United States International Trade Commission

Investigation No. 332-510

USITC Publication 4189

November 2010

Small and MediumSized Enterprises: 

Characteristics and 

Performance 
Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436

U.S. International Trade Commission

COMMISSIONERS 

 

Deanna Tanner Okun, Chairman 

Charlotte R. Lane 

Daniel R. Pearson 

Shara L. Aranoff 

Irving A. Williamson 

Dean A. Pinkert

Karen Laney

Acting Director of Operations

Robert B. Koopman

Director of Economics

Robert Carr

Acting Director Office of Industries
U.S. International Trade Commission

Washington, DC 20436 

www.usitc.gov

Publication 4189 November 2010

Small and Medium-Sized Enterprises: 

Characteristics and Performance 

Investigation No. 332-510
This report was prepared principally by the Offices of Industries and Economics 

Co-Project Leaders 

William Deese 

william.deese@usitc.gov 

and

Erland Herfindahl 

erland.herfindahl@usitc.gov 

Coordinating Project Leader 

Laura Bloodgood 

laura.bloodgood@usitc.gov 

Principal Authors 

Tamar Asadurian, Michael Ferrantino, Eric Forden, Dennis Fravel, Tani Fukui, Joann 

Peterson, George Serletis, Jose Signoret, and Zhi Wang 

Primary Reviewers 

Joanna Bonarriva and William Powers 

Supervisory Reviewers 

Arona Butcher 

Special Assistance From 

Jared Fronk, William Greene, David Lundy, Cynthia Payne, Patricia M. Thomas, and 

Jeremy Wise 

Under the Direction Of 

Hugh Arce, Chief 

Research Division, Office of Economics 
ABSTRACT 

This report is the third in a series by the U.S. International Trade Commission 

(USITC) that examines the domestic and global operations of U.S. small and 

medium-sized enterprises (SMEs). The Commission found that U.S. exporting 

SMEs outperform their nonexporting SME counterparts by several measures. 

Whether they deal in services or manufacturing, exporting SMEs show higher 

total revenues, faster total revenue growth, and higher labor productivity than 

their nonexporting SME counterparts. The Commission also found several 

noteworthy contrasts between exporting large firms and exporting SMEs. Across 

all sectors, large firms primarily sell to foreign clients via foreign affiliates rather 

than through direct exports, while SMEs serve foreign clients primarily through 

direct exports. Exporting services SMEs, which represent a very small share of 

all U.S. services SMEs, are more export-intensive than large services exporters. 

U.S. services SME multinational companies, which are even less common, are 

nearly three times more export-intensive than large U.S. multinationals. On the 

other hand, trade barriers, including both tariffs and nontariff measures, 

disproportionately affect SMEs relative to large firms, as do many business 

impediments, such as high transportation costs. In addition to their role as direct 

exporters, U.S. goods and services SMEs also participate in the export economy 

by exporting indirectly through wholesalers and other intermediaries or selling 

intermediate goods or services domestically to large and small firms that use 

these intermediate inputs to produce exported goods or services. The 

Commission estimates that SMEs contribute a substantially higher share of the 

value-added content embedded in exports than suggested by traditional trade 

statistics.

i 

iii 

CONTENTS 

Page

Abstract............................................................................................................................... i

List of Frequently Used Terms and Acronyms ix

Executive Summary............................................................................................... xi

Chapter 1: Introduction.................................................................................... 1-1 

 Purpose and scope ................................................................................................................... 1-1 

 Approach ................................................................................................................................. 1-2 

 Data sources ....................................................................................................................... 1-2 

 Statistics on SME trade and foreign affiliate sales ........................................................ 1-3 

 Commission survey of U.S. firms.................................................................................. 1-3 

 Other sources of data ..................................................................................................... 1-5 

 Organization of the report........................................................................................................ 1-5 

 Previous reports in this series .................................................................................................. 1-6 

Chapter 2: Exports and SME Performance.............................. 2-1 

 Key findings ............................................................................................................................ 2-1 

 Size and performance .............................................................................................................. 2-1 

 Exporting and performance of manufacturing SMEs.............................................................. 2-2 

 Exporting and performance of SMEs in the services sector.................................................... 2-4 

Chapter 3: Examination of Services SME Exporters....... 3-1 

 Key findings ............................................................................................................................ 3-1 

 Tradable services..................................................................................................................... 3-2 

 Cross-border trade ................................................................................................................... 3-3 

 Top five services subsectors ............................................................................................. 3-3

 Services SME share of exports and employment.............................................................. 3-6 

 SME exporters’ growth..................................................................................................... 3-7 

 Sectoral analysis ............................................................................................................... 3-7 

 Services supplied through U.S. MNCs.................................................................................... 3-13 

 SME MNCs’ share of U.S. parent sales............................................................................ 3-13 

 Services SME MNC’s foreign sales growth ..................................................................... 3-16 

 Foreign affiliate sales........................................................................................................ 3-17 

 Foreign affiliate sales concentrated in foreign markets .................................................... 3-21 

 Data gaps on SME exports of services .................................................................................... 3-21 

 Bureau of Economic Analysis .......................................................................................... 3-21 

 U.S. Census Bureau .......................................................................................................... 3-23 

 Approaches for overcoming data deficiencies .................................................................. 3-23 

 Potential improvements.............................................................................................. 3-23 

 Comparison to other countries’ best practices............................................................ 3-24 
iv 

CONTENTS—Continued

Page

Chapter 4: SMEs Multinational Firms........................................... 4-1 

 Key findings ............................................................................................................................ 4-1 

 U.S. SMEs as MNCs ............................................................................................................... 4-2 

 SME MNCs: Profile.......................................................................................................... 4-4

 Foreign affiliates of U.S. SME MNCs ....................................................................... 4-4 

 Foreign sales by U.S. SME MNCs ............................................................................. 4-6 

 Goods exports by U.S. SME MNCs ........................................................................... 4-6 

 SME MNC labor productivity .................................................................................... 4-7 

 SME MNCs by sector................................................................................................. 4-9 

 Firm size and methods of serving foreign customers ................................................. 4-9 

 Related-party exports of SMEs .................................................................................. 4-13 

 Small and medium-sized U.S. affiliates of foreign enterprises ............................................... 4-15 

Chapter 5: Indirect exports of U.S. SMEs.................................... 5-1 

 Key findings ............................................................................................................................ 5-1 

 Indirect value-added exports by U.S. SMEs............................................................................ 5-2 

 Conventional export measures and an alternate perspective............................................. 5-2 

 Indirect SME value-added exports ............................................................................. 5-4 

 SME indirect exports via wholesalers and other intermediaries ............................................. 5-7 

 The role of wholesalers and other intermediaries ............................................................. 5-8 

 Indirect SME exporters by sector ..................................................................................... 5-14 

 Indirect SME agricultural exports .............................................................................. 5-14 

 Indirect SME manufacturing exports ......................................................................... 5-18 

 Indirect SME services exports.................................................................................... 5-19 

Chapter 6: Trade Barriers that Disproportionately 

Affect SME Export Performance..................................................... 6-1 

 Key findings ............................................................................................................................ 6-1 

 Disproportionate impediments to SME exports ...................................................................... 6-1 

 Most frequently encountered impediments....................................................................... 6-2 

 Highest ranked impediments............................................................................................. 6-8 

 Impediments disproportionately affecting SMEs ............................................................. 6-10 

 Experience and the severity of barriers............................................................................. 6-13 

 Tariffs faced by U.S. exporters................................................................................................ 6-15 

 Tariffs faced by different U.S. industries.......................................................................... 6-15 

 Firms’ perceptions of foreign tariff barriers ..................................................................... 6-17 

 Nontariff measures .................................................................................................................. 6-18 

 Examination of specific NTMs......................................................................................... 6-20 

 NTMs facing SME manufacturers.............................................................................. 6-21 

 Barriers to foreign markets in services industries ...................................................... 6-23 
v 

CONTENTS—Continued 

Page

Bibliography................................................................................................................... Biblio-1

Appendices

A. Request letter .................................................................................................................... A-1

B. Federal Register notices ................................................................................................... B-1

C. List of industries covered in datasets ................................................................................ C-1

D. Additional chapters 3 and 4 tables .................................................................................... D-1

E. Business Firm Questionnaire ............................................................................................ E-1

F. Description of USITC questionnaire methodology........................................................... F-1

G. Discussion of firm characteristics based on questionnaire results .................................... G-1

H. The indirect contribution of SMEs to U.S. exports: Conceptual model and estimation ... 

 method.......................................................................................................................... H-1

Boxes

3.1 Marketing methods to foreign clients ............................................................................... 3-4

4.1 “Born global” firms........................................................................................................... 4-3

4.2 U.S. SMEs acquired by foreign MNCs ............................................................................. 4-17

6.1 Variable and fixed costs of exporting ............................................................................... 6-2

6.2 Impediments to exporting experienced by minority-owned businesses ........................... 6-10

6.3 Foreign barriers to SME agricultural exports ................................................................... 6-22

6.4 Export-import bank trade finance products for SME services companies........................ 6-24

Figures 

ES.1 Services: Shares of SMEs and large firms rating impediments as burdensome 

 (response of 4 or 5 on scale of 1–5) ............................................................................. xv

ES.2 Manufacturing: Shares of SMEs and large firms rating impediments as burdensome 

 (response of 4 or 5 on scale of 1–5) ............................................................................. xvi

2.1 Manufacturing SMEs that export have higher average revenue per firm than 

 manufacturing SMEs that do not export....................................................................... 2-4

3.1 Portfolio management firms are the largest SME exporters: SME and large services 

 firms’ export revenue, top five subsectors, 2007 ......................................................... 3-5

3.2 No one SME size class dominates export revenue: SMEs’ and large services firms’ 

 shares of export revenue, with SME’s share broken down by number of 

 employees, 2007........................................................................................................... 3-8

3.3 Services SME exporters account for a small share of service sector employees: All 

 services establishments, share of total services employees, 2007................................ 3-9

3.4 Services SMEs exporters outperform large services exporting firms: SMEs’ and 

 large services firms’ growth rates, 2002–07 ................................................................ 3-11

3.5 SME services MNCs are more export-oriented than large services MNCs: Ratio of 

 foreign sales to total sales by U.S. MNCs, 2007 .......................................................... 3-16

3.6 SME parents in “Other service industries” have highest foreign affiliates sales: 

 Distribution of foreign affiliate sales in service sectors, 2007 ..................................... 3-18

3.7 Foreign affiliates of services MNCs rarely service clients in the United States: 

 Foreign affiliate sales in service industries by destination, 2007 ................................. 3-22

5.1 Value of products by exporting firm obscures the involvement of upstream firms 5-4

5.2 Agricultural supply chain: Farm to market....................................................................... 5-17

6.1 Services: Shares of SMEs and large firms rating impediments as burdensome 

 (response of 4 or 5 on a scale of 1-5) ........................................................................... 6-11
vi 

CONTENTS—Continued 

Page

Figures

6.2 Manufacturing shares of SMEs and large firms rating impediments are burdensome 

 (response of 4 or 5 on a scale of 1-5) ........................................................................... 6-12

6.3 Manufacturing and food processing SME export participation and applied 

 tariffs by 4-digit NAICS codes ......................................................................... 6-16

H.1 Input-output table with separate production account for SMEs............................ H-5

Tables 

ES.1 U.S. SMEs: Comparison of the performance of exporters with nonexporters................. xii

ES.2 Services firms: Comparison of SMEs with large firms, (figures are for 2007 except 

 as indicated).................................................................................................................. xiii

1.1 Comparison of major datasets employed in this study...................................................... 1-4

2.2 Selected services SMEs: Comparison of labor productivity for exporting versus 

 nonexporting firms ....................................................................................................... 2-7

3.1 Revenue from exported services, subset of service industries, 2007................................ 3-10

3.2 SME involvement in exporting across services sectors, 2007.......................................... 3-12

3.3 U.S. multinationals: Sales and foreign sales of U.S. parents by industry and 

 employment size of U.S. parent ................................................................................... 3-14

3.4 U.S. multinationals: Sales and growth of sales by majority-owned foreign affiliates, 

 by industry and employment size of U.S. parents........................................................ 3-19

4.1 U.S. MNCs: Parents and affiliates by class of parent, 2004–07 ....................................... 4-5

4.2 U.S. trade in goods associated with MNCs, by size of parent and major industry, 

 2007.............................................................................................................................. 4-7

4.3 Relative labor productivity of U.S. MNCs, by size of firm and major industry, 

 2006.............................................................................................................................. 4-8

4.4 Sales of U.S. parents and U.S. exports associated with MNCs, by size class and 

 major industry, 2007..................................................................................................... 4-10

4.5 Methods of serving foreign markets: Exports and foreign affiliates sales by firm 

 size, 2007 .......................................................................................................................... 4-11

4.6 SME related-party exports, 2007 ...................................................................................... 4-14

4.7 SME-sized foreign-owned affiliates in the United States, 2007 ....................................... 4-16

5.1 Gross exports by firm size, 2002 and 2007....................................................................... 5-6

5.2 Estimated contribution to domestic value added exports by firm size.............................. 5-6

5.3 Estimated direct and indirect value added ........................................................................ 5-6

5.4 Estimates of sectoral breakdown of SME exports, 2007 .................................................. 5-6

5.5 Estimated SME activity as a share of total sectoral activity, 2007 ................................... 5-7

5.6 Estimated breakdown of export-supported jobs, 2007...................................................... 5-8

5.7 Exports of manufactured goods by firm type and size class, 2007 ................................... 5-10

5.8 Value of exports of manufactured goods by sector, firm type, and firm size, 2007 ......... 5-11

5.9 Share of exports of manufactured goods, by sector, firm type and firm size, 2007.......... 5-12

5.10 Exports of agricultural goods by firm type and size class, 2007....................................... 5-13

5.11 Exports of mining goods by firm type and size class, 2007.............................................. 5-13

6.1 Impediments to SME exporting included in the USITC questionnaire and described 

 in the Commission’s July 2010 report on SMEs.......................................................... 6-3

6.2 Proportion of firms encountering the impediment ............................................................ 6-8
vii 

CONTENTS—Continued 

Page

Tables—Continued

6.3 Share of respondents to USITC questionnaire ranking a given impediment as the 

 most important.............................................................................................................. 6-9

6.4 SMEs with less experience report greater impediments ................................................... 6-14

6.5 Tariff rates applied to U.S. exports, 2004 ......................................................................... 6-16

6.6 Percentage of exporting firms and firms considering exporting that identified high 

 tariffs as a barrier.......................................................................................................... 6-18

6.7 Percentage of firms experiencing burdensome NTMs, by size......................................... 6-19

6.8 Percentage of firms experiencing burdensome NTMs, by sector and size ....................... 6-20

C.1 Services industries included in Census cross-border datasets........................................... C-3

C.2 Industries included in USITC questionnaire ..................................................................... C-5

C.3 Industries included in BEA foreign affiliate dataset ......................................................... C-9

C.4 Industries included in Census datasets on goods exports by firm size and related- 

 party exports, 2007....................................................................................................... C-10

D.1 Shares of revenue and exported services, subset of services industries, 2007.................. D-3

D.2 Shares of revenue and exported services, subset of services industries, 2002.................. D-4

D.3 Revenue from exported services, subset of services industries, 2002............................... D-5

D.4 Growth of number of establishments and employees, subset of service industries, 

 2002 and 2007 .............................................................................................................. D-6

D.5 Growth of revenue and exported services, subset of service industries, 2002 and 2007 .. D-7

D.6 Information services: Revenue from exported services, 2007 .......................................... D-8

D.7 Information services: Share of revenue and exported services, 2007 ............................... D-9

D.8 Professional, scientific and technical services: Revenue from exported services, 2007... D-10

D.9 Professional, scientific and technical services: Shares of revenue and exported 

 services, 2007 ............................................................................................................... D-11

D.10 Derivation of percentages reported in table 4.5 ................................................................ D-12

F.1 Number of firms by strata contained in Orbis database and number of firms sampled 

 by USITC ..................................................................................................................... F-4

F.2 Number of respondents to USITC questionnaire .............................................................. F-5

G.1 Primary characteristics of questionnaire respondents, 2009 ............................................. G-3

G.2 Exporting profile of questionnaire respondents, 2009 ...................................................... G-5

G.3 Primary foreign markets for questionnaire respondents: Market share by country or 

 region, 2009 ................................................................................................................. G-6

G.4 Foreign client revenue share by method of delivery, 2009 ............................................... G-7

G.5 Results of difference of proportion tests between SME and large manufacturers 

 rating impediments as a 4 or 5...................................................................................... G-9

G.6 Results of difference of proportion test between SME and large services firms rating 

 impediments as a 4 or 5................................................................................................ G-9

G.7 Test of whether SMEs rated impediments to trade higher than large firms...................... G-10

H.1 Data from Economic Census used to split BEA annual Input-Output tables.................... H-9

H.2 Data from SBA: GDP by business size used to split the BEA annual input-output 

 tables ............................................................................................................................ H-13

H.3 Decomposition of U.S. gross exports by sources of value-added based on data from 

 the Economic Census ................................................................................................... H-15

H.4 Decomposition of SMEs’ value-added exports based on data from the Economic 

 Census .......................................................................................................................... H-16

H.5 Decomposition of U.S. gross exports by sources of value-added based on data from 

 the SBA........................................................................................................................ H-17
viii 

CONTENTS—Continued 

Page

Tables—Continued

H.6 Decomposition of SMEs’ value-added exports based on data from the SBA................... H-18

H.7 Sensitivity analysis of IO table ......................................................................................... H-19

H.8 Sensitivity analysis on import assumption, 2007.............................................................. H-19
List of Frequently Used Terms and Acronyms

BEA The U.S. Department of Commerce’s Bureau of Economic Analysis 

Census The U.S. Department of Commerce’s Census Bureau 

Commerce U.S. Department of Commerce 

Commercial presence A mode of exporting services in which a firm from one country establishes an 

(GATS Mode 3) affiliate in a second country, with the income generated from the affiliate’s 

 transactions appearing as direct investment income in the first country’s balance of 

 payments 

Commission or The U.S. International Trade Commission 

USITC 

Consumption abroad A mode of exporting services in which a resident in one country consumes services 

(GATS Mode 2) while visiting or temporarily residing in another country 

 

Cross-border supply A mode of exporting services in which suppliers in one country sell services to 

(GATS Mode 1) consumers in another country, with people, information, or money crossing 

 national boundaries 

Employer firms Firms subject to federal income tax that employ at least one worker or having 

 payroll expenses during the year 

Establishment A single physical location where business is conducted or where services are 

 performed 

Firm A business organization or entity consisting of one or more domestic 

 establishments under common ownership or control 

Foreign affiliate A branch or subsidiary of a parent company, established outside of the parent 

 company’s home country 

Foreign sales, U.S. Sales by U.S. firms to foreign affiliates and to other foreign firms or persons. 

Foreign sales data do not exactly correspond to export data 

GATS General Agreement on Trade in Services (under the WTO) 

Gross exports Exports reported using the conventional approach of crediting the total value of 

 exports to the final producer 

Indirect value-added Goods and services produced by nonexporting firms which are embedded in 

 products that are exported via large firms and SMEs 

IP Intellectual property 

Large firms Firms with 500 or more U.S.-based employees 

ix
x

MNCs Multinational companies; any firm that has at least one foreign affiliate 

NAICS North American Industry Classification System 

Nonemployer firms Firms that are subject to federal income tax and that have no paid employees 

Nonmanufacturers All firms except those engaged in the mechanical, physical, or chemical 

transformation of materials, substances, or components into new products 

NTM Nontariff measure 

ORBIS A commercial database that consolidates micro-level statistical information 

Presence of natural A mode of exporting services in which an individual travels to another country on 

persons a short-term basis to supply services 

(GATS Mode 4) 

Primary commodities Products that are produced on farms and that are minimally processed, such as 

soybeans, corn, wheat, cotton, fruits, and nuts 

Pure foreign sales Sales by U.S.-owned firms to customers that are both located in a foreign country 

 and (if a firm) foreign-owned 

Related-party exports Exports for which both the exporter and importer are part of the same multinational 

 company 

SBA U.S. Small Business Administration 

Semiprocessed Primary commodities that have been transformed into intermediate goods, such as 

agricultural products soybean meal and wheat flour 

SMEs Small and medium-sized enterprises. For this report, the Commission has defined 

SMEs as firms with less than 500 U.S.-based employees 

Trade barriers Tariffs and nontariff measures imposed by governments 

Trade impediment Challenges faced by exporters, including both business impediments, such as 

transport costs and limited access to finance, and trade barriers 

USTR U.S. Trade Representative 

Value added The value created by a firm when it combines factor inputs, such as land, labor, and 

capital, with intermediate inputs to produce new products 

Value-added exports The added value embodied in exports 

WTO World Trade Organization 
xi 

Executive Summary

The U.S. International Trade Commission (Commission or USITC) found that despite 

facing trade barriers and other impediments, small and medium-sized enterprises (SMEs) 

in the United States that export goods and services are more productive than their 

nonexporting counterparts. SMEs (defined in this report as firms with less than 500 U.S.-

based employees), through their role as suppliers to exporting firms, make a larger 

contribution to U.S. exports than standard trade statistics suggest, and SMEs in the 

services sector are more export-intensive (i.e., reliant on exports) than large exporters of 

services. 

The report is the last in a series of three Commission reports requested by the United 

States Trade Representative (USTR). The reports investigate the performance of SMEs in 

U.S. exports of goods and services. The first report, released in January 2010, described 

the characteristics of U.S. SMEs and the role they play in U.S. exports.1

 The second 

report, published in July 2010, provided views of U.S. industry on impediments to trade 

and compared U.S. SMEs with those from the European Union and other major trading 

partners.2

 This third report analyzes the contribution of U.S. services SMEs to U.S. trade 

and focuses on the role of SMEs as indirect exporters, thereby highlighting their 

contribution to the foreign trade sector of the U.S. economy. 

This analysis was made possible by the availability of new data from the Bureau of 

Economic Analysis (BEA) and the U.S. Census Bureau (Census) on affiliate sales and 

cross-border exports of U.S. services SMEs. These data are used to describe the linkages 

between exporting and SME performance, characteristics of U.S. services SME 

exporters, and U.S. SME multinational companies (MNCs). The Commission also issued 

a questionnaire that generated several thousand responses from SMEs and large firms in 

both the manufacturing and services sectors. The questionnaire data are used throughout 

the report, but are particularly useful in identifying trade barriers and other impediments 

that disproportionately affect SME export performance. 

U.S. SMEs That Export Generally Outperform SMEs That 

Do Not Export

U.S. exporting SMEs outperform their nonexporting SME counterparts according to 

several measures. According to data from the Commission questionnaire, exporting SME 

manufacturers in 2009 had more than twice the total revenue of their nonexporting 

counterparts (table ES.1). These exporters had revenue growth of 37 percent between 

2005 and 2009, while total revenue declined by 7 percent for nonexporting SME 

manufacturers over the same period. Also, labor productivity, as measured by revenue 

per employee, was over 70 percent greater for manufacturing SME exporters than for 

nonexporters. Similarly, Census data show that services SME exporters had nearly four 

times as much total revenue per firm as services SME nonexporters and that total revenue 

per firm earned by these exporters grew faster than the total revenue per firm earned by 

nonexporters between 2002 and 2007. Labor productivity in 2007 was more than twice as 

high for services SME exporters as for their nonexporting counterparts. 

 1

 USITC, Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports, January 2010. 2

 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, and Barriers and 

Opportunities Experienced by U.S. Firms, July 2010.
xii 

TABLE ES.1 U.S. SMEs: Comparison of the performance of exporters with nonexporters 

Indicator Exporters 

Nonexporters Key finding 

Average revenue per 

firm (million $, 2009) 3.9 1.5

● SME manufacturers that export earned 

more revenue than nonexporting SME 

manufacturers 

Manufacturer revenue 

growth (% change, 

2005–09) 

36.8 –6.8 ● Exporting SME manufacturers’ revenue 

grew faster than that of nonexporting SMEs

Average revenue per 

employee 

(thousand $, 2009) 

281 163

● SME manufacturers that export are 

associated with higher labor productivity 

than nonexporting SME manufacturers 

Average revenue per 

firm (million $, 2007) 3.8 1.0

● Services SMEs that export earn more 

total revenue than nonexporting services 

SMEs 

Services revenue 

growth (% change, 

2002–07) 

32.3 23.6

● Exporting services SMEs’ revenue grew 

faster than that of nonexporting services 

SMEs 

Labor productivity 

growth (% change, 

2002–07) 

43.5 26.8

● Services SMEs that export realized 

higher growth in labor productivity than 

nonexporting services SMEs 

Source: Data for manufacturing SMEs are from the Commission’s questionnaire; data on services 

SMEs are from Census. 

Services SME Exporters Are More Export-Intensive than 

Large Exporting Services Firms

Services SMEs that export account for a very small share of total services providers, but 

they were more export-intensive between 2002 and 2007 than large services exporters.3

Services SME exporters derived, on average, 22 percent of their total revenue from 

exports, versus only 15 percent for large services exporters (table ES.2). Of the exporting 

services firms, the smallest firms (0–19 employees) were the most export-intensive, with 

29 percent of their total revenue originating from exports. Revenue and employment 

growth of services exporting SMEs also outpaced that of large services exporters. 

U.S.-based multinational (MNC) services SMEs that own and operate at least one foreign 

affiliate accounted for a small share of foreign sales by all U.S. MNCs; the SME share 

generally ranged between 1 and 4 percent for most industries. The one exception was 

wholesale trade, where U.S. MNC SMEs accounted for just over 15 percent of foreign 

sales by U.S. MNC wholesalers. U.S.-based services SME MNCs were more exportintensive than large U.S. services MNCs; foreign sales accounted for 15 percent of total 

sales of services SME MNCs and only 6 percent of those for comparable large firms 

(table ES.2). Although total sales of foreign affiliates of U.S. SME MNCs were small 

compared to those of foreign affiliates of larger firms, sales by foreign affiliates of U.S. 

services SMEs experienced faster revenue growth. Sales back to the United States by 

foreign affiliates of both SME and large U.S. services MNCs accounted for less than 

10 percent of the affiliates’ total sales. 

 3

 Export intensity refers to the ratio of revenue from export sales to total revenue. 
xiii 

TABLE ES.2 Services firms: Comparison of SMEs with large firms, (figures are for 2007 except as 

indicated) 

Indicator SMEs

Large 

firms Key finding 

Total value of exports 

(billion $) 47 78 ● The value of SME exports was less than 

that of large firms 

Exports as a share of total 

firm revenue (%) 22 15 ● SMEs were more export-intensive than 

large firms 

Export revenue growth (% 

change, 2002–07) 90 88 ● Exports by SMEs and large firms grew at 

similar rates 

Total revenue growth (% 

change, 2002–07) 64 25 ● Exporting SMEs’ total revenue grew faster 

than that of large exporting firms 

Employment growth (% 

change, 2002-07) 12 -1 ● Employment in exporting SMEs increased 

at a higher rate than in large exporting firms 

Value of MNCs’ foreign 

sales (billion $) 17 270

● The value of foreign sales of SME MNCs 

was substantially less than that of large 

MNCs 

MNCs’ foreign sales as a 

share of their total sales 

(%) 

15 6 ● SME MNCs were more export-intensive 

than large MNCs 

Growth in foreign sales 

revenue of MNCs (% 

change, 2004–07) 

27 23 ● Foreign sales by SME MNCs grew more 

rapidly than those of large MNCs 

Revenue of foreign 

affiliates (billion $) 90 1,258

● Total foreign affiliate sales of U.S. SMEs 

were much less than those of foreign 

affiliates of larger firms 

Foreign affiliates’ sales 

growth (% change, 2004–

07) 

20 14 ● Foreign affiliates of U.S. SMEs grew faster 

than affiliates of large firms 

Foreign affiliates’ sales to 

the United States as share 

of total sales (%) 

9 8

● Most sales by foreign affiliates of U.S. firms 

are in foreign markets, rather than to the 

United States 

Source: Staff calculations from BEA and Census data. 

Large Multinational Firms Sell Primarily to Foreign 

Customers through Foreign Affiliates, while SMEs Tend to 

Export Directly

SMEs typically serve foreign customers in a significantly different way than large firms. 

According to Commission estimates, SMEs tend to serve their foreign customers 

primarily through direct exports, rather than selling through foreign affiliates. An 

estimated 73 percent of foreign sales by SMEs were conducted through direct exports, 

with the remainder (27 percent) by foreign affiliates of U.S.-based SMEs. On the other 

hand, large firms primarily sell to foreign customers via foreign affiliates rather than 

through direct exports. In 2007, an estimated 85 percent of foreign sales by large firms 

were conducted through foreign affiliates of U.S. firms, versus approximately 16 percent 

of foreign sales conducted via direct exports. 
xiv 

The Commission also found that there are a small but significant number of SMEs in the 

United States that are owned by foreign MNCs. These foreign-owned SMEs are more 

numerous and employ more people in the United States than U.S.-owned SME MNCs. 

There are approximately 9,400 of these foreign-owned U.S.-based SMEs, and they 

employed an estimated 440,000 U.S. workers in 2007, including 187,000 in 

manufacturing and 84,000 in wholesale trade. 

Indirect Exports of U.S. SMEs Increase Their Total 

Contribution to U.S. Exports

In addition to their role as direct exporters, U.S. SMEs participate indirectly in the export 

economy. SMEs export indirectly through wholesalers and other intermediaries and by 

selling intermediate goods and services to large and small firms in the United States that 

produce exports with these intermediate inputs. SMEs’ contribution to U.S. exports 

through these indirect channels was substantial. In 2007, direct exports of goods and 

services by U.S. SMEs totaled $382 billion, or approximately 28 percent of total U.S. 

exports. According to Commission calculations, if the value of intermediate inputs that 

SMEs supplied to exporting firms is taken into account, SMEs’ total contribution to 

exports in 2007 would increase to $480 billion, or 41 percent of the total value of U.S. 

exports of goods and services. These values imply that SMEs that exported goods and 

services directly supported an estimated 1.9 million U.S. jobs in 2007. In addition, when 

employment by SMEs that supply intermediate inputs to exporters is considered, the 

Commission estimates that SME indirect exporters accounted for an additional 2.1 

million U.S. jobs in 2007. Therefore, these results suggest that direct and indirect exports 

of SMEs supported about 4 million jobs—with about half the jobs sustained by direct 

exports and the other half by indirect exports. The Department of Commerce estimates 

that U.S. exports of goods and services support about 10 million jobs. Taken together 

with the results from this study, this work suggests that SME exports account for 

approximately 40 percent of all export-supported jobs in the United States. 

Trade Barriers and Other Impediments Disproportionately 

Affect SME Export Performance 

The Commission’s July 2010 report on SMEs provided views of U.S. SMEs concerning 

impediments to exporting including access to financing and U.S. government regulations. 

The Commission survey data indicate that SMEs regard many impediments as more 

burdensome than large firms do. Responding firms rated the severity of 19 impediments 

on a 1-to-5 scale, with 1 indicating no burden and 5 indicating a severe burden. The 

proportion of SMEs that regarded the impediments as burdensome (a 4 or 5 response) 

tended to be higher than the proportion of large firms that did so, for both services and 

manufacturing firms (figures ES.1 and ES.2). For services firms, SME scores exceeded 

those of large firms by the largest amount for “insufficient intellectual property (IP) 

protection,” “foreign taxation,” and “obtaining financing.” For manufacturing firms, 

SME scores exceeded those of large firms by the largest amounts for the following 

impediments: “inability to find foreign partners,” “difficulty receiving or processing 

payments,” and “high tariffs.” 
xv 
Indications from the survey are that as SMEs export more, their perception of the severity 

of impediments typically declines. However, the pattern varies somewhat depending on 

whether SMEs are in services or manufacturing. Newer services SMEs tend to report 

impediments as more burdensome, export to fewer regions, and export less intensively 

than more established services firms. Manufacturing SMEs tend to report impediments as 

more burdensome when they export to only one or two regions; on the other hand, 

newness to exporting and lack of export intensity have a less pronounced effect on 

burdens reported by manufacturers. 

xvi 
xvii 

Tariffs in foreign markets on certain manufactured goods and processed agricultural 

products, in which SMEs are major suppliers, are substantial. For example, SMEs are 

major exporters of knit apparel and meat and meat products, sectors in which U.S. 

exporters faced average applied tariffs in excess of 20 percent. However, tariffs on most 

products were quite low, and the average tariff faced by SMEs (3.4 percent) was only 

1 percent higher than that faced by large exporters. 

Certain specific NTMs, such as nationality or licensing requirements, which must be met 

to practice certain professions, make it difficult for SMEs to enter many foreign markets. 

In some countries, laws prohibit the establishment of a commercial presence by foreign 

firms. For example, a foreign retail firm must have a net worth of at least $200 million to 

establish itself in the Philippines. Licensing, residency, and commercial presence 

requirements frequently constrain services SMEs from entering foreign markets. Foreign 

standards and certification requirements often impede exports by manufacturing SMEs. 

CHAPTER 1 

Introduction

Purpose and Scope

This report is the third in a series of three interrelated reports on the role of U.S. 

small and medium-sized enterprises (SMEs) in U.S. exports that the U.S. 

International Trade Commission (Commission or USITC) has prepared in 

response to a request by the United States Trade Representative (USTR).1

 As 

requested, it provides (1) an examination of the linkages between exporting and 

SME performance for both goods and services firms; (2) a profile of U.S. 

services SME exporters, including the characteristics of firms that produce 

tradable services, the growth of services exports by SMEs, and the differences 

between SME and large services exporters; (3) an analysis of the operations of 

U.S. SME multinational companies (MNCs) and of U.S. SMEs that are affiliates 

of foreign MNCs; (4) an examination of the role of SMEs as indirect exporters, 

either through sales to exporting wholesalers or other intermediaries, or through 

sales of intermediate goods or services to exporting firms; and (5) an analysis of 

trade impediments that disproportionately affect SME export performance for 

both goods and services exporters. This report, like the previous reports in this 

series, defines SMEs as firms with less than 500 U.S.-based employees.2

A major focus of this report is an analysis of the operation of U.S. services SME 

exporters. As noted in the first report, SMEs accounted for 99.9 percent of the 

27 million employer and nonemployer3

 nonfarm businesses in 2006. Eighty-eight 

percent of these SMEs were services firms.4

 Before the publication of the current 

report, no official trade data were publicly available on the export activities of 

SME services firms, even though they accounted for the vast majority of all U.S. 

businesses. This report seeks to fill an important gap by reporting data on the 

international operations of U.S. services SMEs. In addition to services, however, 

this report also provides information on SMEs in the agriculture and 

 1

 See appendix A and B for the request letter from the USTR, and Federal Register notices 

associated with this investigation. The first report in this series—USITC, Small and Medium-Sized 

Enterprises: Overview of Participation in U.S. Exports—was published in January 2010. The 

second report in this series, USITC, Small and Medium-Sized Enterprises: U.S. and EU Export 

Activities, and Barriers and Opportunities Experienced by U.S. Firms—was published in July 

2010. 2

 Earlier reports in this series applied an additional revenue threshold for services firms (less 

than or equal to $7 million for most services firms). This report does not apply revenue thresholds 

for services firms because they do not correspond to those used by the major data sources on 

services—that is the U.S. Census Bureau and the U.S. Dept. of Commerce (USDOC), Bureau of 

Economic Analysis (BEA)—used in this report. However, an analysis of this revenue threshold, 

applied to the services firms in the USITC questionnaire described below, indicates that 78 percent 

of services firms with less than 20 employees, 39 percent of firms with between 20 and 99 

employees, and only 3 percent of firms with between 100 and 499 employees have annual revenues 

of less than $7 million. 3

 Nonemployer firms refer to businesses without paid employees that are subject to federal 

income tax. Most nonemployers are self-employed individuals operating very small unincorporated 

businesses, which may or may not be the owner’s principal source of income. 4

 Census, Statistics of U.S. Businesses; Census, Nonemployer Statistics. 

1-1 
manufacturing sectors, particularly in chapters analyzing SME MNCs, SME 

indirect exporters, and impediments to SME exporters.5

Approach

Most of the analysis in this report is based on comparisons between SMEs and 

large firms (firms with 500 or more U.S.-based employees) or between SME 

exporters and SME non-exporters. In many cases, this involves direct 

comparisons of business statistics, such as total exports by SMEs versus those of 

large firms, or employment by SME exporters versus that of SME nonexporters. 

In the analysis of trade impediments, however, the Commission has relied on 

questionnaire responses to determine which of the impediments have a 

disproportionate (greater) effect on SMEs relative to large firms. To examine the 

role of SMEs in indirect exports (goods or services that are inputs into goods or 

services produced and exported by other firms), the Commission used inputoutput analysis. 

Data Sources

The current report builds on the two previous Commission reports by drawing on 

a number of new data sources to provide additional details on the exports, 

international operations, and challenges faced by U.S. SMEs.6

 For instance, the 

first report, published in January 2010, analyzed foreign affiliates of U.S. 

services SMEs using a firm-level commercial database, but noted that no official 

data existed on services exports disaggregated by firm size. The current report 

uses specially tabulated data from the Bureau of Economic Analysis (BEA) and 

the U.S. Census Bureau (Census) to report additional details regarding affiliate 

sales and cross-border exports of U.S. services SMEs.7

 Also, the first report 

disaggregated SMEs by broad types of firms—manufacturers, wholesalers, and 

other firms—but did not include direct information on the types of goods 

exported by those firms. The current report takes this analysis one step further 

by presenting new information on the types of goods exported by SMEs, crossreferenced by firm type (e.g., chemicals exported by manufacturers versus 

chemicals exported by wholesalers or other firms), which allows a more in-depth 

analysis of the role of intermediaries in SME trade. 

Similarly, the Commission’s second report on SMEs, published in July 2010, 

summarized the views of SMEs regarding export impediments that were gathered 

in a series of public hearings and interviews with SMEs throughout the United 

States. However, the report did not rank the reported trade impediments faced by 

SMEs, nor did it assess which barriers disproportionately affected SMEs relative 

to large firms. The current report employed a questionnaire in which both SMEs 

and large firms rated the severity of many of the impediments identified by the 

 5

 Throughout this report, industries are classified by the North American Industry Classification 

System (NAICS); under the NAICS, agricultural processing is classified as a manufacturing 

activity. 6

 A list of industries covered in each of these datasets is presented in appendix C. 

7

 Analysis of this data is primarily found in chapter 3, with additional detail presented in 

appendix D. 

1-2 
1-3 

 

Commission’s July 2010 report on SMEs.8 This approach allowed for a 

quantitative analysis to determine which impediments pose the greatest 

challenges to SME exporters. Information regarding the industry coverage, time 

frame, and contribution of new information from each of these data series is 

summarized in table 1.1. Additional information on the data sources used in this 

report is provided below. 

