GAO

United States General Accounting Office

Testimony

Before the Subcommittee on Tax, Finance, and Exports, 

Committee on Small Business, House of Representatives

For Release on Delivery

Expected at

2:00 p.m., EDT

Thursday,

September 9, 1999

EXPORT PROMOTION

U.S. Export Assistance 

Centers’ Efforts to Support 

U.S. Businesses

Statement of Benjamin F. Nelson, Director, International 

Relations and Trade Issues, National Security and 

International Affairs Division

GAO/T-NSIAD-99-242

Page 1 GAO/T-NSIAD-99-242 Export Promotion

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the activities of the U.S. Export 

Assistance Centers—the so-called USEACs. As you well know, small 

businesses offer great potential for export growth. However, they also are 

likely to seek export assistance—particularly those that have never 

exported. Various federal agencies and public and private organizations 

provide a range of export assistance activities, from giving export 

counseling to supplying export finance. Research by GAO and others in the 

late 1980s and early 1990s found that export assistance at the federal level 

was fragmented among 10 different agencies. In response, USEACs were 

created to strengthen the delivery of export promotion programs by serving 

as “one-stop shops” that would provide information on all export 

promotion activities available to U.S. firms seeking assistance. There are 

currently 19 USEACs.

We have followed the development of the USEAC concept and have 

reported on early implementation issues. My testimony today will focus on 

our most recent report: Export Promotion: U.S. Export Assistance Centers 

Seek to Improve Services (GAO/NSIAD-99-180, June 25, 1999). Specifically, 

I will discuss our findings related to (1) USEAC agencies’ efforts to improve 

coordination among federal agencies and nonfederal export service 

providers and (2) the challenges USEAC agencies face in their efforts to 

better meet the needs of the business community—particularly firms that 

export services and firms that are not yet ready to export. 

Summary Agencies participating in the USEACs are making joint calls on prospective 

clients and sharing information on clients and services, where appropriate. 

The USEACs have also pursued partnerships with nonfederal 

export-service providers, including state and local government, nonprofit, 

and for-profit organizations. In many cases, the USEAC agencies have 

co-located their staff in the same office suite or building with such 

nonfederal providers. For fiscal year 1998, nearly 20 percent of the “export 

actions” reported by USEAC trade specialists mentioned at least one 

partner as having participated in assisting a firm in exporting a product or 

service.

While coordination among the various entities has improved, USEACs face 

significant challenges in helping firms that export services. At a time when 

opportunities for service sector exports are growing, Commerce’s export 

promotion services are often unavailable or inappropriate for firms that 

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Page 2 GAO/T-NSIAD-99-242 Export Promotion

export services—as they were largely designed for firms that export goods. 

Certain USEACs have initiated creative approaches to addressing this 

issue. For example, one USEAC helped to stage a series of international 

video conferences through which U.S. architects could gain market 

intelligence and meet potential clients. USEACs are also helping groups of 

service exporters in the design services sector (including architectural, 

engineering, industrial, graphic, and new media design) and the education 

sector to form consortiums through which they can jointly pursue export 

business. 

Some USEACs have also used a special partnership program developed by 

the Small Business Administration (SBA) to assist enterprises that are not 

yet ready to export. Under this program, USEACs organize federal and 

nonfederal export-service providers into consortiums that provide firms 

that are not ready to export with comprehensive export training tailored to 

the firms’ needs. USEACs then offer intensive follow-up counseling to 

those firms that successfully complete the program. Some firms 

participating in this program have become customers for USEAC export 

promotion and finance services and, ultimately, exporters.

Background The Export Enhancement Act of 19921

 sought to improve the delivery of 

federal export promotion services by, among other things, requiring the 

Trade Promotion Coordinating Committee (TPCC) to develop a National 

Export Strategy that would include transforming the Commerce 

Department’s nationwide network of district offices into “one-stop shops.” 

In response, the TPCC brought together Commerce, SBA, and the 

Export-Import Bank (Eximbank) staff as part of a nationwide network of 

export promotion service-delivery offices. By mid-1999, there were 19 

USEACs–supported by 84 satellite offices. The satellite offices, which 

generally have one or two Commerce staff members, are placed closer to 

outlying business.

Through the USEAC network, the participating agencies seek to deliver a 

full range of nonagricultural export education, promotion, and finance 

services to U.S. firms. Commerce provides export promotion services 

largely to export-ready, small- to medium-sized firms. SBA provides export 

finance primarily in the form of export working capital guarantees. It also 

1

(Pub. L. 102-429, Oct. 21, 1992).

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Page 3 GAO/T-NSIAD-99-242 Export Promotion

offers export education services, largely through two quasi-governmental 

programs, to small firms that are not ready to export. The Eximbank offers 

a broad range of financing to exporters. In providing export promotion 

services, participating agencies are expected not only to coordinate among 

themselves but also to coordinate with nonfederal export-service 

providers, such as state agencies and world trade centers.

