Export Promotion: U.S. Export Assistance Centers Seek To Improve Services
(Letter Report, 06/25/1999, GAO/NSIAD-99-180).

Three agencies--the Commerce Department, the U.S. Export-Import Bank,
and the Small Business Administration--have established a domestic
network of 19 "one-stop shops," called U.S. Export Assistance Centers.
The agencies participating in this network were to coordinate among
themselves, as well as with nonfederal organizations, such as state
agencies and world trade centers. Their goal was to deliver a full range
of nonagricultural export education, promotion, and finance services to
small- and medium-sized exporters. The report examines the network's
activities. GAO discusses (1) the nature of coordination among the
federal agencies participating in the network and between these agencies
and nonfederal export-service providers and (2) network assistance to
firms that export services and to firms that are not ready to export but
show potential and interest in doing so.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-99-180
     TITLE:  Export Promotion: U.S. Export Assistance Centers Seek To
	     Improve Services
      DATE:  06/25/1999
   SUBJECT:  Interagency relations
	     Exporting
	     Small business assistance
	     Sales promotion
IDENTIFIER:  USEAC U.S. Export Assistance Centers Network
	     Dept. of Commerce Client Management System
	     USEAC Export Trade Assistance Partnership Program

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GAO/NSIAD-99-180

A Report to the Honorable Gordon Smith, U. S. Senate

June 1999 EXPORT PROMOTION

U. S. Export Assistance Centers Seek to Improve Services

National Security and International Affairs Division

B-283863 Letter June 25, 1999 The Honorable Gordon H. Smith United
States Senate

Dear Senator Smith: The interagency Trade Promotion Coordinating
Committee (TPCC) was created in statute by the Export Enhancement
Act of 1992 1 to, among other things, coordinate the delivery of
federal export promotion services. 2 To carry out Congress'
intent, three TPCC agencies the Department of Commerce, the U. S.
Export- Import Bank (Eximbank), and the Small

Business Administration (SBA) established a domestic network of 19
one- stop shops, called U. S. Export Assistance Centers (USEAC).
The agencies participating in this network were to coordinate
among themselves as well as with nonfederal organizations, such as
state agencies and world trade centers. Their goal was to deliver
a full range of nonagricultural export education, promotion, and
finance services to small- to medium- sized exporters and firms
interested in becoming exporters. 3

At your request, we examined activities of the USEAC network.
Specifically, we identified (1) the nature of coordination among
the federal agencies participating in the USEAC network and
between these agencies

and nonfederal export- service providers and (2) USEAC assistance to firms that export services and to firms that are not ready to export but show potential and interest in doing so. In conducting this review, we interviewed officials and obtained pertinent documents at Commerce, SBA, and Eximbank headquarters and several trade associations. We visited the USEACs in Atlanta, Ga.; Baltimore, Md.; New York, N. Y.; Portland, Oreg.; San Jose, Calif.; and Seattle, Wash., where 1 Public Law 102- 429, October 21, 1992. 2 Before 1992, U. S. firms seeking assistance in selling or financing exports faced a fragmented structure of federal agencies and programs. See our March 15, 1993, testimony, Export Promotion: Governmentwide Strategy Needed for Federal Programs (

GAO/T-GGD-93-7
); our August 10, 1992,
and nonfederal export- service providers and (2) USEAC assistance
to firms that export services and to firms that are not ready to
export but show potential and interest in doing so. In conducting
this review, we interviewed officials and obtained pertinent
documents at Commerce, SBA, and Eximbank headquarters and several
trade associations. We visited the USEACs in Atlanta, Ga.;
Baltimore, Md.; New York, N. Y.; Portland, Oreg.; San Jose,
Calif.; and Seattle, Wash., where 1 Public Law 102- 429, October
21, 1992. 2 Before 1992, U. S. firms seeking assistance in selling
or financing exports faced a fragmented structure of federal
agencies and programs. See our March 15, 1993, testimony, Export
Promotion: Governmentwide Strategy Needed for Federal Programs (
GAO/T-GGD-93-7 ); our August 10, 1992,

testimony, Export Promotion: Federal Approach Is Fragmented
(GAO/T-GGD-92-68); and our January 10, 1992, report, Export
Promotion: Federal Programs Lack Organizational and Funding
Cohesiveness (GAO/NSIAD-92-49).

3 The TPCC has defined small- to medium- sized firms as those with
fewer than 500 employees.

we also interviewed other export- service providers and clients.
For the other 13 USEACs, we interviewed their directors by
telephone. We also analyzed 6,009 export actions, 4 valued at
approximately $4.2 billion, to assess USEAC efforts to coordinate
with federal and nonfederal partners and assist firms that export
services. These export actions were reported

to Commerce by trade specialists at the USEACs for fiscal year
1998. (See app. IV for additional information on our objectives,
scope, and methodology.)

