The U.S. Commercial Service is designed to help small and medium-size businesses expand into international sales. With trade specialists in more than 100 American cities, the primary thrust of the U.S. Commercial Service is to equip businesses with the knowledge and tools necessary to navigate the foreign market.
Over the past several years, a confluence of factors including free trade agreements, technological advancements, and U.S. government programs and partnerships have converged to simplify the export process.
According to B. Peter Knudson, senior vice president and regional manager, international trade finance at Comerica Bank, now is the ideal time for businesses to engage in exporting.
“One of the few bright spots in the U.S. economy today is the export market,” he says. “Because of the weakness of the dollar and the weakness of the U.S. market, exports have been increasing and have created a lot of new opportunities for U.S. companies, particularly small- to mediumsize enterprises.”
Smart Business spoke with Knudson about the U.S. Commercial Service, the services it provides and how a company can secure export financing.
What is the U.S. Commercial Service?
The U.S. Commercial Service is the trade promotion arm of the U.S. Department of Commerce. Its primary purpose is to help create economic opportunity for American workers and businesses. The U.S. Commercial Service does this through promoting trade and investment with the objective of promoting prosperity and a better world throughout. The U.S. Commercial Service provides the opportunity for companies particularly small-to medium-size ones to utilize the resources of the U.S. government.
What type of assistance does the U.S. Commercial Service provide to exporters?
The U.S. Commercial Service has trade specialists in 107 U.S. cities and more than 80 countries who will work with companies directly to either help them begin to export or to increase sales internationally. Services include market research, trade events, introductions to qualified buyers and distributors, education, and counseling and advocacy throughout the export process.
How does the U.S. Commercial Service partner with corporate organizations to build awareness of exporting opportunities?
The Department of Commerce selects certain companies to help promote their activities through a ‘forced multiplier effect.’ Basically, it joins forces to leverage both the private company that is its partner and the government resources that the Department of Commerce has. It looks to partner with private-sector companies that it considers best in class. Some of its partners include UPS, FedEx, eBay, the law firm Baker & McKenzie and, most recently, Comerica Bank.
How are corporate partners selected?
Corporate partners are selected on a number of criteria, including being considered as best in class, having a recognizable name, being regionally or globally strong, and having a stake and being involved with international trade and business. Also, they must possess a significant customer base that is either currently seeking to expand its international business or seeking to enter the international business field.
How can a company secure export financing?
A company must first have a relationship with a commercial bank, and it must have the ability to qualify for credit under normal credit terms. An important component for companies that are looking to expand into exporting is what we term trade cycle financing. This method of financing allows banks to help companies finance the sale of their products from the initial order through to the collection of the accounts receivable. There are many ways in which they do this, including working with the Export-Import Bank of the United States and obtaining export credit insurance from private companies. Banks also provide normal working capital as well as assistance in helping hedge the foreign currency risk that might be involved with international business.
How should a company proceed if it is interested in working with a partner of the U.S. Commercial Service?
Through their partnership with the U.S. Department of Commerce, there are corporate organizations that can be of assistance, including Comerica Bank. They can introduce a potential exporter to one of the trade finance specialists of the Department of Commerce and help them identify markets, identify distributors and provide financing so they can be successful in their business expansion.
B. PETER KNUDSON is senior vice president and regional manager, international trade finance at Comerica Bank. Reach him at (310) 297-2849 or email@example.com.