USEAC Agencies 

Improve Coordination

In an effort to improve service delivery, USEAC agencies have taken steps 

to better coordinate their activities. For instance, they have encouraged 

USEAC staff from the different agencies to make “joint counseling” calls on 

clients. When joint calling might not be appropriate, USEAC staff shared 

information and referred clients to each other.

In 1996, we recommended that the USEACs establish a customer tracking 

system that would contain information on clients and services provided to 

them. During our recent work, we found that Commerce has introduced its 

new Client Management System (CMS) to the USEAC network. CMS may 

have the potential to serve as a USEAC-wide client tracking system that 

could be shared by all participating agencies. For example, access to a 

common database on clients could help participating agencies better target 

their services to client needs. SBA is currently working with Commerce to 

adapt the CMS system to meet its needs and is training its USEAC staff to 

use it. The Eximbank also is considering introducing a client tracking 

system that would be compatible with Commerce’s CMS.

All USEACs also coordinate at least some of their export service activities 

with nonfederal export-service providers. For example, USEAC staff make 

presentations at trade seminars sponsored by nonfederal organizations, 

enter into formal memorandums of understanding with nonfederal 

export-service providers, or participate on a partner’s board of directors. 

Coordination may also take the form of co-location of USEAC staff in the 

same building or office space with nonfederal export-service providers. 

According to Commerce officials, about 75 percent of all USEACs and 

satellite offices are co-located with nonfederal partners. For example, the 

Portland, OR, USEAC is located in a World Trade Center with several state 

export promotion agencies and a nonprofit export-service organization. At 

the Atlanta, GA, USEAC, some staff from the Georgia Department of 

Industry, Trade, and Tourism actually work in the USEAC. Staff roles have 

been allocated so as to avoid duplication, and staff from both the USEAC 

and the state agency have access to each other’s client tracking systems. 

According to the Atlanta USEAC Director, this arrangement has permitted 
Page 4 GAO/T-NSIAD-99-242 Export Promotion

the participating federal agencies to leverage their staff and extend their 

reach into the export community.

The level of coordination is reflected in the number of joint efforts. For 

fiscal year 1998, nearly 20 percent of the “export actions”2

 reported by trade 

specialists at the USEACs through the CMS system mentioned at least one 

partner as having participated in assisting the client. Over 6.7 percent of the 

export actions involved assistance by another federal agency, such as SBA 

and the Eximbank, as well as the Agency for International Development, 

the U.S. Department of Agriculture’s Foreign Agricultural Service, and the 

Trade Development Agency. Over 14 percent of the export actions for fiscal 

year 1998 mentioned nonfederal partners as having also contributed to the 

export. These included a wide variety of state, local, quasi-governmental, 

and nonprofit organizations.

USEACs Seek to 

Improve Assistance to 

Firms That Export 

Services

The1998 National Export Strategy reaffirmed a 1994 TPCC commitment to 

assist service sector firms seeking to export. According to the Commerce 

Department, U.S. service exports in 1998 were $260.3 billion, an increase of 

about 160 percent from 1988 and about 50 percent from 1993. In 1998, U.S. 

exports of services represented nearly 28 percent of total exports. The 

demand for U.S. services is fueled not only by increased foreign demand 

but also by the decentralization of manufacturing worldwide. U.S. firms 

need certain services as they seek to establish and maintain manufacturing 

facilities overseas. At the same time, technology has reduced the cost of 

providing services on a large scale and allowed them to be produced at a 

much greater distance from the customer. 

Commerce, as part of a wider-ranging effort to strengthen assistance 

provided to exporters, formed an inter-USEAC Services Team to focus on 

the needs of service exporters.3

 In fiscal year 1998, about 10 percent of the 

export actions submitted by Commerce staff at the USEACs were in 

support of service exporters. The Services Team, which is organized into 

2

Commerce has been using export actions as a measure of USEAC activity for about 3 years. Trade 

specialists submit export action reports when they believe their assistance has directly contributed to a 

firm’s export sale of at least $1,000. Export actions are not a precise measure, however, since not all 

firms are willing to share the necessary information regarding their export sales.

3

The Services Team is comprised of Commerce Trade Specialists from the Long Beach, CA, and Seattle, 

WA, USEACs; USEAC satellite offices, including those in Anchorage, AK; Honolulu, HI; Inland Empire, 

CA; Monterey, CA; Newport Beach, CA; Orange County, CA; Reno, NV; and San Francisco, CA; and 

overseas posts, including those in Buenos Aires, Argentina; and Ontario, Canada.
Page 5 GAO/T-NSIAD-99-242 Export Promotion

several industry-focused subteams,4 found that service exporters 

sometimes have difficulty using Commerce’s export promotion programs. 

These programs were largely designed for firms that export goods and are 

often unavailable or inappropriate for firms that export services. For 

example, service exporters have experienced difficulty using Commerce’s 

Agent/Distributor Service program. This program, which U.S. 

manufacturing firms typically use to locate overseas agents or distributors, 

can be inappropriate for service firms, which might want to use it to 

identify individuals interested in licensing a patent or participating in a 

franchise.