Results in Brief The U. S. Export Assistance Centers have sought
to promote coordination among participating agencies through such
activities as making joint calls on prospective clients and
sharing information on clients and services,

where appropriate. For fiscal year 1998, nearly 20 percent of the
export actions reported by USEAC trade specialists mentioned a
partner (or partners) as having participated in assisting the
client. Currently, 5 of the 19 USEACs have staff from all three
agencies, and 14 sites have staff from Commerce and SBA. In fiscal
year 1998, the Commerce staff began using a

new Client Management System (CMS) to track clients that has the
potential to further enhance information sharing among these
partner agencies. Access to this system, which contains detailed
information on Commerce's clients, could potentially permit
agencies to better target services to client needs. The USEACs
have also pursued partnerships with nonfederal export- service
providers-- state and local government, nonprofit,

and for- profit organizations that provide assistance to
exporters. The USEACs have co- located their staff in the same
office suite or building with these export- service providers or,
otherwise, made arrangements to coordinate their export
assistance.

In response to an October 1994 TPCC initiative, Commerce has
sought through the USEACs to expand its assistance to firms that
export services. The agency created an inter- USEAC Services Team,
comprised of staff from USEACs and foreign posts, to devise means
to do so. The team found that Commerce's export promotion programs
were largely designed for firms

4 Commerce has been using export actions as a measure of USEAC
activity for approximately 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.
These export actions are used as an indicator of

the nature of the assistance provided by the USEACs. They are not
a precise measure of this activity, however, since not all firms
are willing to share the necessary information regarding their
export sales. Further, Commerce's current system for collecting
export actions is less than a year old, and some USEACs might not
yet be able to take full advantage of all its features.

that export goods and are often unavailable or inappropriate for
firms that export services. As part of this effort, selected
USEACs have taken the initiative to use other approaches. For
example, one USEAC helped to stage a series of international
videoconferences through which U. S. architects could gain market
intelligence and meet potential clients. USEACs are also seeking
to help groups of service exporters in the design and education
sectors to form consortiums through which they can jointly pursue
export business.

The TPCC has affirmed the central role of the USEAC network in
assisting small- and medium- sized enterprises. Many such firms,
however, are not yet ready to export. Since assisting them can be
time consuming, USEACs

generally refer them to nonfederal partner organizations that
specialize in helping such firms. But no formal mechanism existed
for USEAC staff to follow up with firms that had been referred to
nonfederal partners. Some USEACs are beginning to use a special
program developed by SBA, which is tailored to the particular
needs of such firms. Using this partnership program, USEACs can
organize federal and nonfederal export- service providers into
consortiums that provide firms that are not ready to export with
comprehensive export training. USEACs then offer intensive follow-
up counseling to those firms that successfully complete the
program. Firms participating in this program have become customers
for USEAC export promotion and finance services and, ultimately,
exporters.

Background The Export Enhancement Act of 1992 authorized the TPCC
to establish a national export strategy for the federal government
and to update Congress annually on implementation of and revisions
to that strategy. In the context of this overall strategy, the act
instructed the Commerce Department to use its domestic network of
district offices as one- stop shops to provide exporters with
information on all export promotion and export finance activities
of the federal government. Rather than simply require Commerce to
ensure that its district offices had the requisite information,
the TPCC's national export strategy recommended that Commerce and
two other TPCC agencies-- SBA and the Eximbank-- join their
separate nationwide networks of service- delivery offices into one
federal export promotion

network of USEACs. This network would co- locate staff from all
three agencies.

These agencies opened 4 pilot USEACs in January 1994 and have
expanded the network to 19 USEACs and 84 satellite offices
nationwide. 5 The satellite offices, which generally have one or
two Commerce staff members, are placed closer to outlying business
centers where USEAC

clients are often located. (See app. II for a more detailed
presentation of the USEAC network.) At the USEACs, Commerce
provides export promotion services largely to export- ready small-
to medium- sized firms, both directly and with the assistance of
District Export Councils, which are comprised of local business
representatives who share advice and expertise with firms
interested in exporting. SBA provides export finance primarily in
the form of export working capital guarantees. It also provides
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 export financing to exporters. SBA and the
Eximbank have worked to harmonize 6 their export working capital
programs, the only type of finance where the potential for
competition exists. (See app. I for information on the legislative
authority for these agencies' export programs and the types of
services offered.)

USEACs market their services in various ways-- directly to
exporters through presentations at export conferences and
seminars; by distributing literature, such as brochures or packets
of information on their services; and through sites on the
Internet's worldwide web. They also market indirectly through
formal relationships with organizations, such as the banks that
work with SBA and the Eximbank; and informal relationships with
numerous state and local nonprofit and private organizations that
represent USEAC services to their clients.

5 Other federal agencies have limited representation at USEACs.
The U. S. Department of Agriculture's Foreign Agricultural Service
has staff representation at the Atlanta, Ga., USEAC. The Agency
for International Development has staff representation at the
Inland Empire, Calif., satellite office of the Long Beach, Calif.,
USEAC. Commerce's Economic Development Administration has staff at
the Portland, Oreg., USEAC. 6 The agencies agreed to a market
segmentation plan that assigned SBA primary responsibility for
assisting small businesses whose export working capital needs do
not exceed a $750, 000 exposure limit and made the Eximbank
responsible for assisting exporters with greater export working
capital needs. See our February 13, 1997, report, Export Finance:
Federal Efforts to Support Working Capital Needs of

Small Business (GAO/NSIAD-97-20).

