The year ahead will see expanded efforts made by American business and financial institutions to increase American exports overseas. Expanding trade has been the concern of American business since the inception of the Republic - in fact, our own War of Independence had part of its origin in America's desire to export the products of its industries and fields. Today it is also in our national interest, and to protect the position of the dollar as the central trading currency in the world, to devote serious attention to exporting more of our goods and services. The Secretary of Commerce directly, and through the Regional Export Expansion Councils, is urging us all to play our roles with a view toward helping our country move toward a solution to our nagging balance of payments problem.

Our industrialists are increasingly aware of expanding opportunities for marketing their products abroad, even though only 4% of U.S. manufacturing concerns are presently exporting any part of their product directly.

During the past few years many industrialists have complained of better credit terms available to their foreign competitors who were shipping into third markets. There were stories that the British financing organization, or HERMES in Germany, or the French counter-part, could offer better terms to their nationals than did the U.S. Government or the other financial institutions serving American exporters. So far as Government institutions are concerned, Mr. Harold F. Linder, President of the Export-Import Bank of Washington, is in a position to say, in 1963, that -

"The new assistance available to the American exporter through the FCIA, commercial banks, and Export-Import Bank is consonant with the Governments drive to increase exports and meets a number of requests from the export community.

These broadening services, together with project loans and other facilities which the Eximbank continues to provide, give United States exporters financial assistance which as a whole is at least equal to and in Eximbank's opinion, better than that available to their foreign competitors. "

Increasingly, American banks are doing their part in establishing departments to finance foreign trade, are expanding existing facilities, and are cooperating with joint financing arrangements with the Washington lending agencies when overseas political risks loom large. Our own institutions has expanded its system of more than 90 branches throughout the world - thirty new branches have been established overseas since early in 1959 - and during the past year has issued over 52,000 credits to serve U.S. suppliers selling abroad.

American banks as a whole are becoming familiar with the new financing techniques which have been developed by Eximbank and the Foreign Credit Insurance Association. But the broad use of these institutions by American exporters and banks outside of the major export centers has not come up to expectations.

More and more the lure of foreign markets is drawing the attention of American businessmen who now generally realize it is necessary to compete on a price and quality of service basis on a world-wide scale. To do so, many of our industries must step up the rate at which they replace outmoded equipment; for the rest of the industrial world, notably France, Germany, Japan, have taken major strides in modernizing.

The small, medium and large business concern and commercial bank can do much directly to expand exports. The businessman must decide whether he wishes to invest a portion of his firm's time and money in foreign markets and whether he can obtain a greater return in this endeavor than he could by investing the same resources in the U.S. market. Each firm must analyze its own ability to undertake export activities by appraising its resources and their projected future use, and should evaluate overseas sales opportunities by analyzing its product lines in the light of possible foreign demands.

While the rates of growth of markets abroad compare, in many cases, more favorably than the rate of growth of the U.S. market, identifying sources of competition, present and future, is admittedly more difficult. Bankers stand ready to assist exporters, as do independent market institutions such as the combination export-management firms, trading companies, domestic manufacturers of related but not competitive products and foreign importers located in the U.S. A firm new to overseas selling can find guidance from his bank and his own government through the work of the Department of Commerce, its field offices scattered throughout the country, through reports of their overseas missions, trade fairs and exhibits.

The economies of size and standardization which have made the American market the best in the world have their applications in the new regional groupings which are emerging in Europe and Latin America; namely, EEC (European Economic Community), EFTA (European Free Trade Area), CAFTA (Central American Free Trade Area) and the embryonic LAFTA (Latin American Free Trade Association). The full impact of these larger regional markets is not yet fully appreciated.

For example - it should shortly become possible to ship to any one of the five countries of Central America embraced within CAFTA for they are all working toward a common economic entity without artificial barriers to trade. An American exporter of equipment may establish a plant in one of the countries which can export its product to the other four without barriers of currency or tariff or other restrictions being imposed at the levels which were once commonplace.