Statistics on SME Trade and Foreign Affiliate Sales

At the request of the Commission, Census compiled a special tabulation using 

data from the 2002 and 2007 Economic Censuses to produce statistics on crossborder exports for certain services sectors by firm size. Additionally, at the 

request of the Commission, BEA produced a special tabulation on financial and 

operating data for U.S. MNCs and their foreign affiliates, by employment size of 

U.S. parents in all sectors.9

 Census provided additional data on related-party 

exports of SMEs, i.e. exports for which both the exporter and importer are part of 

the same MNC. Finally, at the request of the Commission, Census compiled a 

data series that provides product-level detail on the exports of goods by nonmanufacturers (wholesalers and other companies). These special data tabulations 

allowed a much more detailed analysis of the international operations of services 

SMEs than was previously possible. 

Commission Survey of U.S. Firms

To assess the degree to which impediments to exporting disproportionately affect 

U.S. SME exporters compared to large firms, the Commission sent 

questionnaires to firms in the manufacturing and tradable services sectors.10 For 

comparison purposes, the questionnaire sampled both SMEs and large firms, as 

well as SME exporters and SME nonexporters.11 The questionnaire employed a 

stratified random sample to survey over 8,400 U.S. firms, and weighted results 

on the basis of firms’ proportion in the overall population and the response rates 

of various categories of firms to ensure that reported results more accurately 

represented the entire population of SMEs.12 Besides asking about impediments 

to exporting, the questionnaire also included questions on employment, total 

revenue, revenue from foreign clients (export revenue or revenue from foreign 

affiliates), and method of marketing to foreign clients.13

8

 A copy of this questionnaire is presented in appendix E. 

9

 These data are also available on BEA’s Web site at 

http://www.bea.gov/international/xls/SelectUSMNCEMP.xls. 10 Technical details regarding this questionnaire can be found in appendix F. 11 Because the vast majority of large firms are exporters, large firms are not classified as 

exporters or non-exporters for this analysis. 12 The questionnaire was originally sent to 9,000 firms, however, a number of questionnaires 

were undeliverable due to incorrect addresses. 13 Results and analysis of this data are presented in appendix G. 
TABLE 1.1 Comparison of major datasets employed in this study 

Dataset: Analysis found in chapter: Industries covereda: Years covered: What is new about this dataset: Census cross-border services trade by firm size (derived from the 2002 and 2007 Economic Censuses) 

Chapter 2 Chapter 3 

Services: Information; finance (except insurance); professional services; administrative and support services; and several other services industries 

2002, 2007 Categorizes services trade data by five firm size 

categories: Total SMEs (less than 500 employees) SMEs with 0-19 employees SMEs with 20-99 employees SMEs with 100-499 employees Large firms (500 or more employees) 

Commission questionnaire Chapter 2 

Chapter 6 Appendix E 

Manufacturing; services (services data not disaggregated, but includes construction, wholesaling, transportation, information, finance, professional services, higher education services and a number of other service industries) 

2005–2009 Quantitative data on the severity of trade 

impediments for SMEs and large firms in the manufacturing and services sectors 

Bureau of Economic Analysis (BEA) multinational companies (MNCs) operating data by firm size of parent 

Chapter 3 Chapter 4 

Mining and agriculture, forestry, fishing, and hunting; manufacturing; wholesale trade; information; finance and insurance; other services industries 

2004–2007 Data on the operations, including foreign and 

domestic sales, exports, and number of employees, of U.S. MNC parents and their affiliates by SMEs and large firms 

Census data on related-party exports

Chapter 4 Agricultural goods; 

Mined goods; and Manufactured goods 

2007 Data on related-party exports of SMEs, i.e. 

exports within MNCs 

Census goods exports by firm size 

Chapter 5 Agricultural goods; 

Mined goods; and Manufactured goods 

2007 Product level data on exports by manufacturers, 

wholesalers and other firms by five firm size categories described above aFor complete list of industries covered in each dataset, please see appendix C. 

1-4 
Other Sources of Data

The Commission also used a number of other sources in analyzing the operations 

of U.S. SMEs. The Commission used information obtained from hearings held in 

Washington, DC, Portland, OR, and St. Louis, MO, in March 2010, and 

information from interviews with SME personnel conducted by Commission 

staff throughout the United States. This information was used to explore trade 

impediments that disproportionately affect SME export performance and to 

describe how SMEs participate in indirect exports, by producing inputs that are 

sold to exporting firms.14 The Commission also received new data on U.S. 

government trade financing that is provided to services SMEs.15 Finally, the 

Commission drew extensive information from the economic literature, U.S. and 

foreign government reports, and other published sources. 

Organization of the Report

This report contains six chapters. In addition to describing the purpose, scope, 

and approach of this report, chapter 1 offers a brief summary of the major 

findings of the previous two reports in this series. 

Chapter 2 briefly reviews the previous research related to the performance of 

SME exporters and nonexporters globally, and provides new supporting evidence 

for U.S. SMEs on linkages between exporting and performance indicators, such 

as revenue growth and labor productivity, for both goods and services firms. 

Chapter 3 examines U.S. SMEs engaged in providing services, including the 

characteristics of firms that produce tradable services, the growth in these 

services exports, and the difference between SME and large services exporters. 

The chapter also describes services SME MNCs, including the operations of the 

U.S.-based SME parents of foreign affiliates, as well as the activities of the 

foreign affiliates themselves. Finally, the chapter identifies how data gaps might 

be overcome to further enhance understanding of SME services exporters. 

Chapter 4 provides insights on the degree to which SMEs operate as MNCs and 

as affiliates of foreign MNCs. The chapter also analyzes the extent to which 

SMEs and large firms service their clients through foreign affiliate sales versus 

direct exports, and the extent to which SME exports of goods are to related 

parties. 

Chapter 5 examines the role of SMEs as indirect exporters.16 This includes two 

kinds of transactions: sales of intermediate inputs to exporters, and sales to 

wholesalers or other intermediaries who export essentially untransformed goods 

and services produced by SMEs. The chapter also provides an estimate of the 

number of U.S. jobs supported by SME indirect exporters. 

 14 The views of all witnesses who testified at the Commission’s public hearings or expressed 

their views in written testimony are summarized in chapter 6 of the Commission’s July 2010 report 

on SMEs. 15 Ex-Im Bank, e-mail spreadsheet attachment to Commission staff, July 28, 2010. 16 Technical details regarding this analysis are presented in appendix H. 

1-5 
Chapter 6 identifies and ranks trade impediments that may affect SME exporters 

more than large exporters, based on questionnaire responses. The chapter also 

describes how firms’ responses vary relative to export experience. The chapter 

primarily focuses on tariff and nontariff measures (NTMs) that 

disproportionately affect SMEs, but in order to provide context on the importance 

of trade barriers relative to other measures, it also analyzes the impact of business 

impediments and domestic policy impediments identified by the Commission’s 

second report on SMEs. 

Previous Reports in this Series

In its first report in this series, the Commission gave an overview of the current 

state of SMEs’ participation in U.S. exports, based on available data.17 It found 

that SMEs accounted for about 30 percent of known U.S. merchandise exports 

between 1997 and 2007. Canada and Mexico were the largest markets for these 

exports. Electrical products, machinery, and chemicals were the primary 

merchandise export categories for SMEs. The Commission also found that 

between 1997 and 2007, much of the growth in SME merchandise exports was 

attributable to an increase in the number of net new market entrants—SMEs that 

were new to exporting. Export growth from large firms, by contrast, resulted 

almost exclusively from increases in the value of exports by existing firms. The 

Commission also found that Canada and the United Kingdom appeared to be the 

largest destination markets for U.S. SMEs’ services exports, based on a 

comparison between data on affiliate transactions by SMEs from ORBIS, a 

proprietary firm-level database, with official cross-border exports statistics—not 

differentiated by firm size—in three services sectors.18

In its second report, the Commission compared exporting activities of SMEs in 

the United States and the European Union (EU). The Commission found that 

SMEs in the EU accounted for 40 percent of total manufacturing sales and 

31 percent of manufacturing exports, while U.S. SMEs accounted for just 

19 percent of total manufacturing sales and 13 percent of manufacturing 

exports.19 The Commission found that this difference is consistent with the larger 

share of EU economic activity accounted for by SMEs. The report also included 

a summary of the views of SMEs on trade impediments and the strategies they 

have used to increase exports, including views expressed at Commission public 

hearings and in interviews with Commission staff.20

The Commission found that SMEs commonly identified access to finance, 

certain U.S. government regulations,21 transportation costs, and the small scale of 

SME production as major domestic impediments to increased exports. SMEs 

identified foreign government regulations, lack of knowledge of foreign markets, 

and language and cultural barriers as the major foreign impediments to increasing 

 17 USITC, Small and Medium-Sized Enterprises: Overview, January 2010. 18 Bureau van Dijk, Orbis Companies Database. 19 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010. 20 A summary of the major findings from the Commission’s July 2010 report on SMEs 

regarding trade impediments, which is used as a basis for the quantitative analysis of trade 

impediments in this report, can be found in chapter 6. 21 Primarily U.S. visa and export control regulations. 

1-6 
1-7 

exports. U.S. SMEs also reported that they use three primary strategies to 

overcome these barriers: (1) combining forces with other firms in the same 

industry; (2) working with larger companies; and (3) taking advantage of U.S. 

government support programs. Finally, U.S. SMEs identified several improved 

export opportunities associated with FTAs and other trading arrangements, such 

as greater competitiveness in foreign markets, increased market access, improved 

regulatory environments, and better intellectual property rights protections. 

2-1 

Chapter 2

Exports and SME Performance

Key Findings 

U.S. SME exporters of manufactured goods were larger and grew more rapidly than their 

counterparts that only sold in the domestic market during 2005–09, according to 

Commission questionnaire data. These data also show that labor productivity of SME 

manufacturers that exported was almost twice as high as that of SMEs that only sold in 

the domestic market. By contrast, questionnaire data on exporting SMEs in the services 

sector were inconclusive with respect to whether they earned more revenue or had higher 

labor productivity than similar nonexporting firms. However, Census data on firms in 

selected services industries did show that exporting firms were larger and had higher 

rates of labor productivity than nonexporters. 

This chapter examines the relationship between exporting and firm performance of 

SMEs. Previous work shows that large firms were more likely to export than small firms, 

although most of the literature was not specific to SMEs. Exporting manufacturing firms 

generally scored higher than nonexporting manufacturers on a number of performance 

indicators. Based on some indicators, it appeared that after manufacturing firms began to 

export, exporting itself contributed to improved performance. In other cases, however, 

firms after beginning to export did not outperform nonexporting firms. Only a few studies 

on performance and SMEs in the services sector were available, and the final part of this 

chapter provides one of the first presentations of data on revenue and labor productivity 

for SMEs that export services. 

Size and Performance 

Empirical research suggests that large firms usually pay higher wages, produce more 

output per given level of inputs, are more likely to survive, obtain more patents, and 

export more than small firms.1

 Leung et al. found that large Canadian firms, both 

manufacturers and non-manufacturers, were more productive than small firms.2

 Van Ark 

and Monnikhof found similar results for firms in France, Germany, Japan, the United 

Kingdom, and the United States.3

 Kim et al. found that the number of patents per 

inventor increases with firm size in the U.S. pharmaceutical and semiconductor industries 

even after controlling for education, experience, other inventors in the firm, and other 

firm characteristi 4 cs.

 1

 Gibson and Stillman investigated the link between wages, skill level, and firm size in nine countries. 

They found that large firms pay higher wages even after controlling for education and workplace literacy and 

that workers in English-speaking countries with better literacy skills are more likely to work for bigger firms. 

Gibson and Stillman, “Why Do Big Firms Pay Higher Wages?” 2009. Large firms also usually obtained more 

patents than small firms. See Kim et al., “Relation of Firm Size to R&D Productivity,” 2009, which examined 

some complexities related to patents. 2

 Leung et al., “Firm Size and Productivity,” 2008, 1–3. 3

 Van Ark and Monnikhof, “Size Distribution of Output and Employment,” 1996. 4

 Kim et al., “Inventor Productivity and Firm Size Evidence from Panel Data on Inventors,” 2009, 516. 
2-2 

Firm size also affects survival, and a body of empirical evidence shows that small firms 

are less likely to survive than large firms, that growth is positively related to size, and that 

smaller firms beginning operations are less likely to survive than firms that are larger at 

entry.5

 The particular group of firms that are active at any one time is in constant flux. In 

2006, approximately 600,000 firms went out of business in the United States, of which 

96 percent had less than 20 employees and over 99 percent had less than 500 employees.6

That same year, there were 670,058 new firms, which had a similar distribution of sizes. 

Large firms are more likely to perform well and are more likely to export than small 

firms because firms with greater sales and higher revenue from exporting are better able 

to cover the fixed costs of entering foreign markets. Using revenue as an indicator of size, 

Armenter and Koren found that exporters were 4.2 times larger, on average, than 

nonexporters based on 2002 firm-level Census data for manufacturers.7

 Bernard and 

Jensen examined plant-level data from the U.S. Census and found that exporting plants 

with less than 250 employees had 1.9 times more revenue than nonexporting plants.8

Using revenue as an indicator of size as in previous studies, data from the Commission’s 

questionnaire show that SMEs that export manufactured goods were, on average, from 

1.8 to 2.6 times larger than nonexporting SME manufacturers during 2005–09.9

 These 

estimates suggest that relationships between exporting and size among manufacturing 

SMEs are similar to those that have been noted between exporters and nonexporters in 

the overall economy. 

Exporting and Performance of Manufacturing SMEs 

This section summarizes some previous studies on exporting and performance in the 

manufacturing sector. It also uses data from the Commission’s survey to compare 

revenue and labor productivity of SMEs that export with those that do not export. 

Just as large firms often outperform small firms, exporters score better on a variety of 

performance measures than nonexporters. For example, one study of firms in the United 

States found that exporters are more productive and grow faster than nonexporters.10

Exporters, regardless of the size of the firm, have been shown to be more skill- and 

capital-intensive, to be more productive, and to pay higher wages than nonexporting 

firms.11 Bernard and Jensen found that labor productivity was 12 to 24 percent higher for 

exporters than for nonexporters. Studies on firm performance in other countries have 

 5

 Agarwal and Audretsch, “Does Size Matter?” 2003, 23. 

6

 Small Business Administration (SBA), Office of Advocacy. Data originated from Census’s longitudinal 

database. The Commission is not aware of any public data on firm births and deaths by export status. 7

 Armenter and Koren, “Economies of Scale and the Size of Exporters,” August 2009. 8

 Bernard and Jensen, “Exceptional Exporter Performance: Cause, Effect, or Both?” 1999, 5. 9

 A revenue export premium is the ratio of mean revenue per exporting firm to that of nonexporters. A 

premium greater than 1 indicates that exporters’ revenue was higher than that of nonexporters. The export 

revenue premium was statistically greater than 1 for manufacturing SMEs for four out of five years during 

2005–09. Mean revenue for SMEs that export services was actually less than that of SMEs that only sell 

services domestically; however, the revenue data on services were highly variable, and one cannot determine 

at conventional levels of statistical significance from the questionnaire data whether exporters of services 

earned more or less revenue than nonexporters. It is thus possible that the revenue export premium is greater 

than 1 for the population of services firms. 10 Bernard and Jensen, “Exporting and Productivity in the USA,” 2004, 344. 11 Bernard et al., “Firms in International Trade,” 2007, 105. 
2-3 

 

roughly similar results. A study of European SMEs found that internationally active firms 

had higher revenue growth relative to all SMEs from 2007 to 2008.12

Commission questionnaire data indicate that U.S. SME exporters of manufactured goods 

performed better with respect to revenue and labor productivity than manufacturing 

SMEs that only sold in the domestic market. The average revenue of exporting SME 

manufacturers grew by 36.8 percent between 2005 and 2009, a period during which the 

nominal gross domestic product increased by 12.8 percent (figure 2.1). Nonexporting 

SME manufacturers experienced a slight decline (6.8 percent) in revenue for this period. 

As previously stated, SME manufacturing exporters earned more per firm than 

nonexporters. Also, labor productivity as measured by revenue per employee was over 

70 percent greater for manufacturing SMEs that exported than for nonexporting 

manufacturing SMEs. 

Exporters typically have superior performance characteristics before they enter a foreign 

market. Bernard and Jensen examined plant-level data of U.S. manufacturing firms 

before they began exporting and while they were exporting. They found that the firms, 

including small plants, that later became exporters were initially larger, had greater labor 

productivity, and paid higher wages.13 Moreover, for the manufacturing sector, a firm’s 

productivity level is a better predictor of whether it will export than the industry to which 

it belongs.14 Another study found that higher-performing Taiwanese firms are more likely 

to choose to become exporters than lower-performing firms.15 In this study, firms’ initial 

high performance permits them to incur a nonrecoverable sunk cost related to obtaining 

information about the foreign market and meeting any initial requirements and 

regulations. 

Exporting in itself potentially improves performance, because the need to serve additional 

markets may require a firm to expand production and allow it to operate on a more 

efficient scale. The higher level of production could permit the firm and its workers to 

improve the production process, so that there may be a “learning-by-doing” effect. 

Selling in several markets could also allow a firm to diversify risks if the markets 

perform differently. 

Bernard and Jensen examined the performance of manufacturing plants once they became 

exporters and found mixed results.16 They found that exporters have significantly lower 

failure rates than nonexporters with similar characteristics. However, performance 

measures at exporters’ plants did not improve more rapidly than at other plants, and 

productivity improved at a slower rate. They attributed this to volatile foreign markets. 

During entry into foreign markets, a plant is typically growing and improving 

12 Van Elk, Hessels, and van der Horst, Internationalisation of European SMEs: Final Report, 2009. The 

EU has a broad definition of “internationally active,” which includes exporting, importing, or engaging in 

foreign direct investment. 13 Bernard and Jensen, “Exceptional Exporter Performance: Cause, Effect, or Both?” 1999, 11. 14 Bernard et al. “Plants and Productivity in International Trade,” 2003, 1287. 15 Aw et al., “R&D Investment, Exporting, and Productivity Dynamics,” forthcoming. 16 Bernard and Jensen, “Exceptional Exporter Performance: Cause, Effect, or Both?” 23. 
performance, but plants that stop exporting often experience declines in performance, and 

more than 10 percent of manufacturing plants enter or exit foreign markets every 

17 year.

Exporting and Performance of SMEs in the Services Sector 

Data collected through the Commission’s questionnaire were generally inconclusive 

about whether U.S. firms that export services outperform their nonexporting U.S. 

counterparts. Examination of Census data shows that exporters typically have higher 

revenue per firm and higher labor productivity than similar nonexporters. 

 

2-4 

17 Empirical work on performance after beginning to export is mixed. Aw et al. found that firms that 

continued to export raised their future productivity, but generally by small amounts. Plants whose 

productivity was already high realized large benefits from exporting, but other plants benefited less or not at 

all. Aw et al., “R&D Investment, Exporting, and Productivity Dynamics,” forthcoming. Lileeva and Trefler 

found that some less productive Canadian plants that were induced to export because of tariff cuts became 

more likely to increase their labor productivity, to develop innovative products, and to adopt new 

manufacturing technologies than firms that did not begin to export. They concluded that exporting potentially 

improved the profitability of investing in technical improvements because it increased the output over which 

the investment to enter the export market was spread; thus, some plants found it profitable to export and 

invest, although either exporting or investing would be unprofitable by itself. Lileeva and Trefler, “Improved 

Access to Foreign Markets Raises Plant-level Productivity,” 32. 
2-5 

 

There is very little economic literature on the relation between performance and 

exporting for the services industries. One study found that exporters in retail and 

wholesale trade increased their employment more rapidly than other firms between 1993 

and 2000.18 Another study found that a smaller proportion of services firms than 

manufacturing firms are engaged in international trade in the United Kingdom (UK).19

This study also found that, although trade was rare, services exports occur in a variety of 

sectors, including manufacturing sectors that sometimes tie technical assistance and 

service contracts in with export sales. Using firm-level data from the UK, these 

researchers found that exporters employ more people, pay higher wages, earn more 

revenue, are more productive, and have a higher share of skilled employees than firms 

that do not engage in foreign trade.20 Another study found that U.S. services industries 

with higher wages have more exports per worker.21

Data from the Commission’s questionnaire indicated that the average annual revenue of 

SMEs that export services was only about 60 percent of that of providers of exclusively 

domestic services; however, the data were highly variable, and there was no statistically 

significant difference between revenue for exporters and that for nonexporters of 

services. From 2005 to 2009, U.S. exporters of services grew more (47.4 percent) than 

nonexporters (43.4) on a revenue basis.22

Detailed unpublished data on selected services industries from the Census Bureau show 

that exporting SMEs earned more revenue per firm than nonexporting SMEs in the 

similar industry (table 2.1). The export revenue premium ranged from a low of 1.4 for 

performing arts, spectator sports, and related industries to a high of 8.1 for securities, 

commodity contracts, and other financial investment activities. Overall, SME exporters in 

these industries earned 3.8 times more revenue per firm than nonexporting SMEs. For 

about half of these services industries, revenue grew faster for exporters than for 

nonexporters between 2002 and 2007. Revenue grew most rapidly for securities, 

commodity contracts, and other financial and related activities, while exporters of waste 

management and remediation services experienced a decline of 36 percent. Overall, 

however, these exporting services industries grew by 32.3 percent, compared to 

23.6 percent for nonexporters between 2002 and 2007.23 Labor productivity (revenue per 

employee) was approximately equal for exporters and nonexporters of services, 

according to data from the Commission’s questionnaire.24 According to the Census data, 

however, an employee of an SME that exported services generated approximately twice 

as much revenue on average as an employee for a firm that sold only domestically (table 

2.2). The largest export labor productivity premiums for 2007 occurred in other 

information services and in securities, commodity contracts, and other financial 

investment and related activities. Labor productivity for exporters grew faster than that of 

nonexporters for about half of these services industries between 2002 and 2007, although 

the growth rates were uniformly positive for the nonexporting firms. 

18 Bernard, Jensen, and Schott, “Importers, Exporters and Multinationals,” 2009, 514, tables 1 and 2. 19 Breinlich and Criscuolo, “International Trade in Services,” 2010, 1. 

20 Breinlich and Criscuolo, “International Trade in Services,” 2010, 2. 

21 Jensen and Kletzer, “‘Fear’ and Offshoring,” 2008, 10. This conclusion is based on information 

services (NAICS 51), professional, scientific, and technical services (NAICS 54), and administrative and 

support and waste management and remediation services (NAICS 56). 22 Similarly, this difference is not statistically significant. 

23 Information is unavailable to determine the statistical significance of the differences between services 

exporters and nonexporters in the Census data. 24 Because the data on revenue and employment for services were highly variable in the Commission’s 

questionnaire, it is impossible to determine the mean labor productivity with much precision for this group; it 

is thus possible that the population value of labor productivity of services exporters may exceed the similar 

measure for nonexporters, which would be consistent with other information. 
2-6 

TABLE 2.1 Selected services SMEs: Comparison of revenue for exporting versus nonexporting firms 

Mean revenue per firm in 

2007, $ 

Export 

revenue 

premium

Mean revenue growth 

rate 2002–07, % 

Exporter Nonexporter 2007 a Exporter Nonexporter 

Securities, commodity contracts, and 

other financial investment and related 

activities 17,169,940 2,132,563 8.1 135.1 62.7 

Other information services 3,632,238 713,891 5.1 26.6 25.6 

Repair and maintenance 2,263,552 595,156 3.8 35.6 25.1 

Motion picture and sound recording 

Industry 3,818,972 1,101,087 3.5 29.3 14.7 

Lessors of nonfinancial intangible assets 

 (except copyrighted works) 11,246,899 3,303,559 3.4 51.5 38.1 

Broadcasting (except internet) 6,571,079 2,083,200 3.2 -8.2 28.1 

Professional, scientific, and technical 

services 2,654,586 824,622 3.2 17.8 19.4 

Internet service providers, web search 

portals, and data processing services 6,328,557 2,017,953 3.1 32.3 38.7 

Publishing industries 5,643,472 1,928,355 2.9 39.5 18.6 

Rental and leasing services 5,221,121 1,897,770 2.8 -4.5 33.7 

Administrative and support services 2,174,635 773,710 2.8 16.5 23.9 

Telecommunications 6,994,664 3,230,888 2.2 -19.6 22.5 

Waste management and remediation 

services 4,051,142 1,848,066 2.2 -36.0 37.4 

Credit intermediation and related 

activities 5,496,633 3,369,398 1.6 -20.1 19.0 

Internet publishing and broadcasting 2,931,914 1,798,766 1.6 37.9 16.3 

Performing arts, spectator sports, and 

related industries 1,781,371 1,264,038 1.4 -6.1 32.2 

All selected services SMEs 3,802,055 1,001,102 3.8 32.3 23.6 

Source: Commission calculations from Census data. 

Note: These data are aggregated at the 3-digit NAICS. 

a

The export revenue premium is the ratio of the exporters’ revenue value to the revenue value of 

nonexporters. A premium greater than one indicates that exporters’ revenue was higher than nonexporters.
2-7 

TABLE 2.2 Selected services SMEs: Comparison of labor productivity for exporting versus nonexporting firms 

 2002 2007 2002-2007 

Exporter 

labor 

productivity 

(revenue/ 

employee) 

Export 

labor 

productivity 

premiuma

Exporter 

labor 

productivity 

(revenue/ 

employee) 

Export 

labor 

productivity 

premiuma

Nonexporter 

growth 

rates 

Exporter 

growth 

rates 

$ $ % 

Other information services 153,609 2.8 212,942 2.8 37.2 38.6 

Securities, commodity contracts, 

 and other financial investment 

 and related activities 544,318 2.0 1,158,145 2.7 60.2 112.8 

Administrative and support 

services 128,998 2.3 152,810 2.2 25.1 18.5 

Performing arts, spectator sports, 

and related industries 185,890 1.9 264,250 1.8 49.0 42.2 

Motion picture and sound 

recording industry 297,435 1.6 406,510 1.7 30.4 36.7 

Rental and leasing services 416,344 2.3 361,939 1.7 19.9 -13.1 

Publishing industries 183,554 1.5 245,396 1.6 20.8 33.7 

Professional, scientific, and 

technical services 169,332 1.5 224,411 1.6 23.6 32.5 

Repair and maintenance 139,573 1.4 186,121 1.5 24.2 33.4 

Telecommunications 462,124 1.9 385,337 1.4 16.0 -16.6 

Internet service providers, web 

search portals, and data 

processing services 157,334 1.3 233,673 1.4 42.1 48.5 

Credit intermediation and related 

activities 317,942 1.6 343,540 1.4 27.6 8.1 

Broadcasting (except internet) 286,266 2.7 178,294 1.2 33.3 -37.7 

Lessors of nonfinancial intangible 

assets (except copyrighted 

works) 402,196 1.3 543,080 1.2 48.8 35.0 

Waste management and 

remediation services 265,069 2.2 200,986 1.2 32.2 -24.2 

Internet publishing and 

broadcasting 165,858 1.1 219,541 1.0 44.3 32.4 

All selected services SMEs 194,050 1.8 277,984 2.1 26.8 43.3 

Source: Commission calculations from Census data. 

Note: These data are aggregated at the 3-digit NAICS. 

a

The export labor productivity premium is the ratio of mean labor productivity of exporters to that of nonexporters.

3-1

CHAPTER 3 

Examination of Services SME Exporters

Key Findings

Relatively few services SMEs export; however, export activity among those that do, is 

often relatively dynamic. Among services exporting firms and among services 

multinational companies (MNCs), SMEs are more export-oriented than their large 

counterparts. Additionally, in the recent period, services SMEs’ cross-border exports 

grew faster than that of large services firms and sales by foreign affiliates of SME MNCs 

outpaced that of foreign affiliates of large MNCs. As noted in chapter 1, the examination 

of both cross-border exports by services SMEs and services supplied through SME 

MNCs and their foreign affiliates is based on data that for the first time report services 

trade activity by firm size. 

Using special tabulations prepared by the Census and the BEA for 2007 (the most recent 

year for which data are available), the Commission has found that while only a small 

fraction of services SMEs participate in exporting, services SME exporters are fast 

growing and relatively more export-oriented than large services exporters. Overall, 

services SMEs account for a small share of export revenue earned by large and small 

services exporters collectively. However, services SMEs that export derive a larger share 

of their total revenues from exporting than do large firms. Moreover, services SME 

exporters’ exports, revenues, and employment grew faster than those of large services 

exporting firms between 2002 and 2007. 

There were several standout subsectors among services SMEs. Information services firms 

accounted for the highest percentage of all exporting establishments, as well as leading in 

terms of employment and revenue generated by exporters among all U.S. services SME 

exporters included in the analysis. In addition, SME exporters of administrative, support, 

waste management, and remediation services ranked highest in share of exports by large 

firms and SMEs collectively, while SME exporters of finance and insurance services 

ranked highest in the ratio of export revenue to total revenue. 

The Commission also found that U.S. parents of SME MNCs in services industries 

accounted for only a small share of MNCs’ total sales and foreign sales by all U.S. 

parents. Nonetheless, U.S. parents of SME MNCs in services industries are more exportoriented than large services MNCs as measured by their share of foreign sales to total 

sales. They also recorded higher foreign sales growth than large MNCs during 2004-07. 

Likewise, foreign affiliates of SME MNCs in services industries accounted for only a 

small share of all foreign affiliate sales. Such affiliates, however, recorded higher total 

sales growth than foreign affiliates of large services MNCs during 2004-07. It is worth 

noting that virtually all foreign affiliates’ sales remain in foreign markets (host countries 

and third countries), rather than being exported back to the United States.1

 1 The term “third country” in this chapter is used differently than in USITC Title VII investigations. Sales 

by foreign affiliates in third countries refer to countries other than the United States and the host country of 

affiliates. 
3-2

This chapter begins with a discussion of tradable services, which provides context for the 

analysis that follows. The analysis focuses first on cross-border exports by services SMEs 

and second on services SME MNCs. The chapter concludes by briefly identifying 

remaining data gaps that impede further examinations of services SMEs’ exports. 

Tradable Services

Services are “traded” or provided to foreign markets and consumers through four modes 

or channels of delivery—cross-border supply (mode 1), consumption abroad (mode 2), 

commercial presence (mode 3), and the presence of natural persons (mode 4)—which are 

exemplified below.2

 The cross-border supply of services occurs when an individual or firm in one 

country provides a service to an individual or firm in another country, with 

people, information, or money crossing national boundaries in the process. 

An example of such a transaction is an advertising firm in the United States 

delivering an advertising plan by e-mail to a client in the United Kingdom.

 Consumption abroad takes place when a resident in one country consumes 

services while visiting or temporarily residing in another country. For 

instance, a Chinese national that pursues graduate studies at a university in 

the United States is engaging in consumption abroad; the provision of 

educational services by the U.S. institution to the Chinese resident is 

considered a U.S. export.

 Services delivered via commercial presence occurs when a firm from one 

country establishes an affiliate in another country, with the income generated 

from affiliate transactions appearing as direct investment income in the 

balance of payments.3

 Such trade would take place, for example, if a 

subsidiary of a U.S. management consulting firm, established in Germany, 

were to provide services to local clients.

 Services trade via the presence of natural persons occurs when an individual 

service supplier travels to another country on a short-term basis to supply 

services. A U.S. architect traveling to France to render design advice is an 

example of services supplied through this channel.4

Services firms in all industries could engage in international trade through the four modes 

of delivery mentioned above. In many services industries, however, the share of SMEs 

that conduct business with foreign clients is small and it is exceptionally low in others. 

For instance, trade in retail services is primarily achieved through commercial presence, 

 2 These modes of services trade delivery are defined under the General Agreement on Trade in Services. 

For more information, see WTO, “Chapter 1: Basic Purpose and Concepts,” undated (accessed August 30, 

2010). 3

 By contrast, “cross-border transactions” in which providers in one country sell services to consumers in 

another country appear as imports and exports in the balance of payments. See chapter 4 discussion in 

USITC, Small and Medium-Sized Enterprises: Overview, 2010, 4-1. 4

 Official data on U.S. services trade published by the BEA captures services provided through mode 1 

(cross-border supply), mode 2 (consumption abroad), and some mode 4 (presence of natural persons) as 

cross-border imports and exports. Services provided through mode 3 (commercial presence) are captured as 

affiliate transactions. Data collected by the USITC questionnaire include all four modes of delivery. 
3-3

and small or boutique stores often lack the financial capital to establish brick-and-mortar 

operations overseas.5

 At the same time, restrictions on establishing a commercial 

presence in a particular foreign market may hinder trade in professional services, though 

professionals may be able to participate in the market by traveling there briefly to 

perform the service demanded and then returning home (presence of natural persons). In 

addition to four modes of services delivery, there are varying means by which firms 

attract foreign clients (see box 3.1 for a comparison between services and manufacturing 

SMEs’ marketing methods to foreign clients). 

Cross-Border Trade

This section examines services SME exporters, in part by comparing them to all services 

SMEs, all large services firms, 6 and large services exporters based on a special tabulation 

provided by the Census Bureau, which focuses on seven broad services sectors 

considered highly “tradable.”7

 The discussion identifies key exporting sectors and 

examines growth and employment trends among the sectors. The discussion concludes by 

examining the relative export-orientation of services SME exporters, or the degree to 

which exports affect employment and sales. 

Top Five Services Subsectors

The largest services exporting sectors for both SMEs and large firms, in terms of export 

revenue in 2007, were finance; information; and professional, scientific, and technical 

services. On a more disaggregated industry level, services SME exports were highest in 

portfolio management; architectural, engineering, and related services; computer systems 

design and related services; software publishing services; and management, scientific, 

and technical consulting services (figure 3.1). Large services firms were active exporters 

in two of the same categories: software publishing and scientific research and 

 5

 For a discussion of trade in retailing services, see USITC, Recent Trends in U.S. Services Trade, 2010, 

chap. 6. 6 In this chapter, “firms” refers to a business organization or entity consisting of one or more domestic 

establishments under common ownership or control. “Establishments” refer to a single physical location 

where business is conducted or where services are performed. In many cases, firms, particularly large firms, 

have multiple domestic establishments. The Census data presented in this chapter were tabulated according to 

firm size categories: firms with 0–19 U.S. employees, 20–99 U.S. employees, 100–499 U.S. employees, and 

less than 500 U.S. employees are all SMEs; and firms with 500 or more U.S. employees are large firms. The 

data reported throughout this chapter, however, refer to the establishments of SMEs and large firms, rather 

than the firms themselves. For instance, figure 3.3 refers to the number of employees in exporting 

establishments, by large firms and by SMEs. Since firms may have multiple establishments, a single large 

firm may have some exporting establishments and some nonexporting establishments. Therefore, the 

percentage of exporting large-firm establishments should not be construed to represent the percentage of 

exporting large firms. 7 These sectors are considered “tradable” through mode 1 (cross-border supply), though it is likely that 

the tabulation also captures mode 2 (consumption abroad) and mode 4 (presence of natural persons) 

transactions. For purposes of this analysis, the seven broad services sectors are at times disaggregated into 

their component subsectors such that, for instance, the subsector “portfolio management” can be examined 

apart from the “finance and insurance” sector in which it is categorized. 
3-4

BOX 3.1 Marketing methods to foreign clients 

In marketing to foreign clients, both services and manufacturing SMEs rely principally on foreign customers to initiate 

contact for the purchase of goods and services. Earlier studies on the export behavior of SMEs suggest that this type 

of marketing method is a “reactive” rather than a “proactive” strategy.a

Methods of attracting foreign clients, 2009

Foreign 

client 

initiated 

contact 

Existing 

business 

relationship 

Trade 

shows 

Firm’s 

Website 

Personal 

relationship 

Other 

marketing 

methods 

Assistance of 

private firm 

Assistance 

of U.S. 

government 

 —— Rank (1 = highest)—— 

Services firms 

 SMEs (employees<500) 1 2 3 4 5 6 7 8 

 Less than 20 emp. 1 3 4 2 5 6 7 8 

 Between 20 and 99 emp. 1 2 3 6 4 5 7 8 

 Between 100 and 499 emp. 2 1 4 5 3 6 7 8 

 Large firm (employees>500) 2a 1 6 2a 4 5 7 8 

Manufacturers 

 SMEs (employees<500) 1 3 6 5 2 7 4 8 

 Less than 20 emp. 1 4 6 5 2 7 3 8 

 Between 20 and 99 emp. 2 1 4 3 5 6 7 8 

 Between 100 and 499 emp. 2 1 3 5 4 6 7 8 

 Large firm (Employees>500) 3 1 4 6 2 5 7 8 

Source: Data compiled from responses to USITC questionnaire. 

Note: Overall rank based on calculated mean scores ranging from 1 to 9. 

a Both categories have a mean score of 2.64.

For services SMEs, the second most popular method of cultivating foreign sales is through existing business 

relationships. For manufacturing SMEs, it is through personal relationships with overseas clients. Services 

SMEs also attract foreign clients through participation in trade shows and through their firms’ Web sites; 

these two marketing methods ranked third and fourth, respectively, among services SMEs that responded to 

the questionnaire. By contrast, large firms in both the services and manufacturing sectors indicated that 

existing business relationships served as the primary means of attracting foreign clients, followed by the 

foreign client initiating contact (for services firms) and personal relationships with foreign clients (for 

manufacturing firms). Of note, firms across all employment categories ranked “assistance from the U.S. 

government” as the least frequently used method for attracting overseas clientele. 

a

 Pope, “Why Small Firms Export: Another Look,” 2002, 17–26; SBA, “Costs of Developing a Foreign 

Market for a Small Business,” November 2004, 5, and “The Small Business Economy,” 2008, 101.
0 2 4 6 810 12

Management, scientific, &

technical consulting services

Software publishers

Computer systems design &

related services 

Architectural, engineering, &

related services 

Portfolio management

Billion $

FIGURE 3.1 Portfolio management firms are the largest SME exporters: SME and large services firms' 

export revenue, top five subsectors, 2007a 

SMEs

(less than 500 employees)

0 2 4 6 8 10 12 14 16 18

Motion picture & video

production 

Savings institutions (federally

chartered) 

Scientific research &

development services 

National commercial banks

(banking) 

Software publishers

Billion $

Large services firms

(500 or more employees)

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations. 

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 North American Industry Classification System 

(NAICS) codes. The data include selected subsectors in the following NAICS sectors: 51 (information), 52 (finance and insurance), 53 

(real estate and rental leasing), 54 (professional, scientific, and technical services), 56 (administrative and support and waste 

management and remediation services), 71 (arts, entertainment, and recreation), and 81 (other services (except public 

administration)). Data are generally provided at the 4-digit NAICS level except where complete 4-digit industry data were not 

collected. In those cases data are shown at more detailed NAICS levels. 

 a

All numbers in the table refer to revenue from exported services (in billions of dollars) in 2007. However, the numbers for some 

industries in the information sector include exports of services and goods.