USEACs Coordinate USEAC partners have used coordination as a
mechanism for delivering a With Other Service

wide range of export services to clients. Partnerships are
encouraged through joint efforts with other federal agencies and
nonfederal Providers in Various

export- service providers, and co- location of staff. Ways

Export Actions Reflect For fiscal year 1998, nearly 20 percent of
the export actions reported by

USEAC Cooperative Efforts trade specialists at the USEACs through
the CMS mentioned a partner as

having participated in assisting the client. Many individual
export actions mentioned more than one partner. Over 6.7 percent
of the export actions involved assistance by another federal
agency. These actions mentioned

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, such as the
Georgia Department of Industry, Trade, and Tourism; the city of
Santa Clara, Calif.; BAYTRADE, a quasi- governmental organization
that promotes exports in the San Francisco Bay area; and the Maine
International Trade Center.

Cooperation Among USEAC Since the creation of the USEAC network,
participating agencies have

Agencies introduced various measures to promote coordination at
the USEACs. For instance, they have encouraged USEAC staff to make
joint counseling

calls on clients. On such a call, staff from more than one USEAC
agency would make a joint presentation to a client. When joint
calling might not be appropriate, USEAC staff routinely refer
clients to each other. In addition, USEAC staff also share
information on clients, when appropriate. Commerce has also
introduced its Client Management System to the USEAC network. CMS
may have the potential to serve as the basis for a USEAC- wide
client tracking system that could be shared by all participating
agencies. Access to a common database on clients could help

participating agencies to better target their services to client
needs. As a result of Commerce's efforts, SBA has decided to use
Commerce's CMS as its client tracking system. SBA is currently
working with Commerce to adapt the CMS to meet its needs and train
its USEAC staff on the use of the system. Moreover, the Eximbank
is considering introducing a client tracking that would be
compatible with Commerce's CMS.

Cooperation Between All USEACs coordinate at least some of their
export service activities with

USEACs and Nonfederal nonfederal export- service providers. This
coordination ranges from joint

Partners participation in specific activities to co- location of
staff and integration of operations. For example, several staff
members of the Seattle, Wash.,

USEAC made presentations at a trade seminar sponsored by the World
Trade Center of Tacoma, Wash., to firms interested in exporting.
USEACs and nonfederal partners also refer clients to each other.
At the New York, N. Y., USEAC, for example, USEAC staff have told
clients to seek assistance at Brooklyn Goes Global, a not- for-
profit organization associated with the

local Chamber of Commerce that promotes the export of goods and
services from Brooklyn. In addition, USEACs may enter into formal
memorandums of understanding with nonfederal export- service
providers

or participate in a partner's board of directors. Some USEACs are
co- located in the same building or office suite with nonfederal
export- service providers. For example, the Portland, Oreg., USEAC
is located in the World Trade Center with several state export
promotion agencies and a nonprofit export- service organization.
In addition, the Atlanta, Ga., USEAC has integrated its operations
with the

Georgia Department of Industry, Trade, and Tourism. At this USEAC,
staff roles have been allocated so as to avoid duplication, and
staff from both agencies have access to each other's client
tracking systems. According to the Atlanta USEAC Director, this
arrangement has permitted the participating federal agencies to
leverage their staff and extend their reach into the export
community.

According to Commerce officials, about 75 percent of all USEACs
and satellite offices are co- located with nonfederal partners,
such as state agencies and world trade centers. As one of its
National Performance Review 7 goals, Commerce pledged to increase
that percentage to 100 percent by the end of fiscal year 1999.

7 The National Performance Review is a major management reform
initiative by the executive branch that is intended to identify
ways to make the government work better and cost less.

USEACs Seek to The TPCC first made a commitment to helping
exporters of services in its

Improve Assistance to 1994 National Export Strategy and reaffirmed
that commitment in the 1998

update to that strategy. According to the Commerce Department, U.
S. Firms That Export

service exports in 1998 equaled $260.3 billion, an increase of
about Services

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 wide- ranging effort to strengthen
assistance provided to exporters, formed an inter- USEAC Services
Team to focus on the needs of service exporters. 8 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 several industry- focused subteams, 9 found that
service exporters sometimes have difficulty using Commerce's
export promotion programs, which were largely designed for firms
that export goods and are often

unavailable or inappropriate for firms that export services. For
example, Commerce could not make available adequate, up- to- date,
market research for design service firms. Also, service exporters
have experienced

difficulty using Commerce's Agent/ Distributor Service program.
This program, which U. S. firms typically use to locate overseas
agents or distributors, can be inappropriate for service firms,
who might use it to identify individuals interested in licensing a
patent or participating in a franchise. USEAC directors, most of
whom also stated that many current export assistance programs were
not meeting the needs of firms that export services, echoed this
finding.

