Governmental Role in Exporting
Governmental Role in Exporting
Governments play a variety of roles in the export process, some of which support exporting and others that appear to retard it. For example, government regulations designed to keep high-tech products from aiding the Soviet military retard high-tech exports of U.S. companies. The International Trade Administration (ITA) of the U.S. Department of Commerce offers a variety of services to firms. There are offices in every state where trade specialists can help firms develop export strategy and gain access to commercial officers overseas as well as to a variety of data services. The ITA also sponsors and promotes trade shows.
Eximbonk A major federal source of assistance to U.S. exporters is the Export-Import Bank (Eximbank). The Eximbank is the oldest federal agency specializing in foreign lending. As a fully owned government corporation, it has been in existence since 1934, with the specific objective of financing U.S. foreign trade. The Eximbank provides assistance in the form of loans, guarantees, and insurance.39
The loans can be made directly to foreign buyers of U.S. exports or to intermediary parties that provide loans to foreign buyers of U.S. exports. The guarantee program is designed to provide security for firms that provide loans to purchasers of U.S. exports. Guarantees can be for political and commercial risks, but they are also available for political risk only.
Another way that an exporter can reduce risk is through the Foreign Credit Insurance Association (FCIA). An exporter that secures a policy with the FCIA is insured against loss resulting from failure of the exporter's customers to pay because of commercial or political reasons. Political risks include currency inconvertibility, expropriation, cancellation of import licenses, or other actions taken by foreign governments that prevent payment by the buyer. Also, the policyholder can arrange favorable financing of export receivables because of the security brought about by the insurance.
As mentioned in the opening case, other governments provide significant export assistance to their firms. Some of the assistance is in the form of data gathering, such as the marketing report developed by the New Zealand Export-Import Corporation. Other forms of assistance involve developing trading contacts, finding distributorships, and arranging low-cost financial support for exports. This latter area is especially sensitive politically when governments subsidize loans to the point that interest rates are substantially below market rates. However, these forms of assistance are considered to be very important in promoting the expansion of exports, thus jobs in a country.
Governments play a variety of roles in the export process, some of which support exporting and others that appear to retard it. For example, government regulations designed to keep high-tech products from aiding the Soviet military retard high-tech exports of U.S. companies. The International Trade Administration (ITA) of the U.S. Department of Commerce offers a variety of services to firms. There are offices in every state where trade specialists can help firms develop export strategy and gain access to commercial officers overseas as well as to a variety of data services. The ITA also sponsors and promotes trade shows.
Eximbonk A major federal source of assistance to U.S. exporters is the Export-Import Bank (Eximbank). The Eximbank is the oldest federal agency specializing in foreign lending. As a fully owned government corporation, it has been in existence since 1934, with the specific objective of financing U.S. foreign trade. The Eximbank provides assistance in the form of loans, guarantees, and insurance.39
The loans can be made directly to foreign buyers of U.S. exports or to intermediary parties that provide loans to foreign buyers of U.S. exports. The guarantee program is designed to provide security for firms that provide loans to purchasers of U.S. exports. Guarantees can be for political and commercial risks, but they are also available for political risk only.
Another way that an exporter can reduce risk is through the Foreign Credit Insurance Association (FCIA). An exporter that secures a policy with the FCIA is insured against loss resulting from failure of the exporter's customers to pay because of commercial or political reasons. Political risks include currency inconvertibility, expropriation, cancellation of import licenses, or other actions taken by foreign governments that prevent payment by the buyer. Also, the policyholder can arrange favorable financing of export receivables because of the security brought about by the insurance.
As mentioned in the opening case, other governments provide significant export assistance to their firms. Some of the assistance is in the form of data gathering, such as the marketing report developed by the New Zealand Export-Import Corporation. Other forms of assistance involve developing trading contacts, finding distributorships, and arranging low-cost financial support for exports. This latter area is especially sensitive politically when governments subsidize loans to the point that interest rates are substantially below market rates. However, these forms of assistance are considered to be very important in promoting the expansion of exports, thus jobs in a country.
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