Market Access and Trade Barriers in SME Internationalisation

SME International Trade

There is no greater priority for the nation than to put the citizens back to work. Look around, there are millions who are unemployed. Nations needs to constantly looking at job creations for younger generations and growing workforce, and also for job replacements that were lost in the transitions.

Those policymakers who are looking out for solutions, they need to create a business environment which would be conducted to the success of smaller businesses as well as the entrepreneurs. The principal drivers of the growth of the job sector are the small and the medium sized enterprises ( or SMEs ) which generate about two thirds of the new jobs which is as per the data of the U.S. Small Business Administration.

The second ingredient that is needed to create jobs successfully is a focus on trade. The opportunity to tap into the dynamic foreign markets has a higher appeal as the foreign markets make up about 80% of the purchasing power of the world and contributes more than ninety percent in the economic growth of the country and provides over ninety five percent of the consumers.
For boom in trade the entrepreneurs and firms in the US have played a large role over the past years. As per the data from the U.S. Department of Commerce, the SMEs of the US continues to expand their share in the US merchandise exports and it was 33% in the year 2011 which was up by 27% since 2002.

As per a survey done by the National Association of Small Businesses, the small businesses are exporting more today than they did three years back. Also, about 63% of non exporter businesses are interested to start exporting their goods and services which is a hike of 43% in 2010. Despite such eagerness, today only one in 100 among the US SMEs export their goods or services. The non exporters find the main barrier in lack of information and not knowing where and how to start. A few months and an average of 8.4%of annual operating revenue are required to prepare for exports.

The encouraging trend is seen in the SMEs trying to increase their share in the merchandise exports which is up by 33% in 2011. The findings show that the SME do have the tools and the resources as well as the bank financing options for export and import.
SME International Trade
International markets need to open up
Another focus of the US government needs to be towards eliminating the foreign barriers that come up for US exports in order to make trade a way of creation of jobs. While many think that free trade agreements only work for multinationals, but the truth is a different one. Usually foreign markets have barriers like steep tariffs or licensing requirements for which the multinationals need to establish a local affiliate in order to get past the trade barriers and they hire lawyers to get through the red tape.

However, for small businesses such luxuries do not exist. Non tariff barriers add to the fixed cost for smaller companies and can be a show stopper for them. There needs to be intellectual property rules well established or the smaller firms will see their innovations ripped off and no way to seek redress. There needs to come by greater access to the procurement markets of the government which can create lucrative opportunities for the small entrepreneurs.