8 The Services Team is comprised of Commerce Trade Specialists
from the Long Beach, Calif.; and Seattle, Wash., USEACs; USEAC
satellite offices, including those in Anchorage, Alaska; Honolulu,
Hawaii; Inland Empire, Calif.; Monterey, Calif.; Newport Beach,
Calif.; Orange County, Calif.; Reno, Nev.; and San Francisco,
Calif; and overseas posts, including those in Buenos Aires,
Argentina; and Ontario, Canada.

9 Subteams include design services; training, consulting, and
education; franchising; professional services; transportation; and
travel and tourism.

In connection with their participation on the inter- USEAC
services team, Commerce staff at several USEACs we visited have
implemented innovative approaches to assisting firms that export
services. For example, the USEAC satellite office in San Francisco
is working with firms in the design services industry (including
architectural, engineering, industrial, graphic, and new media
design) to develop a strategy to promote these

firms' exports. This office, in cooperation with the American
Institute of Architects, has initiated a series of international
videoconferences through which U. S. architects gain market
intelligence and give presentations to potential clients. It has
also organized firms from a wide range of design sectors into a
consortium through which the members can, among other

things, (1) pool resources to create more effective marketing
tools than would be feasible for any single firm and (2) take
advantage of enhanced visibility that the consortium achieves
through its own brand name and partnership with large, brand- name
corporations.

In another example, the Portland, Oreg., and Seattle, Wash.,
USEACs are working with two separate groups of colleges to develop
strategies for each group to promote the enrollment of foreign
students. Like tourism, education provided to foreign students in
the United States is considered to be a service export. These
USEACs, working with separate groups of colleges, have helped
these colleges form consortiums to handle their efforts 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.

The Portland, Oreg., USEAC has also found ways to use current
Commerce programs to assist an organization that does not fit the
traditional definition of an exporter. One of the USEAC's clients
is a health provider that brings foreign patients into the United
States for surgery and related

treatments. It arranges for patients and their families to travel
to the United States, provides medical care to the patients and
meals and lodging for the family, and arranges for their travel
home. Like tourism, this health provider's service is considered
to be an export. Over the years, this firm has used the Portland,
Oreg., USEAC to obtain National Trade Data Bank

information and has participated in a Commerce Gold Key program in
Hong Kong. Under the Gold Key program, U. S. embassies, for a fee,
set up meetings in- country for U. S. firms seeking to meet with,
among other things, potential customers, distributors, or agents.

Special Program May Beginning with its 1994 National Export
Strategy, the TPCC has

Hold Promise for consistently characterized the USEACs as a key
element in federal efforts

to assist small- to medium- sized exporters and firms interested
in Assisting Firms That exporting. Firms seeking USEAC assistance
vary considerably in their Are Not Ready to ability to export.
Commerce staff focuses on firms that are ready to export, 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 similar state- affiliated
or nonprofit export- service providers. Firms that have a viable
domestic business are usually referred to a local Small Business
Development Center. These facilities, sponsored in part by SBA,
can provide the training that such companies need to build
exporting into their business plan. Clients that do not meet this
test are usually referred to the local Service Corps of Retired
Executives chapter, which works with the firm to develop a
business plan and to help to create the business processes needed
to export. At each of the USEACs that relied on such organizations
to assist not- ready- to- export firms, no formal mechanism
existed for USEAC staff to follow up with

firms that had been referred to education and training 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,
which was developed by the SBA Seattle District Office in the
early 1990s, provides a structured

mechanism for supplying such firms with comprehensive export
education and follow- up export promotion assistance. Essentially,
E- TAP involves a comprehensive presentation of how to information
on exporting to an

audience of firms interested in becoming exporters. The E- TAP
could be industry specific or could be presented to firms from
several industries. 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 to
Seattle, two other USEACs Dallas, Tex., and Long Beach, Calif.
have had several years of experience with the E- TAP program.
Seven other USEACs have recently used the program on one or two

occasions. (App. III contains the agenda for a 1998 E- TAP program
sponsored by the Seattle USEAC.)

While E- TAP programs may differ from location to location, they
all involve three essential steps. First, the USEAC assesses its
clients who are not ready to export in order to identify firms
with the greatest potential to export and encourages them to apply
for the E- TAP program. A client's readiness for export trade
development is based on, among other things, its management
commitment, financial capacity, product qualification

(including sales history), market potential, and production
capacity. 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. Presenters with whom we spoke indicated that they consider
participating in an E- TAP program a worthwhile exercise because
it exposes them to potential clients and is a productive way to
meet professional requirements that they work with small- to
medium- sized firms that might not otherwise be able to obtain
their services. 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. Firms successfully completing the
program may be permitted to apply a large portion of that fee to
obtain a Commerce Department export promotion service, such as the
Gold Key service. Firms completing the program also may be
encouraged to participate in an overseas trade mission, during
which they would meet prospective customers and

possibly make sales. 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 that 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 used the Commerce Gold Key
program 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. Similarly, a Seattle
engineering company decided that, to maintain a steady level of
business, it would need to broaden its customer base by expanding
to export markets. At the suggestion of the USEAC, this firm's
President and Marketing Manager attended an E- TAP program.
Subsequent to the program, the firm developed a working
relationship with the USEAC and

eventually made its first export sale. This firm currently works
in countries throughout the Caribbean. Agency Comments Commerce
and SBA provided oral comments on a draft of this report. Both
agencies generally agreed with the information and analyses in the
report.

