House Small Business Subcommittee on Agriculture, Energy and Trade Chairman Scott Tipton (R-CO) today led a hearing on the obstacles and barriers that deter small businesses from participating in international trade. In addition to exposing challenges facing small business exporters, the hearing highlighted trade policy initiatives for the 113th Congress.
“Considering that less than one percent of all American small businesses export, Washington should be doing everything possible to help open new markets for small businesses in international trade,” said Chairman Tipton. “Small businesses face many barriers to exporting, like navigating complicated processes, understanding foreign and domestic regulations, and obtaining financing to support their international transactions. Simplifying the process, strengthening the coordination of the federal export promotion agencies, and implementing an aggressive trade strategy to open new markets would not only help small businesses export more, but provide a much needed boost to the overall economy.”
Total U.S. exports in goods and services reached nearly 14 percent of U.S. GDP in 2012. According to the International Trade Center, small businesses who exported averaged 37 percent revenue growth from 2005 to 2009; compared to a decline of seven percent for non-exporting small businesses.
Many of the federal assistance trade programs overlap and offer duplicative services, including mirroring the same efforts as many individual state trade offices. Currently, there are over 20 federal agencies that can assist with some or all of the steps in the export process. Navigating trade rules can be very confusing to small businesses.
During the 112th Congress, Small Business Committee Chairman Sam Graves (R-MO) and Tipton introduced legislation that would help small firms enter the trade marketplace by simplifying the maze of federal export promotion agencies. The Export Coordination Act of 2012 (H.R. 5393) would have required the Trade Promotion Coordinating Committee to better coordinate state and federal agencies to make the export process more efficient, while Rep. Tipton’s TRADE for Small Businesses and Jobs Act (H.R. 5513) would have helped companies better understand foreign regulations.
Materials for the hearing are posted on the House Small Business Committee’s website HERE.
Notable Witness Quotes:
Raymond Arth, President and CEO of Phoenix Products, Inc in Avon Lake Ohio said, “Many small and medium-sized [businesses] think exporting is too burdensome or too risky, or they just do not know where to start. As highlighted throughout my testimony, some of the top barriers for small exporters are: (1) problems identifying foreign business opportunities and federal export assistance resources, (2) limited information on how to analyze foreign regulations and contact potential foreign customers, and (3) the need for external financing in order to undertake an export transaction. Federal and state agencies play an important role in helping to reduce these types of exporting barriers for small businesses.”
Daniel Ogden, Attorney at Law and International Trade Consultant in Carrollton, Texas said, “…to answer the question “what can Congress do to assist small businesses in increasing their exports?”, one answer quite simply is to stop over-regulating, over-legislating, and over-taxing small business in general. That answer may perhaps do more for the health of small business exporters than any other single thing the United States government could do.”
Jennifer Fulton, CEO of Miss Jenny's Pickles in Kernersville, North Carolina said, “On the federal level, the Government Accountability Office has determined that the 17 federal agencies with export promotion programs could be made more effective through better coordination, elimination of duplicative activities, and better allocation of resources.”
“I’m getting ready to export to Canada. That means a bilingual label has to go on it. I’ve had to contact five different people to figure out how to get that done… [I]f I want to export to Germany, because going to Germany is one of my goals for 2013, I’d like to know the steps in advance, of what I’ve got to do to get my product over there without having to contact 20 different places. We’ve got the technology, we’ve got the resources. Let’s put it all together and help us. Because that’s time and money, and that’s important in our world.”