3-5
3-6

 

development services.8 Large services firms also recorded large export revenues in 

national commercial banking, federally chartered savings institutions, and motion picture 

and video production. 

Increasing wealth and incomes in emerging economies have provided new investment 

opportunities and clients to services SMEs; as noted, a large share of total services SME 

export revenue derives from SMEs in portfolio management. The number of SME 

exporting establishments in portfolio management increased from 854 in 2002 to 1,251 in 

2007; by 2007, SME exporters of portfolio management derived 41.9 percent of their 

revenue from exports.9

U.S. services SME exporters and large services exporters are both active in software 

publishing, but for somewhat different reasons.10 For large services exporters, the main 

reason is the globalization of the information industry: major large companies, including 

Microsoft Corporation, Oracle Corporation, and International Business Machines (IBM) 

Corporation, have operations in foreign markets, and sales to foreign clients represent 

about half of total sales. Smaller firms are active exporters in this area partly because 

software is typically provided to clients electronically, thereby reducing the transaction 

costs associated with exporting. Further, small U.S. software publishers are known to be 

especially innovative, enabling them to provide services unavailable from other firms. 

Partnerships with, or acquisition by, larger software firms can also boost smaller firms’ 

exports by allowing them to leverage the resources and experience of the larger firm.11

Services SME Share of Exports and Employment

Compared with large services exporters, services SMEs account for a small share of total 

export revenue and employment in services sectors covered by the Census data. In 2007, 

cross-border exported services as reported by Census totaled approximately $124 billion, 

which represents only part of services trade data as reported by the BEA.12 SMEs 

generated 37.6 percent (nearly $47 billion) of total cross-border services exports, and 

8 Similar to SMEs overall (as shown in figure 3.1), each finer-size category of SME generated a high 

share of their export revenue (among the top five) in the following industries: portfolio management; 

architectural, engineering, and related services; and computer systems design and related services. Further, 

similar to both SMEs overall and large firms, SMEs with 20–99 employees and 100–499 employees recorded 

large export revenues in software publishing; like large services firms, the exports of SMEs with 20–99 

employees and 100–499 employees were highest in scientific research and development services. Finally, 

like SMEs overall, SMEs with 0–19 employees generated a high share of their export revenue in 

management, scientific, and technical consulting services; they also recorded large export revenue in office 

administrative services. 9 USDOC, Census, Service Sector Statistics Division; USITC staff calculations. In 2002, portfolio 

management ranked second highest (after computer systems design and related services) in services SME 

export revenue. 10 Census Web site. http://www.census.gov/epcd/ec97/def/5112.HTM (accessed August 18, 2010). 

Software publishing is mostly accounted for by businesses involved in producing and distributing computer 

software. 11 IBISWorld, “Software Publishing in the US Industry,” July 2010, 18, 20–21. 12 USDOC, BEA, U.S. International Services, (accessed August 10, 2010); BEA representative, telephone 

interview by USITC staff, May 11, 2010. The U.S. Census reports cross-border services exports of $124 

billion in 2007, while the BEA estimates services exports of $478 billion. Differences in services coverage 

explain most of this disparity. As discussed in Chapter 1, Census data on only seven services sectors are 

available for this report; among those seven sectors, data were complete only for (1) professional, scientific, 

and technical services; and (2) administrative and support and waste management and remediation services. 

(see appendix C). On the other hand, BEA covers most types of services, including travel services, freight 

and port services, and royalties and license fees, which are not included in the Census data, and respectively 

accounted for 20.3 percent, 10.8 percent, and 17.5 percent of cross-border services exports as published by 

BEA in 2007. 
3-7

 

large firms generated the remaining 62.4 percent (nearly $78 billion) (figure 3.2). Among 

SMEs, no one size class dominated export revenue. 

Services SMEs accounted for 42.7 percent of all employees in services sectors covered 

by the 2007 Census data, with 39.9 percent employed in services SME nonexporting 

establishments and 2.8 percent employed in services SME exporting establishments 

(figure 3.3).13 These ratios were very similar to those for 2002.14

While exporting is not common among services SMEs, SMEs that do export derive a 

larger share of their total revenue from exporting than do large services firms. 

Specifically, only 3.7 percent of all services SMEs exported their services in 2007, 

compared with 9.7 percent of large services companies (table 3.1, column 1). Just 

13.3 percent of total SME revenue was generated by exporting establishments, compared 

with 16.3 percent by large companies (column 3).15 However, among services SMEs that 

export, the export revenue/total revenue ratio (22.4 percent) was significantly higher than 

that of large services exporters firms (15.3 percent) (column 6).16 SME exporters with the 

lowest number of employees had the highest export revenue/total revenue ratios.17

SME Exporters’ Growth

During 2002–07, services SME exporters’ export revenues, total revenues, and 

employment increased by more than that of large services exporting firms. SME export 

growth (90.4 percent) marginally outpaced large firms’ export growth (88.4 percent) 

(figure 3.4). Disparities in revenue and employment growth were wider, with SME 

exporters’ revenue and employment increasing by 64.1 percent and 11.9 percent, 

respectively, whereas revenues for large exporting firms grew by 25.4 percent and 

employment declined by 0.6 percent. Moreover, among services SME exporters, rates of 

growth in exports, revenues, and employment surpassed the SME average.18

Sectoral Analysis

SMEs in information services are the most active in export markets among all services 

sectors. In 2007, 11.2 percent of SMEs in information services exported their services, 

compared with 3.7 percent of all services SMEs, as indicated earlier (table 3.2, column 

1).19 Further, 20.1 percent of SME employees in information services were employed by 

exporting SMEs (compared with only 6.6 percent overall) and 26.7 percent of SME 

revenue in information services was derived from SME exporters (compared with 

13.3 percent overall) (table 3.2, columns 2 and 3). The unusually high export activity of 

SMEs in information services may be explained by the composition of information 

services, which includes industries that export goods and services. 

13 See appendix table D.1 for more detail. 14 See appendix table D.2. For example, in 2002, SMEs generated 37.3 percent of all export revenue 

earned by large and small firms collectively. 15 Between 2002 and 2007, this difference narrowed, with larger firms’ share decreasing and SMEs’ 

share increasing: in 2002, only 11.1 percent of all SME revenue came from establishments with revenue from 

exported services, as compared with 18.5 percent for large firms. See appendix table D.3 for 2002 data. 16 Both large and small firms’ export revenue as a share of total revenue did not exceed 3.0 percent in 

either 2002 or 2007. 17 See appendix table D.3 for similar trends in 2002. 18 See appendix tables D.4 and D.5 for growth rates of finer categories of SMEs and underlying data. 19 As shown in table 3.2, 9.3 percent of SMEs in arts, entertainment, and recreation export. 
20-99 employees 

13.4%

100-499 employees 

14.0%

Large firms 62.4%

0-19 employees 

10.2%

Total SMEs 37.6%

of which: 

FIGURE 3.2 No one SME size class dominates export revenue: SMEs' and large services firms' 

shares of export revenue, with SMEs' share broken down by number of employees, 2007

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS codes. The data include selected 

subsectors in the follow ing NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and rental leasing), 54

(professional, scientific, and technical services), 56 (administrative and support and w aste management and remediation 

services), 71 (arts, entertainment, and recreation), and 81 (other services (except public administration)). 

 aDue to differences in sectoral coverage, the addition of some data for size class of SMEs do not correspond to total SME 

contributions to export revenue.

Total: $124.3 billion

a

a

a

3-8
Large firm exporters SME exporters 2.8%

5.2%

SME nonexporters 

39.9%

Large firm 

nonexporters 52.1%

FIGURE 3.3 SME exporters account for a very small share of service sector employees: All services 

establishments, share of total services employees, 2007

Large firms: 57.3%

SMEs: 42.7%

Total: 25.4 million employees

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS codes. The data include selected 

subsectors in the follow ing NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and rental leasing), 54 

(professional, scientific, and technical services), 56 (administrative and support and w aste management and remediation 

services), 71 (arts, entertainment, and recreation), and 81 (other services (except public administration)). 

3-9
TABLE 3.1 Revenue from exported services, subset of services industries, 2007a

(1) 

Number of 

establishments 

(2) 

Number of 

employees 

(3) 

Total revenue 

($1,000) 

(4) 

Export revenue 

from exported 

services 

($1,000) 

(5) Export revenue 

as a share of all 

establishment 

revenue (%) (4b / 

3a) 

(6) Export revenue 

as a share of total 

revenue for 

establishments 

reporting exported 

services (%) (4b / 

3b) 

Less than 500 employees (SMEs) 1,391,916 10,737,066 1,567,451,560 

a. All establishments 

b. Establishments with 

receipts/revenue from exported services 52,035 712,765 208,526,835 46,696,428 

Share of total (%) 3.7 6.6 13.3 

Export/revenue ratio 3.0 22.4 

500 or more employees (large 

companies) 

a. All establishments 288,577 14,400,930 3,103,898,563 

b. Establishments with receipts/revenue from 

exported services 28,083 1,316,738 506,479,845 77,567,473 

Share of total (%) 9.7 9.1 16.3 

Export/revenue ratio 2.5 15.3 

Sum of SMEs and large companies 

a. All establishments 1,680,493 25,137,996 4,671,350,123 b. Establishments with receipts/revenue 

from exported services 80,118 2,029,503 715,006,680 124,263,901 

Share of total (%) 4.8 8.1 15.3 

Export/revenue ratio 2.7 17.4 

Classes of SMEsb 

0-19 employees 

a. All establishments 1,211,861 4,041,509 590,661,292 

b. Establishments with 

receipts/revenue from exported services 41,662 166,669 43,310,163 12,586,731 

Share of total (%) 3.4 4.1 7.3 

Export/revenue ratio 2.13 29.1 

20-99 employees 

a. All establishments 117,802 3,378,925 487,750,274 

b. Establishments with receipts/revenue 

from exported services 7,222 256,318 67,378,939 16,565,029 

Share of total (%) 6.1 7.6 13.8 

Export/revenue ratio 3.4 24.6 

100-499 employees 

a. All establishments 62,253 3,316,355 488,951,394 

b. Establishments with receipts/revenue 

from exported services 3,151 288,183 97,247,167 17,268,093 

Share of total (%) 5.1 8.7 19.9 

Export/revenue ratio 3.5 17.8 

Sources: USDOC, U.S. Census Bureau, Service Sector Statistics Division; USITC staff calculations. Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS codes. The data include selected subsectors in the following NAICS sectors: 51 

(information), 52 (finance and insurance), 53 (real estate and rental leasing), 54 (professional, scientific, and technical services), 56 (administrative and support and waste 

management and remediation services), 71 (arts, entertainment, and recreation), and 81 (other services (except public administration)). 

aAn exported service is a product (e.g., service performed, license agreement) that is performed for, or sold or transferred to, a customer or client (individual, government, 

business establishment, etc.) located outside the United States (i.e., outside the 50 states, District of Columbia, U.S. commonwealth territories, or U.S. possessions). Included are products provided to unaffiliated and affiliated foreign firms (e.g., foreign parent firms, subsidiaries, branches). Excluded are products provided to domestic subsidiaries of 

foreign firms. Some industries in the information sector include exports of services and goods. bData for “Classes of SMEs” may not add to totals listed under “Less than 500 employees” due to suppression of sectoral/industry data for some disaggregated classes of 

SMEs.

3-10 
37.2%

5.9% 11.9%

90.4%

64.1%

0%

20%

40%

60%

80%

100%

Number of

employees

Revenue Exports

All establishments Exporting establishments

SMEs

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. The data include selected subsectors in 

the following NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and rental leasing), 54 (professional, 

scientific, and technical services), 56 (administrative and support and waste management and remediation services), 71 (arts, 

entertainment, and recreation), and 81 (other services (except public administration)). 

FIGURE 3.4 Services SMEs exporters outperform large services exporting firms: SMEs' and large services 

firms' growth rates, 2002–07

41.9%

9.2%

25.4%

-0.6%

88.4%

-20%

0%

20%

40%

60%

80%

100%

Number of

employees

Revenue Exports

Large firms

3-11 
Service sector

Percent of SMEs 

in exporting 

establishments

Percent of SME 

employees in 

exporting 

establishments

Percent of SME 

total revenue 

from exporting 

establishments

SME share of 

total exportsa

SME exporters' 

export revenue/ 

total revenue

Informationb 11.2 20.1 26.7 21.6 18.2

Finance and insurancec 2.9 5.4 17.6 38.3 28.3

Real estate & rental leasing 4.0 7.5 12.1 47.2 20.0

Professional, scientific, & 

technical services 4.2 8.3 12.4 49.5 21.0

Administrative & support and 

waste management & 

remediation services 1.3 1.6 3.4 63.4 26.0

Arts, entertainment, & 

recreationd 9.3 7.5 12.7 – 22.4

Other services (except public 

administratione 2.7 6.5 9.7 61.6 11.2

All sectors 3.7 6.6 13.3 37.6 22.4

 bSome industries in the information sector include exports of both services and goods. cFigures for the exports of large and small firms for one industry in this sector were not available in 2007. dFigures for the exports of large firms in this sector were not available in 2007. eFigures for the exports of large firms for one industry in this sector were not available in 2007. 

TABLE 3.2 SME involvement in exporting across services sectors, 2007 (%)

Notes: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. The data include 

selected subsectors in the following NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and 

rental leasing), 54 (professional, scientific, and technical services), 56 (administrative and support and waste 

management and remediation services), 71 (arts, entertainment, and recreation), and 81 (other services (except public 

administration)). Most sectors have varying industry coverage. Professional, scientific, and technical services has 

complete industry coverage; information services is missing only motion picture and video exhibition, NAICS 51213. For 

sectors with only a few industries, undisclosed export data are appropriately noted. 

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

 aAdding large firm shares to SME shares would equal 100 percent.

Information services firms include software publishers (NAICS 5112), where 

43.4 percent of SMEs in 2007 were engaged in exporting. The sector also includes other 

export-intensive industries such as motion picture and video distribution (NAICS 51212) 

and wireless telecommunications carriers (NAICS 5172), where the ratios of export 

revenue to total revenue were 38.2 and 46.9 percent, respectively, in 2007.20

However, SMEs in certain other sectors were also notable exporters by other measures. 

They accounted for a higher share of combined large-firm and SME exports and were 

more export-oriented as measured by the ratio of export revenue to total revenue. For 

example, SMEs in professional, scientific, and technical services accounted for a higher 

share of large firms’ and SMEs’ combined exports than SMEs in information services 

(49.5 percent compared with 21.6 percent) (table 3.2, column 4).21 Similarly, SMEs in 

administrative, support, waste management, and remediation services accounted for a 

high share of all exports by large and small firms (63.4 percent). Within the sector, 

industry-level exports by SMEs in office administrative services (NAICS 5611) 

accounted for 41.1 percent of SME exports and 26.1 percent of combined SME and large- 

 20 For more detail on information services, see appendix tables D.6 and D.7. 

3-12 

21 For more detail on professional, scientific, and technical services, see appendix tables D.8 and D.9. 
3-13 

firm exports.22 Further, as measured by SME exporters’ ratio of export revenue to total 

revenue, SMEs in finance and insurance (28.3 percent) and administrative, support, waste 

management, and remediation services (26.0 percent) were more export oriented than 

SMEs in information services (18.2 percent) or in overall services (22.4 percent) (table 

3.2, column 5). 

Services Supplied through U.S. MNCs

This section compares the services supplied by U.S. SME and large MNCs and their 

foreign affiliates based on data from the BEA.23 U.S. MNCs can service their foreign 

clients in two ways: (1) they can export across borders, an activity captured in this report 

as MNC parents’ sales to foreign persons and their foreign affiliates, and (2) they can sell 

their services through their foreign affiliates.24 The first two sections of this discussion 

focus on the services supplied through U.S. parents of U.S. MNCs, and the third and 

fourth sections concentrate on the services supplied through foreign affiliates. 

SME MNCs’ Share of U.S. Parent Sales

Both SME and large MNCs in services industries record most of their sales in the 

wholesale trade, finance and insurance, and “other” services sectors, but the distribution 

is not the same.25 In 2007, services SME MNCs derived a majority of their total sales in 

wholesale trade, which accounted for 48.8 percent of sales; “other” services industries, 

27.1 percent; and finance and insurance, which accounted for 15.8 percent (table 3.3, 

derived from column 1). While large services MNCs made most of their total sales in the 

same sectors, the sales were in different rank order: “other” services industries accounted 

for 37.8 percent; finance and insurance, 21.7 percent; and wholesale trade, 20.0 percent. 

 22 SMEs also accounted for a high share of sector exports in real estate and rental leasing (47.2 percent), 

and in other services (61.6 percent) compared with overall services (table 3.2, column 4). Within other 

services, however, export revenue for one subsector (of three total industries) was not available for large 

firms, which may partly explain the high SME share. Census representative, e-mail communication with 

USITC staff, July 19, 2010 and September 23, 2010. As discussed in chapter 1, there are various levels of 

sectoral coverage. Sectors 54 and 56 are complete. In Sector 51, data on exported services were not collected 

from part of 5121 (NAICS 51213: motion picture and video exhibition, which is the only industry missing 

from Sector 51). See Appendix C for a complete list of subsectors included in the data. 23 While this section focuses on the sales of U.S. parents and their foreign affiliates in services industries, 

chapter 4 uses the same data to further analyze operations of SME and large MNCs in select services as well 

as mining and manufacturing industries, including their exports and imports of goods and their relative labor 

productivity. 24 Foreign sales by U.S. parents of U.S. MNCs are mode 1 transactions (cross-border supply), and 

services supplied by foreign affiliates in their host country or third countries are mode 3 (commercial 

presence). 25 “Other services industries” consists of the following NAICS sectors: utilities; construction; retail trade; 

transportation and warehousing; real estate, rental, and leasing; management of companies and enterprises; 

administration, support, and waste management; health care and social assistance; accommodation and food 

services; and miscellaneous services. 
(1) Total 

sales 2007

(2) Share of 

total industry 

sales, 2007

(3) Average 

growth rate, 

2004–07a

(4) Foreign 

sales, 

2007b

(5) Share of

total industry 

foreign sales, 

2007

(6) Average 

growth rate, 

2004–07a

(7) Foreign 

sale share of 

all sales for 

size class in 

industry, 2007

Million $ Million $

All industriesc

0-499 employees 154,891 1.8 4.5 25,170 2.4 5.2 16.6

500 employees or more 8,459,842 98.2 6.9 1,029,432 97.6 11.9 12.2

All U.S. parents 8,614,733 6.9 1,055,142 11.6 12.2

Total services

0-499 employees 114,186 2.5 3.5 16,902 5.9 26.6 14.8

500 employees or more 4,476,627 97.5 6.5 269,599 94.1 22.6 6.0

All U.S. parents 4,590,812 6.4 286,499 22.8 6.2

Wholesale trade

0-499 employees 55,699 5.9 2.4 12,441 15.3 4.0 22.0

500 employees or more 896,138 94.1 9.4 68,716 84.7 10.7 7.7

All U.S. parents 951,837 8.9 81,156 9.1 8.5

Information

0-499 employees 3,861 0.6 -3.8 359 0.8 8.9 9.3

500 employees or more 665,006 99.4 6.6 42,407 99.2 7.4 6.4

All U.S. parents 668,868 6.5 42,766 7.4 6.4

0-499 employees 18,056 1.8 23.7 752 1.1 -18.2 4.2

500 employees or more 969,827 98.2 11.0 68,251 98.9 -7.0 7.0

All U.S. parents 987,882 11.1 69,003 -7.1 7.0

0-499 employees 5,630 2.2 0.1 795 4.4 23.0 14.1

500 employees or more 253,395 97.8 5.3 17,478 95.6 -7.2 6.9

All U.S. parents 259,024 5.1 18,273 -6.5 7.1

0-499 employees 30,940 1.8 10.3 2,555 3.4 30.0 8.3

500 employees or more 1,692,261 98.2 3.2 72,747 96.6 41.0 4.3

All U.S. parents 1,723,201 3.3 75,301 41.0 4.4

TABLE 3.3 U.S. multinationals: Sales and foreign sales of U.S. parents by industry and employment size of U.S. parent

Finance (except depository institutions) and insurance

Professional, scientific, and technical services

%

 c

Includes wholesale trade; information, finance (except depository institutions) and insurance; professional, scientific, and technical 

services; other service industries; mining and agriculture, forestry, fishing, and hunting; and manufacturing.

 d

"Other service industries" consists of the following NAICS sectors: utilities; construction; retail trade; transportation and 

warehousing; real estate and rental and leasing; management of companies and enterprises; administration, support, and waste 

management; health care and social assistance; accommodation and food services; and miscellaneous services.

 aGrowth rate of sales for other industries and total services is between 2006–07. 

%

Sources: USDOC, BEA, International Investment Division; and USITC staff calculations.

 b

This category is calcuated by adding sales to U.S. parents' foreign affilates and sales to other foreign persons.

Other service industriesd

3-14 
3-15 

 

SME MNCs in services industries account for a very small share of total MNC sales and 

foreign sales by U.S. parents, with one exception.26 Within services industries as a whole, 

SME MNCs accounted for 2.5 percent and 5.9 percent of total U.S. parent sales and 

foreign sales in 2007, respectively (table 3.3, column 2 and column 5). Within services 

industries other than wholesale trade, the SME share of foreign sales by U.S. parents 

ranged from approximately 1 percent to just over 4 percent. SMEs in wholesale trade, 

however, had a disproportionately high share of foreign sales by U.S. parents, at 

15.3 percent.27 One reason for the relatively robust showing of SME MNCs in wholesale 

trade could be that they distribute intermediate goods which are used in the final 

production of other goods and services.28 For example, Weaks Martin Implement Co., 

Inc., an SME with a foreign affiliate in Mexico, distributes equipment for use in farm and 

garden activities.29

Although U.S. parents of services SME MNCs account for a small share of total U.S. 

sales and foreign sales of services MNCs, SME MNCs are more export-oriented than 

large MNCs as measured by the ratio of foreign sales to total sales. Across all sectors, 

SME MNC parents’ foreign sales accounted for 16.6 percent of total sales in 2007, 

compared to a share of 12.2 percent among parents of large MNCs (table 3.3, column 7). 

Within the services sector, there was a wider gap between the ratio of foreign sales to 

total sales by U.S. parents (14.8 percent for SME MNCs versus 6.0 percent for large 

MNCs), signifying that SME MNCs in services industries are particularly export-oriented 

(figure 3.5). Within wholesale services, the SME MNC foreign sales to total sales ratio of 

U.S. parents (22.0 percent) was almost triple that of the parents of large MNCs 

(7.7 percent). Similarly, within most other industries—information; professional, 

scientific, and technical services; and “other” services—the SME MNC ratio of foreign 

sales to total sales by U.S. parents was significantly higher than that of large MNCs. This 

result—similar to the SME export revenue/total revenue ratio reported in the previous 

section—indicates that relative to large multinationals, SME multinationals are more 

export-oriented and possibly more reliant on sales in foreign markets. The exception to 

this pattern was in financial services, where SME MNCs are less export-oriented than 

large MNCs. This exception may be because affiliate transactions comprise a vast share 

of trade in this sector, particularly in insurance services: most countries prohibit crossborder trade in personal lines of insurance in the interest of consumer protection.30

26 Foreign sales are calculated by adding U.S. MNC sales to their foreign affiliates and their sales to other 

foreign persons. BEA representative, e-mail communication with USITC staff, March 15, 2010. Although 

sales to U.S. parents’ foreign affiliates and sales to other foreign persons may be considered exports, sales 

data do not exactly correspond to export data. For example, there are cases where there is an export but a sale 

is not recorded (i.e., if a parent ships a good to its foreign affiliate and there is no change in ownership, then a 

sale may not get charged) and cases where there is a sale but an export is not recorded (i.e., an affiliate may 

attribute a sale to the U.S. parent even if the product was never produced in and never left the United States). 

According to a USITC staff calculation, the ratio of exports of goods to sales of goods is 71.7 percent. 27 USDOC, BEA, Survey of Current Business 87, 2007, 110. It is important to note that within the BEA 

sales data, the distributive services that wholesalers provide (which are likely a significant portion of 

wholesale services) are included in the sales of goods, and the data reported in table 3.3 mostly reflect the 

sales of goods. BEA’s measures of distributive services raised the 2005 estimate of “services provided to 

U.S. residents through U.S. affiliates” by $171.0 billion, or 44 percent. 28 Additionally, SME wholesalers could distribute products of large firms as well as small ones. See 

USITC, Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports, 2010, 3-3. 29 Bureau van Dijk, ORBIS database (accessed August 26, 2010). 30 USITC, Recent Trends, 2008, 4-1. 
0

5

10

15

20

25

All services Finance &

insurance

Information Professional,

scientific, &

technical

services

Wholesale trade Other service

industries

Percent

SMEs (0-499 employees) Large firms (500 employees or more)

FIGURE 3.5 SME services MNCs are more export-oriented than large services MNCs: Ratio of foreign 

sales to total sales by U.S. MNCs, 2007a

Sources: USDOC, BEA, International Investment Division; and USITC staff calculations.

Note: Foreign sales are calcuated by adding sales to U.S. parents' foreign affilates and sales to other foreign persons.

 a

Finance excludes depository institutions. "Other service industries" consists of the following NAICS sectors: utilities; 

construction; retail trade; transportation and warehousing; real estate and rental and leasing; management of companies and 

enterprises; administration, support, and waste management; health care and social assistance; accommodation and food services;

and miscellaneous services.

Services SME MNCs’ Foreign Sales Growth

Between 2004 and 2007, SME MNCs in services industries experienced lower growth of 

total sales, but higher growth of foreign sales compared with large MNCs; again, 

however, this pattern was not uniform across all sectors. SME MNC total sales in 

services industries grew more slowly (3.5 percent) than those of large MNCs (6.5 

percent) during 2004–07 (table 3.3, column 3). However, SME MNCs’ foreign sales in 

services industries grew faster (26.6 percent) than those of large MNCs (22.6 percent) 

(column 6). The gap was far wider in professional, scientific, and technical services, 

where foreign sales by SME MNCs grew on average by 23 percent, while foreign sales 

by large MNCs declined by 7.2 percent. The high growth of foreign sales by professional 

services SMEs may be because SME multinationals in this sector rely more heavily on 

parents than their affiliates to serve foreign markets, which is reinforced by the 

professional services SME export orientation discussed above.31 On the other hand, 

foreign sales declined on average for both SME MNCs and large MNCs in financial 

services. This decline may be explained in part by the regulations discussed above, which 

require certain financial services providers to supply their services to foreign clients 

through foreign affiliates.32

 31 During 2004–07, total sales by foreign affiliates of SME parents in professional, scientific, and 

technical services declined by 9.3 percent (table 3.4, column 3). 

3-16 

32 During 2004–07, total sales by foreign affiliates of SME parents in finance and insurance services 

increased by 54.3 percent (table 3.4, column 3). 
3-17 

 

Foreign Affiliate Sales

U.S. SME parents in “other” services industries had the highest foreign affiliate sales in 

2007 (42.8 percent), followed by wholesale trade (24.7 percent), and finance and 

insurance (21.8 percent) (figure 3.6).33 Similarly, the highest shares of foreign affiliate 

sales of large services parents were from “other” services industries (28.6 percent), 

wholesale trade (22.4 percent), and finance and insurance (22.1 percent). Foreign 

affiliates of services SME parents had a lower share of their sales from professional, 

scientific, and technical services (4.0 percent) than foreign affiliates of large parents 

(13.1 percent), which is consistent with the earlier finding that SME multinationals in this 

sector rely heavily on their parents to serve foreign markets. 

Foreign affiliates of SME MNCs in services industries account for a low share of all 

foreign affiliate sales. Foreign affiliates of SME parents accounted for 6.7 percent of all 

services sector sales by foreign affiliates (table 3.4, column 2).34 The SME share of 

foreign affiliate sales in services, broken out by destination of sales, are as follows: the 

SME share of local sales (or sales to persons in the country where the affiliate is located) 

was 5.6 percent; the SME share of sales to the United States was 7.2 percent; and the 

share of SME sales to third countries (or sales to persons in foreign countries other than 

the country where the affiliate is located or the United States) was 9.1 percent.35

Foreign sales by affiliates of U.S. SME parents grew faster than those of large parents; in 

fact, affiliates of SME parents in services industries had higher growth in total sales, local 

sales, and sales to third countries (every category except sales to the United States). 

Between 2004 and 2007, the average growth of total sales in services industries grew by 

20.4 percent for affiliates of SME parents compared with 13.7 percent for those of large 

parents; between 2005 and 2006, local sales grew by 43.7 percent for affiliates of SME 

parents compared with 11.5 percent for those of large parents, and third-country sales 

grew by 31.1 percent compared to 27.9 percent for those of large parents (table 3.4 

column 3, column 6, and column 12).36 The growth of sales by affiliates of SME parents 

in financial services, in particular, outperformed the growth of sales by affiliates of large 

parents.37 The BEA reports that for the beginning of the period (2004–05), the highest 

(and largest relative) increase of foreign affiliate sales in finance and insurance was 

mostly attributed to greater activity in foreign securities markets, higher value in 

commodity markets, and rising demand for both life and non-life insurance in Asia and 

the Pacific and in Latin America and other Western Hemisphere countries.38

33 Foreign affiliates are categorized under the sector and employment of their U.S. parents. 34 The SME share of foreign affiliate sales in the services sector (6.7 percent) was higher than the SME 

share of foreign sales in all industries (2.5 percent) (table 3.4, column 2). 35 BEA representative, e-mail message to USITC staff, March 15, 2010. The portion of foreign affiliate 

sales to the United States and to third countries can be considered foreign affiliate exports. However, as 

discussed earlier, sales and export data do not perfectly match. 36 While it was possible to calculate total sales growth for services industries (as a whole) between 2004 

and 2007, growth of local sales, sales to third countries, and sales to the United States for services industries 

could only be calculated between 2005 and 2006. 37 As noted in the table, the growth rate of certain sales for finance and other industries are based on 

varying years between 2004 and 2007. 38 USDOC, BEA, Survey of Current Business 87, 2007, 108–9. 
SMEs (of U.S. parents with 0-499 employees)

Professional, scientific, 

& technical services 

4.0%

Information 6.7%

Finance & insurance 

21.8%

Wholesale trade 

24.7%

Other service 

industries 42.8%

SME total: $83.5 billion

FIGURE 3.6 SME parents in "other service industries" have highest foreign affiliate sales: 

Distribution of foreign affiliate sales in service sectors, 2007

Large firms (of U.S. parents with 500 employees or more)

Information 13.6%

Professional, scientific, 

& technical services 

13.1%

Other service 

industries 28.6%

Wholesale trade 

22.4%

Finance & insurance 

22.1%

Large firms total: $1,210.8 billion

Sources: USDOC, BEA, International Investment Division; and USITC staff calculations.

Notes: Total sales include local sales (sales charged by an affiliate to persons in the country where the affiliate is located), sales to 

the United States, and sales to third countries (sales charged by an affiliate to persons in foreign countries other than the country 

where the affiliate is located). Data for "other service industries" are for 2006 and consist of the following NAICS sectors: Utilities; 

construction; retail trade; transportation and warehousing; real estate and rental and leasing; management of companies and 

enterprises; administration, support, and waste management; health care and social assistance; accommodation and food services;

and miscellaneous services.

3-18 
TABLE 3.4 U.S. multinationals: Sales and growth of sales by majority-owned foreign affiliates, by industry and employment size of U.S. parent 

Total sales, 

2007a

Share of 

total sales, 

2007 

Average 

growth of 

total 

sales, 

2004–07 

Local 

sales, 

2007 

Share of 

local sales, 

2007 

Average 

growth of 

local sales, 

2004–07b

Sales to 

the United 

States, 

2007 

Share of U.S. 

sales, 2007 

Average 

growth of 

sales to 

the 

United 

States, 

2004–07c

Sales to 

third 

countries, 

2007 

Share of 

sales to 

third 

countries, 

2007 

Average 

growth of 

sales to 

third 

countries, 

2004–07d

Million $ % Million $ % Million $ % Million $ %

All industriese

Of U.S. parents with 0-499 

employees 119,810 2.5 17 70,690 2.5 15.1 9,889 2.0 11.9 39,231 2.7 23.7 

Of U.S. parents with 500 

employees or more 4,616,199 97.5 12.6 2,717,916 97.5 10.7 489,651 98.0 12.1 1,408,632 97.3 16.8 

All majority-owned nonbank 

affiliates 4,736,009 12.7 2,788,606 10.8 499,540 12.1 1,447,863 17 

Total servicesf

Of U.S. parents with 0-499 

employees 90,128 6.7 20.4 52,342 5.6 43.7 7,796 7.2 12.7 23,341 9.1 31.1 

Of U.S. parents with 500 

employees or more 1,258,220 93.3 13.7 876,937 94.4 11.5 100,369 92.8 13.1 233,524 90.9 27.9 

All majority-owned nonbank 

affiliates 1,348,348 14.1 929,279 13.1 108,165 13.1 256,865 28.2 

Wholesale trade 

Of U.S. parents with 0-499 

employees 20,634 7.1 10.3 9,090 4.6 11.0 1,929 7.3 1.7 9,615 14.2 14.3 

Of U.S. parents with 500 

employees or more 271,775 92.9 14 189,087 95.4 9.9 24,640 92.7 19.4 58,048 85.8 32.3 

All majority-owned nonbank 

affiliates 292,409 13.6 198,177 9.8 26,569 17.6 67,663 28.0 

Information 

Of U.S. parents with 0-499 

employees 5,568 3.3 12.8 4,880 5.0 17.2 96 0.8 12.7 592 1.0 -8.3 

Of U.S. parents with 500 

employees or more 165,81 96.7 14.2 93,559 95.0 10.4 12,360 99.2 29.3 59,262 99.0 20.4 

All majority-owned nonbank 

affiliates 170,749 14.2 98,439 10.7 12,456 29.1 59,854 19.8 

Finance (except depository 

institutions) and insurance 

Of U.S. parents with 0-499 

employees 18,159 6.3 54.3 12,123 6.4 53.6 1,974 6.0 91.9 4,062 6.3 85.4 

Of U.S. parents with 500 

employees or more 268,197 93.7 17.6 177,270 93.6 15.9 30,964 94.0 16.0 59,963 93.7 23.3 

All majority-owned nonbank 

affiliates 286,356 19.0 189,393 17.2 32,938 24.8 64,024 22.0 

See footnotes at end of table. 

3-19 
TABLE 3.4 U.S. multinationals: Sales and growth of sales of majority-owned foreign affiliates, by industry and employment size of U.S. parent—Continued 

Total 

sales, 

2007a

Share of 

total 

sales, 

2007 

Average 

growth of 

total sales, 

2004–07 

Local 

sales, 

2007 

Share of 

local 

sales, 

2007 

Average 

growth of 

local 

Sales, 

2004–07b

Sales to 

the 

United 

States, 

2007 

Share of 

U.S. 

sales, 

2007 

Average 

growth of 

sales to 

the United 

States, 

2004–07c

Sales to 

third 

countries, 

2007 

Share of 

sales to 

third 

countries, 

2007 

Average 

growth of 

sales to 

third 

countries, 

2004–07d

Million $ % Million $ % Million $ % Million $ % 

Professional, scientific, and 

technical services 

Of U.S. parents with 0-499 

employees 3,361 2.1 -9.3 2,345 1.9 -14.1 556 4.8 24.8 460 1.6 19.5 

Of U.S. parents with 500 

employees or more 158,913 97.9 5.8 118,796 98.1 2.9 10,935 95.2 4.5 29,182 98.4 24.6 

All majority-owned nonbank 

affiliates 162,274 5.2 121,141 2.2 11,491 5.1 29,643 24.4 

Other services industriesg

Of U.S. parents with 0-499 

employees 42,406 9.7 25.1 23,904 7.4 23.2 3,241 13.1 -5.7 8,612 24.1 108.5 

Of U.S. parents with 500 

employees or more 394,154 90.3 14.9 298,225 92.6 15.6 21,470 86.9 3.4 27,069 75.9 

3-20 1.6 All majority-owned nonbank 

affiliates 436,559 15.6 322,129 16.0 24,711 16.7 35,681 18.1 

Source: USDOC, BEA, International Investment Division; USITC staff calculations

aTotal sales include local sales (sales charged by an affiliate to persons in the country where the affiliate is located), sales to the United States, and sales to third countries (sales charged by an 

affiliate to persons in foreign countries other than the country where the affiliate is located). bGrowth of local sales for foreign affiliates of U.S. parents with 0-499 employees, 500 employees or more, and all majority-owned nonbank affiliates in other services industries is based on 2004–06 

data. 

Growth of local sales for foreign affiliates of U.S. parents with 0-499 employees, 500 employees or more, and all majority-owned nonbank affiliates for total services is based on 2005–06 data. 

cGrowth of sales to the United States for foreign affiliates of U.S. parents with 0-499 employees and 500 employees or more in finance and insurance industries is based on 2005–07 data and in 

other services industries on 2005–06 data. Growth of sales to the United States for foreign affiliates of U.S. parents with 0-499 employees, 500 employees or more, and all majority-owned nonbank affiliates for total services is based on 2005–06 data. 

dGrowth of sales to third countries for foreign affiliates of U.S. parents with 0-499 employees and 500 employees or more in finance and insurance industries is based on 2005–07 and in other service 

industries on 2005–06 data. Growth for all majority-owned nonbank affiliates in other services industries is based on 2004–06. Growth of sales to third countries for foreign affiliates of U.S. parents 

with 0-499 employees, 500 employees or more, and all majority-owned nonbank affiliates for total services is based on 2005–06 data. 

eIncludes wholesale trade; information, finance (except depository institutions) and insurance; professional, scientific, and technical, services; other services industries; mining and agriculture, 

forestry, 

fishing, and hunting; and manufacturing. fLocal sales, sales to the United States, and sales to third countries for total services are calculated using 2006 figures for other services industries. 

g”Other services industries” consists of the following NAICS sectors: utilities; construction; retail trade; transportation and warehousing; real estate and rental and leasing; management of companies 

and enterprises; administration, support, and waste management; health care and social assistance; accommodation and food services; and miscellaneous services. Local sales, sales to the United 

States, and sales to third countries for other services industries reported in this table refer to 2006. 
3-21 

tates. 