Commerce characterized the report as well balanced and focused on
issues that the USEACs need to address. Commerce also emphasized
that it is actively pursuing a strategy for improving assistance
to firms that export services and that it supports the use of E-
TAP as a method for assisting firms that are not ready to export
but show potential. SBA also commented that its USEAC staff would
soon be using Commerce's CMS client tracking system. Both agencies
provided updated information that has been incorporated in the
report where appropriate. The Eximbank did not comment on the
report. We are sending copies of this report to appropriate
congressional

committees; the Honorable William M. Daley, the Secretary of
Commerce, who also serves as Chairman of the TPCC; the Honorable
Aida Alvarez, Administrator of the Small Business Administration;
the Honorable James

A. Harmon, Chairman of the U. S. Export- Import Bank; and the
Honorable Jacob Lew, Director, Office of Management and Budget. We
will also make copies available to others upon request.

Please contact me at (202) 512- 4128 if you or your staff have any
questions about this report. Other GAO contacts and staff
acknowledgments are listed in appendix V. Sincerely yours,

Benjamin F. Nelson, Director International Relations and Trade
Issues

Letter 1 Appendix I

14 Legislative Mandate for Agencies to Participate in Export
Programs

Appendix II 17

The USEAC Network Appendix III 20 The Seattle USEAC's Export-
Trade Assistance Partnership Program

Appendix IV 22

Objectives, Scope, and Methodology

Appendix V 24

GAO Contacts and Staff Acknowledgments

Tables Table II. 1: The Nationwide USEAC Network 17 Table III. 1:
Sample E- TAP Program Agenda 20

Abbreviations

CMS Client Management System E- TAP Export- Trade Assistance
Partnership Eximbank U. S. Export- Import Bank SBA Small Business
Administration TPCC Trade Promotion Coordinating Committee USEAC
U. S. Export Assistance Center

Legislative Mandate for Agencies to Appendi I x Participate in
Export Programs As discussed in the following paragraphs, U. S.
Export Assistance Center (USEAC) efforts to assist exporters are
governed by legislation creating the USEAC network, as well as
legislation governing the activities of each federal agency
participating in the USEAC network. These agencies include the
Commerce Department, the Small Business Administration (SBA), and
the U. S. Export- Import Bank (Eximbank). Based on legislation,
these agencies have developed programs and services, which they
market to businesses both directly and indirectly through partner
organizations.

The Commerce The Omnibus Trade and Competitiveness Act of 1988 (15
U. S. C. 4721), as Department

amended, outlines the basic responsibilities of the Commerce staff
at the U. S. Export Assistance Centers. This legislation requires
that they place primary emphasis on assisting small- to medium-
sized businesses. Among other things, it instructs Commerce to
identify such U. S. businesses with the potential to export goods
and services and to

 provide them with information and advice on establishing export
businesses;  provide them with actual leads and an introduction to
contacts within foreign countries and information on, among other
things, economic

conditions, market opportunities, and the legal and regulatory
environment within foreign countries;  assist them in locating
reliable sources of business services in foreign

countries and in their dealings with foreign governments and
government- owned enterprises; and  assist with the coordination
of state and local government and private

export- service organizations so as to maximize effectiveness and
minimize duplication of effort.

Commerce implements these requirements through a broad array of
export promotion programs and activities. These include

 counseling on various phases of exporting, often in conjunction
with specific market information and possibly trade leads and
referrals;  market information from region- specific sources, such
as the European Union Single Internal Market 1992 Information
System; and global databases, such as the National Trade Data
Base, which contains a vast amount of information and statistics
on many aspects of exporting;

 trade leads and referrals, which seek to provide exporters with
specific export sales leads, the opportunity to market products or
services

abroad, and an in- country office to conduct business in export
markets; and  advocacy made on behalf of U. S. firms to foreign
governments and government- owned enterprises.

The Small Business The Small Business Act (15 U. S. C. 631), as
amended, among other things,

Administration created within SBA an Office of International
Trade, which was authorized

to promote small business exporting. This legislation instructs
the Office of International Trade to work closely with Commerce
and other export- service providers to assist the small business
community by, among other things, aggressively marketing existing
pre- export finance programs. The Office of International Trade
pursues this requirement through the SBA

staff at the USEACs, who devote nearly 80 percent of their time to
promoting the agency's Export Working Capital Program and the
remaining time to other USEAC- related activities. In addition,
the SBA- affiliated Small Business Development Centers 1 provide
counseling and in- classroom training, usually through a community
college, on a wide range of business topics, including exporting.
Similarly, the SBA- affiliated Service Corps of Retired Executives
2 program is composed of retired executives who volunteer their
time to counsel small businesses on a wide range of business
topics, including exporting.

