillion GDP and a growing market of 49 million consumers to a full range of U.S. goods and services, from autos to telecommunications and financial services. The U.S. International Trade Commission estimates the reduction of Korean tariffs and tariff-rate quota provisions on goods market access alone would add $10-12 billion to annual U.S. GDP, meaning an increase of better-paying jobs for American workers. Under the KORUS FTA, Korea and the United States will eliminate tariffs on nearly 95 percent of bilateral trade in consumer and industrial products within three years, and almost two-thirds of U.S. agriculture exports to Korea will become duty-free immediately. The free trade agreement will also address a range of non-tariff barriers and increase transparency in Korea’s regulatory processes. In addition, the KORUS FTA will add an important new economic element to the close strategic partnership that the United States has maintained with South Korea on the Korean Peninsula for over 60 years. Commercial Service United States-Mexico Border Initiative: The United States provides an estimated 47 percent of all inputs to the maquiladoras (export manufacturing plants), valued conservatively at $41 billion in U.S. exports. As the U.S. and Mexican economies experience further integration, the more than 2,800 such plants throughout Mexico—of which 60 percent are located along the border with the United States—will have an ongoing need to source quality inputs, equipment, and services from U.S. industry. To better help U.S. businesses tap sales opportunities offered by the maquiladoras, the Commercial Service launched the Border Trade Initiative (BTI). The BTI extends the strong trade promotion programs that already exist throughout Mexico and on the border in Tijuana, to include the significant manufacturing clusters that have been underserved by the Commercial Service in the Mexican states bordering Arizona, New Mexico, and Texas. The BTI is being gradually implemented throughout the border region in 2008, and will build on the success of the Tijuana office in offering matchmaking services, hands-on border region programs, special events, market research, and other tools to help U.S. businesses be successful in accessing this important market. The Commercial Service in Mexico maintains a schedule of upcoming events including seminars and trade shows throughout 2008.4 Commerce-USTDA—The United States and Mexico: Building Partnerships in Infrastructure Conference: On February 26–28, 2008, USTDA and the Commercial Service co-sponsored the Conference in Mexico City. Over 400 participants joined the event, designed to promote U.S.- Mexican business ventures in ports, aviation, energy, and the environment. U.S. Ambassador to Mexico Antonio Garza, U.S. Secretary of Commerce Carlos M. Gutierrez, then USTDA Acting Director Leocadia Zak, and several senior cabinet members of the Mexican government joined the plenary session attended by U.S. and Mexican company representatives. Ex-Im Bank Vice Chair Linda Conlin gave remarks at the Finance Plenary, and FedEx Mexico sponsored a major networking event. During the Conference, USTDA signed $1.7 million in grants for infrastructure projects in support of Mexico’s National Infrastructure Program objectives, which include studies on expanding Puebla International Airport, Queretaro International Airport, and San Luis Potosi International Airport; studies on a proposed municipal water desalination facility in the state of Sonora; and, technical assistance for strengthening environmental management at power plants, substations, and power transmission and distribution facilities. 4 www.buyusa.gov/mexico/en/border_trade_initiative.html