Foreign Affiliate Sales Concentrated in Foreign Markets

All foreign affiliates predominantly serve their host country market or export to third 

countries. Foreign affiliates of SME parents and large parents in services industries 

supplied most of their services locally, with 62.7 percent and 72.4 percent, respectively, 

of all sales in 2007 remaining in affiliates’ host countries (figure 3.7). The second-highest 

category was sales to third countries; foreign affiliates of SME and large parents sold 

28.0 percent and 19.3 percent, respectively, of their services in third countries. The fact 

that foreign affiliates of SMEs have a lower share of local sales than that of large parents 

and a higher share of third country sales than that of large parents suggests that they have 

different strategies for servicing foreign markets. The data suggest that SMEs likely have 

one base from which they service both the host market and export to third markets, 

whereas large firms more likely set up affiliates in each market they want to service. 

Sales to the United States were smallest of any category. Within services industries, 

affiliates of SME parents supplied 9.3 percent of their sales to the United States, and 

affiliates of large parents supplied 8.3 percent.39 This result suggests that foreign 

affiliates are set up chiefly to sell their services abroad and not to service clients in the 

United S

Data Gaps on SME Exports of Services

This section identifies gaps in SME services trade data and focuses on data published by 

the BEA and the Census, the two main bureaus that report official services trade 

statistics. Though BEA and Census provided SME services trade statistics that were used 

for analysis in this report, the way they routinely collect and publish services trade data 

prohibits analyses of SME trade activity. While the first two sections focus on BEA and 

Census data gaps, respectively, the third section identifies approaches for overcoming 

data deficiencies and compares U.S. services trade statistics with select European 

countries.

Bureau of Economic Analysis (BEA)

BEA publishes data on trade in services for two channels of delivery: cross-border trade 

and services supplied through affiliates.40 Within BEA’s annual cross-border trade 

statistics, there are two issues related to SMEs. First, data may exclude the detailed 

activity of SMEs which fall below quarterly exemption thresholds.41 However, below- 

 39 The share for SME affiliates in information services was well below the aggregate services share, with 

only 1.7 percent of sales supplied to the United States. 40 USDOC, BEA, Survey of Current Business 86, 2006, 38–40. Cross-border transactions, which are 

transactions between residents of two different countries, are recorded in the international transactions 

accounts of both countries in accordance with the residency principle of balance of payments accounting. On 

the other hand, sales through foreign affiliates of multinational companies are not captured in international 

transaction accounts, since the sale is officially between residents of the same country. The GATS modes of 

supply do not perfectly correspond to cross-border trade and affiliate transactions published by the BEA. In 

broad terms, GATS modes of supply 1 (cross-border supply), 2 (consumption abroad), and part of 4 

(presence of natural persons) are captured in BEA’s cross-border trade data; mode 3 (commercial presence) is 

captured as direct investment data. 41 USDOC, BEA, form BE-125 (1-2010), “Quarterly Survey of Transactions in Selected Services,” 2010, 

5, 6, 8, 12. Specifically, this survey is required from each U.S. person that has exports over $6,000,000 or 

imports that exceed $4,000,000. If neither sales nor purchases meet the relevant thresholds, the report is 

requested but not mandatory. 
0

10

20

30

40

50

60

70

80

Local sales Third-country sales U.S. sales

Share of industry/class size sales (%)

of U.S. SME parents of U.S. large parents

FIGURE 3.7 Foreign affiliates of U.S. services MNCs rarely service clients in the United States: Foreign 

affiliate sales in service industries by destination, 2007a

Sources: USDOC, BEA, International Investment Division; and USITC staff calculations.

Note: Local sales are those charged by an affiliate to persons in the country w here the affiliate is located, and sales 

to third countries are those sales charged by an affiliate to persons in foreign countries other than the country w here

the affiliate is located.

aTotal sales, local sales, sales to the United States, and sales to third countries for total services are calculated w ith 

2006 figures for other service industries. 

threshold firms are required to submit estimates of total exports and imports. Further, 

benchmark surveys conducted every five years have lower thresholds, and estimates for 

reporting firms that fall below the quarterly threshold are carried forward in between 

benchmarks.42 Second and most importantly, cross-border statistics on services exports 

are not specific to firm size, since the surveys do not collect any information on the 

operation of firms, including the number of employees they have. The only way to report 

information on the size of exporters sampled in the cross-border trade surveys is to link 

them with surveys which collect information on employment size.43

 42 BEA representative, telephone interview by USITC staff, May 13, 2010; BEA representative, e-mail 

message to USITC staff, February 25, 2010; USDOC, BEA, form BE-120 (12-2006), “Benchmark Survey of 

Transactions in Selected Services and Intangible Assets with Foreign Persons,” 3, 5. For the same set of 

services, the benchmark threshold for exports is $2 million. Firms that fall below the benchmark survey 

thresholds account for a small share of reported data. Further, as in the quarterly survey, reporters on the 

benchmark survey are requested to fill in detailed information on a voluntary basis; and in both the quarterly 

and benchmark surveys, below-threshold firms are required to report an estimate of sales they do not 

voluntarily report.

3-22 

43 BEA representative, e-mail message to USITC staff, February 25, 2010.
3-23 

 

Unlike the surveys of cross-border trade, BEA surveys on MNCs and their foreign 

affiliates44 include questions on operations, including employment, which permit the 

services supplied through MNCs and their foreign affiliates to be reported by firm size.45

However, operating data for direct investment abroad are typically not published by firm 

size due to three issues—confidentiality, data quality, and data quantity—which 

determine the level of detail that BEA reports.46 Since smaller firms are less likely to 

establish foreign affiliates, they represent a small share of the sample.47

U.S. Census Bureau

The Census produces services trade statistics through the Economic Census and the 

Service Annual Survey (SAS).48 While the SAS contains useful information on export 

revenue, it supplies no trade data specific to firm size, since the survey does not ask firm 

size questions. However, although Economic Census trade statistics specific to SMEs are 

not publicly available, SME trade statistics can be produced by merging different data 

segments collected through the Economic Census.49 It is possible to merge export data 

(from “Miscellaneous Subjects” reports) with data on firm size (from “Establishment and 

Firm Size” reports), as was done through a special request to Census for this study, to 

obtain export data specific to SMEs. However, the reports are distinct, have different 

patterns of response, and are not published together.50

Approaches for Overcoming Data Deficiencies

Potential Improvements

An important SME data gap would be overcome if BEA cross-border surveys and Census 

SAS forms asked companies to report their employment levels. BEA identified this and 

other related changes as potential improvements to its data collection methods for cross44 USDOC, BEA, Survey of Current Business 86, 2006, 24. BEA publishes data on direct investment 

abroad for every 2-digit NAICS services sector, as well as subcategories for certain sectors through 

benchmark and annual surveys of U.S. parent firms and their foreign affiliates. 45 BEA representative, telephone interview by USITC staff, May 13, 2010. USDOC, BEA, form BE-10D 

(REV. 1/2010), “2009 Benchmark Survey of U.S. Direct Investment Abroad,” 2010. As in the cross-border 

trade surveys, there are exemption thresholds for annual direct investment abroad surveys. Total assets, sales 

or gross operating revenues excluding sales taxes, and net income (loss) after provision for foreign income 

taxes must be greater than $10 million for each nonbank foreign affiliate acquired or established during the 

fiscal year, and greater than $60 million for existing affiliates. However, the five-year benchmark surveys 

require U.S. parent firms to report information for each of their affiliates. For example, each U.S. parent is 

required to report information for those affiliates falling below the lowest benchmark threshold on Form BE10D. Between benchmark years, information on direct investment abroad is carried forward. 46 BEA representative, telephone interview by USITC staff, May 13, 2010. 47 BEA representative, e-mail message to USITC staff, February 25, 2010. 48 Moody and Wallace, “Service Statistics Improvements by the U.S. Census Bureau,” March 26, 2010, 3; 

Census SAS Web site. http://www.census.gov/services/sas/get_forms.html (accessed May 5, 2010). 

Available export data from both sources only cover cross-border trade and a subset of services sectors. 49 2002 Economic Census Web site. 

http://www.census.gov/econ/census02/pub_text/sector00/cmdesc.htm (accessed May 17, 2010); 2007 

Economic Census Web site. 

http://factfinder.census.gov/servlet/MetadataBrowserServlet?type=series&id=Industry+Series&&survey=200

7+Economic+Census§or=Information&series=Industry+Series&_lang=en#ec51mdesc (accessed June 

23, 2010); Census representative, telephone message by USITC staff, May 11, 2010. Economic Census 

collects data on SME exporters, since their survey is sent to large employers above a designated payroll and a 

sample of small employer firms (where employers are firms with at least one paid employee). Non-employers 

are not likely to export their services. 50 Census representative, telephone interview by USITC staff, May 11, 2010. 
3-24 

 

border trade in a 2010 report to Congress. The potential improvements identified include 

changing surveys to (1) expand the types of services for which data are collected 

(including greater detail for exports); (2) reduce revenue reporting thresholds, which 

currently exempt some firms from reporting; and (3) collect operating data such as 

employment, which would result in more information on characteristics of firms.51 The 

report to Congress also noted that synchronizing BEA data with Economic Census data, 

as was done in 2002, would help BEA to identify and sample firms which export 

services.52

Comparison to Other Countries’ Best Practices

No other country in the world publishes official statistics on international trade in 

services by SMEs like those presented in this report. Outside of the United States, 

European countries generally have the most well-developed services trade statistics. An 

examination of services trade statistics in select European countries—including Belgium, 

France, Hungary, Italy, and the United Kingdom—reveals that, as in the United States, 

services trade statistics are not publicly reported by firm size.53 However, such data can 

be produced by linking services trade data with another data source containing variables 

on firm-level characteristics. Typically, linked data are made available for specific 

research requests and upon approval. For example, French trade data from the Banque de 

France and business survey data from the National Institute of Statistics and Economic 

Studies (INSEE) 54—which are not publicly available and include firm-level data on 

51 Borga, “U.S. Statistics on Trade in Services,” March 26, 2010, 16; BEA representative, telephone 

interview by USITC staff, May 13, 2010. 52 Borga, “U.S. Statistics on Trade in Services,” March 26, 2010, 14; BEA representative, telephone 

interview by USITC staff, May 13, 2010. For more information on data synchronization, see 

http://www.bea.gov/international/ai1.htm#BEACENS. 53 Belgian government representative, e-mail communication with USITC staff, May 30, 2010, and June 

6, 2010; French academic representative, interview with USITC staff, April 12, 2010; UK academic 

representative, e-mail communication with USITC staff, June 9, 2010; National Bank of Belgium (accessed 

May 26, 2010); Banque de France (accessed June 7, 2010); Hungarian Central Statistical Office (accessed 

June 2, 2010); Italian National Institute of Statistics (accessed June 8, 2010); and UK Office for National 

Statistics (accessed June 10, 2010). 54 French academic representative, interview with USITC staff, April 12, 2010; email message to USITC 

staff, June 10, 2010. To receive data from INSEE, one must receive a special certificate after submitting a 

proposal through a French institution to a particular committee specifying exactly what one plans to do with 

the data. 
3-25 

 

variables such as employment and turnover—can be merged to obtain trade in services by 

size of firm.55

At the European level, Eurostat, the statistical office of the EU, does not routinely report 

services trade data by employment size of firms as part of national accounts statistics.56

However, Eurostat has published services trade statistics by firm size twice. A pilot 

exercise, “External Trade Statistics by Enterprise Characteristics,” which was first 

launched in 2002, links limited extra-EU services trade data collected by EU member 

states with business registers that contain firm-level information, including employment 

levels.57 In addition, a voluntary survey, “Structural Business Statistics (SBS): Business 

Services Development Project,” reported exports of business services by employment 

size for selected EU member states and Norway.58 However, there are no plans to carry 

out similar surveys in the future.59

55 Italian academic representative, e-mail message to USITC staff, June 4, 2010; UK government 

representative, e-mail message to USITC staff, June 16, 2010; Belgian government representative, e-mail 

message to USITC staff, May 30, 2010 and June 6, 2010; and Hungarian government representative, e-mail 

message to USITC staff, June 8, 2010. Similarly, Italian data on services trade from the Italian Statistical 

Office may be linked to another data source which contains firm characteristics. However, these datasets are 

not publicly available. Similarly, the National Bank of Belgium’s data on services trade (balance of payments 

statistics) and firm characteristics (Companies Balance Sheet Reports) could be merged to come up with 

trade in services by firm size. It is likewise possible for the Hungarian Central Statistical Office to match data 

from representative surveys of firms that export services with size. Finally, the survey used to collect UK 

trade data on services (International Trade in Services, or ITIS) does not include questions on employment 

size; however, it is possible to link the trade data to business registers which would yield trade by 

employment categories. Literature describing country-specific patterns of international trade at the firm level, 

based on trade data linked with firm level data which contain employment and other characteristics, has been 

carried out for a number of countries, including the United States, Belgium, Hungary, Italy, and France, but is 

mostly limited to manufacturing or merchandise trade more broadly. See Bernard et al., “Importers, Exporters 

and Multinationals,” 2005; Muuls and Pisu, “Import and Exports at the Level of the Firm,” 2007; Bekes et 

al., “Firms and Products in International Trade,” 2009; Castellani et al., “Firms in International Trade,” 2008; 

Eaton et al., “An Anatomy of International Trade,” 2009. However, in a recent publication, UK researchers 

reported patterns of services trade at the firm level using data from the Annual Respondents Database 

(ARD)—a data source which is not publicly available and contains variables such as employment at the firm 

level—with services trade data from ITIS. Breinlich and Criscuolo, “Service Traders in the UK,” 2008. 56 Eurostat representative, e-mail message to USITC staff, June 11, 2010; European Commission, 

Eurostat, National Accounts (accessed June 11, 2010). 57 European Commission and Eurostat, “External Trade by Enterprise Characteristics,” 2007, 15–17; 

European Commission and Eurostat, “External Trade by Enterprise Characteristics,” 2002; European 

Commission, Eurostat, External Trade Statistics by Enterprise Characteristics (accessed June 11, 2010). 58 Alajaasko, “Exports of Business Services,” 2007. See table 2: “Business Service Exports as Share of 

Turnover, Average of Available Countries, by Size Class, 2004 (%).” 59 Eurostat representative, email message to USITC staff, June 10, 2010; French academic 

representative, interview with USITC staff, April 12, 2010. There is, however, a current EU initiative to build 

an EU-wide database at a micro level.

4-1

CHAPTER 4 

SME Multinational Firms 

Key Findings 

Both large firms and SMEs in the United States participate in the global 

economy, but—as mentioned in the previous chapter—their trade patterns are 

different. A major contrast is that the SMEs that are involved in international 

trade are much more likely to export rather than sell goods or services through 

foreign affiliates; in fact, over 60 percent of U.S. exports of goods to unaffiliated 

parties are exports by SMEs. Large U.S. firms are more likely to serve foreign 

customers through their foreign affiliates. 

However, a relatively small number of SMEs in the United States are U.S.-

owned MNCs, that sell through affiliates in foreign countries in addition to 

exporting;1

 another small but significant group consists of SMEs located in the 

United States that are affiliates of foreign-owned MNCs. This chapter presents 

data on SMEs located in the United States that are either U.S.-owned MNCs or 

affiliates of foreign-owned MNCs. 

SME MNCs are rare: they represent only about 1 in 10,000 U.S. SMEs. 

Nonetheless, SME MNCs comprise an important part of the foreign presence of 

U.S. SMEs as a whole; by one measure, they account for approximately one 

quarter of all sales to foreign customers by U.S. SMEs. Also, labor productivity 

in SME MNCs is substantially higher than in other SMEs, for both manufacturers 

and wholesalers. 

SME MNCs have smaller networks of affiliates than large-firm MNCs, and are 

more likely than large-firm MNCs to export to unaffiliated customers rather than 

to their own affiliates. On the other hand, across sectors, SMEs account for the 

highest share of U.S. MNC activity in wholesaling. 

U.S. SMEs that are affiliates of foreign-owned MNCs are both more numerous 

and employ more people than do U.S.-owned SME MNCs. In addition, they 

generated most of the $43 billion in related-party exports made by SMEs in 2007, 

in the form of exports to their foreign parents. Many such U.S. SMEs become 

part of a foreign firm through acquisition; the chapter briefly discusses five 

recent examples of such transactions. 

This chapter begins with an explanation of how some SMEs become MNCs, and 

then describes some key characteristics of SME MNCs, including their exports, 

foreign affiliate sales, and labor productivity. The chapter concludes with a brief 

examination of U.S. SMEs which are affiliates of foreign MNCs. 

 1

 For a more thorough examination of the role of SME MNCs in the services sector, please see 

chapter 3 of this report. 
4-2

U.S. SMEs as MNCs

MNCs are defined as enterprises that engage in foreign direct investment (FDI) 

and own or control business activities in more than one country.2

 While not all 

enterprises follow the same path of development, one typical path for an MNC is 

that a firm originally begins exporting to a foreign marketing or distribution 

agent, then acquires its own marketing and distribution affiliate abroad, begins 

exporting to a final assembly affiliate, develops more elaborate manufacturing 

operations overseas, and finally transfers part of its core functions, such as 

research and development (R&D), to foreign affiliates.3

 MNCs are generally 

thought of as large firms, since it would usually require the capabilities of a large 

firm to engage in most of the types of activities just described. However, some 

SMEs do become MNCs. Such firms have a deeper and more elaborate form of 

global engagement than SMEs that simply export. 

There is relatively little literature on SME MNCs per se. However, the category 

of SME MNCs overlaps two other categories of rare firms that have been the 

object of research: “born global” firms, which enter international markets soon 

after their founding, and venture capital start-ups. That is, some SME MNCs are 

either “born global” firms, or venture capital start-ups, or both. 

The term “born global” generally refers to new firms that begin exporting 

immediately or soon after their founding, although it also includes new firms that 

engage in FDI. While small firms are not always new, new firms are usually 

small.4

 Hence the conditions under which new businesses enter international 

markets are, in at least some cases, the same as those that give rise to SME 

MNCs (box 4.1). 

Like SME MNCs and born-global firms, venture capital start-ups are rare. While 

the total number of new business started in the United States varies from between 

half a million to two million a year, only several hundred new ventures a year 

receive start-up financing from venture capital firms.5

 Since venture capitalists 

expect the management teams of firms they finance to produce high rates of 

growth, venture capital start-ups are usually innovative and often involve foreign 

activities; that is, they plan to be “born global” and are sometimes organized as 

SME MNCs. In a recent study of 106 venture capital-backed businesses, 34 

reported having facilities or offices outside the United States. Most of these 

operated in four or fewer locations. 

 2

 Dunning and Lundan, Multinational Enterprises and the Global Economy, 2008, 3. 3

 Dunning and Lundan, Multinational Enterprises and the Global Economy, 2008, chap.7. 4

 Bhidé, The Origin and Evolution of New Businesses, 2000. Examples of small, but not new, 

enterprises include European restaurants which have been in operation for centuries. 5

 Bhidé, The Venturesome Economy, 2008, 41–42. 
4-3

BOX 4.1 “Born Global” Firms 

In the business literature, the term “born global” refers to firms that sell in international markets as soon as 

they are founded, or very soon thereafter.a The presence of “born global” firms is not readily explained by 

traditional theories of internationalization, which predict that firms enter the international arena only 

gradually, either as exporters or as MNCs. One such theory explains this as a result of the time and costs 

needed to gain enough knowledge about foreign markets to reduce uncertainty and overcome the firm’s risk 

aversion. Another sees internationalization as resulting from a series of managerial innovations in the firm or 

as a development of networked relationships by the firm.b

 According to any of these theories, new firms 

should be unlikely to engage in exporting, much less in FDI. Yet the presence of new firms that engage in 

either or both of these activities suggests that there are certain conditions under which some small or new 

enterprises may bypass some of the typical stages of firm development to engage in more rapid 

internationalization. 

Entrepreneurs who found “born global” firms often have an above-average degree of international 

orientation. This may come from having lived or studied in a number of different countries, from having left 

an MNC to start one’s own firm, or from selling to an MNC customer in the domestic market and having an 

opportunity to sell to the same customer in other countries.c

 One survey of U.S. and Danish “born global” 

firms found evidence that such firms have a high customer focus, which drives product quality, marketing 

competence, and product differentiation. For U.S. “born globals,” product quality and (to a lesser extent) 

marketing competence and product differentiation were found to be key drivers of international performance, 

while for Danish firms the primary driver of international performance was marketing competence.d

Innovation is also a frequently observed characteristic of “born global” firms, as is specialization in niche 

markets. 

Some examples of “born global” firms have profiles corresponding to those of SME MNCs, at least in their 

start-up phases. For example, Logitech, a producer of mouse and other desktop aids for PCs, was founded 

by a Swiss citizen and an Italian citizen who met while studying at Stanford University in the United States. 

They were joined by a third person who had worked at Olivetti, an Italian multinational, and IBM, a U.S. 

multinational. While Logitech is Swiss-based, it was manufacturing and engineering its products in the 

United States, the Far East and Europe, and engaging in R&D in Silicon Valley, all within 10 years after its 

establishment in 1984.e

 

_______________ 

a

 The term “born global” appears to have been coined by Rennie, “Born Global,” 1993. Other terms 

appearing in the literature include “global start-ups,” “high technology start-ups,” and “international new 

ventures”; Madsen and Servais, “The Internationalization of Born Globals,” 1997, 562. b

 This literature is reviewed by Andersen et al., “Generic Routes to Subcontractors’ Internationalization,” 

1993. That paper refers to the first theory as the “Uppsala Internationalization Model” and to the second as 

the “Innovation-Related Internationalization Model.” See also Madsen and Servais, “The Internationalization 

of Born Globals: An Evolutionary Process?” 1997; Liesch and Knight, “Information Internalization and Hurdle 

Rates in Small and Medium Enterprise Internationalization,” 1999. c

 Madsen and Servais, “The Internationalization of Born Globals, 1997; Knight and Cavusgil, “Innovation, 

Organizational Capabilities, and the Born Global Firm,” 2004. d

 Knight and Servais, “An Inquiry Into Born-Global Firms in Europe and the USA,” 2004. 

e

 Examples cited in Madsen and Servais, “The Internationalization of Born Globals,” 1997. 

While over 60 percent of venture capital-backed businesses derived at least some 

revenue from foreign clients, U.S. revenue was usually more important than 

foreign revenue. These characteristics are broadly consistent with the profile of 

SME MNCs presented below, although the typical SME MNC appears to be 

more outward-oriented than the typical U.S. venture-capital start-up. Also, 57 of 

the 106 venture capital-backed businesses studied had at least one immigrant 

founder, a characteristic similar to the profile of born-global firms. 6

 6

 Bhidé, The Venturesome Economy, 2008, 37–38. 
4-4

SME MNCs: Profile

This section presents a profile of U.S. SME MNCs, which are defined as U.S.-

based firms with fewer than 500 U.S. employees that own or control one or more 

foreign affiliates. It includes MNCs in all sectors of the economy: manufacturers, 

services MNCs (also discussed in chapter 3), and firms in other sectors.7

 This 

profile is drawn from data provided by BEA on the operations of MNCs, broken 

down by firm size of parent, and data provided by Census on related-party goods 

trade of SMEs. BEA’s data include information both on U.S. parents of MNCs, 

reflecting the operations of these firms located in the United States, and on their 

foreign affiliates. The Census data pertaining to related-party trade reflect either 

trade between parents and affiliates, or (in the case of U.S. affiliates of foreignowned MNCs) exports of those affiliates to the foreign parent group. Using these 

data, it is possible to compare the general performance of U.S. SME MNCs with 

large-firm MNCs (MNCs for which the U.S. parent company employs 500 or 

more workers in the United States), U.S. trade in goods associated with U.S. 

SME MNCs, labor productivity of U.S. SME MNCs relative to all SMEs, and 

sectoral differences in the performance of U.S. SMEs. 

SME MNCs represent a very small fraction of the approximately 6 million SMEs 

with employment in the United States―approximately 1 in 10,000, a fraction 

that appears to be shrinking. Table 4.1 shows that there were at least 645 U.S. 

SME MNCs in 2004; the number declines to at least 555 SME MNCs in 2007.8

These figures imply a rate of decline of 14.0 percent over the period, as 

compared to a 2.3 percent decline in the number of large U.S. MNCs in the same 

period. Consistent with these trends, total sales and exports of SME MNCs grew 

more slowly than those of large MNCs over 2004–07 (table 4.1). The absolute 

decline in the number of SME MNCs may reflect merger and acquisition activity 

among U.S. MNCs, with SME MNCs being more likely to be acquired than large 

firms. 

Foreign Affiliates of U.S. SME MNCs

SME MNCs tend to have smaller networks of foreign affiliates than large MNCs, 

as would be expected. The number of affiliates of SME MNCs declined by 

3.0 percent during 2004–07,9

 while those of large U.S. MNCs increased by 8.7 

percent. Based on data from table 4.1, SME MNCs had approximately 2.9 

affiliates per parent in 2007, compared to 14.4 affiliates per parent for large 

MNCs. However, also based on data from table 4.1, the number of affiliates per 

SME multinational increased from 2.5 in 2004 to 2.9 in 2007. 

 7

 These sectors include, mining and agriculture, forestry, fishing, and hunting. 

8

 Each year, BEA sends one survey form to U.S. parents of MNCs, and another to each parent’s 

foreign affiliates that had total assets, sales, or net income (or losses) greater than $10 million. 

Smaller affiliates are exempt from completing an affiliate survey, as are parents that had only 

exempt affiliates, but summary information about the smaller affiliates is gathered in the survey of 

parents. The phrase “at least” in the text above reflects the number of parents completing affiliate 

surveys, and does not include parents reporting only exempt affiliates. The data pertaining to SME 

MNCs provided by BEA includes estimates for parents and affiliates not subject to reporting in the 

values of some items. 9

 The BEA data include information for each of the four years from 2004 to 2007. Comparison 

of the beginning and final years is broadly reflective of overall trends. 
TABLE 4.1 U.S. MNCs: Parents and affiliates by class of parents, 2004–07 

2004 2007 2004–07 

Total SMEsa

Large 

firms 

SMEs’ 

share of 

total Total SMEsa

Large 

firms 

SMEs’ 

share of 

total Total SMEsa

Large 

firms 

% % % change

Number of parentsb 2,400 645 1,755 26.9 2,270 555 1,715 24.4 -5.4 -14.0 -2.3 Number of affiliatesb 24,405 1,637 22,768 6.7 26,342 1,588 24,754 6.0 7.9 -3.0 8.7 Sales by parents 

(million $) 7,058,957 135,876 6,923,082 1.9 8,614,733 154,891 8,459,842 1.8 22.0 14.0 22.2 

Sales by affiliates 

 (million $) 3,312,531 75,230 3,237,301 2.3 4,736,009 119,810 4,616,199 2.5 43.0 59.3 42.6 

U.S. exports of 

goods associated with U.S. multinationals (million $)c 438,193 15,699 422,494 3.6 558,622 13,675 544,947 2.4 27.5 -12.9 29.0 

U.S. imports of 

goods associated with U.S. multinationals (million $)c 540,904 13,372 527,532 2.5 728,413 13,606 714,806 1.9 34.7 1.7 35.5 

Employment by U.S. 

 parents (thousands) 21,177 233 20,944 1.1 22,003 218 21,785 1.0 3.9 -6.2 4.0 

Sources: US DOC, BEA, International Investment Division; USITC calculations. 

aSME multinationals are defined as firms for which the U.S. parent company has less than 500 employees. Large multinationals are defined as firms for which 

the U.S. parent company has 500 or more employees. bThe number given for parents and affiliates in this table excludes affiliates that were exempt from completing a survey form in the benchmark survey, and 

parents that had only exempt affiliates, even though estimates for such affiliates and parents are included in the values for other items. 

cU.S. exports and imports of goods associated with U.S. MNCs cover all U.S. exports and imports of goods that involved U.S. parents and their foreign 

affiliates. It includes all U.S. trade in goods by nonbank U.S. parents, with both affiliated and unaffiliated foreign residents, and all U.S. trade in goods with the 

nonbank foreign affiliates of U.S. parent companies, with both affiliated and unaffiliated U.S. residents. 

4-5 
4-6

Foreign Sales by U.S. SME MNCs

One of the consequences of SME MNCs having relatively smaller networks of 

affiliates is that, compared to large MNCs, the foreign sales10 of SME MNCs are 

more likely to be “arms’ length” sales to unaffiliated partners than sales to 

foreign affiliates.11 In 2004, 21.3 percent of the foreign sales of SME MNCs were 

to their overseas affiliates, while 57.1 percent of the foreign sales of large MNCs 

were to their overseas affiliates. The difference between SME and large MNCs 

was narrower by 2007, when 39.8 percent of the foreign sales of SME MNCs 

were to their overseas affiliates, compared to 46.3 percent for large MNCs. 

Goods Exports by U.S. SME MNCs

The role of SMEs in multinational activity is relatively small compared to their 

role in exports. SMEs account for approximately 30 percent of U.S. merchandise 

exports.12 By contrast, in 2007, the U.S. parents of SME MNCs accounted for 

only 1.8 percent of all sales made by parents of U.S. MNCs, 2.5 percent by all 

sales of affiliates, 2.4 percent of all exports of goods associated with U.S. MNCs, 

and 1.9 percent of all imports of goods associated with U.S. MNCs;13 they also 

represented only 1.0 percent of all parents of U.S. MNCs. 

For SME MNCs, the value of their “arms’ length” exports of goods to 

unaffiliated parties tends to be larger than that of their exports to affiliates, while 

for large MNCs, exports of goods to affiliates predominate (table 4.2). This is 

consistent with SME MNCs having smaller networks of affiliates than large 

MNCs. It may also reflect a greater development of vertical linkages (exports of 

parents to affiliates for further processing) by large MNCs. U.S. exports to 

 10 The concept of “foreign sales” in BEA data on the operations of U.S. MNCs is different from 

the concept of exports. A sale is a “foreign sale” if it is charged to a person outside the United 

States, while it is an export if it is shipped outside the United States. For example, if a foreign 

person pays for goods or services which are shipped from one location in the United States to 

another, or from one foreign location to a different foreign location, the transaction is a foreign sale 

but not an export. Similarly, if a U.S. parent firm ships goods or services without charging for 

them, the transaction is recorded as an export but not a sale. In BEA’s data, the value of foreign 

sales of goods tends to be larger than of exports. In 2004, the most recent year for which a direct 

comparison can be made, total foreign sales by U.S. parents of MNCs, including both affiliates and 

other foreign persons, amounted to $567 billion, while U.S. exports of goods by parents, including 

both affiliates and unaffiliated persons, amounted to $407 billion. (BEA data; USITC staff 

calculations). See also the related discussion in chapter 3. 11 Data in this paragraph are based on the data provided by BEA to USITC, as described above, 

and from USITC calculations. 12 USITC, Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports, 

January 2010, ix. 13 Data on U.S. exports and imports of goods associated with U.S. MNCs are reported in BEA’s 

publications on U.S. direct investment abroad. They include all U.S. trade in goods by nonbank 

U.S. parents, with both affiliated and unaffiliated foreign residents, and all U.S. trade in goods with 

the nonbank foreign affiliates of U.S. parent companies, with both affiliated and unaffiliated U.S. 

residents. To illustrate the relative importance of the trade flows included in this concept, publicly 

reported data for all U.S. MNCs for 2007 can be used. Of U.S. exports of goods associated with 

U.S. MNCs and their affiliates in 2007, approximately 38 percent were exports of U.S. parents to 

their affiliates, 8 percent were exports by U.S. affiliates to unaffiliated foreign persons, and 54 

percent were exports by U.S. parents to unaffiliated foreign persons. The proportions are very 

similar for U.S. imports of goods; approximately 38 percent of such imports were imports by U.S. 

parents from their affiliates, 8 percent were imports by unaffiliated persons from U.S. affiliates of 

MNCs, and 54 percent were imports by U.S. parents from unaffiliated foreign persons (BEA data; 

USITC estimates). 
4-7

TABLE 4.2 U.S. trade in goods associated with MNCs, by size of parent and major industry, 

2007 

U.S. trade in goods associated 

with U.S. MNCsa U.S. trade in goods associated 

with foreign affiliatesb 

Million $ % Million $ %

Exports of goods 

All industries 558,622 100.0 247,642 100.0 

SMEc

 13,675 2.4 3,501 1.4 

Large 544,947 97.6 244,141 98.6 

 

Manufacturers 481,102 100.0 222,495 100.0 

SMEc

 6,516 1.4 1,454 0.7 

Large 474,585 98.6 221,041 99.3 

 

Wholesalers 51,874 100.0 9,554 100.0 

SMEc

 5,749 11.1 1,175 12.3 

Large 46,124 88.9 8,379 87.7 

Sources: USDOC, BEA, International Investment Division; Commission calculations. 

a

U.S. exports of goods associated with U.S. MNCs cover all U.S. exports and imports of 

goods that involved U.S. parents and their foreign affiliates. It includes all U.S. trade in goods 

by nonbank U.S. parents with both affiliated and unaffiliated foreign residents, and all U.S. 

trade in goods with the nonbank foreign affiliates of U.S. parent companies, with both 

affiliated and unaffiliated U.S. residents. b

U.S. exports of goods to foreign affiliates, and U.S. imports of goods from foreign 

affiliates. c

SME MNCs are defined as firms for which the U.S. parent company has less than 500 

employees. Large MNCs are defined as firms for which the U.S. parent company has 500 or 

more employees. 

affiliates of SME MNCs14 amounted to approximately $3.5 billion in 2007, 

compared to $13.7 billion of U.S. exports associated with SME MNCs in the 

same year. Thus, in 2007, about 26 percent of the exports associated with U.S. 

SME MNCs were exports to the affiliates of U.S. SME MNCs, with the other 

74 percent consisting of exports of the parents of U.S. SME MNCs to unaffiliated 

parties, i.e., arms’-length exports, of the parents. In that same year, 

approximately 45 percent of exports associated with large U.S. MNCs were 

exports to affiliates, a much larger percentage than for SME MNCs. 

SME MNC Labor Productivity

SME MNCs exhibit higher labor productivity than other SMEs. Simple 

comparisons of labor productivity (sales per worker) are shown in table 4.3. For 

manufacturers, large firms are more productive than SMEs, and the parents of 

MNCs are more productive than manufacturing firms as a whole. For the parents 

of SME manufacturing MNCs, output per worker was 37 percent higher in 2006 

(the most recent year with available data) than for manufacturing SMEs as a 

whole. This suggests that the parents of SME MNCs may be more capitalintensive or technologically advanced than SMEs as a whole. In 2006, the labor 

productivity of parents of large manufacturing MNCs was only 2 percent higher 

than that of large manufacturing firms as a whole. This may be because the sales 

 14 Including both U.S. exports of parents and U.S. exports of unaffiliated parties to the affiliates 

of U.S. MNCs. 
4-8

TABLE 4.3 Relative labor productivity of U.S. MNCs, by size of firm and major 

industry, 2006 

Sales per worker

All U.S. 

firms U.S. MNCs 

Productivity of U.S. 

MNCs relative to all 

U.S. firms 

$ Ratio 

Manufacturers 

Total 370,222 507,733 1.37 

SMEa 206,247 282,488 1.37 

Large 501,312 511,429 1.02 

 

Wholesalers 

Total 954,370 833,575 0.87 

SMEa

 643,842 1,754,811 2.73 

Large 1,442,438 804,820 0.56 

Sources: U.S. Department of Commerce, Bureau of Economic Analysis, International 

Investment Division, U.S. Small Business Administration, Statistics of U.S. 

Businesses, and USITC staff calculations. 2002 sales data for all firms have been 

adjusted to 2006 using Commerce department data on shipments. 

a

SME MNCs are defined as firms for which the U.S. parent company has fewer 

than 500 employees. Large MNCs are defined as firms for which the U.S. parent 

company has 500 or more employees. 

of large manufacturing firms tend to be dominated by MNCs, so the two figures 

are similar.15

There is a very large difference in labor productivity between U.S. SME 

multinational wholesalers16 and U.S. SME wholesalers as a whole. In 2006, sales 

per worker for U.S. SME multinational wholesalers were 173 percent higher than 

the level for U.S. SME wholesalers as a whole. This is likely due to a much 

stronger export orientation among SME multinational wholesalers than among 

U.S. SME wholesalers as a group. It may be relevant that some firms engaged in 

international trade are involved in both manufacturing and wholesaling activities. 

These “mixed” firms tend to be substantially larger than pure manufacturers, and 

very much larger than pure wholesalers.17 SME multinational wholesalers are 

thus more likely to be pure wholesalers relative to large multinational 

wholesalers, which are more likely to be both manufacturers and wholesalers. 

This difference in industrial structure could account in part for the measured 

difference in productivity for these two types of firms. 

 15 In 2006, the most recent year for which comparable data are available, there were 4,069 large 

manufacturing firms, of which 919 were parents of MNCs. However, the parents of large 

manufacturing MNCs accounted for approximately 97 percent of the employment of all 

manufacturing MNCs, and likely accounted for a comparable share of sales. (Data from Census and 

BEA, and Commission calculations.) 16 Wholesalers act as intermediaries between the producers of goods and their final consumers, 

whether these goods are internationally or domestically traded. 17 Bernard, Jensen, Redding, and Schott, “Wholesalers and Retailers in International Trade,” 

2010. 
4-9

SME MNCs by Sector

Among all U.S. MNCs, the relative importance of SME MNCs varies 

significantly by sector (table 4.4), when measured by sales of parents and U.S. 

exports of goods associated with MNCs. When using these measures, the sectors 

for which SMEs account for a particularly high share of MNC activity, measured 

by both sales of parents and exports associated with U.S. MNCs, include 

wholesalers and mining, agriculture, forestry, fishing, and hunting. In the 

wholesaling sector, SME MNCs account for 5.9 percent of sales of U.S. parents 

and 11.1 percent of U.S. exports of goods. Similarly, SME MNCs account for 

4.3 percent of sales of U.S. parents and 3.0 percent of U.S. exports of goods 

associated with MNCs in the mining, agriculture, forestry, fishing, and hunting 

sector. 

The relative importance of SME MNCs is in general greater in services industries 

than in goods industries. Among U.S. MNCs in services industries, SME MNCs 

accounted for 2.5 percent of all sales by parents, 6.5 percent of all sales by 

affiliates, 9.6 percent of exports of goods associated with U.S. MNCs, 7.5 percent 

of imports of goods associated with U.S. MNCs, and 0.64 percent of employment 

by parents. For firms in the information industries, U.S. SME MNCs are 

relatively underrepresented in parent sales (0.6 percent of the total for MNCs in 

the sector) but overrepresented in exports of goods associated with MNCs 

(8.4 percent of exports of goods for MNCs in the sector). 

