Chairman Graves in Politico: Small Businesses Need FTA Passage
Jul 1, 2011 -
Small Businesses Need FTA Passage
By: Rep. Sam Graves
July 1, 2011
The clock has run out.
On July 1, the European Union-South Korea free trade agreement goes into effect. Then, on Aug. 15, the Colombia-Canada free trade agreement will take effect — leaving U.S. small businesses at a competitive disadvantage in the international marketplace.
There has been recent progress on three pending trade agreements with Panama, Colombia and South Korea — but time is of the essence.
The slow progress certainly does not help our small businesses, which are already facing uncertainty because of skyrocketing energy costs, excessive federal regulations and possible tax increases. We owe it to small businesses to open new markets and lower trade barriers so they can compete with their foreign counterparts and increase their exports.
More exports means more revenue and job creation. In fact, $1 billion in U.S. exports creates 6,000 jobs, according to the U.S. Chamber of Commerce. In addition, the independent U.S. International Trade Commission estimates passing the trade agreements will increase U.S. exports by $13 billion and create 75,000 jobs — all without one dime of new government spending.
Phil Wise, the owner of Wise Family Farm in Harris, Mo., gave sobering testimony on the necessity of passing the trade agreements at a recent House Small Business Committee hearing. “While we sit on our hands,” Wise said, “other pork-exporting countries are moving forward with FTAs of their own with Colombia, Panama and South Korea. … [Iowa State University economist] Dr. Dermot Hayes calculates that we will be out of the Korea and Colombia markets in 10 years if the U.S. fails to implement its agreements.”
The key to America’s long-term economic recovery is held by flourishing small businesses — our nation’s most robust job creators. Small firms create more than half the nonfarm private gross domestic product and employ more than half the U.S. workforce. In fact, 64 percent of net new jobs over the past 15 years were created by small businesses.
But we have to provide the market opportunities and resources for small businesses to compete — so they can grow and hire more workers.
With 95 percent of the purchasing market outside the U.S., small businesses and farmers understand the opportunities and benefits of exporting. Like large U.S. companies, small businesses face a variety of trade barriers that limit their ability to compete — including higher tariffs, technical standards and foreign customs regulations.
Most small firms, however, do not have the resources and capital to navigate complex trade barriers. As a result, many simply do not export. This is why passing all three trade agreements is critical. They remove both tariff and nontariff barriers, protect intellectual property and streamline the trade process.
More than 20,000 U.S. companies export to South Korea alone — and more than 18,500 are small businesses. The South Korea FTA will increase total U.S. exports by $10 billion, according to ITC estimates, including $2.8 billion from small- and medium-sized U.S. companies.
Passing the trade agreement with Colombia would also increase opportunities and level the playing field for small businesses. Most Colombian exports already enter the U.S. duty free, while U.S. exports face tariffs as high as 35 percent. Lowering the barriers would generate an estimated $2.5 billion per year to the U.S. GDP and increase exports by more than $1 billion.
“My customers [in Colombia] have been paying 20 percent tariffs on hundreds of thousands of dollars on my imported products, and this has reduced the range of items that they could purchase from me,” said Roy Paulson, president of Paulson Manufacturing in California.
In addition, more than 7,200 small businesses now export to Panama. Passage of the FTA with Panama would allow more than 88 percent of U.S. exports to enter duty free and increase U.S. exports by a whopping 145 percent.
The benefits of these three job-creating agreements for small businesses and our economy are too big to move this slowly. It’s time for America to get in the game.
The longer we wait, the longer small businesses will be at a disadvantage, which means waiting longer for a full economic recovery.
Rep. Sam Graves (R-Mo.) is chairman of the Small Business Committee.
To read the op-ed online CLICK HERE.