The U. S. Export- Import The Export- Import Bank Act of 1945 (12
U. S. C. 635), as amended, governs

Bank the activities of the Eximbank's USEAC staff. This
legislation creates the

framework guiding Eximbank efforts to provide finance in the form
of, among other things, insurance, guarantees, and loans to U. S.
exporters. It instructs the Eximbank to promote small business
exporting and the use of its programs in cooperation with the
Secretary of Commerce, the Office of International Trade of the
Small Business Administration, and the private 1 The Small
Business Development Center program is a cooperative effort of the
private sector; educational community; and federal, state, and
local governments to deliver up- to- date counseling,

training, and technical assistance in all aspects of small
business management. There are currently 57 Small Business
Development Centers, with a network of over 1, 000 service
locations. In 1998, approximately 4.5 percent of those who
attended a Small Business Development Center training

program or sought guidance from one of its counselors received
instruction on international trade matters. 2 Through the Service
Corps of Retired Executives program, which was initiated in 1964,
retired executives volunteer to assist individuals who need advice
regarding starting or managing a small business. Program
management does not maintain reliable information on the extent to
which its counselors address trade- related issues.

sector . . . State agencies, chambers of commerce, banking
organizations, export management companies, export trading
companies, and private industry. Eximbank staff at the USEACs work
with business directly and through two multiplier programs: the
City/ State Program and the Delegated Authority Program. Under the
Eximbank's City/ State Program, 3 qualifying state and local
governments can provide Eximbank guarantees on a co- financing
basis. Under the Eximbank's Delegated Authority

Program, 4 qualifying lending institutions can process and approve
an Eximbank working capital guarantee without the need for the
Eximbank's approval.

USEAC Marketing of USEACs market their services in various ways.
They do so directly to Programs and Services

exporters through presentations at export conferences and
seminars. For example, USEAC staff use booths at conferences to
distribute literature and meet with firms potentially interested
in USEAC services. Such literature might include brochures,
packets of more detailed information on USEAC services, or book-
length publications, such as Commerce's A Basic Guide to
Exporting. They also give presentations at seminars that seek to
interest firms in exporting or to inform current exporters of the
services available in a metropolitan area.

USEACs also market their services indirectly and on- line. They
work indirectly through formal relationships with organizations,
such as the finance organizations that participate in the
Eximbank's City/ State and Delegated Authority programs. USEACs
also work through informal relationships with numerous state and
local, nonprofit, and private

organizations that represent USEAC services to their clients or
refer their clients to the USEACs. Each of the primary USEAC
agencies has a page on the worldwide web. These web pages contain
a wide variety of information, ranging from how to information
appropriate for those

becoming interested in exporting to more specialized information
for the experienced exporter. The Commerce web page also contains
links to the web pages of individual USEACs. The primary agencies'
web page addresses are Commerce (www. ita. doc. gov/ uscs), SBA
(www. sba. gov/ oit), and the Eximbank (www. exim. gov).

3 According to the Eximbank, 36 state and local organizations
participate in its City/ State Program. 4 According to the
Eximbank, 216 lending institutions nationwide participate in the
Delegated Authority Program.

Appendi I I x The USEAC Network Table II. 1 illustrates the USEAC
network, which is comprised of 19 USEACs and 84 satellite offices.
Of the 19 USEACs, 5 have staff from Commerce, SBA, and the
Eximbank; the remaining centers have staff from Commerce and SBA.
The satellite offices usually consist of one or two Commerce staff
members. Nationwide, these satellite offices are aligned with the
USEACs in a hub- and- spoke formation, although individual USEAC
directors may alter the pattern. 1 USEACs are connected through
Commerce with the Foreign Commercial Service at U. S. embassies
and consulates. They also seek to work closely with the nonfederal

export- service providers.

Table II. 1: The Nationwide USEAC Network USEAC Federal agencies
Satellite offices

Atlanta, Ga. (Sunbelt) Commerce

Birmingham, Ala. USEAC

SBA Knoxville, Tenn.

U. S. Department of Memphis, Tenn.

Agriculture Nashville, Tenn. Savannah, Ga.

Baltimore, Md., USEAC Commerce

Arlington, Va. SBA Charleston, W. Va.

Harrisburg, Pa. Richmond, Va. Wheeling, W. Va.

Boston, Mass., USEAC Commerce

Marlborough, Mass. SBA Middletown, Conn.

Montpelier, Vt. Portland, Maine Portsmouth, N. H. Providence, R.
I.

Charlotte, N. C., (Carolinas) Commerce Charleston, S. C. USEAC SBA
Columbia, S. C.

Greensboro, N. C. Greenville, S. C.

Chicago, Ill., USEAC Commerce

Highland Park, Ill. Eximbank

Milwaukee, Wis. SBA

Peoria, Ill. Rockford, Ill.

1 For example, the Atlanta, Ga., USEAC does not have each of its
three satellite offices in Tennessee report directly to Atlanta.
Rather, the offices in Memphis and Knoxville, Tenn., report to the
satellite office in Nashville, Tenn., which reports to the
Atlanta, Ga., USEAC.

