Report to Congressional Committees

United States General Accounting Office

GAO

September 2001 EXPORT

PROMOTION

Government Agencies

Should Combine Small

Business Export

Training Programs

GAO-01-1023
Page 1 GAO-01-1023 Export Promotion

September 21, 2001

The Honorable Christopher S. Bond

Ranking Minority Member

Committee on Small Business and Entrepreneurship

United States Senate

The Honorable Donald A. Manzullo

Chairman, Committee on Small Business

House of Representatives

The interagency Trade Promotion Coordinating Committee was created by

the Export Enhancement Act of 1992 to coordinate the delivery of federal

export promotion services and to eliminate the areas of overlap and

duplication among federal export promotion programs.1

 The 1999 Export

Enhancement Act reiterated that eliminating duplication was a primary

Committee objective. In 1993, the Committee had recommended that three

agencies—the Department of Commerce, the Small Business

Administration, and the U.S. Export- Import Bank,—co-locate their staffs

at a domestic network of 19 “one-stop shops,” called U.S. Export

Assistance Centers. These centers were to provide coordinated export

training, as well as trade leads, export finance, and counseling to U.S.

firms interested in becoming exporters. The Committee designated that

the Small Business Administration be responsible for providing export

training to new-to-export firms. Both the Department of Commerce and

U.S. Export-Import Bank staffs provide information on their agencies’

programs during the training sessions. Because export training is the first

step in assisting new-to-export firms, you asked us to assess how well the

agencies were (1) coordinating the delivery of export training and (2)

measuring training program results.

 1

The U.S. Departments of Agriculture, Commerce, Defense, Energy, the Interior, Labor,

State, Transportation, and the Treasury; the Agency for International Development; the

Council of Economic Advisers; the Environmental Protection Agency; the U.S. ExportImport Bank; National Economic Council; the Office of Management and Budget; the

Overseas Private Investment Corporation; the Small Business Administration; the U.S.

Trade and Development Agency; and the U.S. Trade Representative comprise the Trade

Promotion Coordinating Committee.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-1023 Export Promotion

The Department of Commerce did not coordinate closely with the Small

Business Administration in introducing its export training program. As a

result, Commerce and the Small Business Administration provide separate

and duplicative training programs for potential small business exporters,

although the Commerce program is aimed at serving minority- and

women-owned firms. The goal of both programs is to create an interest in

exporting and a demand for export services. Both training programs have

the same objectives and similar content and seek to serve a similar mix of

clients. Such duplication can result in agency staff being diverted from

their primary responsibilities of making loans and counseling clients.

Three of the 10 U.S. Export Assistance Centers that we visited had decided

to combine both programs into a single export training program serving

potential exporters. The Trade Promotion Coordinating Committee,

located in the Office of the Secretary of Commerce, did not prevent these

duplicative efforts.

Neither Commerce nor the Small Business Administration systematically

collect outcome data for their export training programs. Instead, both

agencies track the number of clients trained and Commerce identifies

export successes for its clients overall but not specifically for its training

participants. Small Business Administration survey data indicate that few

training participants have used the export services provided by the centers

sponsoring the training, but they do not explain the reasons for these

results. Neither Commerce nor Small Business Administration staff

systematically follow up with training participants to learn whether they

have exported, the difficulties they encountered, and how the training

programs might need to be adjusted to be more helpful. According to some

training sponsors, the difficulty of recruiting qualified firms has resulted in

the expansion of participant criteria to include non-export-ready firms,

which may explain why few participants have used export services.

In this report, we are recommending that the Trade Promotion

Coordinating Committee eliminate duplication of export training services

by determining the best way to combine the Small Business

Administration and Commerce’s export training programs delivered by the

U.S. Export Assistance Centers. We are also recommending that the U.S.

Export Assistance Centers systematically follow up on new-to-export

training participants as part of an effort to consider the training needs of

small business in order to make program adjustments.

We provided a draft of this report to the Department of Commerce and

the Small Business Administration. The Department of Commerce

generally agreed with our analysis and planned to implement our

Results in Brief
Page 3 GAO-01-1023 Export Promotion

recommendations. The Small Business Administration did not comment

on the report.

