- Norwich University Online - Master of Arts in International Relations Program - Online
The world economy is being sustained and driven largely by the importing and exporting of natural resources, raw materials and finished goods between international trade partners. According to the U.S. Small Business Administration, 96 percent of the world’s consumers – which represents nearly two-thirds of total consumer purchasing power in the world – live outside of the United States. In addition to putting businesses in a better position to respond to global market trends and foreign competition, conducting international trade may increase sales and profits, eliminate the need to rely solely on the domestic market, and help businesses remain competitive within their market so as to withstand seasonal fluctuations in the domestic economy.
Mark Watkinson, Head of Commercial Banking North America at HSBC, wrote in his August 10, 2011 article, Internationalization as a Growth Strategy: “The divergence between domestic and international opportunities has not been lost on many U.S. corporations. A recent business survey revealed that nearly a quarter of mid-sized domestic U.S. corporations were planning to go international in the next two years.”
Watkinson also noted that of the U.S. companies with current overseas operations, 93 percent reported growth from international activities in the last 12 months and 72 percent of those companies planned to increase their international activities in the next 12 months. In addition, the survey also revealed that 74 percent of those companies stated that their overseas revenue was either keeping pace with or growing more rapidly than their domestic revenue.
E-commerce and logistical advances have lowered the cost of doing business across borders, while free trade agreements have allowed U.S. businesses to enjoy facilitated importing and exporting operations with such markets as Chile, Singapore, Australia, Jordan, Mexico, Central America, Canada and Israel.
The Value of Imports and Exports
The Federation of International Trade Associations (FITA) reports that the majority of its 450 associated members and more than 450,000 company members are involved in one or more of the following: promotion of international trade, importing and exporting, international logistics management or international finance.
Among the many types of businesses involved in importing and exporting goods and raw materials are manufacturers, distributers, retailers, contractors, trading companies, shipping companies, freight forwarders, custom house brokers, insurance brokers and underwriters; as well trade compliance specialists, lawyers and consultation firms.
According to the U.S. Census Bureau, Department of Commerce report, A Profile of U.S. Importing and Exporting Companies, 2008-2009, there were a total of 275,000 U.S. export companies and 179,000 U.S. import companies. According to this same report, as of November 2011, the total value of U.S. exports was $177.8 billion compared to the total value of U.S. imports, which was $225.6 billion.
A closer look at the manufacturing industry revealed that large companies, identified as those companies employing over 500 workers, were accountable for 67.2 percent of the known export value and 68.1 percent of the known import value in 2009. However, the number of large-company exporters made up just 2.4 percent of all known exporters, and the number of large-company importers made up 2.9 percent of all known importers. In other words, large companies, although representing a very small portion of the overall number of importers and exporters, accounted for the vast majority of value in both importing and exporting.
According to the U.S. Census Bureau, 82.6 percent of all U.S. export companies exported to at least one of the following major U.S. trade partners: Canada, Mexico, the United Kingdom, Germany and China. Canada was the largest U.S. trade partner as of 2009, followed closely by Mexico.
The states with the largest number of exporting businesses in the country in 2009 were California, Florida, New York, Texas and Illinois, which collectively accounted for 41.5 percent of total exports during this time. The states with the largest number of importing businesses in the county in 2009 were California, New York, Florida, Texas and New Jersey, which accounted for 47.6 percent of the total known U.S. import value.
The following list furnished by the U.S. Census Bureau, U.S. Bureau of Economic Analysis News, shows the total value of goods and services imported to and exported from the United States as of November 2011:
Export of goods – November 2011 (in millions)
- Foods, feeds and beverages $10,127
- Industrial supplies and materials $41,433
- Capital goods, except automotive $42,032
- Automotive vehicles, parts and engines $11,018
- Consumer goods $15,683
- Other goods $4,816
Import of goods – November 2011 (in millions)
- Foods, feeds and beverages $9,329
- Industrial supplies and materials $63,765
- Capital goods, except automotive $43,832
- Automotive vehicles, parts and engines $22,291
- Consumer goods $42,503
- Other goods $5,809
2011 U.S. Services by Major Category – Imports (January – November, in millions)
- Travel $72,560
- Passenger Fares $28,429
- Other Transportation $50,172
- Royalties and Licensing Fees $32,563
- Other Private Services $174,541
- Direct Defense Expenditures $27,354
- U.S. Government misc. services $4,021
2011 U.S. Services by Major Category – Exports (January – November, in millions)
- Travel $105,838
- Passenger Fares $33,570
- Other Transportation $38,962
- Royalties and Licensing Fees $109,138
- Other Private Services $248,266
- Direct Defense Expenditures $16,307
- U.S. Government misc. services $1,059
Handling the Logistics of Importing and Exporting
Businesses involved in exporting must operate in accordance with specific laws pertaining to packing, documentation, labeling and insurance. Many businesses interested in streamlining the logistics involved with exporting hire freight forwarding companies or join one of the Shippers’ Associations. The American Institute for Shippers’ Association describes shippers’ Associations as “non-profit transportation membership cooperatives that arrange for the domestic or international shipment or members’ cargo.” Shippers’ Associations often pool multiple shippers to increase shipment volume and negotiate volume discounts or service contracts.
Export.gov describes an international freight forwarder as an “agent for the exporter who can move cargo from ‘dock to door.” Freight forwarders may advise on exporting costs, prepare export documentation, advise on the most appropriate mode of transport, reserve cargo space and make arrangements with overseas custom brokers to ensure all cargo complies with customs regulations. The International Air Transport Association (IATA) licenses all freight forwarders.