By contrast, among U.S. MNCs in manufacturing industries, SME MNCs 

accounted for 0.9 percent by all sales of parents, 0.8 percent of all sales by 

affiliates, 1.4 percent of exports of goods associated with U.S. MNCs, 0.8 percent 

of imports of goods associated with U.S. MNCs, and 1.7 percent of employment 

by parents. 

Firm Size and Methods of Serving Foreign Customers

As indicated above, U.S. MNCs sell to foreign customers in two principal ways: 

by exporting directly from the United States, and by selling goods or services 

produced by a foreign affiliate. Purely domestic firms sell to foreign customers 

principally by exporting directly.18 SMEs differ from large firms in that SMEs 

are relatively more likely to rely on exporting than large firms, which are 

relatively more likely to rely on the sales of foreign affiliates. This is largely 

because SMEs are much less likely to be MNCs than large firms, as already 

noted. However, for those firms that are multinational, SME MNCs behave 

similarly to large MNCs in that they tend to rely heavily on affiliate sales. Data 

related to these types of transactions are presented in table 4.5, which compares 

various measures of U.S. exports of goods and sales by foreign affiliates for 

SMEs and large firms. 

In order to analyze the relative importance of different ways of serving foreign 

markets, table 4.5 uses the concept of pure foreign sales―a category not found 

in BEA data but derived from it―to denote sales of U.S.-owned firms to 

 18 A third option is to license the firm’s technology, copyrights, or trademark to a foreign firm. 

This option is not included in the present analysis. 
4-10

TABLE 4.4 Sales by U.S. parents and U.S. exports associated with MNCs, by size class and major industry, 2007 

Sector Firm type (number) Sales by U.S. parents 

 U.S. exports associated with 

U.S. MNCsa 

 Million $ 

% of industry

 total Million $ 

% of industry 

total 

Total (2,270) 8,614,733 100.0 558,622 100.0 

SMEsb (555) 154,891 1.8 13,675 2.4 All industries 

Large firms (1,715) 8,459,842 98.2 544,947 97.6 

Total (63) 119,191 100.0 6,547 100.0 

SMEsb (17) 5,116 4.3 197 3.0 Mining and agriculture, 

forestry, fishing, and hunting 

Large firms (46) 114,074 95.7 6,350 97.0 

Total (1,124) 3,904,730 100.0 481,102 100.0 

SMEsb (212) 35,589 0.9 6,516 1.4 Manufacturing 

Large firms (912) 3,869,141 99.1 474,585 98.6 

Total (238) 951,837 100.0 51,874 100.0 

SMEsb (96) 55,699 5.9 5,749 11.1 Wholesale trade 

Large firms (142) 896,138 94.1 46,124 88.9 

Total (155) 668,868 100.0 2,290 100.0 

SMEsb (26) 3,861 0.6 194 8.5 Information 

Large firms (129) 665,006 99.4 2,096 91.5 

Total (121) 987,882 100.0 316 100.0 

SMEsb (34) 18,056 1.8 (d) n/a Finance (except depository 

institutions) and insurance 

Large firms (87) 969,827 98.2 (d

) n/a 

Total (169) 259,024 100.0 4,766 100.0 

SMEsb (34) 5,630 2.2 (d) (e) 

Professional, scientific, and 

technical services 

Large firms (135) 253,395 97.8 (d

) (e) 

Total (400) 1,723,201 100.0 11,728 100.0 

SMEsb Other industries (136) 30,940 1.8 848 7.2 c 

Large firms (264) 1,692,261 98.2 10,880 92.8 

Sources: USDOC, BEA, International Investment Division; USITC calculations. Number of parents in parentheses. The 

number given for parents and affiliates in this table exclude affiliates that were exempt from completing a survey form in 

the benchmark survey, and parents that had only exempt affiliates, even though estimates for such affiliates and parents 

are included in the values for other items. 

a

U.S. exports of goods associated with U.S. MNCs cover all U.S. exports of goods that involved U.S. parents and their 

foreign affiliates. It includes all U.S. exports of goods by nonbank U.S. parents, with both affiliated and unaffiliated foreign 

residents, and all U.S. exports of goods by the nonbank foreign affiliates of U.S. parent companies, with both affiliated and 

unaffiliated U.S. residents. b

SME MNCs are defined as firms for which the U.S. parent company has fewer than 500 employees. Large MNCs are 

defined as firms for which the U.S. parent company has 500 or more employees. c

Other industries consists of the following NAICS sectors: utilities; construction; retail trade; transportation and 

warehousing; real estate and rental and leasing; management of companies and enterprises; administrative, support, and 

waste management; health care and social assistance; accommodation and food services; and miscellaneous services. d

Data not disclosed. 

e

n/a = not applicable. 
4-11

TABLE 4.5 Methods of serving foreign markets: Exports and foreign affiliate sales by firm size, 2007 

All firms Manufacturing firms 

Total SMEsa Large 

firms Total SMEsa Large firms 

 Billion $ 

U.S. merchandise exportsb 1,025.8 306.6 719.2 674.6 106.1 568.5 

U.S. exports of goods 

associated with 

MNCs 558.6 13.7 544.9 481.1 6.5 474.6 

U.S. exports of goods not 

associated with 

MNCs 467.2 292.9 174.3 193.5 99.6 93.9 

U.S. exports of goods to 

foreign affiliates of U.S. 

MNCsc 247.6 3.5 244.1 222.5 1.5 221.0 

U.S. exports of goods by 

parents of MNCs 

to unaffiliated persons 311.0 10.2 300.8 258.6 5.0 253.6 

Sales by foreign affiliates of 

U.S. MNCsd 4,736.0 119.8 4,616.2 3,326.6 27.8 3,298.8 

Sales by foreign affiliates of 

U.S. MNCs to persons in 

the United States 499.5 9.9 489.7 381.3 3.1 378.3 

Sales by affiliates to foreign 

personse 4,236.5 109.9 4,126.5 2,945.3 24.7 2,920.5 

 

All Firms % 

Percentage of pure 

foreign sales through 

unaffiliated exportsf 15.5 73.4 10.3 13.3 80.9 10.6 

Percentage of pure 

foreign sales through 

foreign affiliatesf 84.5 26.6 89.7 86.7 19.1 89.4 

 

MNCs 

Percentage of pure 

foreign sales by 

MNCs through 

unaffiliated exportsf 6.9 8.5 6.8 8.1 16.8 8.0 

Percentage of pure 

foreign sales by 

MNCs through 

foreign affiliatesf 93.1 91.5 93.2 91.9 83.2 92.0 

Sources: USDOC, Census; USDOC, BEA, International Investment Division; USITC calculations. 

Percentages are approximate and subject to caveats. See footnote discussion. 

a

SMEs are defined as firms with fewer than 500 employees. Large firms are defined as firms with 500 

or more employees. b

Merchandise exports are exports of goods. 

c

Includes both exports by parents to their own foreign affiliates and exports by unaffiliated parties to 

foreign affiliates of U.S. MNCs. d

Sales by affiliates include both sales of goods and sales of services. 

e

Includes both sales to foreign persons located in the same country as the foreign affiliate and sales to 

foreign persons located in third countries. f

For an explanation of how these numbers were derived, please see appendix D. 
4-12

customers that are both located in a foreign country and foreign-owned, i.e., they 

are not foreign affiliates of U.S. MNCs. This concept is designed to exclude 

exports by U.S. parents of MNCs to their own affiliates, which are generally 

either intermediate inputs into the goods or services finally sold by those 

affiliates, or else final goods sold to an affiliate acting as a sales office. Since the 

foreign affiliate is generally not the final customer, including exports by U.S. 

parents to their own affiliates would be double-counting foreign sales. “Pure 

foreign sales” thus include exports by U.S. firms, whether or not they are MNCs, 

to unaffiliated foreign parties (these transactions are also known as “arms-length 

exports”) and sales by foreign affiliates of U.S. MNCs to customers located 

outside the United States. The available data distinguishing SME MNCs do not 

permit a perfect distinction between unaffiliated or arms’-length exports and 

intrafirm exports. Thus, the calculations presented in table 4.5, reflecting the 

share of pure foreign sales accounted for by unaffiliated exports vs. sales of 

affiliates to foreign persons, are approximate.19 However, they are broadly 

indicative of the relative tendencies of SMEs and large firms to serve foreign 

customers through exporting as opposed to affiliate sales. 

As reported in table 4.5, pure foreign sales by SMEs consist of approximately 

73 percent arms’-length exports and 27 percent sales by affiliates to foreign 

persons. The pure foreign sales of large firms consist of approximately 10 

percent arms’-length exports and 90 percent foreign affiliate sales. This is largely 

because SMEs are usually not MNCs, but the sales by large firms are dominated 

by MNCs. The 27 percent share of pure foreign sales by SMEs accounted for by 

affiliates may be compared to the small shares of SMEs in sales by parents 

(1.8 percent) and by affiliates (2.5 percent) reported in table 4.1, suggesting that 

SME MNCs punch above their weight in terms of serving foreign markets. This 

is because SME MNCs rely on affiliate sales about as much as large firms do: 

affiliate sales account for approximately 92 percent of pure foreign sales by SME 

MNCs and 93 percent of pure foreign sales of large MNCs. The share of pure 

foreign sales accounted for by arms’-length exports is somewhat higher for 

manufacturing firms than for other firms―approximately 81 percent for SMEs 

and 11 percent for large firms. 

Since SMEs tend to be purely domestic firms that serve foreign markets through 

exporting from the United States, while large firms tend to be MNCs serving 

foreign markets primarily through their affiliates, the role of SMEs in unaffiliated 

 19 Limitations of the calculations in table 4.5, potentially resolvable with better data, include the 

following: 

Most U.S. exports to affiliates of U.S. MNCs are exports of the affiliated parents, but not all. In 

2007, over 80 percent of U.S. exports to affiliates were exports of U.S. parents to their own 

affiliates (cf. fn. 11.) The calculation in table 4.5 treats the (unobserved) exports of unaffiliated 

U.S. persons to foreign affiliates of U.S. MNCs as inputs into the sales of affiliates, and thus avoids 

double-counting. 

The available data include U.S. exports of goods only, while the sales of foreign affiliates 

include both goods and services. The share of unaffiliated exports in table 4.5 is thus lower than the 

share of unaffiliated exports in pure foreign sales of goods and services combined, but higher than 

the share of unaffiliated exports in pure foreign sales of goods. There are at present no available 

data on U.S. exports or imports of services associated with U.S. parents and their foreign affiliates. 

It can be calculated from BEA data that in 2009, U.S. exports of services amounted to 

approximately 32 percent of U.S. exports of goods and services combined. Similarly, it can be 

calculated that in 2007, the sales of U.S. foreign affiliates in foreign countries consisted 

approximately of 77 percent sales of goods and 23 percent sales of services. While the share of 

sales of goods and services of foreign affiliates of manufacturing firms is not available, the share of 

goods for manufacturing firms is likely to be higher than the 77 percent reported for all firms. 
4-13

exports from the United States turns out to be unusually high. Approximately 63 

percent of U.S. exports of goods not associated with MNCs are exports by SMEs, 

as are 51 percent of U.S. exports of goods by manufacturing firms not associated 

with MNCs. This perspective sheds new light on the relative performance of 

SMEs. The high share of unaffiliated exports accounted for by SMEs suggests 

that SMEs play a surprisingly large role in finding foreign customers for U.S.-

made goods, since SMEs mainly have U.S. goods to offer. Large firms, which are 

more likely to be MNCs, have a built-in market for U.S. exports in their own 

affiliates, and are more likely to offer the production of foreign affiliates to their 

foreign customers than to export final goods directly from the United States. 

The share of SMEs in U.S. exports of goods not associated with MNCs is higher 

for all firms than for manufacturing firms because a large share of SME exports 

of goods are in fact accounted for by wholesalers and other nonmanufacturing 

firms. Information relating to this point was presented in the Commission’s first 

two reports on SMEs.20 The present report examines the role of 

nonmanufacturing firms in the export of goods in more detail in chapter 5, using 

newly available data from Census. 

Related-Party Exports of SMEs

Related-party exports are exports that take place within the boundaries of a 

firm―from parents to affiliates, from affiliates to parents, or between affiliates. 

They include both U.S. exports from parents of MNCs to their foreign affiliates, 

and exports by U.S. affiliates of foreign-owned MNCs to their foreign parent 

group.21 Table 4.6 presents data on the related-party exports of SMEs for 2007, 

based on data newly obtained by USITC from Census. These exports amounted 

to $43.2 billion in 2007. SMEs accounted for 14.8 percent of all related-party 

exports in 2007, and related-party exports accounted for 15.6 percent of all SME 

exports in 2007. 

As just noted, SME related-party exports include two different types of exports: 

(1) exports of U.S. SME MNCs to their own affiliates, and (2) exports of U.S. 

SMEs that are affiliates of foreign companies to their foreign parent groups. The 

available data do not directly distinguish between these two possibilities. 

However, BEA reports that U.S. exports of goods associated with affiliates of 

U.S. SME MNCs were about $3.5 billion in 2007 (table 4.5). The value of U.S. 

exports of SME MNCs to their own affiliates is therefore smaller than this 

amount. This would suggest that over 90 percent of the related-party exports of 

U.S. SMEs are exports of foreign-owned U.S. SMEs to their foreign parents. 

These SMEs are discussed in more detail in the following section of the report. 

The related-party exports of U.S. SMEs are dominated by manufactured goods. 

This suggests that U.S. SMEs play an important part in the supply chains of 

foreign MNCs, as suppliers either of intermediate inputs or of final goods. In 

dollar terms, the largest categories of goods22 in related-party exports by U.S. 

SMEs in 2007 were basic chemicals ($3.6 billion), aerospace products and parts 

 20 USITC, Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports, 

2010, especially Chapters 1 and 3 and Appendix C; USITC, Small and Medium-Sized Enterprises: 

U.S. and EU Export Activities, and Barriers and Opportunities Experiences by U.S. Firms, 2010, 

pp. 2-6 to 2-17. 21 Either to the parent itself, or to another affiliate of the foreign parent group. 22 By NAICS-4. 
4-14

TABLE 4.6 SME related-party exports, 2007 

Sector 

Related-party exports 

(Million $) 

SME share of 

sector relatedparty exports 

Basic chemicals 3,609.0 22.7 

Aerospace products and parts 2,792.0 27.0 

Pharmaceuticals and medicines 2,613.0 13.1 

Petroleum and coal products 2,598.0 22.2 

Semiconductors and other electronic 

components 2,060.0 9.2 

Communications equipment 1,672.0 43.7 

Navigational, measuring, electromedical, 

and control instruments 1,605.0 7.2 

Miscellaneous manufactured commodities 1,449.0 47.2 

Computer equipment 1,358.0 15.0 

Medical equipment and supplies 1,309.0 16.2 

Agriculture and construction machinery 1,289.0 13.2 

Other fabricated metal products 1,114.0 22.0 

Other general purpose machinery 1,099.0 16.2 

Resin, synthetic rubber, and artificial and 

synthetic fibers and filiment 1,007.0 8.9 

Electrical equipment and components, 

n.e.s.o.i. 911.9 15.6 

Motor vehicle parts 888.2 4.7 

Nonferrous metal (except aluminum) and 

processing 812.5 33.0 

Plastics products 687.2 13.6 

Motor vehicles 684.3 2.2 

Electrical equipment 604.3 14.9 

Iron and steel and ferroalloy 532.8 19.4 

Converted paper products 510.0 15.9 

Engines, turbines, and power transmission 

equipment 497.4 9.6 

Soaps, cleaning compounds, and toilet 

preparations 490.3 12.4 

Rubber products 439.3 13.6 

Other manufacturing 7,926.8 16.5 

Total manufacturing 40,559.0 13.9 

 

Agriculture 1,688.3 25.5 

Mining 939.0 24.3 

Total, all exports of goods 43,186.3 14.8 

Memo: SME related party exports as share 

of total SME exports 15.6 

Sources: Census; USITC calculations. 

n.e.s.o.i = not elsewhere specified or indicated. 

a

Accurate aggregated firm counts cannot be given because the data include firms 

that may have exported more than one type of product. Maximum firm counts of 

23,027; 61,012; 754; and 224 can be inferred for other manufacturing, total 

manufacturing, agriculture, and mining, respectively. 

($2.8 billion), pharmaceuticals and medicines ($2.6 billion), petroleum and coal 

products ($2.6 billion), and semiconductors and other electronic components 

($2.1 billion). 

The share of SMEs in related-party exports of U.S. agricultural goods 

(25.5 percent) and mining goods (24.3 percent) is significantly higher than the 

share of SMEs in related-party exports of U.S. manufactured goods 
4-15

(13.9 percent). Within manufactured goods, the share of SMEs in related-party 

exports is highest for miscellaneous manufactured commodities (47.2 percent), 

communications equipment (43.7 percent), aerospace products and parts 

(27.0 percent), basic chemicals (22.7 percent), and petroleum and coal products 

(22.2 percent). The share of SMEs in related-party exports is lowest for motor 

vehicles (2.2 percent) and motor vehicle parts (4.7 percent), indicating that the 

international supply chain for U.S. exports of motor vehicles and parts is 

dominated by large firms. 

Small and Medium-Sized U.S. Affiliates of Foreign 

Enterprises

Data pertaining to U.S. SMEs tend to include both domestic and foreign-owned 

enterprises. A significant number of SME-sized enterprises in the United States 

are in fact owned by foreign enterprises. BEA data for 2007 report that of the 

10,941 affiliates of foreign MNCs in that year, 9,048 (82.7 percent) had 250 or 

fewer employees (table 4.7). A reasonable estimate is that there were 

approximately 9,400 affiliates of foreign-based enterprises with fewer than 500 

employees, the most commonly used definition of an SME in U.S. data.23

Affiliates of foreign-owned firms with fewer than 500 employees employed an 

estimated 440,000 U.S. workers in 2007, including 187,000 in manufacturing and 

84,000 in wholesale trade.24

Since a significant share of FDI takes place by mergers and acquisitions, some 

U.S. SME-sized affiliates of foreign firms were originally U.S.-based domestic 

companies that were acquired by foreign companies. Box 4.2 presents some 

illustrative recent examples of such acquisitions. 

 23 See USITC, Small and Medium-Sized Enterprises: Overview of Participation in U.S. 

Exports, 2010, pp. 1-2 through 1-4, for the use of “fewer than 500 employees” as a criterion for 

defining SMEs. BEA data on the size distribution of foreign affiliates in the United States use the 

following size categories: less than 10 employees, 10–19, 20–99, 100–249, 250–999, 1000–2499, 

and 2500 employees and over. The number of affiliates with fewer than 500 employees was 

estimated by adding one-third of the number of affiliates with 250–999 employees to the number 

with fewer than 250 employees. 24 In table 4.7, employment is estimated by multiplying the midpoint level of employment in 

each size class reported by BEA by the number of affiliates in that size class. Employment in firms 

with 250–499 employees was estimated by taking one-third of the number of affiliates between 

250–999 employees, and multiplying that number by 374.5 (the midrange of the employment 

category 250–499). 
4-16

TABLE 4.7 SME-sized foreign-owned affiliates in the United States, 2007

Total 

number of 

affiliates, all 

size 

classes 

Number of affiliates 

with fewer than 250 

employees

Estimated number of 

affiliates with fewer 

than 500 employees 

Estimated 

employment in 

affiliates with 

fewer than 500 

employees

Number Number 

% of 

total Number 

% of 

total Thousands

All industries 10,941 9,048 82.7 9,403 85.9 440 

Manufacturing 2,430 1,525 62.8 1,706 70.2 187 

 Of which: 

Food 163 105 64.4 117 71.8 14 

 Chemicals 291 187 64.3 204 70.0 21 

 Plastics and rubber products 158 101 63.9 114 72.2 13 

Primary and fabricated metals 312 200 64.1 226 72.3 26 

Machinery 326 223 68.4 245 75.2 23 

 Computers and electronic 

products 242 167 69.0 183 75.8 17 

Transportation equipment 331 151 45.6 187 56.6 27 

Wholesale trade 1,824 1,540 84.4 1,598 87.6 84 

 Retail trade 220 150 68.2 161 73.3 9 

 Information 448 373 83.3 384 85.7 19 

 Finance and insurance 915 785 85.8 808 88.3 35 

 Real estate and rental and leasing 2,622 2,599 99.1 2,605 99.3 20 

 Professional, scientific, and technical 

services 687 591 86.0 606 88.3 26 

 Other industries 1,795 1,485 82.7 1,534 85.5 61 

Sources: USDOC, BEA; USITC calculations. See text. “Other industries” includes mining; utilities; construction; 

transportation and warehousing; administration, support and waste management; health care and social assistance; 

accommodation and food services; agriculture, forestry, fishing, and hunting; management of nonbank companies and 

enterprises; educational services; arts, entertainment, and recreation; and miscellaneous and other services. 
4-17

BOX 4.2 U.S. SMEs acquired by foreign MNCs 

In recent years, a number of US SMEs have been acquired by foreign MNCs. Examples include Byram 

Healthcare; Ribbit Corporation; CMS, Inc.; Nuclear Security Services Corporation (NSSC); and Miradia, Inc. 

These firms were acquired by firms based in the Netherlands, the United Kingdom, Sweden, and Taiwan.a

Byram, founded in 1968, had about 450 employees and is a major supplier of disposable medical supplies 

and services to patients with chronic diseases. OPG Groep N.V., a Netherlands-based market leader in 

pharmaceuticals and medical supplies, acquired the company in 2008. 

Ribbit, founded in 2006, is a Silicon Valley-based software company which has developed a platform 

allowing new voice applications and services through a combination of telephony and Internet technologies. 

British Telecom (BT) acquired Ribbit in 2008. 

CMS, Inc., founded in 1979, is a developer and distributor worldwide of radiation therapy software, with 

approximately 250 employees. Elektra AB, a Swedish health care company specializing in treating cancer 

and brain disorders, acquired CMS in 2008. 

Nuclear Security Services Corporation, a risk-consulting and security solutions firm with about 70 

employees, has domestic and foreign customers (both private and governmental) in the petrochemical and 

nuclear power security markets. G4S, a British-based international security solutions firm operating in more 

than 100 countries with more than 585,000 employees, acquired NSSC in 2010. 

Miradia, Inc., founded in 2003, has about 20 employees; it designs and manufactures micro-electromechanical system (MEMS) products. The company was acquired in 2009 by the Taiwan-based Touch 

Micro-system Technology Company. 

_______________ 

a

 Information on these transactions was obtained from the Zephyr database (looking for whole-company 

foreign acquisitions of U.S. companies valued under 100 million euros over the past two years) and from 

assorted news reports and company websites. 

CHAPTER 5 

Indirect Exports of U.S. SMEs

Key Findings 

There are a variety of ways in which U.S. SMEs participate in the global economy in 

addition to their role as direct exporters. Many SMEs contribute to U.S. exports 

indirectly, as providers of productive inputs to U.S. exporters both large and small. The 

value created by the SMEs that provide these inputs is not apparent, however, in official 

trade statistics. Due to data limitations, little research has been conducted to attempt to 

estimate the indirect export value created by SMEs. In this chapter, the Commission 

illustrates one way that the value added by SMEs to exports can be traced through the 

production process. The results indicate that this value is substantial: whereas statistics 

indicate that SMEs accounted for approximately 28 percent of gross exports in 2007, 

SMEs contributed an estimated 41 percent of the U.S. value-added exports in the same 

year, according to Commission computations. Further, the Commission estimates that 

these value-added exports supported 4 million U.S. jobs in 2007, including 2.1 million 

U.S. jobs supported by SME exporters, and 1.9 million U.S. jobs supported by SME 

indirect exporters.1

A second way in which SMEs participate in the global economy is via intermediaries 

such as wholesalers. SMEs are frequent users of intermediaries: small and new exporters 

benefit greatly from the services of export intermediaries,2

 as these firms provide skills 

and economies of scale that are unavailable to SMEs or inefficient for them to acquire. 

Unlike in the production process described in this chapter’s value-added example, the 

products are not transformed (or are minimally transformed) after leaving an SME’s 

production facility; SMEs sell their finished goods or services to wholesalers or other 

intermediaries, which in turn export the products. U.S. farms—most of which are 

SMEs—export little directly and instead rely on a variety of intermediaries such as 

wholesalers, consolidators, and cooperatives in order to sell unprocessed or minimally 

processed commodities. SME manufacturers also make frequent use of distribution 

channels, including wholesalers, export management companies, and other 

intermediaries. Finally, many wholesalers and other intermediaries are themselves SMEs 

that enable the export of goods by both large firms and SMEs. 

This chapter provides insights on both direct and indirect U.S. value-added exports by 

SMEs, as well as an illustrative estimate for indirect exports by SMEs. The chapter 

concludes with a description of the several channels of delivery used by SMEs in the 

 1

 Although the Commission examines indirect value-added exports and indirect exports through 

intermediaries using separate data sources and methodologies, estimates of value-added exports and export 

supported jobs presented in this section include the value-added contribution of intermediaries. 2 Peng, Behind the Success and Failure of U.S. Export Intermediaries, 1998; USITC, Small and MediumSized Enterprises: U.S. and EU Export Activities, July, 2010, 3-20 to 3-23. 

5-1 
agriculture, manufacturing, and services sectors, as well as a discussion of the 

intermediaries themselves.3

Indirect Value-Added Exports by U.S. SMEs 

SMEs accounted for $382 billion, or 28 percent, of total U.S. exports of goods and 

services in 2007.4

 However, these values certainly underestimate SMEs’ true 

contribution to the export market: many goods and services produced by SMEs are 

indirectly exported, being embedded in products that are exported via large firms and 

other SMEs. With enough data, it would be possible to compute these indirect exports. 

However, there are significant data gaps: data by firm size do not exist for many of the 

variables necessary for the computations. These data gaps reduce the precision of any 

attempt to quantify SMEs’ full contribution to the U.S. economy. Therefore, the results 

reported by the Commission can best be seen as an example demonstrating that the 

contribution of SMEs to exports is greater than generally assumed. The Commission 

estimates SMEs’ full contribution to be $480 billion, or 41 percent of U.S. value-added 

exports, with an estimated 4.0 million SME jobs supported by thes

5

e value-added 

exports.

Conventional Export Measures and an Alternate Perspective

reated by its suppliers, in the form of the intermediate 

inputs, and its own added value. 

 

Categorizing exports by the characteristics of the final producer to handle the product is 

consistent with the conventional approach to reporting export statistics. In such cases, the 

firm that handles the product last in the production process—regardless of how small the 

value-added contribution of that final step—will be credited with the full value of the 

product. This method attributes more value to the final producer than to those producers 

that may have actually created the bulk of the value added throughout the production 

process.6

 Products are rarely produced completely by a single firm. Instead, a firm 

generally produces goods and services using intermediate inputs purchased from other 

firms in addition to its own capital and labor inputs. As a result, any products that a firm 

exports will contain both value c

3

 Although intermediaries are not discussed in detail until the second section, the first section of the 

chapter does include the use of intermediaries in all computations. Note that while wholesalers are not 

explicitly broken out, they are included in the services sector; both the value contributed by SME wholesalers 

and the value contributed by SMEs that use wholesalers are included in figures for value-added SME exports 

and the corresponding employment figures. 4

 This corresponds to the share of exports attributed to SMEs in USITC, Small and Medium-sized 

Enterprises: Overview of Participation, January 2010, 3-1. 5

 To examine the robustness of these figures to model and data assumptions, the Commission examined 

three sensitivity scenarios. The results of the analysis suggest that the key qualitative finding—that SMEs 

contribute a significant share of total value exported, and that this share is greater than their share of gross 

exports—is unlikely to be reversed. On the other hand, the sensitivity analysis also indicates that the precise 

share of value-added SME exports is uncertain and that the share reported should be seen as indicative. 

Finally, it should be cautioned that the sensitivity analysis is meant to reflect the possible variability of the 

results; it is not exhaustive, and the results cannot be taken as firm bounds on the range of possible values. 

Details of the three sensitivity scenarios are given in appendix H. 6

 Value added is the value created by a firm when it uses factor inputs such as land, labor, and capital. 

These values are combined with intermediate inputs to produce new products. 

5-2 
5-3 

 

In order to properly disentangle the value added to exports created by SMEs from those 

created by large firms, this analysis recategorizes exports by value added. This chapter 

refers to the added value embodied in exports as “value-added exports” (or total valueadded exports) and to exports reported using the conventional approach of crediting only 

the final producer as “gross exports.” Figure 5.1 displays the difference between the two 

perspectives. Gross export value comes from four sources: the exporting firm itself, 

large-firm suppliers, SME suppliers, and foreign suppliers. To compute value-added 

exports, these components are rearranged by firm size. The exporting firm generally adds 

some value; this portion of value-added exports remains in the same size category as in 

the gross-exports perspective. Some goods and services are provided by firms of the same 

size as the exporter (e.g., large firms supplying large exporters and SMEs supplying SME 

exporters): these also remain in their original size category. However, under the valueadded approach, the value added by SME suppliers of large exporters is now part of SME 

exports; similarly, the value added by large suppliers of SME exporters becomes part of 

large firms’ exports under this approach. 

One complicating issue is the role of foreign suppliers. The gross-exports perspective 

does not permit an examination of the role of foreign suppliers:7

 the goods and services 

purchased from abroad are integrated into production and form part of the product that is 

ultimately exported. These values cannot be seen explicitly in the conventional 

perspective. By contrast, the value-added perspective does allow examination of the role 

of foreign imported products separately. As a result, this analysis distinguishes between 

value created purely by domestic players and that obtained from foreign sources. The 

definition of value-added exports is restricted to domestic players only. Total value-added 

exports sum to the same value as gross exports less the foreign suppliers’ contribution. 

The three categories denoted by either a diamond or a square in figure 5.1 together equal 

value-added SME exports. Value-added exports can be further broken down into direct 

and indirect exports. Of these, the category marked with a square—“Self (exporting 

SME)”—is termed “direct exports,” as this is the value created by the exporting firm and 

then exported directly. The two categories marked with a diamond—“SME supplier” of 

large-firm inputs and “SME supplier” of SME inputs—together are defined as “indirect 

exports,” as they are exported only via other producers.8

It is important to note that value-added SME exports are not necessarily greater than 

gross SME exports. In principle, reorganizing exports according to value added could 

yield a higher or lower share of exports for SMEs.9

 However, the nature of SME 

production makes it more likely that SMEs contribute disproportionately to large firms. 

For example, assembly—the combining of many intermediate goods to form a product—

is often best done on a large scale by a large firm. Since assembly is frequently a final 

step in the production process, the large firm will be the exporter according to the 

7

 Indeed, this is the reason for the term “gross” in gross exports, as these exports represent exports prior 

to the subtraction of imports. 8 It is possible to connect the concepts of value-added exports and gross exports precisely through the 

following mathematical relationship: value added exports (of SMEs) = gross exports (of SMEs) + indirect 

exports (by SMEs through large firms and foreign suppliers) – indirect exports (by large firms and foreign 

suppliers through SMEs). 9

 For value-added SME exports to be greater than gross exports, it is necessary that the SME contribution 

to large-firm exports be greater than the large-firm contribution to SME exports. 
FIGURE 5.1 Value of products by exporting firm obscures the involvement of upstream firms 

Value created by: 

Source: Compiled by USITC staff. 

conventional method, but under the value-added method much of the value of the export 

will be shifted to SME producers. 

Indirect SME Value-Added Exports

In this section, the Commission presents the core results using the value-added 

perspective. To estimate value-added exports, an economic framework is constructed that 

models the key features of the production and export value chain. In brief, the model 

keeps track of the inputs and outputs of each industry by firm size, and keeps track of the 

value that is contributed by labor and capital inputs. The model then traces production 

through the value chain, taking note of when a product uses an SME-produced 

component and when the product is exported. Other studies in the literature have 

SME Gross 

exports 

Self (exporting SME) 

Large supplier 

SME supplier 

Foreign supplier 

Large firm 

Self (exporting large firm) 

Large supplier 

Gross 

exports SME supplier 

Foreign supplier 

 = Value-added indirect exports by SMEs 

 = Value-added direct exports by SMEs 

5-4 
5-5 

partitioned input-output tables using a similar methodology in a related context.10

Appendix H provides further details of the methodology. 

The contribution of SMEs according to the traditional or gross-exports perspective is 

given in table 5.1. The breakdown of gross exports in this table is computed according to 

the size of the firm that handled the product immediately before it left the country. Of 

$1.3 trillion in gross exports in 2007, SMEs were responsible for only 28 percent, a value 

that has been relatively stable in recent years. 

By contrast, when considered from the value-added perspective, the value-added exports 

created by SMEs are estimated to be 41 percent of total value-added exports in 2007 

(table 5.2). Correspondingly, large firms’ share is reduced to an estimated 57 percent of 

value added exports, down from their gross-export share of 71 percent. These proportions 

were similar in 2002. 

In both 2002 and 2007, approximately half of the SME value-added exports were direct 

exports (i.e., produced directly by the exporting SME immediately before export) and the 

other half were indirect exports (i.e., supplied to other exporters by SMEs) (table 5.3). 

The value of direct value-added exports by SMEs is lower than that of SME grossexports ($241 billion versus $382 billion in 2007). However, the addition of another 

$240 billion in indirect value-added exports to the direct value-added exports implies 

that the total contribution of SMEs to value-added exports is nearly $100 billion greater 

than official trade statistics indicate. 

SME exports are concentrated in the services sectors from both the gross-exports and the 

value-added perspective (table 5.4). However, manufacturing firms’ share of SME 

exports is lower under the value-added perspective than under the gross-exports 

perspective; this is due to the nature of manufacturing itself more than SMEs’ specific 

attributes. Manufacturing, when disaggregated into its value-added components, uses a 

significant amount of intermediate inputs from primary (agriculture and mining) and 

services sectors, so that its value-added share is much smaller than its gross-export share. 

For both SMEs and large firms, then, manufacturing is a smaller share of total valueadded exports under the value-added perspective than under the conventional perspective. 

Primary and services sectors, by contrast, have a greater share under the value-added 

perspective. 

SMEs contribute a substantial portion of the intermediate inputs used by manufacturing 

firms. This contribution is more apparent in the value-added perspective. SMEs represent 

only 16 percent of gross exports of manufacturing, but value-added exports by SME 

manufacturers are double that share: 32 percent (table 5.5).11 The SME shares for primary 

and services sectors do not change substantially between the gross-export and value- 

 10 See, for example, Koopman, Wang, and Wei, 2008. “How Much of Chinese Exports Is Really Made in 

China?” 2008. 11 This may seem at odds with the decrease of manufacturing shares in table 5.4 from 32 to 23 percent; 

however, this is due to the fact, noted above, that the manufacturing sector as a whole shrinks under the 

value-added perspective. The increase in manufacturing shares by SMEs in table 5.5 demonstrates that 

SMEs’ manufacturing value declines by less across the two perspectives than large firms’ manufacturing 

value. 
TABLE 5.1 Gross exports by firm size, 2002 and 2007 

 2002 2007 

Value 

billion $ 

Share 

% 

Value 

billion $ 

Share 

% 

U.S. gross exportsa 809 1,349 

Exports by SMEsb 246 30 382 28 

Exports by large firmsb 561 69 962 71 

Exports by governmentb 3 0 5 0

Sources: USITC staff calculations. See appendix H for details. 

a

This total excludes trade in used and secondhand goods, as well as noncomparable imports, 

which cannot be matched to IO tables. (See supplementary Use Tables, 

http://bea.gov/industry/xls/Annual_IOUse_After_Redefinitions_1998-2008.xls). b

USITC calculations. See appendix H for details. 

TABLE 5.2 Estimated contribution to domestic value added exports by firm size 

 2002 2007 

Value 

billion $ 

Share 

% 

Value 

billion $ 

Share 

% 

Total domestic value added 726 1,159 0 

SMEs 319 44 480 41 

Large firms 397 54 665 57 

Government 9 1 14 1 

Source: USITC staff calculations. See appendix H for details. 

Note: Sum of values may not equal shown totals due to rounding.

TABLE 5.3 Estimated direct and indirect value added 

 2002 2007 

Value 

billion $ 

Share of 

total value 

added 

% 

Value 

billion $ 

Share of 

total value 

added 

% 

Total value-added exports 726 1,159 

Total SME exports 319 44 480 41 

 Direct exports 167 23 241 21 

 Indirect exports 152 21 240 21 

Source: USITC staff calculations. See Appendix H for details.

TABLE 5.4 Estimates of sectoral breakdown of SME exports, 2007 (%)

Source Gross exports Value added

Agriculture and mining 6 12

Manufacturing 32 23

Services 61 65

 Total 100 100

Source: USITC staff calculations. See appendix H for details. Sector 

values are based on the industry of the SME firm rather than the 

industry of the product. 

Note: Totals may not equal 100 due to rounding. 

5-6 
TABLE 5.5 Estimated SME activity as a share of total sectoral activity, 2007 (%)

Gross exports Value added 

Source SMEs Large firms SMEs Large firms 

Agriculture and Mining 46 54 50 50

Manufacturing 16 84 32 68

Services 46 54 45 55

Source: USITC staff calculations. See appendix H for details. 

added perspectives.12 This indicates that much of the indirect value-added exports by 

SMEs—the intermediate goods and services produced by SMEs that are eventually 

shipped abroad as components embedded in other products—is concentrated in the 

manufacturing sector. 

Total employment supported by value-added SME exports is estimated by the 

Commission to be 4.0 million jobs. Approximately one-half (an estimated 1.9 million) of 

the jobs are supported by direct exports (table 5.6). These are jobs tied directly to the 

value contributed by SMEs in the last stage of the production process. The remaining 

2.1 million jobs are supported by indirect exports of SMEs. The overall number of jobs 

supported by value-added exports (of both SMEs and large firms) is estimated to be 

9.2 million. For both direct and indirect exports, employment in services predominates. 

Other government agencies have also estimated the number of jobs supported by valueadded exports. Analysis performed by the Department of Commerce13 finds similar 

results for the number of jobs supported by U.S. exports; for 2007, the analysis estimates 

a total of 9.5 million jobs supported by exports. Other agencies have not reported results 

by firm size, however. 

SME Indirect Exports Via Wholesalers and Other 

Intermediaries

SMEs can also indirectly export by selling their goods or services to wholesalers or other 

intermediaries that export their products essentially untransformed. A variety of 

specialized firms act as export intermediaries, connecting producers of goods and 

services with overseas buyers. The role of such intermediaries is particularly important 

for many SMEs that lack the resources to export to foreign markets directly. In some 

industries, these indirect exports via wholesalers and other intermediaries are the primary 

channels in which SMEs export their final products. In agriculture, for instance, U.S. 

farms predominantly export through such intermediaries. In addition, SMEs have a 

significant role as export intermediaries themselves. In many industries, these SME 

intermediaries account for a substantial proportion of total U.S. exports. The remainder of 

 12 Gross exports for the agriculture and mining sector include goods exported by these producers directly 

to foreign buyers, as well as the value of goods channeled via wholesalers. Using intermediaries to sell 

abroad is particularly common in agriculture, where a large share of SME farmers sells abroad via 

wholesalers (see the subsequent discussion in this chapter on indirect exports of agricultural products). 