When establishing the U.S. Export Assistance Centers (USEAC) in 1993,

the Trade Promotion Coordinating Committee (TPCC) designated the U.S.

Department of Commerce as the primary provider of export promotion

services, such as market information and counseling, to export-ready

firms. The other USEAC partners, the U.S. Export-Import Bank

(Eximbank) and the Small Business Administration (SBA), were to

provide firms with export financing support. In addition, SBA was to

provide training for new-to-export firms through its Export Trade

Assistance Partnership program.2

 The program provides training,

counseling, and trade mission opportunities available from federal, public,

and private organizations.

Commerce’s Office of U.S. and Foreign Commercial Service and SBA’s

Office of International Trade oversee their staffs at the 19 USEACs—

generally one SBA loan officer and several Commerce trade specialists per

USEAC. The USEACs are aided by a nationwide network of 55

domestically focused Commerce District Export Councils (comprised of

local businesses) as well as over 1,000 Small Business Development

Centers, partially funded by SBA.3

 In addition, USEACs partner with

chambers of commerce, trade centers, and colleges and universities to

encourage small businesses to expand their export activities and to assist

small businesses seeking to export.

To increase the number of U.S. exporters, Commerce and SBA seek to

identify export-capable firms that are not yet exporting and provide them

with export training opportunities. Commerce and SBA staff recruit

attendees through trade associations, chambers of commerce, advertising,

seminar attendance, and cold-calling firms. SBA’s Office of International

Trade requires its staff to conduct one Export Trade Assistance

Partnership program annually. SBA does not provide training program

funding. Training facilitation is a collateral duty of SBA’s staff at the

USEACs and a small part of their required performance criteria.

 2

New-to-export firms may be new businesses that have never exported.

3

Small Business Development Centers, located primarily at colleges and universities, are a

cooperative effort among SBA, the academic community, the private sector, and state and

local governments. The Centers provide information on exporting and assist firms with

export loan applications.

Background
Page 4 GAO-01-1023 Export Promotion

Both SBA and Commerce work with other federal and state agencies to

deliver the training curriculum. For example, SBA , Commerce, and

Eximbank staff at the USEACs participate in export training by providing

information on their agencies’ programs. In addition, public and private

entities, such as state export promotion agencies or local colleges,

sometimes present information on specific export topics.

The Department of Commerce did not coordinate closely with SBA when

it developed a separate Commerce export training program in 1999 as part

of the Global Diversity Initiative—a Commerce effort to reach an

underserved community of minority- and woman-owned firms. Six years

after the TPCC delineated agency roles at USEACs, Commerce’s U.S. and

Foreign Commercial Service began offering export training, known as the

Market Entry Program, that duplicated training provided by SBA. Not only

are the program objectives similar, but the participant criteria and the

curricula are very much the same. (See table 1.) Moreover, speakers for

the programs were the same. Several of the centers have combined

program presentations. TPCC officials, located in the Secretary of

Commerce’s Office, were aware that Commerce had instituted the Market

Entry Program at the USEACs but were unaware that it duplicated SBA’s

training.

The Two Export

Training Programs

Were Not Coordinated
Page 5 GAO-01-1023 Export Promotion

Table 1: Components of SBA and Commerce Export Training Programs

Program objectives and components

SBA Export Trade Assistance

Partnership Program

Commerce

Market Entry Program

Main program elements Partner with state and local trade

organizations to assist exporters.

Train firms on exporting.

Counsel firms and develop market plans.

Participate in trade shows and missions.

Leverage state and local resources to

assist exporters.

Train firms on exporting.

Counsel export-ready firms.

Participate in overseas trade missions.

Program began Mid-1990s 1999

Agency training requirement 1 annually 1 annually

Agency funded program No Yes

Objective To increase exports. To increase exports and use of Commerce

products.

Target Any new-to-export and export-ready firms. Various minority new-to-export and exportready firms.

Participant criteria Established business with an exportable

product or service suited for international

markets and a positive net worth.

Established business with an exportable

product or service suited for international

markets, a positive net worth, and

marketing materials.

