Lauren Scott is an international economist in the Office of Trade and Economic Analysis at the International Trade Administration.
Yesterday the Census Bureau released its annual Profile of U.S. Importing and Exporting Companies, which details the characteristics of U.S. merchandise trading companies in 2013. The report, a joint project between Census and the International Trade Administration (ITA), includes information on company size, industry sector, geographic location, and export markets. More than 304,000 U.S. companies exported goods in 2013, which is a 10 percent increase from 2009, when the National Export Initiative (NEI) was first announced by President Obama.
The Profile especially highlights the role of small businesses in export industries. Small- and medium-sized enterprises, or SMEs, which are firms with fewer than 500 employees, accounted for 98 percent of the number of U.S. exporters in 2013 and $471 billion in known value of goods exports*. The majority of SME exporters ship goods to at least one of our NAFTA partner countries, Canada or Mexico, with the U.K., China, and Germany, also serving as top markets for SME exports. In fact, the known value of SME exports to Mexico increased by nearly 19 percent between 2012 and 2013. Similarly, SME exports, by value, grew by 5 percent to Colombia during its second year as a U.S. free trade agreement partner. Nearly 21,000 SMEs exported goods to South Korea and more than 14,000 exported to Colombia in 2013, both of which became U.S. free trade partners in 2012.
The majority of U.S. exporters are non-manufacturing firms, and SMEs account for the majority of these non-manufacturing companies. Wholesale trade companies and other non-manufacturing firms made up 76 percent of SME exporters. These SMEs contributed 55 percent of the non-manufacturing sector’s $562 billion in exports. Manufacturing firms account for less than a quarter of U.S. exporters; however, this sector accounted for 60 percent of total known export value in 2013, much of which was generated by large firms.
SMEs can also be a critical driver for economic growth through exports at the state level. In fact, SMEs were responsible for more than half of known goods exports in Montana, Rhode Island, Florida, Wyoming, New York, Hawaii, and Maine. Texas added nearly 700 SME exporters in 2013, which represented the largest increase in total exporters by state across the U.S. that year.
Small- and medium-sized firms stand to gain by expanding their reach in the global marketplace. The majority of SMEs (59 percent) exported to a single foreign market in 2013, while the majority of large companies (55 percent) exported to five or more countries. SMEs often face additional trade barriers overseas compared to large companies that use offshore business affiliates to more easily facilitate exports to a target market. Despite these obstacles, almost 93,000 SMEs exported goods to the European Union in 2013, and exports from all companies to the Pacific Rim region increased by $8 billion between 2012 and 2013. Both markets represent opportunities for continued and increasing growth.
Current and future U.S. free trade agreements, including those under negotiation with the EU and through the TPP, will be beneficial for all U.S. companies, especially SMEs, to gain market access to half of the global economy and continue growing America’s export footprint overseas.
* “Known value” refers to export transactions that can be linked to a specific company, so in many cases these figures may be underestimated.