Wholesaler exports—part of the services sector—include only the value of the services provided by 

wholesalers and not the value of the goods being resold. As a result, wheat sold by an SME farmer is part of 

both gross exports and value-added direct exports, regardless of whether it was sold directly by the farmer or 

via a wholesaler. 13 Tschetter, “Exports Support American Jobs,” 2008. 

5-7 
TABLE 5.6 Estimated breakdown of export-supported jobs, 2007 (millions) 

Direct 

exports 

Indirect 

exports Total 

Breakdown by size 

Total 4.4 4.7 9.2 

SMEs 1.9 2.1 4.0 

Large firms 2.5 2.5 5.0 

Government 0.0 0.1 0.2 

Breakdown by industry 

Total 4.4 4.7 9.2 

Agriculture and Mining 0.0 0.1 0.1 

Manufacturing 1.9 1.3 3.2 

Services 2.5 3.4 5.8 

Source: USITC staff calculations. See appendix H for details. 

Note: Totals may not add due to rounding. 

this chapter focuses first on SME wholesalers and intermediaries that facilitate the 

indirect exports of other firms, and then on SME indirect exporters in the agriculture, 

manufacturing, and services sectors that use these intermediaries to access foreign 

markets. 

The Role of Wholesalers and Other Intermediaries

Available trade data do not record the roles of all export intermediaries, such as freight 

forwarders or brokers. Exports are classified according to the industry of the enterprise 

which owns the principal party in interest (formerly the “exporter of record”). The 

principal party of interest is the firm benefiting financially from the sale of the goods in 

question.14 If the enterprise in question is a wholesaler, it may be acting as an 

intermediary that acquired title to the goods from a manufacturer, agricultural, or mining 

firm, and then exported them. 15 In other cases, a firm may act as an export intermediary 

for a firm that engages in a related activity, e.g., computer systems and design consultants 

exporting computers or software, or automobile companies exporting automobile-related 

chemical products. 

The role of intermediaries in the export of goods can be seen more clearly in the present 

study than in the Commission’s January and July 2010 reports on SMEs, as a result of 

data recently made available to the Commission by the U.S. Census Bureau.16 These data 

distinguish both the type of goods being exported and the type of firm doing the 

exporting, i.e., manufacturers, wholesalers, and other types of firms. When goods are 

exported by a different type of firm than that which produced the goods, this is often 

evidence that export intermediation is taking place. Taking small and large firms 

 14 See http://www.census.gov/foreign-trade/reference/definitions/index.html#P. 15 This may not always be the case, however, as firms, particularly larger ones, are often involved in 

multiple industries and activities. The NAICS code identifying the primary activity of an enterprise does not 

necessarily describe all the activities of that enterprise. The designations “manufacturer,” “wholesaler,” or 

“other” in the trade data refer to enterprises. Each enterprise may consist of one or more establishments. 

Thus, for exports classified as coming from “wholesalers,” the principal party of interest may be a 

manufacturer owned by a wholesaler, and for exports classified as coming from “manufacturers,” the 

principal party of interest may be a manufacturer. (U.S. government representative, telephone interview by 

USITC staff, August 17, 2010.) “Wholesalers and Retailers in U.S. Trade,” 2010. 16 For an explanation of how data in this section differ from data reported in the Commission’s January 

and July reports on SMEs, please see chapter 1 of this report. 

5-8 
5-9 

 

together, non-manufacturing firms were responsible for 29.9 percent of all U.S. exports 

of manufactured goods (table 5.7).17 This highlights the large role of wholesalers and 

other intermediaries in securing access to U.S. exports in foreign markets in general. The 

share of SMEs in total exports of manufactured goods, 27.6 percent, is substantially 

higher than the share of SMEs in total exports of goods by manufacturing firms, at 

15.9 percent. In 2007, U.S. SMEs classified as wholesalers exported $95.0 billion of 

manufactured goods, accounting for 10.5 percent of all U.S. exports of manufactured 

goods. U.S. exports by firms in other industries (primarily services firms) accounted for 

$53.8 billion of U.S. exports of manufactured goods in the same year, or 6.0 percent of 

all U.S. exports of manufactured goods. 

The exports of manufactured goods exported by SME manufacturers, wholesalers, and 

other companies in 2007 in dollar terms and percentage terms are presented in tables 5.8 

and 5.9 respectively. 

The degree of intermediation is much higher for agricultural goods than for 

manufacturing goods, and the role of SMEs is also greater. Of all agricultural goods, 

41.6 percent are exported by wholesalers, 46.2 percent by SMEs, and 32.3 percent by 

SME wholesalers (table 5.10). The high share of manufacturing firms in the export of 

agricultural goods suggests another form of intermediation: firms that export both raw 

agricultural commodities and processed foods. Specifically, 46.9 percent of all 

agricultural goods are exported by manufacturers. Of these, 43.7 percent are exported by 

large manufacturers, and 3.2 percent by SME manufacturers. This suggests that SME 

producers of U.S. agricultural goods may often work together with large U.S. producers 

of processed foods in exporting agricultural goods. There is also evidence that SME 

agricultural producers themselves make use of services intermediaries, which are not 

included in the present data. In its July 2010 report on SMEs, the Commission described 

the role of intermediaries such as packers, marketers, industry associations, brokers, and 

agents in the exports of U.S. SMEs producing apples and wine.18 This topic is also 

discussed further in the following section discussing SME agricultural exports. 

Finally, the share of SMEs in the export of mined goods, including oil, gas, coal, and 

metals, is higher than for manufactured goods, but lower than for agricultural goods 

(table 5.11). 

Better data concerning the relationship between the producers of goods and the types of 

firms that export these goods, and further analysis of the available data, would likely be 

useful in understanding the ways in which expanding U.S. exports may influence the U.S. 

economy, including effects on employment in various sectors. It is also likely that various 

goods-producing sectors are paired with particular services sectors in the activity of 

exporting in ways not clearly evident in the data available to the Commission at present. 

17 The Commission’s previous study on this topic, making inferences from the less complete data 

available at the time of writing, estimated that in 2005, a minimum of 20.9 percent of U.S. exports of 

manufactured goods were by non-manufacturing firms. USITC, Small and Medium-Sized Enterprises: U.S. 

and EU Export Activities, 2010, 2-10 and 2-11. 18 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010, 4-4 to 4-5 and 

4-9 to 4-10. 
TABLE 5.7 Exports of manufactured goods by firm type and size class, 2007 

Type of firm: Firm size class 

Exports of 

manufactured 

goods 

Share of total 

exports of 

manufactured 

goods 

Share of total 

exports of 

manufactured 

goods by firm 

type 

Billion $ % 

SME 100.1 11.1 15.9 

Manufacturers Large 531.3 59.0 84.1 

Total 631.4 70.1 100.0 

SME 95.0 10.5 60.6 

Wholesalers Large 61.8 6.9 39.4 

Total 156.7 17.4 100.0 

SME 53.8 6.0 47.6 

Other firms Large 59.3 6.6 52.4 

Total 113.1 12.5 100.0 

Total exports of manufactured goods 901.2a

% 

SME share of total exports of 

manufactured goods 27.6 

Non-manufacturers’ share of total 

exports of manufactured goods 29.9 

Source: U.S. Census Bureau, and USITC staff calculations. 

Note: Data may not add due to rounding. 

a

Total does not include exports of manufactured goods for which the type of firm is not known, 

which amount to approximately $11.4 billion. 

5-10 
TABLE 5.8 Value of exports of manufactured goods by sector, firm type, and firm size, 2007, million $ 

Manufacturers Wholesalers Other Companies 

Type of goods exported SME Large firms Total SME Large firms Total SME Large firms Total Food products 4,495 16,730 21,224 9,150 1,893 11,043 2,619 1,089 3,709 Beverages and tobacco 

products 406 2,779 3,186 432 88 520 351 28 379 

Textiles and fabrics 1,681 3,981 5,663 868 120 988 251 903 1,155 Textile mills products 373 958 1,331 262 34 297 181 357 538 Apparel and accessories 792 833 1,625 747 189 937 336 458 794 Leather and allied products 486 1,240 1,726 428 124 553 248 380 627 Wood products 1,255 1,447 2,701 1,007 103 1,110 453 85 537 Paper 1,997 12,566 14,563 2,221 557 2,778 570 308 878 Printed matter and related 

products, not elsewhere specified or included (n.e.s.o.i.) 379 1,073 1,451 451 917 1,368 1,159 1,583 2,742 

Petroleum and coal products 1,386 13,804 15,190 7,248 (

a) (

a) 762 (

a) (

a) 

Chemicals 17,345 84,124 101,469 12,132 13,803 25,935 5,371 8,717 14,088 

Plastics and rubber products 3,113 10,509 13,622 1,625 385 2,010 1,057 850 1,906 Nonmetallic mineral 

products 1,355 5,107 6,462 529 206 736 420 280 700 

Primary metal 

manufacturing 4,859 22,117 26,976 4,168 1,076 5,244 3,991 4,746 8,738 

Fabricated metal products, 

n.e.s.o.i. 5,636 14,541 20,177 2,598 830 3,428 1,684 1,242 2,926 

Machinery, except electrical 17,519 66,922 84,442 10,634 8,371 19,005 7,797 6,926 14,723 

Computer and electronics 

products 18,724 82,958 101,682 18,558 27,482 46,040 8,834 12,873 21,706 

Electrical equipment, 

appliances & components 4,390 21,260 25,650 2,524 1,313 3,837 1,613 1,609 3,222 

Transportation equipment 7,150 151,059 158,209 8,268 1,670 9,939 13,174 9,272 22,446 

Furniture and fixtures 505 1,461 1,967 350 (

a) (

a) 301 (

a) (

a) 

Misc. manufactured 

commodities 6,256 15,794 22,051 10,749 2,617 13,366 2,653 7,613 10,266 

Totalb 100,103 531,266 631,368 94,951 61,780 156,732c 53,826 59,318 113,143c 

Source: Census; USITC staff calculations. 

aData not available. bTotals do not include exports of manufactured goods for which the type of firm is not known, which amount to approximately $11.4 billion. cSome totals will not correspond due to missing data. 

5-11 
TABLE 5.9 Share of exports of manufactured goods by sector, firm type and firm size, 2007 % 

Manufacturers Wholesalers Other Firms Percent of Exports of Manufactured Goods 

Type of goods exported SME Large firms SME Large firms SME Large firms 

Total 

Manufacturers 

Total 

Wholesalers 

Total 

Other Firms 

Food products 12.5 46.5 25.4 5.3 7.3 3.0 59.0 30.7 10.3 Beverages and tobacco 

products 9.9 68.0 10.6 2.2 8.6 0.7 78.0 12.7 9.3 

Textiles and fabrics 21.5 51.0 11.1 1.5 3.2 11.6 72.5 12.7 14.8 

Textile mills products 17.2 44.2 12.1 1.6 8.4 16.5 61.5 13.7 24.8 

Apparel and accessories 23.6 24.8 22.3 5.6 10.0 13.6 48.4 27.9 23.7 

Leather and allied products 16.7 42.7 14.7 4.3 8.5 13.1 59.4 19.0 21.6 

Wood products 28.8 33.3 23.1 2.4 10.4 1.9 62.1 25.5 12.4 

Paper 11.0 69.0 12.2 3.1 3.1 1.7 79.9 15.2 4.8 Printed matter and related 

products, n.e.s.o.i. 6.8 19.3 8.1 16.5 20.8 28.5 26.1 24.6 49.3 

Petroleum and coal products 7.2 71.9 37.8 (a) 4.0 (a) 79.1 (a) (a) 

Chemicals 12.3 59.5 8.6 9.8 3.8 6.2 71.7 18.3 10.0 Plastics and rubber products 17.7 59.9 9.3 2.2 6.0 4.8 77.7 11.5 10.9 

Nonmetallic mineral 

products 17.2 64.7 6.7 2.6 5.3 3.6 81.8 9.3 8.9 

Primary metal 

manufacturing 11.9 54.0 10.2 2.6 9.7 11.6 65.9 12.8 21.3 

Fabricated metal products, 

n.e.s.o.i. 21.2 54.8 9.8 3.1 6.3 4.7 76.1 12.9 11.0 

Machinery, except electrical 14.8 56.6 9.0 7.1 6.6 5.9 71.5 16.1 12.5 

Computer & electronics 

products 11.1 49.0 11.0 16.2 5.2 7.6 60.0 27.2 12.8 

Electrical equipment, 

appliances and components 13.4 65.0 7.7 4.0 4.9 4.9 78.4 11.7 9.8 

Transportation equipment 3.8 79.3 4.3 0.9 6.9 4.9 83.0 5.2 11.8 

Furniture and fixtures 22.0 63.7 15.3 (a) 13.1 (a) 85.8 (a) (a) 

Misc. manufactured 

commodities 13.7 34.6 23.5 5.7 5.8 16.7 48.3 29.3 22.5 

Source: Census; USITC staff calculations. 

aData not available. 

5-12 
TABLE 5.10 Exports of agricultural goods by firm type and size class, 2007 

Type of firm Firm size class 

Exports of 

agricultural 

goods 

Share of total 

exports of 

agricultural 

goods 

Share of total 

exports of 

agricultural 

goods by firm 

type 

Billion $ % 

SMEs 1.6 3.2 6.9 

Manufacturers Large firms 21.8 43.7 93.2 

Total 23.4 46.9 100.0 

SMEs 16.1 32.3 77.6 

Wholesalers Large firms 4.7 9.3 22.4 

Total 20.8 41.6 100.0 

SMEs 5.3 10.7 93.1 

Other firms Large firms 0.4 0.8 6.9 

Total 5.7 11.5 100.0 

Total exports of agricultural goods 49.9a

% 

SME share of total exports of 

agricultural goods 46.2 

Non-manufacturers’ share of total 

exports of agricultural goods 53.1 

Source: Census; USITC staff calculations. 

Note: Data may not add due to rounding. 

a

Total does not include exports of agricultural goods for which the type of firm is not known, 

which amount to approximately $0.5 billion.

TABLE 5.11 Exports of mining goods by firm type and size class, 2007 

Type of firm Firm size class 

Exports of 

mining goods 

Share of total 

exports of 

mining goods 

Share of total 

exports of 

mining goods 

by firm type 

Billion $ % 

SMEs 0.4 2.6 25.0 

Large firms 1.1 7.9 75.9 

Manufacturers Total 1.4 10.4 100.0 

SMEs 2.1 15.0 94.4 

Large firms 0.1 0.9 5.6 

Wholesalers Total 2.2 15.9 100.0 

SMEs 2.4 17.4 23.6 

Large firms 7.7 56.3 76.4 

Other firms Total 10.1 73.7 100.0 

Total exports of mining goods 13.7a

%

SME share of total exports of mining 

goods 35.0

Non-manufacturers’ share of total 

exports of mining goods 89.6 

Source: Census; USITC staff calculations. 

Note: Data may not add due to rounding. 

a

Total does not include exports of mining goods for which the type of firm is not known, which 

amount to approximately $1.2 billion. 

5-13 
Indirect SME Exports by Sector

As noted above, U.S. SMEs play a larger role in the export economy than is suggested by 

traditional trade statistics by exporting indirectly, either through indirect value-added 

exports or through indirect exports via wholesalers or other intermediaries. The relative 

role of these two channels of indirect exports, however, varies substantially by sector. In 

agriculture, for instance, indirect exports via wholesalers or other intermediaries plays a 

larger role than indirect value-added exports. In professional services, on the other hand, 

indirect value-added exports are the most important channel for SME indirect exporters. 

The final section of this chapter examines the relative role of these two channels of 

indirect exports in the agriculture, manufacturing, and services sectors. 

Indirect SME Agricultural Exports

U.S. agricultural SMEs are relatively minor direct exporters of agricultural goods;19

however, U.S. farms, largely SME operations, are leading indirect exporters of 

agricultural products through other firms.20 Minimally processed bulk commodities––not 

substantially transformed from the farm––represent a substantial share of total U.S. 

agricultural exports. The process by which farmers indirectly export these goods is 

through consolidation of their produce by wholesalers and brokers (consolidators),21

large farmer cooperative organizations, or large multinational agricultural corporations 

that source a wide variety of agricultural produce to supply their global distribution 

networks. A second, much smaller channel of indirect U.S. farm exports (by value) is 

through the exportation of processed agricultural products that contain primary 

commodities as inputs. 

 

U.S. agricultural exports

A significant share of U.S. farm output is exported. For the leading U.S. agricultural 

exports, soybeans, corn, and wheat, 15–43 percent of U.S. domestic production was 

exported in 2009. Export shares of other leading U.S. agricultural products were also 

significant: 7–19 percent of animal products—beef, pork and poultry―were exported; 

19–37 percent of leading horticultural products―apples and grapes―were exported; and 

79–83 percent of almonds and pistachios were exported.22

The majority of U.S. agricultural exports are unprocessed commodities and 

semiprocessed goods that are exported primarily in large bulk shipments by firms other 

than farmers. Such goods include oilseeds and grains (e.g., soybeans, corn, wheat) and 

horticultural products (e.g., apples, grapes, almonds), as well as semiprocessed goods 

19 Agricultural SMEs include farms as well as SME firms that produce value-added agricultural goods. 

The focus of this section is on farms, which represent the overwhelming share of U.S. indirect SME 

agricultural exports. See the Commission’s January and July reports on SMEs for additional information on 

U.S. agricultural SME exports, including nonfarm agricultural SMEs. 20 For a discussion of U.S. farm characteristics, see USITC, Small and Medium-Sized Enterprises: 

Overview, January 2010, 2-12. 21 Certain brokers and wholesalers may be relatively small enterprises in terms of number of employees, 

but they generally trade in very large volumes, in contrast to most farmers. 22 Export shares based on volume, USDA, PSD database. 

5-14 
such as soybean oil, beef, poultry, and tobacco.23 Most direct agricultural exporters are 

large enterprises that are highly efficient, low-cost suppliers leveraging economies of 

scale, whereby high fixed costs of storage, processing, and marketing are spread over 

large sales volumes.24

Indirect agricultural exports

Most agricultural products that are indirectly exported by farmers are primary 

commodities. U.S. exports of agricultural products were $104 billion in 2009, of which a 

substantial share was minimally processed farm commodities.25 The five leading U.S. 

agricultural exports in 2009, accounting for 35 percent of total exports, were soybeans 

($16 billion), corn ($9 billion), wheat ($5 billion), cotton ($3 billion), and soybean meal 

($3 billion), most with minimal value-added processing after leaving the farm.26

Farm products are also indirectly exported when they are used as an input into exported 

processed agricultural products (such as distilled spirits or baked goods). The value of 

farm commodities indirectly exported through the exportation of processed agricultural 

products is much smaller than the value of indirectly exported primary commodities. In 

2009, U.S. exports of primary bulk commodities and semi-processed agricultural 

products represented 67 percent of the total value of agricultural exports compared to 33 

percent for processed agricultural goods.27 Moreover, for most processed foods, the value 

of the farm-produced input is relatively small compared to the final value of the 

processed product. For example, the value of the corn component in Bourbon whiskey or 

the wheat used in bakery goods represents a small share of the value of the final product. 

Moreover, a higher percentage of total U.S. processed food production is consumed 

domestically, than for minimally-processed agricultural products. 

A contributing reason why a substantial share of U.S. agricultural exports are bulk 

commodities is that higher-value products, including processed foods, generally face 

higher tariffs in foreign markets, owing to “tariff escalation,” (a situation in which tariffs 

rise with the level of processing).28 In addition, processed foods are often subject to a 

greater number and variety of nontariff measures, including stringent technical barriers 

(such as labeling and packaging regulations) and other types of regulatory scrutiny 

(including sanitary and phytosanitary measures).29 Consequently, many U.S. processed 

 23 In this analysis, primary commodities are defined as products that are produced on farms and that are 

minimally processed, such as soybeans, corn, wheat, cotton, fruits, and nuts. Semiprocessed agricultural 

products are defined as primary commodities that have been transformed into intermediate goods, such as 

soybean meal and wheat flour. Semiprocessed agricultural products also include meat, such as fresh or frozen 

beef that is generally exported in large primal cuts to be further butchered into retail-size portions, or used as 

an input in processed foods such as sausage, meatballs, or prepared meals. 24 For a discussion of barriers to U.S. SME exports, including barriers to direct farm exports, see USITC, 

Small and Medium-Sized Enterprise: U.S. and EU Export Activities, 2010, chap. 3, “Views on SMEs on 

Barriers to Exporting,” 3-1 to 3-44, and chap. 4, apple and wine case studies, 4-1 to 4-16. 25Of the leading 25 U.S. agricultural exports by 6-digit HS subheading (representing $62 billion or 59 

percent of total U.S. agricultural exports in 2009), 20 subheadings were minimally or semi-processed 

agricultural goods. 26 USITC DataWeb. 

27 USDA, FAS, GATS System. 

28 USDA, ERS, “Market Access for High-Value Foods,” February 2005, 5–9. 29 USDA, ERS, “Processed Food Trade,” February 2005. 

5-15 
5-16 

 

foods companies, mostly large multinational firms, locate production facilities within 

foreign markets or regions, at least in part to bypass tariff and nontariff barriers.30

Distribution: farm to export market

A simplified diagram of the two channels from farms to export markets is presented in 

figure 5.2. The top channel (above the dotted line) represents the flow of primary 

commodities through the agricultural marketing and distribution system (supply chain),31

while the bottom channel (below the dotted line) illustrates the flow of farm products 

exported as processed goods. In almost all cases, agricultural products pass from farms 

through intermediaries―including processors, wholesalers, and manufacturers, 

depending on the product and sector―to reach export markets. 

In figure 5.2, basic processing refers to processing that results in little or no 

transformation of the farm commodity―for example, the cleaning and sorting of grain by 

grain elevator firms, or the washing, grading, and sorting of horticultural products by 

packing houses. Processing is a transformation of the agricultural product into an 

intermediate good that will be used in the manufacture of final consumer goods―for 

example, the grinding of wheat into flour and corn into cornmeal, or the stemming and 

drying of tobacco leaf into semi-processed tobacco. Manufacturing represents the 

production of final consumer goods, such as transforming flour into baked goods or semiprocessed tobacco into cigarettes. 

The supply chain from the farm to the export market for both primary and processed 

products contains a variety of linkages. As indicated in figure 5.2, at each stage of the 

supply chain, products can be exported depending on the sector and product. For 

minimally processed agricultural goods such as soybeans, corn and wheat, farmers 

typically sell or store their produce at local grain elevators (basic processors) that may 

perform cleaning, grading, sorting, and consolidating. From this stage the grain may be 

exported by the grain elevator or further channeled to other grain elevators, wholesalers 

and brokers, or multinational agricultural firms.32

Multinational agricultural corporations such as Cargill, Bunge, and ADM are vertically 

integrated firms that operate facilities in all phases of the supply chain––they own and 

operate grain elevators and processing facilities, and have integrated international 

marketing operations.33 Consequently, they source bulk commodities directly from 

farmers, as well as from grain elevators, distributors, and wholesalers, to supply their 

distribution networks. 

Farmers also indirectly export by consolidating their produce with other farmers in 

cooperative organizations. For example, a large proportion of U.S.-produced almonds are 

exported by farmer-owned cooperatives. Almond farmers transport the product to 

cooperative handlers (basic processors) such as Blue Diamond, which cleans, dries, sorts, 

shells, and consolidates almonds for distribution. Produce may undergo further 

distribution through wholesalers and brokers or may be directly exported by cooperatives. 

30 USITC, Processed Foods and Beverages, 2001, 15-10 to 15-11. 31 The marketing and distribution system represents all commercial agricultural activities from the point 

where raw agricultural products leave the farm to the point where they are consumed by the final purchaser. 32 U.S. government official, telephone interview by USITC staff, June 29, 2010. 33 U.S. government official, telephone interview by USITC staff, June 29, 2010. 
FIGURE 5.2 Agricultural supply chain: Farm to market

Primary commodities

Processed products

Farms

Processors

Basic processors

Privately owned,

Co-op owned,

Grower owned Wholesalers

Brokers, merchants, and

other marketing entities

(owned by private

companies and co-ops)

Domestic

market

Export market

Manufacturers Wholesalers

Export market

Domestic

market

Source: Compiled by USITC staff.

Basic processing firms, such as apple and orange packing houses, may also be owned by 

individual growers that pack their own produce as well as produce from other growers. 

The commodity and processed foods supply chains may be linked at various stages of the 

marketing and distribution system. For example, grains may be channeled from the grain 

elevator (basic processor) to milling companies (processors) that transform the primary 

commodity into flour, which in turn is used by processed food companies 

(manufacturers). In the tobacco sector, tobacco may be exported as a semi-processed 

commodity or as an input in manufactured products (cigarettes). For example, tobacco 

farmers may directly contract with tobacco leaf dealers that process leaf tobacco into 

semi-processed tobacco, then export the product to foreign manufacturers. Farmers also 

directly contract with domestic cigarette manufacturers (e.g., Philip Morris) that produce 

cigarettes for export. 

5-17 
Indirect SME Manufacturing Exports

Indirect exports by SME manufacturers may occur when they use distributors, agents, or 

export management companies to export their products, or when they supply inputs to 

other companies for incorporation into products for export. Because the final destination 

of their output may be several transactions beyond their final sale, SMEs are often 

unaware if their products are eventually exported. This section describes four common 

distribution chains through which SME manufacturers indirectly export their products: 

wholesalers or distributors; services firms that export manufactured goods; agents or 

export management companies; and large manufacturers that export goods that contain 

inputs from U.S. SMEs. 

Agents or export management companies may represent U.S. manufacturers of products 

in foreign markets. The use of an agent or export management company can significantly 

facilitate efforts by SMEs to identify and penetrate foreign markets, thus reducing the 

fixed costs of exporting. The SME pays a fee for the services of the agent or export 

management company, and the agent or export management company may become the 

principal party of interest. According to one source, the number of export management 

companies has declined over time, partly because language barriers have lessened and 

because international communication and trade finance standards are more widespread.34

One SME export management company noted in written comments to the Commission 

that its success was due in part to a strategy of exporting high-value products with a focus 

on a single industry to select markets, rather than exporting commodity products. As a 

result, the export management company developed expertise in this industry, achieved 

economies of scale by offering multiple product lines through foreign distributors, and 

reduced the time to enter the market.35 Other export management companies similarly 

focus on a few product areas and work with companies manufacturing those products. 

For example, Dorian Drake International, Inc., an export management company, focuses 

on four product areas.36

Supplying inputs to companies that export is likely a significant channel of indirect SME 

manufacturer exports. One study released in 2006 reports the names of over 30,000 

suppliers (mainly SMEs) to six large manufacturing firms. These six large firms have 

SME manufacturer suppliers from every state in the United States.37 SMEs either supply 

goods directly to large U.S. exporters or are one or several times removed from the 

exporters. The SME product may be a subassembly or a part that is incorporated into a 

subassembly. The large company exporters generally have several tiers of suppliers, 

typically called Tier 1 and Tier 2 suppliers, but possibly extending further to Tier 3 and 

Tier 4 suppliers. In turn, the Tier 1 and Tier 2 suppliers will also have levels of suppliers. 

For example, in the automotive industry, the Motor & Equipment Manufacturers 

Association describes Tier 1 firms supplying finished components to original equipment 

 34 Horowitz, “A Vanishing Breed,” Shipping Digest, December 18, 2006. A USITC staff search of the 

Export Yellow Pages for “Export Management Company” resulted in fewer than 100 listings. 

http://www.exportyellowpages.com (accessed July 9, 2010). 35 Kimberly Benson, Cange International, Inc., written submission to the USITC, January 23, 2010. 36 Dorian Drake International, “About Dorian Drake,” n.d. (accessed July 14, 2010).

37 Democracy Data and Communications LLC, “ExIm Bank Suppliers.” 

5-18 
5-19 

 

manufacturers, Tier 2 firms supplying parts to Tier 1, and Tier 3 firms supplying raw 

materials to Tier 2.38

For machinery exports, many of the items are likely to be produced by contract machine 

and metal-forming shops that make metal parts to customer specifications; by mold and 

die makers; and by contract plastics and rubber parts molders. Many of these are likely to 

be SMEs. In most instances, these SME manufacturers must be qualified as a supplier to 

the larger customers and meet a variety of quality and performance standards. Once 

qualified as a supplier, they generally compete on price. 

Indirect SME Services Exports

In many cases, U.S. companies export services indirectly, rather than directly. An indirect 

services export occurs when a nonexporting U.S. company provides services to a firm 

that ultimately exports goods or services abroad. Indirect services exports are perhaps 

most associated with professional and business services such as accounting, advertising, 

consulting, and legal services. Using professional services as an example, an indirect 

services export on the part of a U.S. SME firm occurs when a small accounting firm 

prepares the books of a company that exports goods or services to foreign markets. 

Similarly, services would be exported indirectly when a small U.S. advertising firm 

creates an advertising campaign for a multinational corporation that ultimately uses that 

campaign to sell products and services outside the United States. 

Although most often associated with professional services, indirect services exports occur 

across a broad range of industry sectors. In the audiovisual services industry, for 

example, approximately 100,000 SMEs provide services to the producers of film and 

television content, with most such content ultimately exported around the world. For 

example, Hammerhead Productions, a California-based computer graphics, special 

effects, and digital enhancement studio, provided services crucial to the production of 

several big-name Hollywood films.39 Similarly, Hydraulx Visual Effects, which 

specializes in digital cosmetic enhancements and the development of creatures, and a 

make-up special effects studio KNB EFX Group, also provided services in the production 

of a number of major U.S. motion pictures.40

Wholesale transactions are another significant channel for U.S. SME indirect exports: 

U.S. SME services providers both facilitate wholesale transactions and sell services 

abroad through wholesale intermediaries. Such transactions are particularly common in 

the financial services industry. For example, the international sale of services by a small 

U.S. firm is facilitated by wholesale intermediaries when a hedge fund sells shares to 

foreign investors through a wealth management advisory firm. U.S. services SMEs also 

perform the role of wholesale intermediary when, for example, a boutique brokerage 

based in the United States purchases stocks or bonds for foreign clients. 

38 Motor & Equipment Manufacturers Association, “Original Equipment,” n.d. (accessed July 13, 2010). 39 Industry representative, e-mail message to USITC staff, July 1, 2010; Internet Movie Database Web 

site, http://www.imdb.com/company/co0028079/ (accessed July 15, 2010). 40 Internet Movie Database Web site, http://www.imdb.com/company/co0109632/ and 

http://www.imdb.com/company/co0015640/ (accessed July 15, 2010); industry representative, e-mail 

message to USITC staff, July 1, 2010. 

6-1 

CHAPTER 6 

Trade Barriers That Disproportionately 

Affect SME Export Performance

Key Findings 

Overall, SMEs’ share of U.S. exports is low, especially relative to their share of total U.S. 

output.1

 This is partly due to some impediments to exporting falling disproportionately 

on smaller exporters. Information collected and analyzed by the Commission provides 

some evidence that both tariffs and nontariff measures (NTMs) are relatively more 

burdensome to SMEs than to larger firms. Analysis of applied tariffs in foreign markets 

on traded manufactured goods shows tariff spikes in some industries in which U.S. SMEs 

have large export shares. NTMs also frequently impede exports by SMEs 

disproportionately more than exports by large firms. For example, many firms surveyed 

through the Commission’s questionnaire, and especially SMEs, considered foreign 

regulations and customs procedures to be important barriers to doing business abroad. In 

addition to NTMs, business impediments such as transportation costs figured prominently 

in the overall impediments to exporting. Also, according to SME industry representatives, 

standards and certification are typically important hurdles for manufactured goods. 

Licensing, residency requirements, and commercial presence requirements present 

challenges for services providers that export. 

This chapter begins by examining overall impediments to exporting as reported in the 

USITC questionnaire. It then uses trade and tariff data to examine how tariffs on certain 

exports may disproportionately affect some SMEs. The importance of NTMs for SMEs is 

subsequently analyzed. A discussion of particular NTMs on SME exporters in the 

manufacturing and services sectors concludes the chapter. First, however, box 6.1 

describes how NTMs can impose fixed costs on firms and create a disproportionate effect 

on SMEs.

Disproportionate Impediments to SME Exports

Many impediments to international trade disproportionately affect SMEs.2 This is the 

case even though these impediments often do not explicitly discriminate―for example, 

they may apply equally to different-sized firms. The disproportionate effect holds for 

firms in both the services and manufacturing sectors and also for a variety of 

impediments, including business impediments (i.e., obtaining financing, lack of trained 

staff, etc.), foreign policy impediments, and domestic policy impediments. 

The Commission’s questionnaire surveyed firms’ opinions about 19 potential 

impediments to trade. These included seven business impediments, five foreign policy 

 1

 See USITC, Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports, January 

2010. 2

 Findings in this section are drawn from the Commission’s survey of 3,200 firms. Details of the survey 

and the Commission’s analytical approach are in appendix F. 
BOX 6.1 Variable and fixed costs of exporting 

Foreign trade measures can increase both the variable and fixed costs of trade. Variable-cost measures 

vary with the sale value or the quantity sold of the traded goods. Tariffs, whether ad valorem rates or 

specific duties, are typically a variable cost. Fixed-cost measures, on the other hand, represent transaction 

costs that do not vary based on the traded amounts. Many NTMs impose fixed trade costs. Complying with 

certain foreign standards, for instance, imposes fixed costs that must be borne to enter the market, 

regardless of the extent to which exports contribute to a firm’s revenues. Complex licensing procedures 

required to practice certain professional services abroad provide another example of fixed-cost measures 

identified in this chapter. 

The distinction between variable and fixed cost trade measures is important because large exporters can 

spread fixed costs more easily over their sales volumes than small exporters. Thus, many NTMs have the 

potential to affect SMEs disproportionately; some NTMs may even make it infeasible for some SMEs to 

export, at least directly.a

 NTMs are particularly relevant for services trade, for which tariffs at the border are 

unimportant.

a

 For a discussion of indirect exports, see chap. 5 in this report.

measures (tariffs or NTMs), and three domestic policy measures (table 6.1).3 Four others 

were a combination of business impediments and domestic or foreign policies. For 

example, a firm could report “difficulty in receiving or processing payments” as an 

impediment because a foreign government does not adequately enforce contracts or 

because the firm lacks the know-how to set up letters of credit or other instruments used 

in international finance. In the questionnaire, firms were first asked if they had ever 

exported or considered exporting (the latter point was included to account for the 

possibility that firms had faced perceived insurmountable barriers). These firms were 

then asked to report whether they had encountered the impediment and then to assess the 

impediment’s severity on a scale of 1 to 5, with 1 representing no impediment, 3 a 

moderate impediment, and 5 a major impediment. 

Most Frequently Encountered Impediments

The most frequently encountered impediment for manufacturers was high transportation 

and shipping costs, reported by 88.5 percent of SME manufacturers and 93.6 percent of 

large manufacturers (table 6.2). 4

 Language or cultural barriers were reported by the 

second largest share (82.2 percent) of SME manufacturers. Overall, services firms 

encountered fewer impediments than manufacturing firms. The three impediments 

encountered most often by SME services firms were “foreign sales not sufficiently 

profitable” (58.7 percent), “difficulty locating sales prospects” (55.8 percent), and 

“transportation and shipping costs” (53.6 percent). Less than half of the large services 

firms had encountered any of the impediments on the Commission’s list. 

 3

 Table 6.1 also briefly describes the impediments and provides references to the second USITC SME 

report if the impediment is described there more fully. USITC, Small and Medium-Sized Enterprises: U.S. 

and EU Export Activities, July 2010. 

6-2 

4

 Firms responding to the questionnaire had the choice of marking “not encountered” or rating the 

severity of the impediment on the 1-to-5 scale. “Firms encountering the impediment” was calculated as the 

ratio of 1-to-5 responses to all responses. Thus, shares in table 6.2 include firms that encountered the barrier 

but did not find it burdensome. 
TABLE 6.1 Impediments to SME exporting included in the USITC questionnaire and described in the Commission’s July 2010 report on SMEs 

Category Type of impediment Impact of impediments on SME exporting activitiesaDifficulty locating sales prospects Business SME representatives reported that the high costs associated with identifying sales prospects and 

acquiring information on foreign markets are significant impediments to small firms (3-19). SME 

textile and apparel firms rely on a single or relatively few domestic customers and do not have a sales force or marketing strategy to identify potential international sales (4-15). Even small suppliers of well-known brands noted the challenges of high international marketing costs.b

Foreign sales not sufficiently profitable 

Business The costs of accessing a foreign market, when added to the cost of the good or service, reduce 

profit margins and can lower the incentive to export. Also, the attractiveness of exporting to a foreign 

market is less if prices in that market are below U.S. levels. Exchange rate fluctuations can also 

undermine profitability (3-18). Textile and apparel SMEs reported that their products are often at a 

competitive disadvantage internationally because foreign governments subsidize textile and apparel exports through low-cost loans and marketing support (4-16). SME exporters of medical devices 

reported that payments made by third-party insurers and government agencies in foreign markets 

may not fully reimburse them for commercialized medical devices (4-20). Moreover, the significant commercialization costs and lengthy product development cycle of up to two years can pose critical 

challenges for SMEs seeking to export advanced medical devices (4-20). 

Lack of trained staff Business Dealing with foreign regulations, customs and shipping complexities, and international payments 

arrangements can be daunting for small firms that lack specialized staff. Textile and apparel SMEs reported that they are often unfamiliar with letters of credit, accounts receivable insurance, or ways of providing discounts or financing to international customers (4-16). 

Language/cultural barriers Business Language and cultural barriers make it more difficult for firms to identify and service foreign 

customers. Language barriers can lead to misunderstandings in interpretation of customer orders and contracts, and can impede the development of marketing materials.c These barriers also 

impede the ability of SMEs to develop an ongoing relationship with a foreign customer by, for example, providing onsite customer service and installation assistance (3-18 to 3-19). 

Obtaining financing Business SMEs reported more difficulties in obtaining financing than large firms and that those problems were 

exacerbated by the 2008–09 global economic downturn. SMEs reported problems both in obtaining trade financing, particularly pre-shipment financing to cover large exports, and in obtaining working capital for daily operations and expansion into new business areas (3-2, 3-4). For example, SME apple exporters reported that difficulties obtaining financing posed a significant restriction for apple exports (4-3). SME wine exporters reported that obtaining long-term financing was particularly challenging for small firms (4-9). 