Minimum participants 10 No requirement

Minimum hours 18 15

Trade mission required Optional Required

Trainee follow-up required Yes Yes

Source: GAO table based on information provided by the Department of Commerce and SBA.

Seven of the 10 U.S. Export Assistance Centers we visited had conducted

both Export Trade Assistance Partnership and Market Entry Programs.

Training agendas at three of these centers were identical, while the

training agendas at the remaining four centers were similar. Similar course

topics for both programs include market research, market entry and

pricing, legal aspects of exporting, required documentation and

transportation methods, the regulatory environment of importing

countries, international methods of payment, trade finance, and cultural

nuances.

SBA and Commerce USEAC staff at nearly all of the centers that we

visited routinely present information on their services at each other’s

programs. Moreover, both agencies’ staff assist each other in identifying

potential training participants. The one SBA staff at each USEAC not only

develops the SBA training as a collateral duty but also participates in

Commerce’s training program. Sponsoring the program can be timeconsuming, particularly the process of recruiting firms, according to SBA

officials. SBA program guidelines suggest using Commerce staff and

others to help design and deliver the program, and Commerce USEAC
Page 6 GAO-01-1023 Export Promotion

staff have done so. Commerce, which has several staff at most USEACs,

has dedicated staff to facilitate the Market Entry Program and has

provided program funding. In addition to 2 headquarters staff

administrators, Commerce has dedicated 4 staff as field coordinators and

21 as trade specialists in the USEACs to assist with the training, in addition

to their other duties. Market Entry Program guidelines require Commerce

program coordinators to use SBA staff to identify and provide outreach to

minority firms.

Because both training programs have similar course topics and common

presenters and serve similar clients, Commerce and SBA staff at three U.S.

Export Assistance Centers have combined the Export Trade Assistance

Partnership and the Market Entry Programs into a single training program.

Officials in three other U.S. Export Assistance Centers that held separate

training programs believed that the two training programs shared

similarities and could, therefore, be joined.

The TPCC, mandated to eliminate duplication in federal programs that

promote U.S. exports, was unaware that Commerce’s program duplicated

SBA’s training program, although the TPCC was aware of Commerce’s

program and used it to support its budget priorities in a November 1999

memorandum to the Office of Management and Budget (OMB). The TPCC

annually requires member agencies to submit information on their trade

promotion efforts and identify program or agency issues as part of its

mandate to create a unified budget and eliminate duplication. Citing the

need to better coordinate trade promotion activities, the TPCC prioritizes

member agencies’ needs, uses agency initiatives to support those

priorities, and submits a memorandum to OMB outlining them.

Commerce’s Global Diversity Initiative, identified as a relatively new

initiative to outreach to underserved communities, was included to

support a requested increase in funding for Commerce’s U.S. and Foreign

Commercial Service small business programs. When we spoke with TPCC

officials in March 2001 regarding the similarities in SBA’s and Commerce’s

export training programs, they were unaware of how the programs were

duplicative. The TPCC interagency working group on small business, the

forum where such an issue would be discussed, had not met for several

years, according to an SBA official.

TPCC Did Not Identify

Duplication
Page 7 GAO-01-1023 Export Promotion

Commerce and SBA do not systematically collect information on the

number of new exporters or the export sales the training programs

generate. Commerce tracks information on clients generally but does not

distinguish between trainees and other clients, and SBA does not

consistently track training participants’ exports. SBA data collected in the

spring of 2001 indicate that only a few training participants later used

Commerce’s products and services. Our interviews with USEAC personnel

suggest that the difficulty in recruiting export-ready firms, as well as the

normal challenges that exporters face, may contribute to this low usage of

pre-export products and services.

Commerce and SBA track certain pre-export activities as outputs for the

purpose of measuring both USEAC and staff performance. Commerce

collects data on the number of new clients’ export actions (such as going

on an overseas trade mission) and export successes, but it does not track

these measures specifically for trainees. SBA regularly collects loan data

for its clients, but it does not systematically collect data on export sales

generated by training participants. For example, SBA headquarters

officials requested data on export sales generated by Export Trade

Assistance Partnership Program participants in fiscal year 2000, but

several SBA staff at the USEACs that we visited told us that no such

request has been made for fiscal year 2001. However, an SBA official told

us that SBA intends to collect this information again in fiscal year 2001.