USEAC Federal agencies Satellite offices

Cleveland, Ohio, USEAC Commerce

Buffalo, N. Y. SBA Cincinnati, Ohio

Columbus, Ohio Louisville, Ky. Pittsburgh, Pa. Somerset, Ky.
Toledo, Ohio

Dallas, Tex., USEAC Commerce

Austin, Tex. SBA Fort Worth, Tex.

Houston, Tex. Oklahoma City, Okla. San Antonio, Tex. Tulsa, Okla.

Denver, Colo., USEAC Commerce Salt Lake City, Utah SBA Santa Fe,
N. Mex.

Detroit, Mich., USEAC Commerce

Ann Arbor, Mich. SBA Grand Rapids, Mich.

Indianapolis, Ind. Pontiac, Mich.

Long Beach, Calif., USEAC U. S. Agency for

Inland Empire, Calif. International Development

Los Angeles, Calif. (at Inland Empire, Calif.,

(downtown) satellite office)

Orange Country, Calif. Commerce

Phoenix, Ariz. Eximbank

San Diego, Calif. SBA

Tucson, Ariz. Ventura County, Calif. West Los Angeles, Calif.

Miami, Fla., USEAC Commerce

Clearwater, Fla. SBA

Orlando, Fla. Eximbank

San Juan, P. R. Tallahassee, Fla.

Minneapolis, Minn., USEAC Commerce Sioux Falls, S. Dak. SBA New
Orleans, La.

Commerce Jackson, Miss. (Delta) USEAC SBA Little Rock, Ark.

Shreveport, La. New York, N. Y., USEAC

Commerce Harlem, N. Y. SBA

Long Island, N. Y. Eximbank

Newark, N. J. Trenton, N. J. Westchester, N. Y.

Philadelphia, Pa., USEAC Commerce Scranton, Pa. SBA Portland,
Oreg., USEAC

Commerce Boise, Idaho

SBA Eugene, Oreg.

Economic Development Missoula, Mont.

Administration

USEAC Federal agencies Satellite offices

San Jose, Calif., USEAC Commerce

Fresno, Calif. SBA

Honolulu, Hawaii Eximbank

Monterey, Calif. North Bay, Calif. Oakland, Calif. Reno, Nev.
Sacramento, Calif. San Francisco, Calif. Santa Clara, Calif.

Seattle, Wash., USEAC Commerce

Anchorage, Alaska SBA Spokane, Wash.

Tacoma, Wash. St. Louis, Mo., USEAC

Commerce Des Moines, Iowa SBA Kansas City, Mo.

Omaha, Nebr. Wichita, Kans.

Source: U. S. Department of Commerce, Office of Domestic
Operations, U. S. & Foreign Commercial Service.

The Seattle USEAC's Export- Trade Assistance Appendi I I I x
Partnership Program Table III. 1 shows the agenda for an Export-
Trade Assistance Partnership (E- TAP) program managed by the
Seattle, Wash., USEAC during March April 1998. The sessions were
held 7 days apart. The program involved 24 different speakers
presenting 24 topics. To attend every session would require a
commitment of nearly 22 hours of class time. This E- TAP
represents the most recent one managed by the Seattle USEAC for a
general (as opposed to single industry) audience.

Table III. 1: Sample E- TAP Program Agenda Session contents
Presenter's organization Duration a

Session I  Introduction

Welcome & introduction Seattle USEAC (SBA)  hour

E- TAP overview Commitment to exporting Export issues & concerns

Case study by former Private firm 1 hour E- TAP participant SBDC b
export development

Seattle USEAC (SBDC)  hour programs Business plans Seattle USEAC
(SBA) 1  hour

Credit risk: due diligence Seattle USEAC (Export Finance  hour

Assistance Center of Washington) c Session II  Marketing

Product and market Private firm 1  hour research International
pricing International sales options Consulting firm 2 hours

Session III  Marketing

Commerce programs and Seattle USEAC (Commerce) 1  hours services
International trade shows Washington State International Trade
Fair 1 hour

International culture and Consulting firm 1  hours politics Legal
issues Private law firm 1 hour

Session IV  Legal and finance

International methods of Bank 1 hour payment Local banking
services Bank  hour

SBA's and Eximbank's Seattle USEAC (Export Finance

 hour Export Working Capital

Assistance Center of Washington) c programs Specialized export
finance Seattle USEAC (Export Finance

 hour and risk enhancement

Assistance Center of Washington) c programs Insurance

Session V  Tax, export documentation, and transportation

Tax issues Accounting firm 1 hour Air freight forwarding Freight
forwarder 1 hour Ocean service freight

Freight forwarder  hour forwarding Insurance Insurer 1 hour

Session VI  Financial plan and wrap- up

Developing your financial SBA Seattle District Office 2  hours
business plan Washington State government's Washington State
Departments of  hour

international trade programs Community, Trade and Economic
Development; and Agriculture Next step/ wrap- up Seattle USEAC
(Commerce)  hour Reception Sponsored by accounting firm

a All times are approximate. b The Small Business Development
Center (SBDC) in Seattle is located within the USEAC. c The Export
Finance Assistance Center of Washington, a state government export
finance agency, is located within the Seattle USEAC. Source: U. S.
Export Assistance Center, Seattle, Washington.

