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Report on barriers faced by US SME textile exporters

17
Jul '10
The United States International Trade Commission (USITC) recently published a report on barriers and opportunities experienced by small and medium-sized export enterprises. The report presents US SMEs' views on barriers to exporting, strategies to overcome those barriers and other trade costs, and policy recommendations to increase US exports.

It recounts the views of US SMEs on the US economy as a whole and on seven specific industries in the agriculture, manufacturing, and service sectors. The seven industries are apples, wine, chemicals and nanotechnology, textiles and apparel, medical devices, computer services, and professional services. They were selected because SMEs are well represented and highly competitive in all of these industries.

SMEs also cited their difficulty in collecting foreign receivables as a major constraint to exporting. For example, some SMEs have lost business because banks and export credit agencies refuse to extend credit based on foreign receivables.8 Representatives of SMEs in several industries also noted that payment terms tend to be longer when dealing with exports.

For example, SMEs in the textiles industry generally receive payments for domestic sales within 30 days, but payments for foreign sales typically take 90–100 days, and the longer payment terms are reportedly difficult for a small company with limited working capital to handle. This longer payment cycle reportedly is another factor that makes it more difficult for SMEs to obtain financing from domestic banks or the Ex-Im Bank.

As regards US Domestic Laws and Regulations, domestic textiles and apparel SMEs also noted that they must comply with U.S. regulations that are often more costly to implement than those of their counterparts abroad.

One key issue cited by SME exporters of agricultural goods and second hand textiles is the problem of container shortages. Issues with labeling regulations were cited as problems for SMEs in industries as diverse as chemicals, nanotechnology, textiles and apparel, and across the agriculture sector. Some labeling regulations can reportedly prevent an SME from entering new export markets altogether, due to concerns that proprietary formulas or ingredients may be divulged.

As regards foreign tarrifs, US exporters of secondhand textiles stated that they face restrictions imposed by up to 31 countries, some of which ban such imports outright while others have adopted high tariffs to discourage such trade. Given that the primary markets for secondhand textiles are outside the United States, the industry is particularly concerned about such barriers.

In connection with Foreign Government Support Programme, representatives of the textiles and apparel industries cited foreign government support programs for their domestic industries as important impediments, making US exports less price-competitive vis-à-vis locally produced goods in a number of countries.

SMEs also report that foreign governments support exports by their firms to a greater extent than the US government, through low-cost loans; marketing support, including support to appear at international trade fairs; free trade missions; and tax incentives. According to industry and government sources, foreign governments heavily subsidize their companies' participation in trade missions and trade fairs related to a wide variety of industries.


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