Customs and Border Protection
Protocols, rules and restrictions regarding importing and exporting to and from the United States are established and enforced by the U.S. Customs and Border Protection (CBP), a division of the U.S. Department of Homeland Security. Before beginning the process of importing and/or exporting goods, the CBP recommends that companies become familiar with all CBP policies and procedures.
CBP does not require exporting and importing companies in the U.S. to possess particular licenses or permits, but other agencies may require a license, permit or certification for particular commodities being imported. CBP acts in an administrative capacity for these other agencies, which allows companies to obtain the appropriate license, certificate or permit through the CBP, thereby streamlining the process for obtaining the proper approval.
Companies interested in exporting and importing should contact authorities within the state in which they will perform their importing and/or exporting operations, as state authorities may require additional documentation. Businesses can access CBP’s Informed Compliance Publications, “What Every Member of the Trade Community Should Know About…” on the CBP website (www.cpb.gov) to learn more about obtaining the proper compliance material for importing and exporting.
A complete list regarding the ports of entry (air, land or sea) for the United States can also be found on the CBP website. CBP import specialists assigned to a company’s specific commodity are available, thereby allowing companies to receive accurate information regarding classification, commodity specific requirements, and advisory duty rates, among other information. They are also available to help businesses fill out the necessary paperwork.
The CBP website also has valuable information regarding exporting, including export documents, licenses and requirements. Information regarding specific export licenses can be found through the U.S. Department of Commerce, Bureau of Industry and Security websites, although questions regarding export licenses can be answered through CBP officers at the port where the merchandise will leave.
Businesses who do not want to deal with the often-complicated importing procedures can consult a customs broker through the CBP. The CBP has lists of available custom brokers who are licensed to conduct businesses at specific ports.
The Importance of U.S. Free Trade Agreements
Through U.S. Free Trade Agreements (FTA), the United States has negotiated agreements with other countries that help facilitate and streamline the importing and exporting process between nations. The United States engages in these types of agreements with a number of countries in an effort to reduce trade barriers and protect U.S. economic interests. As a result, exports to FTA partner countries have been steadily rising. In 2010, 41 percent of all U.S. goods exported went to partner counties.
The FTA uses the agreements negotiated by the World Trade Organization and addresses a number of current issues, such as the eventual elimination of all tariffs charged on products coming in from other countries.
Currently, the United States has 11 FTAs with 17 partner countries, which include Australia, Bahrain, Chile, DR-CAFTA (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua), Israel, Jordon, Morocco, NAFTA (Canada and Mexico), Oman, Peru and Singapore.
The FTA is also currently negotiating FTAs with Korea, Panama and Columbia and is in the process of negotiating a regional FTA, called the Trans-Pacific Partnership, with Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam.
Organizations Influencing U.S. Importing and Exporting
International Chamber of Commerce (www.iccwbo.org)
The International Chamber of Commerce (ICC) promotes international trade and investment. It works closely with the United Nations and other governmental organizations and oversees the ICC International Court of Arbitration, which is a forum for cross-border commercial dispute resolution. The ICC also provides leadership and guidance on public policy issues as they relate to global trade and investment. The ICC communicates to American businesses the views of a number of organizations, including the World Trade Organization, the International Telecommunications Union, the World Customs Organization, the World Intellectual Property Organization, the UN Environment Program, the UN Commission on International Trade Law and the UN Commission on Sustainable Development.
United States Council for International Business (www.uscib.org)
The United States Council for International Business (USCIB) promotes open markets, encourages competitiveness and innovation, promotes sustainable development, and encourages corporate responsibility. USCIB oversees a global network of leading businesses and organizations and provides a number of business services meant to facilitate overseas trade and investment.
American Association of Importers and Exporters (www.aaei.org)
The American Association of Importers and Exporters (AAEI) is involved in a number of activities as they relate to international business, including advocacy (such as monitoring the activities of Congress and the Executive Branch, proposing legislation and regulatory actions, briefing policymakers, and testifying before Congressional committees and regulatory agencies). Additionally, AAEI is involved in and education and training by facilitating seminars, trade conferences and workshops.
International Trade Administration (www.ita.doc.gov)
The International Trade Administration (ITA) works to ensure the competitiveness of the U.S. industry. This organization promotes trade and investment and ensures fair trade through the enforcement of trade laws. The ITA is designed to improve the health of the global business environment by helping U.S. businesses compete both domestically and abroad. The ITA consists of four, distinct sectors: U.S. and Foreign Commercial Service, Manufacturing and Services, Market Access and Compliance and Import Administration.
World Trade Organization (www.wto.org)
The World Trade Organization (WTO) works to lower customs tariffs, to reduce or eliminate other trade barriers and keep open services markets. The WTO requires governments to make their trade policies transparent and follows up to ensure all agreements are being properly implemented. The WTO also has procedures in place to resolve trade quarrels and to ensure that trade flows smoothly.
Customs Broker and Freight Forwarder Salary
As of the U.S. Department of Labor, Bureau of Labor Statistics (BLS) May 2010 report, there were 90,280 transportation, storage and distribution managers employed under the freight transportation arrangement industry classification. The average salary among these managers was $86,630. The average among the 75th percentile was $104,620, while those in the 90th percentile averaged $133,490.
The 65,220 purchasing managers employed in the freight transportation arrangement industry earned an average of $100,600. Top earning purchasing agents within the 90th percentile earned $149,920 on average.
As of this May 2010 BLS report, there were some 104,800 logisticians involved in arranging freight transportation for the many businesses involved in importing and exporting goods and materials. The average salary among these logisticians was $73,510, while those in the top 10 percent earned $108,080 on average.