USEAC training programs ideally increase the number of new exporters

and also expand the demand for Commerce and SBA products as firms

seek information on specific markets and export finance. However, few of

the USEAC training participants used an export product, such as

customized market research, following training. In response to our request

for data on its export-training participants, SBA initiated a USEAC-wide

survey of its trainers in April 2001.4

 According to SBA officials, only 182 of

the 1,196 participants (about 15 percent) in the 62 Export Trade Assistance

Partnership Program training sessions held between 1998 and 2001

subsequently used a Commerce export product or service. Some training

participants used a Commerce product but did not go on to export.

 4

SBA told us that 16 of the 19 USEACs responded to the survey.

Performance

Measures Provide a

Partial Picture of

Training Program

Results

Measures Are Geared to

Pre-export Activities

SBA and Commerce Data

Show Limited Use of

USEAC Products and

Services
Page 8 GAO-01-1023 Export Promotion

We were unable to determine how many training participants became

active exporters or the value of their exports because the USEAC staff do

not systematically follow up on attendees, although such follow-up is a

program requirement for both SBA and Commerce training programs.

Training program organizers for both programs survey participants at the

end of the training, but they do not systematically collect data on how

many participants go on to export and the value of their subsequent export

sales. As mentioned earlier, SBA conducted a one-time survey to collect

that data, but it does not do so on a regular basis. In that survey, SBA

trainers reported that 96 of the 1,196 firms that received training (8

percent) had generated $452 million in export sales. However, that data

may overstate program results. According to the survey data provided to

us, a portion of the export sales identified came from firms that had

received export training but also had already been exporters.

Consequently, not all of the $452 million in export sales can be claimed as

a result of the training received by these firms.

According to Commerce officials, it takes about a year or more to become

an active exporter. SBA officials said that they may become aware of

training participant exports when the participant uses a USEAC product,

but they said that they have not been able to systematically track

graduates. Commerce’s Market Entry Program, begun in fiscal year 1999,

has had time to show some results. Commerce officials also cited the

difficulty of tracking participants but told us that they knew of a few

participants that had gone on to export. Tracking training participants is

both time-consuming and challenging, according to both SBA and

Commerce officials, due to the lag time between the business’s first

exposure to the training material and its eventual success in entering an

export market. Other factors may also complicate the collection of data

needed for tracking outcomes. In some cases, for example, firms that are

already exporting may send its employees for training, but it would not be

appropriate to count these firms as new exporters or count their exports

as additional exports. As a result, training managers do not have the data

to guide decisions about program improvements or to assess whether the

training program is generally successful in reaching its objective.

The inability of trainers to recruit qualified training participants could

affect USEACs’ meeting their performance goal of an increased number of

exporters and increased use of products. Recruiting qualified participants

sometimes proved difficult for the training organizers, and training

program officials told us that some training participants were not ready to

Training Participants Were

Not Systematically

Tracked

Recruiting Difficulties May

Affect Performance
Page 9 GAO-01-1023 Export Promotion

export, in terms of having a proven business record and an exportable

product.

USEACs that had difficulty recruiting qualified potential exporters relaxed

the criteria for participation for a variety of reasons. According to SBA and

Commerce officials, a general lack of interest in exporting by small firms

and the availability of similar training locally at world trade centers and

universities make it difficult to find firms willing to dedicate work time to

training or to find qualified training participants. At one USEAC, several

classes were cancelled due to lack of interest, while other USEACs

experienced high dropout rates. Difficulty in recruiting and the need to fill

classes resulted in letting firms enroll, even if they did not have an

exportable product or were in fact large manufacturing firms. Moreover,

not all participants in the seminars were focused on becoming exporters.

For example, with local needs driving course content, the objectives in

one training seminar were expanded to include providing information

about importing. Also, one SBA official opined that USEAC staff may have

relaxed the criteria in order to meet agency training requirements for

conducting export training.

