The Exporters and Investors Club warns: “Although the export of goods breaks historical records, since 2018 we have been losing share in the international market”

Weaknesses of Spanish exports

The Exporters and Investors Club has prepared a document that analyzes the current Situation and Challenges of the Foreign Sector of the Spanish Economy, and formulates a series of recommendations and proposals for its advancement and improvement.

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After highlighting that exports of goods and services represented 41% of GDP in 2022 and generated 4,6 million jobs, becoming the main engine of the Spanish economy, the Exporters and Investors Club warns: “Although the export of goods breaks historical records, since 2018 we have been losing share in the international market.”

 

The document made public, which has been prepared by the experts of the Reflection Committee on Internationalization of the Club, begins by exposing the weaknesses of Spanish exports, as is the fact that it is concentrated in very few companies: there are 57.000 regular exporters, but the 1.000 largest exporters account for 67% of the total, a percentage that has remained that way for a quarter of a century.

 

Furthermore, the Club emphasizes, “Only 6,8% of Spanish exports correspond to high technology products, compared to 17,7% in the EU.”

 

The third problem is that the geographical distribution of export It is excessively concentrated in European countries, which absorb 73% of Spanish sales abroad:

 

“A USA, China and Japan“These markets account for 28% of global imports, but we only allocate 8% of our exports to them,” the document highlights, “and in emerging markets we sell a very small part of our exported goods (ASEAN, 1,3%, Sub-Saharan Africa 1,5%).”

 

Improvement proposal

 

Next, and after analyzing the effects that the factors present on the international stage may cause, the Exporters and Investors Club suggests a series of measures to recover the export effort and diversify the destination of our sales abroad.

 

Internationalization must be a State policy

 

According to the document, internationalization is not a true State policy in Spain today. The budget of ICEX - Spanish Institute for Foreign Trade, which shrank very substantially after the financial crisis, has barely grown since then; There are notable difficulties for the public departments and institutions that are dedicated to promote internationalization increase their resources. The foreign risk assumption policy is not aligned with those of export promotion.

 

Neither Internationalization Strategy 2017-2027 and the biannual plans do not contemplate measures to improve competitiveness or the structural reforms that are necessary. According to the Club, "it is necessary to align the policies and strategies of the Treasury, Economy, Trade and Foreign Affairs, and intensify the agenda of official trips to emerging countries, especially Africa and Asia." This implies reinforcing economic diplomacy with the opening of new Economic and Commercial Offices.

 

Spain's international competitiveness is deteriorating

 

Productivity in the Spanish economy has been stagnant for years and World Competitiveness Index The deterioration of Spain's “government efficiency” stands out, which has gone from #38 in 2018 to #50 in 2022.

 

To regain competitiveness, it is necessary reduce the administrative and fiscal bureaucratic burden of exporting companies, increase legal certainty, and that inspection actions are in accordance with the letter and spirit of the Law.

 

According to the document, internationalization is not a true State policy in Spain today. ICEX's budget, which was reduced very substantially after the financial crisis, has barely grown since then

 

Proposals in the tax field

 

The Exporters and Investors Club emphasizes that “fiscal policy was in the past a very important stimulus for the internationalization of Spanish companies, and today that same policy is discouraging international activity"

 

"It is necessary recover tax incentives that have disappeared, and that many of our competitors maintain. It is also advisable to study the convenience of reducing social contributions, which increase costs, and replacing them with small increases in VAT, which do not deteriorate business competitiveness.”

 

In this fiscal area, the organization that defends the interests of Spanish exporters considers necessary to return to the 100% exemption of dividends and capital gains generated abroad, as well as reintroducing the deductibility of negative income from permanent establishments abroad in the tax period itself, to bring us into line with our community partners, or allowing expense invoices that are legally issued from other countries (although not comply with all Spanish formal requirements).

 

Proposals in the financial field

 

According to the Club, “Spanish financial support instruments are very similar to those of our competitors, but with less budget and agility and more obstacles to be used in many emerging economies”. It is true that there has been progress on issues such as new insurance policies, or the reintroduction of subsidies for developing countries to carry out feasibility studies, but more progress is needed, such as, for example.

 

-Use the concept “made by Spain” instead of the traditional “made in Spain” to determine which operations of Spanish companies are financed and their amount.

 

-Significantly increase coverage ceilings by country and operation, leaving more autonomy to CESCE to approve operations on behalf of the state, in countries where other competing countries have coverage.

 

-Continue the reform of the Consensus OECD, to limit unfair competition from non-member countries (e.g. China).

 

Repeal the Foreign Debt Law of 2006, which makes it considerably difficult to finance operations in emerging economies.

 

-Increase the budget and streamline loan processing FIEM and non-refundable aid

Measures to expand the export base

 

The document presented maintains that “various studies show that medium-sized companies have a much greater propensity to export than small ones. If the size of Spanish SMEs were equal to that of German ones, Spanish exports would increase by at least 24%.”

 

For this reason, it is necessary to promote an increase in the average size of Spanish SMEs, fiscally and financially favoring mergers and acquisitions that entail an increase in their size, as well as raising the thresholds for quarterly tax declarations (e.g. from €6 to € 20 M) and the creation of works councils (e.g. 50 to 100 workers).

 

This work would be completed by promoting programs to support the internationalization of SMEs, such as Cre100do or ICEX-Next, encourage the opening of subsidiaries abroad, among others.

 

Finally, the Exporters Club recommends substantially increasing programs as successful as the “ICEX internationalization scholarship holders”.