Export Promotion: Government Agencies Should Combine Small
Business Export Training Programs (21-SEP-01, GAO-01-1023).
The 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.
The Export Enhancement Act of 1999 reiterated that eliminating
duplication was a primary Committee objective. In 1993 the
Committee recommended that three agencies 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
Department of Commerce did not coordinate closely with the Small
Business Administration in introducing its export training
program. As a result, Commerce and the SBA provide separate and
duplicative training programs for potential small business
exporters. Neither Commerce nor the SBA 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 for
training participants. Neither agency staff members
systematically follow up with training participants to learn
whether they have exported, the difficulties they encountered,
and how training programs might need to be adjusted to be more
helpful.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-1023
ACCNO: A01971
TITLE: Export Promotion: Government Agencies Should Combine
Small Business Export Training Programs
DATE: 09/21/2001
SUBJECT: Education or training
Export regulation
Small business assistance
USEAC U.S. Export Assistance Centers
Network
Department of Commerce Global Diversity
Initiative
USEAC Export Trade Assistance
Partnership Program
Department of Commerce Market Entry
Program
******************************************************************
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GAO-01-1023
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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