In connection with their participation on the Services Team, Commerce 

staff at several USEACs we visited have employed innovative approaches 

to assisting firms that export services. For example, the USEAC satellite 

office in San Francisco is working with a consortium of firms in the design 

services industry (including architectural, engineering, industrial, graphic, 

and new media design) to develop a strategy to promote these firms’ 

exports. Under such a strategy, firms can pool resources to create more 

effective marketing tools and take advantage of the enhanced visibility that 

the consortium achieves through its own brand name and its partnership 

with large, brand-name corporations. The San Francisco satellite office, in 

cooperation with the American Institute of Architects, has also initiated a 

series of international videoconferences through which U.S. architects can 

gain market intelligence and give presentations to potential clients. 

In another example, the Portland and Seattle USEACs are working with 

U.S. colleges that wish to bring foreign students into the United States for 

education. Like tourism, education provided to foreign students in the 

United States is considered to be a service export. These USEACs, in 

conjunction with separate groups of colleges, have helped these colleges 

form consortiums to attract foreign students in a more cost-effective 

manner than if each college were to act separately. In Portland, the 

consortium members to date have begun establishing rules governing 

participation in the consortium and making proposals for joint efforts. 

These include developing a consortium web site, obtaining sponsors, and 

generating consortium publications. 

4

Subteams include design services; training, consulting, and education; franchising; professional 

services; transportation; and travel and tourism.
Page 6 GAO/T-NSIAD-99-242 Export Promotion

Special Program May 

Hold Promise for 

Assisting Firms That 

Are Not Ready to 

Export

Beginning with its 1994 National Export Strategy, the TPCC has 

consistently characterized the USEACs as a key element in federal efforts 

to assist small- to medium-sized exporters and firms interested in 

exporting. Firms seeking USEAC assistance vary considerably in their 

ability to export. Commerce staff have traditionally focused on firms that 

are ready to export, and SBA and Eximbank staff provide export financing 

to firms that already have potential deals. As a result, most USEACs do not 

work directly with small- to medium-sized enterprises that are not ready to 

export but show potential. According to USEAC directors, bringing these 

firms to the point where they are export ready can be very labor-intensive 

and time-consuming. In such cases, the USEACs generally refer such firms 

to SBA-affiliated education programs or to nonfederal export-service 

providers with similar programs. 

To better serve firms that are not ready to export but show potential, SBA 

has encouraged the USEACs to adopt a program called the Export-Trade 

Assistance Partnership (E-TAP). This program provides a structured 

mechanism for supplying such firms with comprehensive information on 

how to export and follow-up export promotion assistance. While this 

program was first developed by the SBA District Office prior to the creation 

of the USEAC network, the Seattle USEAC has adopted it as a primary 

program for assisting firms that are not ready to export. In addition, two 

other USEACs have had several years of experience with the E-TAP 

program, and seven others have recently used the program on one or two 

occasions.

While E-TAP programs may differ from location to location, they all involve 

three essential steps. First, the USEAC identifies not-ready-to-export 

clients with the greatest potential to export and encourages them to apply 

for the E-TAP program. Second, the USEAC forms a consortium of federal 

and nonfederal export-service providers who present comprehensive, 

in-classroom training on export matters to these preselected firms. Third, 

the USEAC staff provides one-on-one follow-up assistance to those firms 

that complete the training and decide to become involved in exporting. 

Firms pay a fee to participate in the program. Any firms successfully 

completing the program may apply a large portion of that fee to obtain a 

Commerce Department export promotion service. For example, the Seattle 

USEAC presented an E-TAP program that permitted firms to apply as much 

as $200 of the $385 registration fee to obtain a Commerce service. Firms 

completing the program also may be encouraged to participate in an 

overseas trade mission, during which they would meet prospective 
Page 7 GAO/T-NSIAD-99-242 Export Promotion

customers and possibly make sales. An E-TAP program can be industry 

specific or presented to firms from several industries. 

In Seattle, several of the firms that have participated in this program have 

gone on to export. These include a manufacturer of wastewater treatment 

facilities. This firm recognized that U.S. firms establishing manufacturing 

facilities overseas would need its products. At the suggestion of the 

USEAC, the company sent one of its managers to an E-TAP program in 

1994. The company then developed a close working relationship with the 

Seattle USEAC as it gained experience working with a bank that finances 

export transactions, learned how to structure export transactions to ensure 

repayment, and contacted a law firm to handle the legal aspects of 

exporting. In 1995, the firm worked with Commerce to arrange a visit to 

Singapore where, working with a joint venture partner, it secured its first 

export sale—a $750,000 wastewater treatment facility. Exports now 

represent about 70 percent of the company’s total sales. 

Mr. Chairman, and Members of the Subcommittee, this concludes my 

prepared statement. I will be happy to answer any questions you may have. 

Contact and 

Acknowledgments

For future contacts regarding this testimony, please call Benjamin F. Nelson 

at (202) 512-4128. Individuals making key contributions to this testimony 

included John Hutton and Joseph Natalicchio.

(711453) Letr
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