Other factors affecting the success of export training programs include the

general obstacles all exporters face. Training officials told us that

exporters face numerous difficulties in foreign markets, such as finding

local agents as well as dealing with requirements imposed by foreign

governments. In addition, small business loans have become increasingly

difficult to find due to changes in the U.S. banking sector. Firms that are

eventually successful can take 12 to 18 months before being ready to

export, thus making it more difficult to monitor them systematically and

attribute the resulting exports or use of export services to the training

program.

The TPCC recommended the establishment of the USEACs in order to

provide potential exporters with one-stop shops where agencies would

work together to make the best use of their expertise and resources. Yet

Commerce and SBA are providing export training programs at the

USEACs that are virtually identical in their key program elements.

Commerce’s objective of increasing various minority and women

exporters through training could have been accomplished by coordinating

with SBA trainers to emphasize minority- and women-owned businesses

when recruiting for their program. In fact, both agencies have experienced

difficulties in identifying export-capable firms that could benefit from

Other Factors Affect the

Success of Export Training

Conclusion
Page 10 GAO-01-1023 Export Promotion

export training and in recruiting such firms for the training programs they

are providing. Also, Commerce and SBA have not systematically

conducted follow-up contacts with training participants in order to

understand their export experiences and make training program

adjustments to better serve potential small business exporters. In addition,

Commerce’s duplication of SBA training illustrates that the TPCC has not

fully met its mandate to coordinate trade promotion agencies’ efforts and

eliminate duplication.

We recommended that the Trade Promotion Coordinating Committee

eliminate duplication of export training services by determining the best

way to combine SBA’s and Commerce’s export training programs

delivered by the USEACs. In addition, we recommend that the USEACs

systematically follow up on new-to-export training participants as part of

an effort to consider the training needs of small businesses in order to

make program adjustments.

The Department of Commerce’s Office of International Trade generally

concurred with the report’s findings and planned to integrate SBA and

Department of Commerce export training programs in fiscal year 2002.

The office also plans to conduct a more systematic follow-up with training

participants as we recommended. The Department of Commerce’s written

comments are presented in the appendix. The Small Business

Administration did not provide comments.

To determine how well the USEAC partners coordinated export training,

we interviewed and obtained data from Department of Commerce; SBA;

Eximbank; and TPCC staff in Washington, D.C., and at 10 USEACs

(Baltimore, Chicago, Dallas, Denver, Detroit, Long Beach, San Jose, New

Orleans, St. Louis, and Philadelphia). We selected these centers after

contacting all 19 USEACs to identify those with training programs and by

including centers that SBA recommended as having good programs. We

interviewed agencies’ training organizers or presenters, obtained agency

documents establishing the programs and training agendas, and had

USEAC staff identify various minority and women participants in the

training programs. We also talked with some program participants

identified by the USEACs. In addition, we requested further data on SBA’s

training program, which SBA obtained by surveying USEAC staff in April

2001.

Recommendation for

Executive Action

Agency Comments

Scope and

Methodology
Page 11 GAO-01-1023 Export Promotion

To determine how the agencies measured the results of their export

training programs, we obtained and examined USEAC and agency

strategic plans, personnel performance measures, agency performance

reports, and an internal Commerce evaluation of key products. In addition,

we discussed performance measures with senior agency and USEAC staff.

We performed our work from March through July 2001 in accordance with

generally accepted government auditing standards.

As you requested, we plan no further distribution of this report until 30

days from its issue date. At that time, we will send copies of this report to

the Senate Committee on Small Business and Entrepreneurship and the

House Committee on Small Business, other interested congressional

committees, the Secretary of Commerce, and the Administrator of the

Small Business Administration. We will also make copies available to

others on request.

If you or your staffs have any questions regarding this report, please call

me at (202) 512-4128. Key contributors to this report were Virginia Hughes,

Judith Knepper, Victoria Lin, Patricia Martin, and Hector Wong.

Loren Yager

Director,

International Affairs and Trade
Appendix: Comments From the Department of

Commerce

Page 12 GAO-01-1023 Export Promotion

Appendix: Comments From the Department

of Commerce
Appendix: Comments From the Department of

Commerce

Page 13 GAO-01-1023 Export Promotion
Appendix: Comments From the Department of

Commerce

Page 14 GAO-01-1023 Export Promotion (320030)
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