Preference for local goods/services in foreign market 

Business Consumers in some countries prefer to buy goods that are made locally; moreover, they may have 

limited knowledge of foreign products. For example, SME wineries reported that importers and retailers in many foreign markets know little about U.S. wine (4-8). In addition, foreign government support programs for particular industries—such as low-cost loans, marketing support, and tax incentives—may make U.S. exports less price-competitive vis-à-vis locally produced goods (3-17). 

See footnotes at end of table. 

6-3 
TABLE 6.1 Impediments to SME exporting included in the USITC questionnaire and described in the Commission’s July 2010 report on SMEs–Continued 

Impact of impediments on SME exporting activitiesa Category Type of impediment 

Transportation/shipping costs Business Unit transportation costs are less on larger shipments, which may put SMEs at a disadvantage 

compared to larger firms. Other impediments include rising ocean freight rates, the difficulties small exporters have in filling a shipping container (shipping full containers is less expensive than shipping smaller orders),d and container shortages (3-11). SME chemicals exporters reported that 

transportation costs and limited container availability were constraints on exports (4-11). 

Lack of government support programs 

Domestic Some SMEs reported that their transactions often are too small to qualify for approval by the Ex-Im 

Bank. SMEs reported that Small Business Agency-guaranteed loans became more difficult to obtain during the 2008–09 economic downturn (3-4). Some SMEs also reported that they were not aware of U.S. government support programs for exporters.e

U.S. regulations Domestic U.S. federal and state laws and regulations may serve as barriers to exporting, particularly with 

respect to the administrative burden and logistics required for compliance. Examples include the administrative burdens associated with U.S. export control regulations and USDA Animal and Plant Health Inspection Service (APHIS) fees charged for the approval of export health papers and overtime user fees (3-10 to 3-11). Computer services SMEs stated that U.S. export and re-export 

controls on commercial encryption products constrain exports of both software and hardware (4-22). High U.S. tariffs on goods SMEs import as intermediate inputs can also impede firms’ ability to export (3-9). 

6-4 

U.S. taxation issues Domestic A number of sources expressed the concern that tax rules may place SMEs at a competitive 

disadvantage with regard to both the actual tax burden and the administrative burden of compliance with tax rules.f Firms that do business in other countries face the potential of being taxed on both 

foreign earnings and again when those earnings are repatriated (so-called “double taxation”). SMEs that only export occasionally may find the requirement that they have a federal tax ID number to be a barrier to exporting (3-10). 

Customs procedures Foreign SME exporters frequently reported problems with customs clearance delays.g Delays were 

especially problematic for shipments of perishable products, such as food or medical supplies. One SME that exports radioactive isotopes for medical treatments, which are time-sensitive, stated that it 

does not export to Latin America because of frequent customs delays in many countries in that region (3-17). 

See footnotes at end of table. 
TABLE 6.1 Impediments to SME exporting included in the USITC questionnaire and described in the Commission’s July 2010 report on SMEs–Continued 

Category Type of impediment Impact of impediments on SME exporting activitiesaForeign regulations Foreign The costs of understanding and complying with foreign government regulations are often high 

because of the following: • the administrative burdens of compliance (e.g., administrative paperwork, additional record  keeping, testing, or certification); • the lack of standardized regulations across countries, including the lack of mutual recognition  agreements between U.S. and foreign regulators; • the costs of meeting foreign regulations such as sanitary and phytosanitary (SPS) regulations and  packaging and labeling requirements; and • market access barriers in certain services sectors, including local content or screen quota  requirements in the film and television industry (3-12 to 3-14). For instance, SME apple exporters stated that there were challenges in meeting different SPS rules in various export markets (4-4). SME wineries reported challenges in meeting differing foreign SPS requirements (4-8). SME chemical exporters reported that the costs of compliance with the EU chemical regulatory system constrained their shipments to Europe (4-12). Local labeling requirements were also noted as a constraint to exporting by SME chemical and nanotechnology companies (4-13). Textile and apparel SMEs reported that they lack the resources or experience to navigate foreign customs and other regulations (4-15). SMEs in the medical device industry reported that complex regulatory procedures abroad were a significant barrier to exporting (4-20). 

Foreign taxation issues Foreign 

6-5 Foreign taxes imposed on U.S. exports increase the prices of U.S. products in foreign markets, 

particularly when the taxes are not applied to comparable domestic goods and services. The combination of foreign taxes, foreign duties, and shipping costs can make U.S. goods 

uncompetitive.h This problem is made worse when foreign tax regimes are nontransparent (3-14)i or 

when foreign governments provide tax incentives to local companies (3-17 and 4-16). Textile and apparel SMEs reported that value-added taxes in foreign markets often increase the cost of U.S 

exports compared to local competitors in each market (4-17). 

High tariffs Foreign Foreign tariffs imposed on U.S. exports, when passed on to consumers in the importing country, can 

increase the price of U.S. exports in foreign markets.j SME wineries reported that ad valorem (valuebasis) duties can raise the price of U.S. wines in foreign markets very substantially (4-7). SME 

textile and apparel producers reported that high Brazilian tariffs effectively preclude exports of certain U.S. yarn to Brazil (4-18). 

Insufficient IP protection Foreign Financial losses often occur due to unreliable IP protection in countries with few legal protections 

against theft of trade secrets, IP product designs, and other IP infringements (3-15 to 3-16). Exporters of film and television programming reported that seeking remedies to IP infringement was often too expensive for SME producers.k SME producers of medical devices reported that they incur 

financial losses as a result of third country producers that copy U.S. technologies and sell them on world markets at significantly lower prices.l

See footnotes at end of table. 
TABLE 6.1 Impediments to SME exporting included in the USITC questionnaire and described in the Commission’s July 2010 report on SMEs–Continued

Category Type of impediment Impact of impediments on SME exporting activitiesaDifficulty establishing affiliates in foreign markets 

Foreign, business SMEs often lack the financial resources and detailed knowledge of the foreign business 

environment needed to establish foreign affiliates.m For this reason, SMEs have tended to establish fewer foreign affiliates than large firms do and, consequently, lack the access to local business networks that can be provided by affiliates (3-19). SME exporters of professional services frequently join networks of service providers; some SME professional services providers reported that they can face high entry costs in foreign markets in seeking to first understand the local legal, institutional, or cultural environment (4-26 to 4-27). 

Difficulty in receiving or processing payments 

6-6 Foreign, business Foreign laws and enforcement practices may not be adequate to ensure payment for delivered goods and services. SMEs, particularly those new to exporting, often lack knowledge about 

international payment risks and options such as letters of credit and accounts receivable insurance.n

U.S. textile and apparel SMEs reported that the 2008–09 global financial downturn caused payment terms of their foreign customers to increase significantly, resulting in higher accounts receivable (4-16). 

Unable to find foreign partners Foreign, business Foreign firms often lack resources and business networks to find reliable local representatives, 

business partners, and distribution agents in foreign markets (3-20) . 

See footnotes at end of table. 
TABLE 6.1 Impediments to SME exporting included in the USITC questionnaire and described in the Commission’s July 2010 report on SMEs–Continued 

Category Type of impediment Impact of impediments on SME exporting activitiesaVisa issues Foreign, domestic Foreign visitors sometimes report difficulties in obtaining visas to enter the United States. 

Cumbersome and lengthy entrance procedures can discourage foreign visitors from entering the United States, which can have adverse impacts on U.S. firms in several ways, including: 

• reducing foreign demand for U.S. tourism, health care, and education services; • making it difficult for manufacturers to invite potential foreign customers to the United States to 

 demonstrate their products;o

• restricting or preventing U.S. firms with affiliates outside the United States from sending personnel 

to the United States to receive in-house trainingp (3-8 to 3-9). 

Similarly, U.S. travelers have reported difficulties obtaining visas to enter foreign countries. Delays in obtaining visas can make it difficult for U.S. business operators and their staff to visit foreign customers and to launch or build local business networks. 

Sources: Compiled from questionnaire data; USITC hearings held in conjunction with this investigation; and USITC, Small and Medium-Sized Enterprises: U.S. 

and EU Export Activities, July 2010. 

aNumbers in parentheses refer to page numbers in the Commission’s July 2010 report. 

bUSITC, hearing transcript, March 10, 2010, 189 (testimony of Thomas Dustman, Sunnen Products). cUSITC, hearing transcript, March 10, 2010, 188, 190 (testimony of Rebecca Herwick, Global Products International). dUSITC, hearing transcript, March 18, 2010, 137 (testimony of Jameson French, Hardwood Federation/Northland Forest Products). eUSITC, hearing transcript, March 10, 2010, 290 (testimony of Stephen Mitchell, Magna Technologies); March 12, 2010, 40 (testimony of Matt Nees, Software 

Association of Oregon). fFor example, see OECD, Taxation of SMEs: Key Issues and Policy Considerations, October 2009. gUSITC, hearing transcript, March 10, 2010, 33–37 (testimony of Solomon Akinduro, Afram Corp.); hearing transcript, March 10, 2010, 164 (testimony of 

Thomas Dustman, Sunnen Products); hearing transcript, March 12, 2010, 159–205 (testimony of Leonard Felix, CID Bio-Science); hearing transcript, March 18, 

2010, 197–205 (testimony of Miguel Angel Oliva, HBO Latin America). hUSITC hearing transcript, March 10, 2010, 206–209 (testimony of Rudi Roeslein, Roeslein & Assoc.); March 18, 2010, 203 (testimony of Miguel Angel Oliva, 

HBO Latin America). iUSITC, hearing transcript, March 18, 2010, 12 (testimony of Representative Donald A. Manzullo). jUSITC, hearing transcript, March 10, 2010, 166 (testimony of Thomas Dustman, Sunnen Products); March 10, 2010, 224 (testimony of Karen Bomba, Zoltek 

Corp.). kIndependent Film & Television Alliance, written testimony to the USITC, March 26, 2010. lTiba Medical, written testimony to the USITC, March 26, 2010. 

6-7 

mUSITC, hearing transcript, March 18, 2010, 209–10 (testimony of Maria Hardy, Medical, Laboratory & Technology Consultants). nUSITC, hearing transcript, March 10, 2010, 33–37, 73 (testimony of Solomon Akinduro, Afram Corp.); March 10, 2010, 120 (testimony of Cory Simek, U.S. 

Department of Commerce); March 10, 2010, 198 202–203 (testimony of Rebecca Herwick, Global Products International); March 10, 2010, 206 (testimony of Stephen Mitchell, Magna Technologies); March 10, 2010, 248 (testimony of Rudi Roeslin, Roeslin & Assoc.). oUSITC, hearing transcript, March 10, 2010, 56–57 (testimony of Cory Simek, U.S. Department of Commerce); March 12, 2010, 14 (testimony of Tim McCabe, 

Oregon Business Development Department); March 18, 2010, 143–144 (testimony of Spencer Ross, National Institute for World Trade); March 18, 2010, 272 (testimony of Miguel Angel Oliva, HBO Latin America). 

 pUSITC, hearing transcript, March 10, 2010, 211 (testimony of Karen Bomba, Zoltek Corp.). 
6-8 

TABLE 6.2 Proportion of firms encountering the impedimenta (%)

 

SME 

manufacturer 

Large 

manufacturer 

SME 

services 

Large 

services 

firms 

Transportation/shipping costs 88.5 93.6 53.6 35.1 

Language/cultural barriers 82.2 86.8 53.4 42.2 

Difficulty locating sales prospects 79.1 83.2 55.8 45.2 

Foreign regulations 78.0 90.0 51.1 48.3 

U.S. regulations 73.4 86.8 45.4 37.8 

Foreign sales not sufficiently profitable 72.5 84.4 58.7 46.2 

Customs procedures 71.9 87.4 44.6 35.5 

Difficulty in receiving or processing payments 67.9 87.9 39.3 41.1 

U.S. taxation issues 62.8 80.7 37.4 39.2 

Lack of trained staff 62.6 85.7 36.7 46.5 

Insufficient IP protection 61.8 71.6 43.6 27.3 

Foreign taxation issues 60.4 80.5 36.1 40.6 

Preference for local goods/services in foreign market 57.4 81.7 37.8 35.8 

Difficulty establishing affiliates in foreign markets 57.2 76.9 29.8 33.8 

High tariffs 56.6 81.6 36.8 28.8 

Lack of government support programs 56.4 70.3 29.2 29.4 

Obtaining financing 51.6 63.8 38.5 31.9 

Unable to find foreign partners 50.5 66.6 33.0 36.0 

Visa issues 30.1 67.8 34.9 33.5 

Source: USITC staff calculation from questionnaire data.

a

The proportion of firms encountering the impediment was calculated as the ratio of 1-to-5 responses to all 

responses, including those not encountering the impediment. 

Highest-Ranked Impediments

When asked to rank the three most important impediments to trade, there was a wide 

difference of opinions among firms, with no single impediment ranked as most 

burdensome by a majority of respondents. Manufacturing SMEs most frequently reported 

that the most important impediment was “obtaining financing,” “high tariffs,” or 

“transportation and shipping costs” (table 6.3). Large manufacturing firms reported that 

the most important impediment was either “foreign regulations” or “preference for local 

goods or services in a foreign market.” For services SMEs, the greatest concern was 

“language or cultural barriers” or “foreign sales not sufficiently profitable.” In contrast, 

large service providers most frequently found the most important impediment to be either 

“difficulty locating foreign sales prospects” or “foreign regulations.” 

Box 6.2 summarizes the results of a member survey by the National Minority Business 

Council. Similar to SME manufacturers responding to the USITC questionnaire, their top 

concern was access to capital; government support programs appear to be more important 

to this group than to firms responding to the Commission’s questionnaire.
TABLE 6.3 Share of respondents to USITC questionnaire ranking a given impediment as the most important

Manufacturing Services 

SMEs Large firms SMEs Large firms 

Impediment Percent Rank Percent Rank Percent Rank Percent Rank Obtaining financing 21.0 1 9.7 3 15.9 3 3.4 13 High tariffs 18.3 2 3.3 10 0.2 15 0.9 19 

Transportation/shipping costs 18.3 3 1.1 15 14.9 4 4.5 8 

Language/cultural barriers 8.7 4 0.9 16 23.6 1 4.1 10 

Difficulty in receiving or processing payments 6.7 5 2.1 14 0.5 12 3.8 11 

Difficulty locating sales prospects 5.8 6 7.0 5 3.9 6 27.4 1 Unable to find foreign partner firms 5.3 7 0.6 17 0.2 16 1.4 17 

Difficulty establishing affiliates in foreign markets 4.3 8 0.5 19 0.1 17 1.5 16 

Foreign regulations 3.6 9 19.3 1 2.4 7 12.0 2 

U.S. regulations 2.1 10 5.2 7 1.4 9 5.2 6 

Customs procedures 1.9 11 2.1 13 0.2 14 1.0 18 

Preference for local goods/services in foreign market 1.3 12 17.6 2 0.5 11 3.6 12 

Foreign sales not sufficiently profitable 1.0 13 8.9 4 22.5 2 5.9 4 

Lack of trained staff to manage international business activities 0.6 14 3.0 12 0.2 13 5.0 7 

U.S. taxation issues 0.3 15 3.1 11 1.8 8 2.6 14 

Foreign taxation issues 0.3 16 0.6 18 10.9 5 6.0 3 

Insufficient IP protection 0.2 17 4.1 9 0.6 10 1.5 15 

Lack of government support programs 0.1 18 6.2 6 0.0 19 5.8 5 

Visa issues 0.0 19 4.6 8 0.1 18 4.3 9 

Total 100 100 100 100 

Source: Commission calculations from USITC questionnaire data. Note: Totals may not add due to rounding. 

6-9 
BOX 6.2. Impediments to exporting experienced by minority-owned businesses 

To assist the Commission in understanding the particular impediments to exporting faced by minority-owned 

businesses, the National Minority Business Council (NMBC)a questioned selected member firms regarding the major 

impediments that prevent these businesses from reaching their full export potential.b

The respondent firms represent a wide range of industries, including recycling, industrial chemicals, food ingredients, 

marine equipment, fasteners, and coffee and tea equipment. Firms exported to a number of countries in Asia, 

Europe, South America, and Africa. The principal reported impediments to exporting were: 

 Access to capital, reported as a major concern by all respondents. 

 Increased administrative and marketing costs required to serve the export market. 

 Lack of knowledge regarding the existing government assistance programs and available information. In 

some cases, respondents reported that they were aware of government export assistance programs but 

were unable to meet the requirements. 

 Lack of language skills, particularly for the emerging markets of Asia and South America. 

 Maintaining international quality control standards in foreign markets. 

This list is quite similar to the impediments cited by non-minority-owned SMEs, as described elsewhere in this study, 

and in the previous USITC study, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010. 

However, there is some evidence that small, minority-owned firms find it more difficult to gain access to capital than 

SMEs in general, as they are more likely to be denied credit, and when bank loans are approved, they receive loans 

for smaller amounts and at higher interest rates than the average for all firms.c 

a

 The NMBC is a nonprofit organization that provides advocacy, education, and technical assistance to enable its 

members to effectively compete in the global marketplace. b

 A member of the NMBC staff conducted phone interviews and e-mail inquiries. From the total membership of 350 

firms, NMBC selected and contacted 56 firms, based on the assumption that they had a product or service that was 

exportable. Of these, 18 firms responded and 10 indicated that they were engaged in exporting. c

 Fairlie and Robb, Disparities in Capital Access between Minority and Non-Minority-Owned Businesses, January 

2010. 

Impediments Disproportionately Affecting SMEs

Differences in the ratings of impediments by large firms and SMEs indicated that a 

number of impediments may disproportionately affect SMEs. The Commission tabulated 

the proportion of SMEs and large firms by major sector that provided a response of 4 or 5 

to each impediment. These high scores indicate that firms consider the impediment to be 

a major burden. Of the services firms that had encountered the impediment, a higher 

proportion of SMEs rated each impediment as a 4 or 5 than did large services firms, with 

one exception (figure 6.1).5

 A higher proportion of large services firms rated locating 

sales prospects as a 4 or 5 than did SME service providers. The impediments where 

SMEs’ scores exceeded large firms’ scores by the largest amount were “insufficient 

intellectual property (IP) protection”, “foreign taxation,” “obtaining financing,” 

“difficulty establishing affiliates in foreign markets,” “U.S. regulations,” and “foreign 

sales not sufficiently profitable.” 

 

6-10 

5

 Tests were carried out to determine if the differences in proportions were statistically significant. For 

services firms, except for difficulty locating sales (where large firms had a higher proportion of 4–5 

responses), SMEs had a statistically significantly higher proportion of 4–5 responses than the larger firms at 

the 1 percent significance level for each impediment except foreign regulations, which was significant at the 

5 percent significance level. Also, a test based on ranks was also carried out, and the scores of SMEs services 

firms were significantly higher (indicating that they consider the impediment to be burdensome) for all 

impediments. See appendix G. 
For manufacturing firms that encountered the impediment, SMEs reported 

disproportionate burdens relative to large firms for all impediments except for “foreign 

sales not sufficiently profitable,” “foreign taxation,” “insufficient IP protection,” and 

“U.S. regulations” (figure 6.2). For the remaining 15 impediments, the difference in 

6-11 
proportions was fairly large except for “foreign regulations.” 6 The impediments for 

which SME scores exceeded those of large firms by the greatest amount were “inability 

to find foreign partners,” “difficulty in receiving or processing payments,” and “high 

 6

 Except for foreign regulations, tests of differences in proportions showed that the proportion of SMEs 

rating the impediments as a 4 or 5 was significantly greater than that of large firms for 14 out of these 15 

impediments at a 1 percent significance level. The SME proportion of 4–5 responses for foreign regulations 

was greater than that of large manufacturers at the 5 percent significance level. 

6-12 
6-13 

ers. 

 

tariffs.” In general, the differences in proportions between small and large manufacturers 

were smaller than the similar differences between small and large service provid

Experience and the Severity of Barriers

The survey indicates that as SMEs export more, their perception of the severity of 

impediments tends to decline. Newer services SMEs tend to report impediments as more 

burdensome, export to fewer regions, and export less intensively. Manufacturing SMEs 

also tend to report impediments as burdensome when they export to only one or two 

regions; however, the effects of newness to exporting and lack of export intensity have a 

less pronounced effect on burdens reported by manufacturers. 

The data were divided along three experience metrics. The first was age: the scores of 

firms that have been in business for 15 years or less were compared with those that have 

been in business more than 15 years. The second was the number of export regions: the 

firms that exported to only one or two regions were compared with those that exported to 

three or more. The third was export intensity: the firms that earned less than 10 percent of 

their total revenue from exports were compared with those that earned more than 

10 percent from exports. For each of the 19 impediments to trade, the differences in mean 

scores between the less and more experienced groups encountering impediments were 

tested for statistical significance.7

Table 6.4 shows that experience, particularly experience exporting to multiple regions of 

the world, can reduce the perceived severity of policy and business measures. Each 

column reports a plus (+) where the mean score for inexperienced firms is higher than 

that for more experienced firms, provided that the difference is statistically significant. 

For services SMEs, many barriers are seen as disproportionately more severe by 

inexperienced firms. For five impediments, for example, younger services firms reported 

significantly greater impediments than established firms. Similar results hold for services 

SMEs exporting to relatively few regions; they are more likely to perceive impediments 

as more severe than services SMEs exporting to multiple regions. 

Similarly, SME manufacturers that export to fewer regions view eight impediments as a 

greater problem than SME manufacturers that export to many regions. Other measures of 

experience have less effect on the reported burdens for this group, however. Younger 

SME manufacturers found two impediments (customs and U.S. regulations) more 

burdensome than their older peers. However, more established firms had greater 

difficulty in establishing affiliates and finding foreign partners than new firms. Export 

intensity also had an effect: five impediments are viewed as more burdensome by firms 

that export less than by those that export more. On the other hand, SMEs with high export 

earnings reported greater concern in obtaining visas and overcoming customs issues than 

firms with low export earnings. These results are broadly distributed across impediments. 

Each impediment is significantly more burdensome for inexperienced SMEs by at least 

one measure, and most are significant in two or three instances. Only one impediment, 

difficulty in establishing affiliates, is significant in five cases (one of these being 

significant in the opposite direction). 

7

 These mean scores are computed by averaging the scores of all firms that reported a score of 1 through 

5 for the degree to which a measure was considered an impediment. 
TABLE 6.4 SMEs with less experience report greater impediments 

 Manufacturers Services 

Impediment Age Markets 

Export 

intensity Age Markets 

Export 

intensity 

Transportation/shipping 

costs + + + 

Customs procedures + + 

High tariffs + 

U.S. regulations + (-) + 

Language/cultural barriers + 

Difficulty establishing 

affiliates in foreign 

markets 

(-) + + + + 

Preference for local 

goods/services in foreign 

market 

+ + 

Difficulty in receiving or 

processing payments + + + 

Insufficient IP protection + + 

Foreign regulations + + 

Obtaining financing + + 

Lack of government support 

programs 

+ 

Foreign taxation issues + + 

Foreign sales not sufficiently 

profitable + + 

Difficulty locating sales 

prospects + + + 

Lack of trained staff + + + 

Unable to find foreign 

partner firms (-) + + 

Visa issues (-) + 

U.S. taxation issues + + 

Summary 

Number of measures where 

less experienced firms 

reported greater 

impediments 2 8 5 5 10 9 

Number of measures where 

less experienced firms 

reported fewer 

impediments 2 0 2 0 0 0 

Source: Staff calculations from questionnaire data. 

Note: Statistically significant differences in mean scores were recorded as either a plus (+) or a minus (-) that 

signify, respectively, a higher impediment level reported by less experienced firms and a lower impediment level 

reported by less experienced firms. 

6-14 
6-15 

Tariffs Faced by U.S. Exporters

Tariffs levied on U.S. exports to foreign markets are, on average, moderate, especially 

compared to total trade costs.8

 On an export-weighted basis, the average tariff applied 

against U.S. exports in 2004 was 3.0 percent.9

 An examination of foreign applied tariffs 

faced by different U.S. industries finds significant tariff spikes in industries for which 

SMEs account for a high share of exports, particularly in apparel and certain processed 

food industries. Also, according to the Commission’s survey analysis, SMEs were more 

likely than larger firms to identify high tariffs as a substantial impediment or as the main 

impediment to exporting. 

Tariffs Faced by Different U.S. Industries

Foreign tariffs affect some domestic industries more than others because rates of duty 

vary by product, as well as by country. Table 6.5 shows average applied tariff rates by 

broad industry classification (2-digit NAICS).10 In general, tariffs are higher for U.S. 

agricultural commodity exports (industries within NAICS 11), where the trade-weighted 

average applied tariff was 8.9 percent in 2004, and lower for manufactured and processed 

agricultural products (industries within NAICS 31–33), where the average applied rate 

was 2.9 percent in 2004. 

Detailed information on exports by firm size and 4-digit NAICS codes for the 

manufacturing and food manufacturing sector was combined with applied tariff 

information to calculate trade-weighted average tariffs for SMEs versus large firms. As 

table 6.5 shows, about 90 percent of traded goods fell within this broad sector in 2004.11

The average applied tariff rate for SMEs is calculated at 3.4 percent, while the similar 

measure for large firms is 2.4 percent. Both are moderate tariff levels. Yet, the extra 

percentage point means that SMEs face an average tariff rate that is 41 percent higher 

than that for large firms on the mix of goods that SMEs export. 

Figure 6.3 provides a closer look at the relationship between tariff levels and SME 

exports. The horizontal axis shows the share of SME exports by value, and the 

vertical axis shows the trade-weighted average applied tariff for each manufacturing and 

food manufacturing industry. For reference purposes, the graph is divided in four 

quadrangles by two red lines representing the (simple) averages of both measures. The 

 8

 Anderson and van Wincoop, “Trade Costs,” 2004. 

9

 Applied tariff-rate data in this section are from the MAcMap Database, which reports consistent ad 

valorem equivalent tariff duties and tariff-rate quotas at the HS six-digit product level. The Commission 

analyzed a subset of 864,000 records for the United States that covers 169 trading partners and 5,113 HS 6-

digit product categories. For a description of the database, see Buoët et al., “Assessing Applied Protection 

across the World,” 2008. Although MAcMapHS6-v2 is being updated, the latest data currently available are 

from 2004. 10 Trade-weighted average tariff is a common measure of protection and is used in the analysis in this 

section. It uses trade flows (i.e., exports) as weights to account for the relative importance of the different 

goods in summarizing the data. Yet, to the extent that tariffs significantly disrupt export flows, it may 

understate actual tariff protection. For example, prohibitive tariffs that block any trade would not be reflected 

in such an average. 11 Trade data by firm size and manufacturing and food manufacturing NAICS code is from Census. 

Comparable export data for agriculture or mining were not available. 
6-16 

TABLE 6.5 Tariff rates applied to U.S. exports, 2004 

 

Percent of HS6 

products 

Applied 

tariff rate 

All HS6 products 100.0 3.0 

 

Aggregated by sector: 

 Agriculture, forestry, fishing and hunting (NAICS 11) 7.1 8.9 

 Mining (NAICS 21) 1.5 0.6 

 Manufacturing and food manufacturing (NAICS 31-33) 90.1 2.9 

 Other (NAICS 91, 92, 99) 1.3 1.7 

Source: USITC staff calculation from MAcMaps data. 

FIGURE 6.3 Manufacturing and food processing SME export participation and applied tariffs by 4-digit 

NAICS codes 

animal foods

grain and oilseed milling

sugar and confectionery

dairy

meat and meat packaging

prepared seafood

foods, n.e.s.o.i.

knit apparel

apparel accessories

footwear

sawmill and wood

fruit and vegetable preserves

apparel

leather, other

0 10 20 30

Average applied tariff rate

0 20 40 60 80

Percent of exports by SMEs

Source: USITC staff calculation from MAcMap data and Census trade data. 

red vertical line indicates that, on average, SMEs supply 35.6 percent of sectoral 

exports.12 The horizontal red line at 4.8 percent is the simple average applied tariff across 

products.13

 12 USITC, Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports, January 

2010, reports similar participation statistics. 13 The 4.8 percent average tariff in figure 6.3 is the simple average of the trade-weighted average tariffs 

for manufacturing and food manufacturing at the 4-digit NAICS. The trade-weighted average applied tariff of 

3 percent in table 6.5 is the trade-weighted average tariff over the entire manufacturing and food processing 

sector. 
6-17 

The figure suggests a positive association between both measures: SMEs tend to export 

higher shares of exports in industries with higher tariffs. In particular, the upper right 

quadrangle shows industries in which SME export participation is higher than average 

and the applied tariff rate is also above average. While an ad valorem tariff may affect 

large and small firms within an industry proportionately, significant tariff spikes occur in 

industries for which SMEs account for a high share of exports, such as apparel and 

certain processed foods. This finding helps explain the differing tariff burden by SMEs 

versus large firms reported above. Not all sectors in which SMEs are important exporters, 

however, face high tariffs. As figure 6.3 shows, sawmill and wood products provide a 

case in which SMEs supply a large majority of exports (67.5 percent), yet the applied 

tariff is low (0.7 percent). 

Firms’ Perceptions of Foreign Tariff Barriers

This section reports firms’ assessments of the severity of tariff barriers based on the 

previously discussed 1-to-5 scale from the firm questionnaire. High tariffs were reported 

to be a problem for about half of exporting firms in the manufacturing sector (both small 

and large). Despite the fact that tariff rates are typically proportional to exports and could 

be expected to affect firms in the same export sector proportionally, SMEs identified 

tariffs more often as a substantial impediment―or as the main one―than large firms did. 

Table 6.6 shows responses to the high tariff impediment question by firm size, both for 

all surveyed firms and manufacturing firms only. Tariff effects are, not surprisingly, 

larger for manufacturing firms. Because tariff duties at the border are not relevant for 

trade in services, the discussion below focuses on the responses by manufacturing firms 

(last two columns in table 6.6).14

When asked about high tariffs, 46.4 percent of manufacturing SMEs that export or that 

have considered exporting identified high tariffs as causing some impediment (a score of 

2 or higher in the scale). About half of those SMEs (20.1 percent) reported high tariffs as 

more than a moderate impediment (a score of 4 or higher). On the other hand, only 

11.0 percent of large manufacturing firms that export or that have considered exporting 

identified high tariffs as more than a moderate impediment. In a separate question, firms 

were asked to identify their top impediments. About 1 out of 5 export-oriented 

manufacturing SMEs (18.3 percent) classified tariffs as the most important impediment 

that they face, compared to only 3.4 percent of large manufacturing firms. Again, this 

indicates that tariffs are relatively more burdensome to SMEs than to larger firms. 

To put the tariff burden into perspective, table 6.6 also shows responses for another 

impediment, transport costs. In general, firms cited transport costs as an impediment 

 14 Firms are classified as manufacturing or services based on their main activity. Yet some services firms 

could export goods, as well. 
TABLE 6.6 Percentage of exporting firms and firms considering exporting that identified high tariffs as a 

barrier 

All firms Manufacturing firms only 

Large firms SMEs Large firms SMEs 

Tariffs: 

Some impediment 30.9 30.9 55.9 46.4 

More than moderate impediment 6.2 14.0 11.0 20.1 

The top impediment 2.3 7.2 3.4 18.3 

Transport costs: 

Some impediment 43.0 56.8 77.0 76.6 

More than moderate impediment 12.3 21.4 25.9 34.0 

The top impediment 11.3 16.2 17.9 18.3 

Source: USITC staff calculation from questionnaire data. 

more often than they did high tariffs. This is consistent both with evidence that shows 

that tariffs are, on average, small, and with customs data that suggest that transportation 

costs are at least as large as tariffs.15

Nontariff Measures

Nontariff measures (NTMs)—defined here as foreign policy measures other than tariffs 

that may impede imports by other countries—were a hindrance to exports for a 

substantial share of the firms surveyed.16 These NTMs are a subset of those discussed at 

length in the first section of this chapter and are analyzed here in greater detail. 

Eight of the 19 surveyed impediments pertained at least partly to foreign NTMs:17 (1) 

customs procedures, (2) difficulty establishing affiliates in foreign markets, (3) difficulty 

in receiving or processing payments, (4) foreign regulations, (5) foreign taxation issues, 

(6) insufficient IP protection, (7) unable to find foreign partner firm, and (8) visa issues. 

A large share of firms reported foreign regulations to be at least some hindrance to 

exporting. On the other hand, visa issues and an inability to find foreign partner firms 

were considered less of a burden by the majority of firms surveyed. These results were 

largely consistent across firm size (table 6.7). Differences linked to firm size arose in the 

perception of a measure’s severity; a greater share of SMEs than large firms reported 

most of these NTMs to be more than moderate. 

Table 6.7 displays the details of firms’ perceptions about the NTMs that they face. Two 

measures are used: the column labeled “some burden” reports the share of firms that gave 

a particular impediment a score greater than 1 (where 1 indicates “not a problem”).18 The 

second measure, labeled “major burden,” computes the share of firms that gave the 

impediment a score of 4 or greater. The percentages of each are taken over all 

respondents to the question, including those indicating “not encountered.” 

 15 Hummels, “Transportation Costs and International Trade in the Second Era of Globalization,” 2007. 16 UNCTAD’s Multi-Agency Support Team, set up to examine issues related to nontariff measures, 

defines this as follows: “Non-tariff measures (NTMs) are policy measures, other than ordinary customs tariffs, 

that can potentially have an economic effect on international trade in goods, changing quantities traded, or 

prices or both.” We extend this definition to include trade in services. 17 Detailed explanations of each NTM and its foreign policy relevance are laid out in table 6.1. 18 This measure differs from table 6.2 in that “some burden” excludes scores of 1 (“not a problem”) from 

the share of firms. The “some burden” measure is also referred to as “a burden” in the text. 

6-18 
TABLE 6.7 Percentage of firms experiencing burdensome NTMs, by size (%) 

 SMEs Large firms 

Nontariff Measure 

Some 

burden 

Major 

burden 

Some 

burden 

Major 

burden 

Customs procedures 46 28 39 19 

Difficulty establishing affiliates 34 21 28 12 

Difficulty in receiving or processing 

payments 35 29 38 20 

Foreign regulations 38 34 51 39 

Foreign taxation issues 35 24 41 26 

Insufficient IP protection 38 35 28 14 

Unable to find foreign partners 23 13 25 9 

Visa issues 22 11 20 9 

Source: Staff calculations from questionnaire data. The “some burden” 

measure was calculated as the firms rating the severity of the impediment as a 

2 through 5 as a proportion of firms providing any score plus those reporting 

not encountering the impediment. The “major burden” measures was similarly 

calculated, but based on a score of 4 or 5. 

No NTM is considered a “major burden” (a score of 4 or more) by more than half of 

respondents. Even at the lower threshold of a score of 2 or greater, only one NTM 

(foreign regulation by large firms) was perceived to be a burden by the majority of 

respondents. By contrast, two NTMs―visa issues and the inability to find foreign 

partners―were rated as a burden (a score of 2 or more) by a quarter of respondents or 

less, for both SMEs and large firms. 

SMEs are somewhat more likely to view an NTM as a major burden. Of the eight NTMs, 

six were considered to be a major burden by a higher share of SMEs than large firms (the 

exceptions were foreign regulations and foreign taxation). Moreover, nearly all SMEs 

that rated foreign regulations and poor IP protection as a burden found them to be a major 

burden: 38 percent of respondents considered foreign regulations some burden, and 

89 percent of those (34 percent of total respondents) found them to be a major burden; 

similarly 38 percent found inadequate IP protection to be a burden, and 92 percent of 

those found it to be a major burden. By contrast, out of the 51 percent of large firms that 

saw foreign regulations as a burden, far fewer (76 percent) of these found it to be a major 

burden; this ratio was even lower for other NTMs. 

Table 6.8 provides the same analysis as above, but contrasts manufacturing firms with 

services firms. Again, there are relatively few measures that are considered a burden by 

the majority of firms. A majority of SME manufacturers considered customs procedures 

and difficulties establishing a foreign affiliate to be a burden. A majority of large 

manufacturers considered customs procedures, difficulty receiving and processing 

payments, foreign regulations, and foreign taxation issues to be a burden. No measure is 

considered to be some burden by a majority of services firms, whether large or SME. 

By contrast, many NTMs were considered to be a burden by less than 25 percent of a 

particular group. Visa issues were considered a burden by less than 25 percent of firms in 

each of the four categories. Further, relatively few services firms (large or SME) 

considered the “inability to find a foreign partner” or “difficulty establishing an affiliate” 

to be a burden. Large services firms as a group also did not consider customs procedures 

to be a burden. 

6-19 
TABLE 6.8 Percentage of firms experiencing burdensome NTMs, by sector and size (%) 

 Manufacturing Services 

SME Large firms SME Large firms 

Nontariff Measure 

Some 

burden 

Major 

burden 

Some 

burden 

Major 

burden 

Some 

burden 

Major 

burden 

Some 

burden 

Major 

burden 

Customs procedures 62 47 65 30 39 18 22 11 

Difficulty establishing affiliates 52 21 42 17 24 21 19 8 

Difficulty in receiving or 

processing payments 41 34 55 29 32 26 27 14 

Foreign regulations 35 28 71 50 39 37 39 32 

Foreign taxation issues 44 23 60 36 30 25 28 19 

Insufficient IPR protection 39 36 44 24 37 35 17 7 

Unable to find foreign partners 31 12 31 16 19 13 22 5 

Visa issues 20 3 21 7 23 14 19 10 

Source: Staff calculations from questionnaire data. 

The measures noted as being a burden by a large share of firms vary, by both size and 

sector. Foreign regulations were considered to be a burden by more firms in each group 

(aside from SME manufacturers) than any other NTM. For SME manufacturers, a larger 

share of SME manufacturers considered customs procedures to be a burden than other 

impediments they face. The inability to find foreign partners and visa issues are, as in the 

more aggregate results of table 6.7, less important impediments. 

Placing these impediments in the context of other impediments (business and domestic 

policy impediments), large firms both in the manufacturing and the services sectors 

considered foreign regulations to be the most significant impediment to exports overall. 

For SMEs, however, other types of impediments are considered more important: table 6.2 

shows that the NTM encountered by the largest share of firms only ranked fourth 

according to that measure; for SME services firms, the most encountered NTM is only 

the fifth most encountered overall. 

Finally, firms were invited to write in other barriers that were not covered in the list of 19 

impediments. There were 156 write-in responses, of which 65 percent were from SMEs. 

Large firms commented extensively on various foreign regulatory constraints (47 percent 

of their comments). These included comments on exchange rates and on the lack of 

uniformity or harmonization of standards and regulations surrounding the establishment 

of an affiliate. SMEs were more concerned about business barriers (44 percent of SMEs’ 

comments), including high relative costs of U.S. labor and materials, slow foreign 

acceptance of new technology, and credit insurance. A substantial share of SMEs 

comments (13 percent of all written responses) noted exchange rates as a concern. 