Appendi V I x Objectives, Scope, and Methodology At the request of
Senator Gordon Smith, we examined activities of the USEAC network.
Specifically, we sought to identify the nature of coordination
among the federal agencies participating in the USEAC network and
between these agencies and nonfederal export- service providers.
We also sought to identify USEAC assistance to firms that export
services and to firms that are not ready to export but show
potential

and interest in doing so. To obtain background information on the
USEAC network, we interviewed staff of the Trade Promotion
Coordinating Committee (TPCC) Secretariat; Commerce, SBA, and
Eximbank headquarters officials; the Commerce Office of the
Inspector General; and staff at trade associations with an
interest in USEAC operations. We reviewed documents provided by
these organizations and reviewed legislation governing the
creation of the USEAC network and the programs and services of
participating federal agencies. We also obtained information on
the location of all 19 USEACs

and 84 satellite offices, lines of authority among them, agencies
participating at each site, and the affiliations and activities of
nonfederal partners at each site.

To determine the nature of coordination among USEAC agencies and
cooperation with nonfederal export- service providers, we visited
the USEACs in Atlanta, Ga.; Baltimore, Md.; New York, N. Y.;
Portland, Oreg.; San Jose, Calif.; and Seattle, Wash. There, we
obtained up- to- date information from the USEAC, as well as other
export- service providers and

clients recommended by USEAC staff, regarding the level of
coordination among the USEAC partners and the nature of their
cooperation with nonfederal export- service providers. These
USEACs were selected based on geographic location, availability of
resources, and the relevancy of one or more aspects of their
operations to issues being addressed in this review. We conducted
a telephone survey of directors at USEACs we did not visit

to obtain information on the nature of their cooperation with
nonfederal export- service providers and sought information on
their most significant accomplishments in cooperation with such
export- service providers. We also analyzed export actions
submitted to Commerce's Client

Management System (CMS) by its USEAC staff to identify those that
mentioned participation by another export- service provider. Of
the 6,009 export actions, 1,196 (19.90 percent) mentioned
assistance from a partner export- service provider. We obtained
information regarding Commerce's operation and use of CMS, and
Commerce staff views on the

validity of the information generated through the system but did
not independently test CMS' accuracy or completeness.

To determine the status of USEAC efforts to provide assistance to
firms that export services, we first obtained information on the
service industry. During our visits to the USEACs in Atlanta,
Baltimore, New York, Portland, San Jose, and Seattle, we obtained
up- to- date information from the USEAC, other export- service
providers, and clients (including several service exporters),
regarding USEAC efforts to assist firms that export services. In
our telephone survey of directors at USEACs we did not visit, we
asked them to identify Commerce export promotion programs that are
relevant to firms that export services and provide their overall
opinion of whether they have the tools to help these firms and, if
not, what needs to be done to strengthen Commerce assistance to
such firms. We also analyzed export actions submitted to
Commerce's CMS by its USEAC staff to identify those that dealt
with assistance provided to service exporters. Of the

6,009 export actions that we analyzed, 636 (10.58 percent)
involved assistance to firms that export services.

To determine the status of USEAC efforts to provide assistance to
firms that are not yet ready to export, we obtained information
from the Service Corps of Retired Executives and the Small
Business Development Center headquarters offices regarding their
services, nationwide network of sites, and cooperation with the
USEACs. During our visits to the USEACs in Atlanta, Baltimore, New
York, Portland, San Jose, and Seattle, we obtained up- to- date
information from the USEAC, other export- service providers, and
clients regarding USEAC efforts to assist firms that are not ready
to export. We focused on this objective during our visit to
Seattle, where we obtained in- depth information on that USEAC's
E- TAP program from USEAC staff, presenters, and participating
firms. In our telephone survey

of directors at USEACs we did not visit, we asked them to identify
the services they use to assist firms that are not ready to
export, including an E- TAP program, and to comment on the
relative success they have had with each.

We did our work from August 1998 to June 1999 in accordance with
generally accepted government auditing standards.

Appendi V x GAO Contacts and Staff Acknowledgments GAO Contact
John Hutton, (202) 512- 7773 Acknowledgments In addition to Mr.
Hutton, Joseph Natalicchio, David Artadi, Carlos Evora, Jose Pa,
Tracey Hbert- Barry, and Kathleen Joyce made key

contributions to this report.

GAO United States General Accounting Office

GAO/NSIAD-99-180

Page 1 GAO/NSIAD-99-180 Export Assistance Centers United States
General Accounting Office

Washington, D. C. 20548

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Contents

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Appendix I

Appendix I Legislative Mandate for Agencies to Participate in
Export Programs

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Appendix I Legislative Mandate for Agencies to Participate in
Export Programs

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Appendix II

Appendix II The USEAC Network

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Appendix II The USEAC Network

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Appendix III

Appendix III The Seattle USEAC's Export- Trade Assistance
Partnership Program

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Appendix IV

Appendix IV Objectives, Scope, and Methodology

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Appendix V

(711375)

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