Despite recently approved free-trade agreements with Colombia, South Korea and Panama, only 24 percent of small- and mid-sized businesses in the U.S. are currently engaged in international trade, a UPS study found. And while this may seem like good business practice, it’s actually riskier than the alternative, according to a UPS press release.
UPS’ “Perceptions of Global Trade” study, which surveyed more than 1,000 SMBs, discovered that many of these businesses refrained from exporting goods due to the bleak economic outlook. But this is actually faulty logic, UPS International President Dan Brutto explained.
“With 95 percent of the world’s consumers located beyond U.S. borders, it’s clear that the path to economic growth is through opening new markets for U.S. businesses,” Brutto said in a statement.
“This survey tells me that all of us in a leadership position need to step up our efforts to support and educate small-business owners, in particular, on the potential of markets outside the United States,” Brutto continued.
SMBs that do export goods, however, are reaping the benefits, according to the UPS study. Sixty-four percent of respondents engaged in international trade reported seeing a financial return within two years, with 34 percent of this group seeing it in less than six months.
Moreover, 49 percent of respondents said they plan to double their level of exports by 2015, according to the UPS press release. Plus, 66 percent of those surveyed remarked that up to one-quarter of their yearly revenue is directly attributable to exports.
According to the UPS study, Canada, Mexico, Australia and the United Kingdom are the most export-friendly nations — thanks to FTAs or bilateral trade agreements between these countries and the U.S. Conversely, Brazil, Russia, India and China were deemed the most difficult trade partners since the U.S. lacks FTAs with these nations. Initiating such agreements could have strong economic implications, some experts believe.
“Global commerce flows along the path of least resistance, so it’s incumbent upon government and business to work together to remove trade barriers and help businesses grow beyond our borders, resulting in economic growth in return,” Brutto said in a statement.