In the depth of the great world depression of the 1930's the collapse of the European economies was often partly attributed abroad to our own high tariffs and the unwillingness of our country to permit the importation of European goods to earn the foreign exchange necessary to discharge Europe's short term obligations to the U.S. Today we are urging that Europe will not make the opposite error of surrounding herself with a common tariff barrier which will be so high as to impede American imports with a resultant continuing pressure on our balance of payments.

In the less-developed areas of the world, financing of capital equipment and long-range projects are the prime need. Commercial banks, as such, are usually less favorably placed to assist in this basic activity except through the use of so-called Edge Act corporations. This newly revived tool is beginning to make itself felt in these countries, especially when they work cooperatively with local development banks. The total volume of all Edge Act corporations to date, however, has not been of paramount significance. They do point a way to filling a void in the American financial institutional framework.

Financing exports can be accomplished through small banks, as well as through the large metropolitan banks accustomed to international finance over the years. The banking system is being supplemented by factoring houses which are taking an increasing interest in assisting exporters who find it difficult to get credit assistance for their overseas buyers.

The insurance industry through the participation of over 70 companies in the Foreign Credit Insurance Association, with all their branch offices, is now providing wide insurance coverage for American business firms on a short term basis, as well as medium term, i. e., up to 5 years. The policies and procedures of these institutions have now been refined. Where political risks are very high, where even large banks and large enterprises choose not to allocate their investments, the U.S. Government guaranties and insurance programs stand ready to accommodate the American manufacturer with something to sell abroad.

Banks are endeavoring to develop a more aggressive credit policy with respect to financing export transactions. The American banking system with branches abroad and correspondent banking relationships throughout the free world are endeavoring to secure financing abroad also for American business enterprises which operate overseas, thereby reducing their dependence on export of U.S. capital.

The relative cost structure between the U.S. and certain European countries has been moving in our favor. The shortage of labor is restricting expansion in certain European countries and narrowing profit margins. For example, in West Germany, the discrepancy last year between the rise in wages (8 to 10%) and the increase in labor productivity (2%) has narrowed the gap and will continue to do so, because the total native labor supply of Germany will probably not increase during the decade ahead. In France, the overall expansion of production has been high (5 1/2% per year) but has been accompanied by a rise in imports greater than in exports.

It is noteworthy that both Germany and France are currently considering ways of providing stimuli for their exports. Consideration is being given to tax incentives for exporters in the United Kingdom, and the National Economic Development Council in that country is reviewing the case for and against such subsidies.

European countries, notably Germany, France and Italy, and more recently, Great Britain, have been viewing East-West trade more hopefully than have we. There has, in fact, been a gradual increase in their trade with the prospect of more East-West trade if the China - Soviet rift widens.

Trade figures based on the first quarter of 1963 indicate a favorable trade balance of $4 billion for the United States for the calendar year, 1963. Based on first quarter figures, the Department of Commerce estimates U.S. exports will total $20.0 billion, accompanied by imports of $16.0 billion. This projected surplus compares with surpluses of $5.4 billion and $4.6 billion for 1961 and 1962, respectively. A slow attrition in the balances is revealed.

Our export performance in non-agricultural goods is improving somewhat and may be attributed tentatively to efforts to stimulate exports and to changes in price and cost relationships influencing the competitive position of American goods in foreign markets. Some small comfort may be derived from the fact that during the first quarter of 1963, our imports were about 2.8% of the Gross National Product, even after adjustment for the disruption caused by the shipping strike. This is slightly lower than for the previous year when they constituted 2.92% of the GNP. This is a good performance, since generally during upswings of the business cycle a higher, not lower, proportion of the GNP is imported.

Ralph Waldo Emerson in 1843 stated - "We rail at trade, but the historian of the world will see that it was the principle of liberty; that it settled America, and destroyed feudalism, and made peace and keeps peace....."

The Export Drive is a fundamental approach to our balance of payments problem, and while there may be others, American firms in this effort may increase their profits and will increase the strength of the nation.