Examination of Specific NTMs

This section examines some specific NTMs that affect SMEs in the manufacturing and 

services sectors. Standards and certification requirements can have large effects on 

manufacturing SMEs, and nationality restrictions, licensing, and commercial presence 

requirements affect services SMEs. These NTMs primarily affect exports rather than 

sales by foreign affiliates. As discussed in chapter 4, large firms tend to establish foreign 

affiliates, whereas SMEs tend to export directly; thus, SMEs are more likely to be 

adversely affected by many of these NTMs than large firms. The information for this 

section comes primarily from field work and secondary sources. It also includes two 

6-20 
6-21 

 

boxes: one discusses special issues faced by agricultural SMEs (box 6.3); the other, 

Export-Import Bank programs for SMEs, appears later (box 6.4). 

NTMs Facing SME Manufacturers

A number of impediments disproportionately affect SME manufacturing exporters 

because SMEs often lack the capital and staff to cope with complexities required for 

exporting. For example, several SMEs interviewed by Commission staff stated that a 

single person handled domestic and foreign regulatory compliance issues in addition to 

other responsibilities.19 Many NTMs that affect SME manufacturers concern standards, 

testing, and certification.

The EU Regulation for the Registration, Evaluation, Authorisation and Restriction of 

Chemicals (REACH), implemented on June 1, 2007, is a major regulatory impediment 

for many exporters to the EU.20 REACH disproportionately affects SME exporters in that 

companies lack the staff and funds available to large companies for compliance. The 

regulation mandates that EU manufacturers and importers register all substances in their 

products, if they are equal to or greater than one metric ton per year. Besides chemicals, 

the regulation covers substances used in industrial processes and consumer goods, such 

as cleaning products, paints, textiles and apparel, furniture, and electrical appliances. The 

registration process for firms is complex and costly. For example, one firm estimated 

total registration costs at up to $1 million per product.21 Thus, the high cost of REACH 

compliance can force SMEs not to export to the EU. 

Canada, China, Japan, Switzerland, Taiwan, and Turkey are developing regulations 

similar to REACH. 22 However, SME exporters participating in the Commission 

investigations did not note other substance regulations as having a significant negative 

effect on exports. 

Exporters of medical devices frequently encounter complex regulations and lengthy 

approval times that require extensive test data. Many countries (Australia, Canada, China, 

certain EU member states, Japan, and the United States) have adopted medical device 

approval procedures that require producers to implement a quality management system 

based on International Standard Organization standard 13485 (ISO 13485). A firm must 

pay various fees and related charges to gain accreditation, and additional annual fees and 

inspections may be necessary to maintain accreditation.23 Many SME exporters cannot tie 

up financial resources for long periods to gain approval in multiple markets. One SME 

exporter of such equipment stated that many SME medical device exporters seek to 

generate revenues quickly and therefore pursue regulatory approvals in markets with 

19 Industry representatives, interviews by USITC staff, Raleigh, NC, February 26, 2010, and Boston, MA, 

March 2, 2010. 20 For a more detailed information about REACH, see European Chemicals Agency Helsinki, “About 

Reach,” (accessed June 25, 2010); European Commission, Enterprise and Industry, Chemicals, “REACH: 

Registration, Evaluation, Authorisation and Restriction of Chemicals,” (accessed June 25, 2010). 21 Industry representatives, interviews by USITC staff, January–March, 2010; USITC, Small and 

Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010, 4-19. 22 Banerjee, “REACH-Like Regulations Enacted Globally: A Regulatory World Tour,” ICIS Chemical 

Business, May 26, 2010 (accessed June 25, 2010). 23 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010, 4-30. 
BOX 6.3 Foreign barriers to SME agricultural exportsa

 

Foreign trade barriers that affect U.S. agricultural SMEs include NTMs, such as sanitary and phytosanitary 

(SPS) measures, and tariffs. Although these barriers affect all agricultural exporters, they can have a 

disproportionate effect on SMEs, primarily because many NTMs are fixed-cost charges that SMEs cannot 

spread over large export volumes. Moreover, agricultural SMEs generally compete on quality and other 

factors in addition to price, and generally export higher-value products in relatively low volumes compared to 

large exporters. These factors limit their ability to supply large-scale foreign purchasers, including 

supermarket and other large outlets. 

Most U.S. agricultural exporters are large, highly efficient, low-cost suppliers that export high volumes of 

minimally processed bulk commodities such as soybeans, corn, wheat, cotton, poultry, and beef. In contrast, 

while SMEs account for a small share of total agricultural exports, they are concentrated in higher-value 

specialty products (e.g., certain horticultural products, including fruits, vegetables, and nuts), and certain 

specialty branded products (e.g., wine). U.S. agricultural SMEs generally compete in international export 

markets on factors such as branding, quality, variety, and customer service, which may not be improved 

through economies of scale. 

Scale of production is a major reason NTMs may disproportionally affect SMEs. For example, SPS 

measures can take the form of laboratory analyses to determine if the product is consistent with its label, or 

does not contain prohibited additives or chemicals.b In practice, the same number of certification documents 

may be required for a small container shipment as is required for very large shipments.c Thus, complying 

with foreign standards can be prohibitively costly for small-volume SMEs. 

This problem is compounded by the large number and variety of compliance regulations such as quality, 

health, and labeling standards that can vary substantially from product to product and from country to 

country and often differ markedly from international standards.d

 It may be feasible for large producers that 

export large volumes to absorb the cost of producing to a variety of foreign standards, but this is typically too 

costly for small-scale SME producers. 

a

 This text box refers to barriers facing nonfarm agricultural SMEs that are direct exporters. See chapter 

5 for a discussion of farmers as indirect SME agricultural exporters. b

 Certain markets (including the United States) allow self-certification, but others require third-party 

certification, which can be costly. Industry representative, telephone interview by USITC staff, February 11, 

2010; industry representative, interview by USITC staff, Washington, DC, February 4, 2010. c

 Industry representative, interview by USITC staff, February 4, 2010. d

 Many international standards are set by the Codex Alimentarius, an international body established by 

the Food and Agriculture Organization and World Health Organization to protect consumer health and 

coordinate international food standards; USITC, Small and Medium-Sized Enterprises: U.S. and EU Export 

Activities, 2010, 4-4.

shorter approval costs can limit the number of markets in which SMEs seek to export.24

One SME exporter stopped its efforts to export to Brazil and Russia because of the high 

costs and lack of transparency in those markets.25 In contrast, large firms are more likely 

to have the financial resources to fund lengthy medical device registration in foreign 

markets, as well as staff to direct the process. 

Other complex standards are also a barrier to SME exporters. One SME exporter stated in 

response to the Commission questionnaire that the EU safety and regulatory 

specifications for electrical products are very expensive and time-consuming, with 

requirements that are not found in U.S. standards. Another SME exporter noted in 

response to the Commission questionnaire that its exports were limited to only those 

 24 USITC, hearing transcript, March 12, 2010, 140–143 (testimony of Grant Ramaley, Aseptico, Inc.). 25 Merat Bagha, Tiba Medical, Inc., written submission to the USITC, March 26, 2010. 

6-22 
6-23 

 

countries where U.S. National Electrical Code standards were used, as its product is only 

made to those standards; thus its export volume and opportunities are low. 

Barriers to Foreign Markets in Services Industries 

SMEs in the services sector face a variety of barriers and obstacles in foreign markets, 

including limited knowledge of foreign markets, insufficient access to trade finance 

(box 6.4), 26 and IP violations. 27 In addition to these factors, burdensome or 

discriminatory government regulations in many foreign markets present barriers to the 

exports of services SMEs, similar to the regulations discussed above that affect 

manufacturers. Some such regulations, including nationality and licensing requirements, 

discriminate against U.S. services SMEs by placing restrictions on the individual 

providing a service.28 In other cases, foreign regulations discriminate against SMEs by 

placing restrictions on a service itself, such as screen quotas in the audiovisual industry. 

Such regulations have the potential to affect the operations of U.S. services SMEs by 

increasing costs or introducing delays, or by completely prohibiting the delivery of 

services. Moreover, the very process of complying with some foreign government 

regulations can place a disproportionate burden on services SMEs, which may lack the 

staff, expertise, or financial resources to dedicate to foreign compliance. 

Residency and nationality restrictions

Many countries maintain nationality or residency requirements that apply to hiring and 

employment practices across a broad range of service providers. To the extent that such 

requirements interfere with the cross-border delivery of services―the primary means by 

which small companies operate internationally 29 ―they have the potential to 

disproportionately affect the operations of SME service providers. Impediments that 

restrict the cross-border delivery of services are particularly an issue for the providers of 

26 Box 6.4 describes products offered by the Export-Import Bank to help services SMEs overcome 

financial impediments. 27 For more information on barriers facing SME firms in the services sector, see chapter 3 of USITC 

Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010. Chapter 4 of this report also 

features case studies focusing on the challenges facing companies in the computer services and professional 

services industries. 28 Census, 2007 Economic Census. This particularly affects professional services such as architecture and 

engineering (A&E) services, where SMEs accounted for 52 percent of total U.S. A&E exports in 2007, or 

legal services, where SMEs accounted for 44 percent of total legal services exports during the same year. 29 See Chapter 4 for further discussion. 
BOX 6.4 Export-Import Bank trade finance products for SME services companies 

Of the programs and products offered by the Export-Import Bank of the United States (Ex-Im Bank), SME 

services firms mainly use two short-term products: export credit insurance and working capital guarantees.a

Export credit insurance is a financial product that protects exporters from the risk of nonpayment by foreign 

customers. Such insurance typically covers commercial risks like bankruptcy as well as certain political risks, 

including war and currency inconvertibility. Export credit insurance benefits small U.S. services firms by 

allowing them to extend credit to foreign customers and/or offer more liberal credit terms, key competitive 

advantages in tender competitions that allow U.S. SMEs to successfully bid against foreign services 

suppliers.b

 Such insurance also helps U.S. SME services firms to increase sales abroad by eliminating the 

need for buyers/importers to pay fees associated with letters of credit.c

 By contrast, working capital 

guarantees facilitate SMEs’ access to finance by insuring lenders that extend short-term loans to SME 

services firms. Such loans are subsequently used to purchase inventory and/or pay for labor and overhead 

used in the provision of services abroad.d

In 2009, the Ex-Im Bank provided direct loans, loan guarantees, and export credit insurance that ultimately 

supported $1.0 billion in exports by SME businesses in the services sector. Of this total, working capital 

guarantees and short-term export credit insurance accounted for $213 million and $25 million, respectively. 

The remaining $777 million represented SME services exports associated with large, complex projects 

supported by medium- to long-term loans, medium- and long-term loan guarantees, and medium-term 

insurance products. In terms of industry coverage, the exports of SME firms were spread across a large 

number of sectors, including oil and gas drilling services ($528 million), engineering and consulting services 

($200 million), rental and leasing services ($173 million), information technology and telecommunication 

services ($86 million), transportation services ($19 million), legal and banking services ($2 million), and 

medical services ($2 million).e

_______________ a

 USITC, hearing transcript, March 18, 2010 (testimony of Dianne Farrell, Ex-Im Bank); Ex-Im Bank 

representatives, interview with Commission staff, July 21, 2010. b

 Ex-Im Bank Web site. http://www.exim.gov/smallbiz/index.html; Small Business Administration, “Export 

Credit Insurance,” January 2009. c

 Bank of America Merrill Lynch, Bank of America Solutions for Exporters, 2009, 106; 

CreditManagementWorld.com Web site, 

http://www.creditmanagementworld.com/letterofcredit/lcinternationallocfees.html. In many international 

transactions, the foreign buyer/purchaser pays some, if not all, fees charged in connection with a letter of 

credit (LOC). Common LOC fees include, inter alia, advising fees, confirmation fees, negotiation fees, 

payment fees, discrepancy fees, and bank reimbursement charges as well as telecommunication, courier, 

and postage fees. d

 Ex-Im Bank Web site, http://www.exim.gov/smallbiz/index.html; Ex-Im Bank representatives, interview 

by USITC staff, July 21, 2010. e

 Ex-Im Bank, spreadsheet attachment to e-mail sent to Commission staff, July 29, 2010. In addition, 

exports in an “other services” category totaled $5 million. 

professional services, which often have to send employees abroad to perform contracted 

services. In Malaysia, for example, foreign engineers cannot work on building projects 

unless the hiring company demonstrates to the Malaysian Board of Engineers that a 

Malaysian engineer cannot perform the required engineering work. Once authorized, 

foreign engineers are allowed to work in Malaysia only for the duration of the specific 

project for which they were hired.30

In Thailand, the Alien Occupation Act lists architecture and engineering services among 

occupations that are reserved for Thai nationals. 31 In the Bahamas, applicants for a 

license to practice architecture must be permanent residents of the Bahamas and must 

possess a permanent resident certificate permitting gainful employment. Applicants must 

 30 U.S. Trade Representative, 2010 National Trade Estimate Report on Foreign Trade Barriers, 2010. 31 U.S. Department of Commerce, International Trade Administration, “Country Commercial Guide: 

Thailand,” February 18, 2008, 64. 

6-24 
also demonstrate that they have previously worked in the Bahamas in architectural 

practice for not less than six months.32

In some countries, the practice of certain professions, including mandatory membership 

in professional organizations/associations, is restricted to citizens or residents. In the 

Philippines, for example, the practice of most licensed professions is reserved by law for 

Philippine citizens.33 In Morocco, foreign architects are not allowed to register with the 

National Association of Architects, a mandatory requirement for practicing architecture 

in Morocco.34 In Malaysia, too, citizenship or permanent residency is required to register 

with the Malaysian Institute of Accountants.35

Licensing and authorization requirements

In many countries, the practice of certain professions requires service providers to obtain 

a license or other form of authorization. In some cases, complex procedures to obtain 

needed licenses can place a disproportionate burden on SMEs, which may not have the 

staff, technical expertise, or financial resources to uncover and comply with such 

procedures.36 Licensing issues are particularly prevalent in the architectural and legal 

services fields. Many countries, for example, require foreign architects to obtain a license 

or other approval before working on domestic projects, with typical requirements 

including a degree from a recognized school of architecture, several years of experience, 

and passage of a professional exam. In Canada, for example, architects are required to 

obtain a Canadian Architectural Certification Board Certificate recognizing a degree from 

an accredited Canadian university architecture program, with degrees from outside 

Canada subject to equivalence approval. Architects are also required to have 5,600 hours 

of approved experience and pass the Architect Registration Exam.37

In Peru, to practice architecture, both domestic and foreign architects must be members 

of the Colegio de Arquitectos del Peru (CAP), a professional architect’s society that also 

performs a licensing function. In some cases, CAP membership criteria impose a heavy 

burden on foreign architects. A key criterion is a degree from a Peruvian university, or 

from a foreign university that has a bilateral agreement with a Peruvian university.38

Architects with a degree that does not comply must go through a lengthy process with 

multiple approvals to have their degree revalidated, a process that requires burdensome 

notary and translation procedures, coursework evaluations, interviews, and other steps.39

In Japan, to practice architecture as a Kenchikushi,

40 foreign architects are required to 

take a Kenchikushi test as well as obtain approval of (pretranslated) educational and 

 32 Perkins, International Practice for Architects, 2008, 79. 33 U.S. Trade Representative, 2010 National Trade Estimate Report on Foreign Trade Barriers, 2010. 34 Perkins, International Practice for Architects, 2008, 189. 35 U.S. Trade Representative, 2010 National Trade Estimate Report of Foreign Trade Barriers, 2010. 36 Industry representative, interview with Commission staff, June 28, 2010. 37 Perkins, International Practice for Architects, 2008, 65. 38 Perkins, International Practice for Architects, 2008, 65. 39 Perkins, International Practice for Architects, 2008, 108. 40 The Japan Architectural Education and Information Center Web site. http://www.jaeic.or.jp/kseidozenpan-e.htm. The qualification of Kenchikushi combines the roles of architect and building engineer, 

allowing individuals to both design buildings and supervise construction. 

6-25 
experience qualifications by the Ministry of Land, Infrastructure, Transport, and Tourism. 

License issuance, too, is determined on a case-by-case basis.41

Foreign lawyers face potentially burdensome licensing or conditions of qualification in 

many countries. In Brazil, a foreign lawyer seeking to become a Foreign Legal 

Consultant―a designation required of foreign lawyers interested in providing advice on 

home-country law―must obtain authorization from and registration by the Brazilian Bar 

Association (OAB), a process that requires extensive documentation detailing homecountry legal licenses, home-country bar admission, and proof of Brazilian residency. 

Applicants are also required to provide evidence of good conduct―an affidavit by three 

OAB-registered, Brazilian lawyers. 42 In India, where the domestic legal profession 

strongly opposes even minimal access to foreign lawyers, the provision of legal services 

is restricted to natural persons who are both Indian citizens and on the advocates roll in 

the state where legal services will be provided. Furthermore, to be eligible for enrollment 

as an advocate, candidates must either be an Indian citizen or a citizen of a country that 

allows Indian nationals to practice law on a reciprocal basis; hold a degree from a 

university recognized by the Bar Council of India; and be at least 21 years of age.43

Commercial presence issues 

In several countries, laws and regulations restrict or prohibit the establishment of 

commercial presence by foreign firms, with some such laws directed specifically at 

SMEs. In the Philippines, the Department of Trade and Industry prohibits the entry of 

SMEs in the retail sector via prequalification criteria. Specifically, foreign firms wishing 

to establish a commercial presence in the Philippines must (a) have a net worth of at least 

$200 million; (b) have at least five retailing branches or franchises in operation anywhere 

around the world;44 and (c) have been engaged in the retailing business for at least five 

years. Indonesia also maintains regulations that impair the ability of retail SMEs to 

establish a commercial presence: mini-markets smaller than 400 square meters, 

community stores, convenience stores, and other small retailers are closed to foreign 

investment.45

Conversely, laws and regulations that require in-country commercial presence, or specify 

the exact legal form of such presence, could present problems for SMEs that lack the 

resources or expertise to set up operations in another country. In Korea, for example, 

firms or individuals intending to offer architecture services are required to establish a 

local office.46 Similarly, in Bahrain, a commercial presence is required to offer legal and 

certain other professional services.47 In Hong Kong, foreign law firms seeking to practice 

 41 The Japan Architectural Education and Information Center. http://www.jaeic.or.jp/k-seidozenpane.htm; Perkins, International Practice of Architects, 2008, 266. 42 WTO, Trade Policy Review: Brazil, 2009, 142. The approval process is lengthy, with multiple 

approvals required. 43 WTO, Trade Policy Review: India, April 18, 2007, 147. 44 Republic Act 8762 of 2000. The Department of Trade and Industry’s requirement pertaining to the 

number of worldwide branches or franchises can be waived if the retailer maintains at least one branch or 

franchise with a capitalization of at least $25 million. 45 Philippa Dee, “Benchmarking and Assessing Indonesia’s Regulation of Services,” September 2008, 22. 

This law also applies to supermarkets smaller than 1200 square meters and department stores smaller than 

2000 square meters. 46 Republic of Korea, “Business Services: Architectural,” 2006. 47 U.S.-Bahrain Free Trade Agreement, Schedule of Bahrain, Annex I. 

6-26 
6-27 

 

both foreign and domestic law are allowed to do so only by establishing associations with 

local law firms.48

Restrictions on competition 

Restrictions on the way services are delivered in many countries could impair the ability 

of SMEs to export services abroad, often because complying with such restrictions 

imposes additional administrative burdens and costs. Such restrictions are particularly 

prevalent in the audiovisual services industry and potentially impose a disproportionate 

impact on small, independent producers of movie and television content. Of particular 

concern to small producers are dubbing requirements and various types of quotas applied 

to foreign film and television content.49

Some countries stipulate that film dubbing be performed in-country, requiring film 

distributors to use local laboratories and language specialists. In-country dubbing 

requirements increase the expenses (and reduce the scale economies) of small distributors 

that would otherwise dub for all countries at a central location. France and Spain, among 

other countries, maintain dubbing requirements. 50 Similarly, the Catalan regional 

government in Spain recently proposed regulations requiring films released in more than 

15 prints within the region to have 50 percent of such prints dubbed into Catalan. If 

enacted, such regulations would likely impede the release of independent films there 

because, depending on the size of the release, independent film producers and their local 

distributors would find it difficult to recoup the costs of additional dubbing.51

Screen quotas reduce export opportunities and revenues by lowering the number of slots 

available for theatrical exhibition and are an important barrier to foreign film and 

television producers.52 They are likely to squeeze out small, independent film producers, 

as foreign film distributors often prefer to fill their quota with big-budget Hollywood 

films, assuming that such films will be more profitable.53 In Canada, for example, the 

Canadian Radio-television and Telecommunications Commission (CRTC) requires 

Canadian-produced television programming to represent at least 60 percent of total 

television programming per broadcast day. Similarly, the government of France requires 

television programming to consist of 60 percent European content, of which 40 percent 

must be of French origin. 54 In Poland, too, broadcasters are required to dedicate 

33 percent of quarterly broadcasting time to programming originally produced in the 

Polish language.55

48 WTO, Trade Policy Review-Hong Kong, China, 2006, 102. Foreign law firms may be associated with 

overseas law firms established in Hong Kong if at least one partner of the Hong Kong firm is also a partner of 

the overseas firm. 49 Independent Film and Television Alliance, written submission to the USITC, March 26, 2010. 50 Independent Film and Television Alliance, written submission to the USITC, March 26, 2010. 51 Industry representative, email message to USITC staff, July 14, 2010. 52 Independent Film and Television Alliance, written submission to the USITC, March 26, 2010. 53 Industry representative, e-mail message to USITC staff, August 23, 2010. 54 Industry representative, e-mail message to USITC staff, July 14, 2010. 

55 Industry representative, e-mail message to USITC staff, July 14, 2010. 

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APPENDIX A 

Request Letter



APPENDIX B 

Federal Register Notices 

62812 Federal Register / Vol. 229, No. 74 / Tuesday, December 1, 2009 / Notices 

4. Right-of-Way N–51242 for water 

storage tanks, road, water pipeline, and 

ancillary facility purposes granted to the 

City of Fernley, its successors or assigns, 

pursuant to the Act of October 21, 1976 

(43 U.S.C. 1761); 

5. Right-of-Way N–58193 for road and 

buried utility purposes granted to DB 

Fernley Investments, Ltd, its successors 

or assigns, pursuant to the Act of 

October 21, 1976 (43 U.S.C. 1761); 

6. Rights-of-Way N–63393 and Nev060169 for gas pipeline purposes 

granted to Paiute Pipeline Company, its 

successors or assigns, pursuant to the 

Act of February 25, 1920 (30 U.S.C. 

185); 

7. Right-of-Way N–73706 for 

communication purposes granted to 

Nevada Bell, its successors or assigns, 

pursuant to the Act of October 21, 1976 

(43 U.S.C. 1761); 

8. Right-of-Way N–75056 for gas 

pipeline purposes granted to Southwest 

Gas Corporation, its successors or 

assigns, pursuant to the Act of February 

25, 1920 (30 U.S.C. 185); 

9. Right-of-Way N–84710 for gas 

pipeline purposes granted to DB Fernley 

Investments, Ltd, its successors or 

assigns, pursuant to the Act of February 

25, 1920 (30 U.S.C. 185). Holders of 

rights-of-way N–51242, N–58193, N– 

63393, and N–84710 have submitted 

applications to exercise term extension 

and conversion to easement 

opportunities. The land conveyance will 

be subject to these modifications. 

10. The purchaser/patentee, by 

accepting patent, agrees to indemnify, 

defend, and hold the United States 

harmless from any costs, damages, 

claims, causes of action, penalties, fines, 

liabilities, and judgments of any kind 

arising from the past, present, or future 

acts or omissions of the patentee, its 

employees, agents, contractors, or 

lessees, or a third party arising out of, 

or in connection with, the patentee’s use 

and/or occupancy of the patented real 

property. This indemnification and hold 

harmless agreement includes, but is not 

limited to, acts and omissions of the 

patentee, its employees, agents, 

contractors, or lessees, or third party 

arising out of or in connection with the 

use and/or occupancy of the patented 

real property resulting in: 

(a) Violations of Federal, State, and 

local laws and regulations that are now, 

or in the future become, applicable to 

the real property; 

(b) Judgments, claims, or demands of 

any kind assessed against the United 

States; 

(c) Costs, expenses, or damages of any 

kind incurred by the United States; 

(d) Releases or threatened releases of 

solid or hazardous waste(s) and/or 

hazardous substance(s), as defined by 

Federal or State environmental laws, off, 

on, into, or under land, property, and 

other interests of the United States; 

(e) Other activities by which solid or 

hazardous substances or wastes, as 

defined by Federal and State 

environmental laws are generated, 

released, stored, used, or otherwise 

disposed of on the patented real 

property, and any cleanup response, 

remedial action, or other actions related 

in any manner to said solid or 

hazardous substances or wastes; or 

(f) Natural resource damages as 

defined by Federal and State law. This 

covenant shall be construed as running 

with the patented real property and may 

be enforced by the United States in a 

court of competent jurisdiction. 

11. Pursuant to the requirements 

established by Section 120(h) of the 

Comprehensive Environmental 

Response, Compensation and Liability 

Act (CERCLA) (42 U.S.C. 9620 et seq.), 

as amended by the Superfund 

Amendments and Reauthorization Act 

of 1988, (100 Stat. 1670), notice is 

hereby given that the above-described 

land has been examined and no 

evidence was found to indicate that any 

hazardous substances have been stored 

for 1 year or more, nor had any 

hazardous substances been disposed of 

or released on the subject property. 

Encumbrances of record, appearing in 

the BLM public files for the parcel 

proposed for sale, are available during 

normal business hours at the BLM 

Carson City District Office. 

No warranty of any kind, expressed or 

implied, is given by the United States as 

to the title, physical condition, or 

potential uses of the parcel of land 

proposed for sale, and the conveyance 

of any such parcel will not be on a 

contingency basis. It is the buyer’s 

responsibility to be aware of all 

applicable Federal, State, or local 

government laws, regulations, or 

policies that may affect the subject lands 

or its future uses. It is also the buyer’s 

responsibility to be aware of existing or 

prospective uses of nearby properties. 

Any land lacking access from a public 

road and highway will be conveyed as 

such, and future access acquisition will 

be the responsibility of the buyer. 

Federal law requires that bidders must 

be 

(1) United States citizens 18 years of 

age or older; 

(2) A corporation subject to the laws 

of any State or of the United States; 

(3) An entity including, but not 

limited to, associations or partnerships 

capable of acquiring and owning real 

property, or interests therein, under the 

laws of the State of Nevada; or 

(4) A State, State instrumentality, or 

political subdivision authorized to 

acquire and own real property. 

U.S. citizenship is evidenced by 

presenting a birth certificate, passport, 

or naturalization papers. Certification of 

bidder qualification must accompany 

the deposit. 

Only written comments submitted by 

postal service or overnight mail will be 

considered properly filed. Electronic 

mail, facsimile or telephone comments 

will not be considered as properly filed. 

Before including your address, phone 

number, e-mail address, or other 

personal identifying information in your 

comment, you should be aware that 

your entire comment—including your 

personal identifying information—may 

be made publicly available at any time. 

While you can ask us in your comment 

to withhold your personal identifying 

information from public review, we 

cannot guarantee that we will be able to 

do so. 

Any adverse comments regarding the 

proposed sale will be reviewed by the 

BLM Nevada State Director, who may 

sustain, vacate, or modify this realty 

action. In the absence of any adverse 

comments, this realty action will 

become the final determination of the 

Department of the Interior. 

(Authority: 43 CFR 2711) 

Linda J. Kelly, 

Field Manager, Sierra Front Field Office. 

[FR Doc. E9–28721 Filed 11–30–09; 8:45 am] 

BILLING CODE 4310–HC–P 

INTERNATIONAL TRADE 

COMMISSION 

[Inv. No. 332–509] 

Small and Medium-Sized Enterprises: 

U.S. and EU Export Activities, and 

Barriers and Opportunities 

Experienced by U.S. Firms 

AGENCY: United States International 

Trade Commission. 

ACTION: Institution of investigation and 

scheduling of hearing. 

SUMMARY: Following receipt of a request 

on October 6, 2009, from the United 

States Trade Representative (USTR) 

under section 332(g) of the Tariff Act of 

1930 (19 U.S.C. 1332(g)), the 

Commission instituted investigation No. 

332–509, Small and Medium-Sized 

Enterprises: U.S. and EU Export 

Activities, and Barriers and 

Opportunities Experienced by U.S. 

Firms, for the purpose of preparing the 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 229, No. 74 / Tuesday, December 1, 2009 / Notices 62813 

second in a series of three reports 

requested by the USTR relating to small 

and medium-sized enterprises. 

DATES:

January 26, 2010: Deadline for filing 

requests to appear at the public hearing. 

January 28, 2010: Deadline for filing 

pre-hearing briefs and statements. 

February 9, 2010: Public hearing 

(Washington, DC). 

February 23, 2010: Deadline for filing 

post-hearing briefs and statements. 

March 26, 2010: Deadline for filing 

written submissions. 

July 6, 2010: Transmittal of 

Commission report to the USTR. 

ADDRESSES: All Commission offices, 

including the Commission’s hearing 

rooms, are located in the United States 

International Trade Commission 

Building, 500 E Street, SW., 

Washington, DC. All written 

submissions should be addressed to the 

Secretary, United States International 

Trade Commission, 500 E Street, SW., 

Washington, DC 20436. The public 

record for this investigation may be 

viewed on the Commission’s electronic 

docket (EDIS) at http://www.usitc.gov/ 

secretary/edis.htm. 

FOR FURTHER INFORMATION CONTACT: 

Project Leaders Laura Bloodgood (202– 

708–4726 or laura.bloodgood@usitc.gov) 

or Justino De La Cruz (202–205–3252 or 

justino.delacruz@usitc.gov) for 

information specific to this 

investigation. For information on the 

legal aspects of this investigation, 

contact William Gearhart of the 

Commission’s Office of the General 

Counsel (202–205–3091 or 

william.gearhart@usitc.gov). The media 

should contact Margaret O’Laughlin, 

Office of External Relations (202–205– 

1819 or margaret.olaughlin@usitc.gov). 

Hearing-impaired individuals may 

obtain information on this matter by 

contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background: In his letter the USTR 

requested that the Commission provide 

three reports during the next 12 months 

relating to small and medium-sized 

enterprises (SMEs). In this notice the 

Commission is instituting the second of 

three investigations under section 332(g) 

for the purpose of preparing the second 

report, which is to be transmitted to the 

USTR by July 6, 2010. The Commission 

published notice of institution of the 

first investigation, investigation No. 

332–508, in the Federal Register of 

October 28, 2009 (74 FR 55581). As 

requested, in the second report 

(investigation No. 332–509) the 

Commission will: 

(1) Assist in analyzing the 

performance of U.S. SME firms in 

exporting compared to SMEs exporting 

in other leading economies. As one way 

of comparing the performance of U.S. 

SMEs to those in other countries, the 

Commission will compare the exporting 

activity of SMEs in the United States 

and the European Union (EU), and 

analyze the distinctions between U.S. 

and EU firms in terms of sectoral 

composition, firm characteristics, and 

exporting behavior. 

(2) Identify barriers to exporting noted 

by U.S. SMEs and strategies used by 

SMEs to overcome special constraints 

and reduce trade costs. 

(3) Identify the benefits to SMEs from 

increased export opportunities, 

including free trade agreements and 

other trading arrangements. 

To best aid the Commission in 

gathering information for the report, the 

Commission is seeking information in 

response to the following questions: 

• What are the most significant 

constraints that U.S. SMEs face in their 

efforts to export? 

• If SMEs have been successful in 

overcoming those constraints, what 

strategies have they adopted? 

• What particular benefits do SMEs 

believe they have received from 

increased export opportunities 

including those from free trade 

agreements and other trading 

arrangements; which trade agreements 

or other arrangements have been most 

beneficial? 

The USTR requested that the 

Commission deliver the second report 

by July 6, 2010. The Commission shortly 

expects to institute a third investigation, 

investigation No. 332–510, Small and 

Medium-Sized Enterprises: 

Characteristics and Performance, for the 

purpose of preparing the third report. In 

that report the Commission will, among 

other things, examine U.S. SMEs 

engaged in providing services, including 

the characteristics of firms that produce 

tradable services, growth in services 

exports, and the differences between 

SME and large services exporters. It will 

also examine U.S. goods and services 

exports by SMEs and identify trade 

barriers that may disproportionately 

affect SME export performance, as well 

as possible linkages between exporting 

and SME performance. In addition, the 

report will identify how data gaps might 

be overcome to enhance our 

understanding of SMEs in service sector 

exports. The USTR requested that the 

Commission transmit this third report 

by October 6, 2010. 

Public Hearing: The Commission will 

hold a joint public hearing in 

connection with this investigation and 

investigation No. 332–510 at the U.S. 

International Trade Commission 

Building, 500 E Street, SW., 

Washington, DC, beginning at 9:30 a.m. 

on Wednesday, February 9, 2010 (and 

continuing on February 10, 2010, if 

needed). Requests to appear at the 

public hearing should be filed with the 

Secretary no later than 5:15 p.m., 

January 26, 2010, in accordance with 

the requirements in the ‘‘Submissions’’ 

section below. Persons wishing to 

appear should indicate in their request 

to appear whether they plan to provide 

testimony with respect to investigation 

No. 332–509, investigation No. 332–510, 

or both investigations. All pre-hearing 

briefs and statements should be filed not 

later than 5:15 p.m., January 28, 2010; 

and all post-hearing briefs and 

statements responding to matters raised 

at the hearing should be filed not later 

than 5:15 p.m., February 23, 2010. In the 

event that, as of the close of business on 

January 26, 2010, no witnesses are 

scheduled to appear at the hearing, the 

hearing will be canceled. Any person 

interested in attending the hearing as an 

observer or non-participant may call the 

Office of the Secretary (202–205–2000) 

after January 26, 2010, for information 

concerning whether the hearing will be 

held. The Commission is also 

considering holding additional hearings 

in Portland, Oregon and St. Louis, 

Missouri. Notice of the time, date, and 

place of those hearings would be 

published at a later date. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning this 

investigation. All written submissions 

should be addressed to the Secretary, 

and all such submissions (other than 

pre- and post-hearing briefs and 

statements) should be received not later 

than 5:15 p.m., March 26, 2010. All 

written submissions must conform with 

the provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Section 201.8 

requires that a signed original (or a copy 

so designated) and fourteen (14) copies 

of each document be filed. In the event 

that confidential treatment of a 

document is requested, at least four (4) 

additional copies must be filed, in 

which the confidential information 

must be deleted (see the following 

paragraph for further information 

regarding confidential business 

information). The Commission’s rules 

mstockstill on DSKH9S0YB1PROD with NOTICES

62814 Federal Register / Vol. 229, No. 74 / Tuesday, December 1, 2009 / Notices 

authorize filing submissions with the 

Secretary by facsimile or electronic 

means only to the extent permitted by 

section 201.8 of the rules (see Handbook 

for Electronic Filing Procedures, http:// 

www.usitc.gov/secretary/ 

fed_reg_notices/rules/documents/ 

handbook_on_electronic_filing.pdf). 

Persons with questions regarding 

electronic filing should contact the 

Office of the Secretary (202–205–2000). 

Any submissions that contain 

confidential business information must 

also conform with the requirements of 

section 201.6 of the Commission’s Rules 

of Practice and Procedure (19 CFR 

201.6). Section 201.6 of the rules 

requires that the cover of the document 

and the individual pages be clearly 

marked as to whether they are the 

‘‘confidential’’ or ‘‘non-confidential’’ 

version, and that the confidential 

business information be clearly 

identified by means of brackets. All 

written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. 

In his request letter, the USTR stated 

that his office intends to make the 

Commission’s reports available to the 

public in their entirety, and asked that 

the Commission not include any 

confidential business information or 

national security classified information 

in the reports that the Commission 

transmits to his office. Any confidential 

business information received by the 

Commission in this investigation and 

used in preparing this report will not be 

published in a manner that would 

reveal the operations of the firm 

supplying the information. 

By order of the Commission. 

Issued: November 25, 2009. 

William R. Bishop, 

Acting Secretary to the Commission. 

[FR Doc. E9–28764 Filed 11–30–09; 8:45 am] 

BILLING CODE P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 337–TA–644] 

In the Matter of Certain Composite 

Wear Components and Products 

Containing Same; Notice of Issuance 

of Limited Exclusion Order and Cease 

and Desist Order; Termination of 

Investigation 

AGENCY: U.S. International Trade 

Commission. 

ACTION: Notice. 

SUMMARY: The United States 

International Trade Commission hereby 

provides notice that it has determined to 

issue a limited exclusion order and 

cease and desist order and terminate the 

investigation. 

FOR FURTHER INFORMATION CONTACT: 

Michael K. Haldenstein, Office of the 

General Counsel, U.S. International 

Trade Commission, 500 E Street, SW., 

Washington, DC 20436, telephone (202) 

205–3041. Copies of non-confidential 

documents filed in connection with this 

investigation are or will be available for 

inspection during official business 

hours (8:45 a.m. to 5:15 p.m.) in the 

Office of the Secretary, U.S. 

International Trade Commission, 500 E 

Street, SW., Washington, DC 20436, 

telephone (202) 205–2000. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server at http://www.usitc.gov. 

The public record for this investigation 

may be viewed on the Commission’s 

electronic docket (EDIS) at http:// 

edis.usitc.gov. Hearing-impaired 

persons are advised that information on 

this matter can be obtained by 

contacting the Commission’s TDD 

terminal on (202) 205–1810. 

SUPPLEMENTARY INFORMATION: This 

investigation was instituted on April 25, 

2008, based on a complaint filed by 

Magotteaux International S/A and 

Magotteaux, Inc. (collectively, 

‘‘Magotteaux’’). The complaint, as 

supplemented, alleged violations of 

section 337 of the Tariff Act of 1930 (19 

U.S.C. 1337) in the importation into the 

United States, the sale for importation, 

and the sale within the United States 

after importation of certain composite 

wear components and products 

containing the same that infringe claims 

12–13 and 16–21 of U.S. Patent No. RE 

39,998 (‘‘the ‘998 patent’’). The 

complaint named Fonderie Acciaierie 

Rioale S.P.A. (‘‘FAR’’), AIA Engineering 

Ltd., and Vega Industries (collectively, 

‘‘AIAE Respondents’’) as respondents. 

FAR was subsequently terminated from 

the investigation on the basis of a 

settlement agreement, leaving the AIAE 

Respondents as the only remaining 

respondents. 

On May 8, 2009, the ALJ issued an ID 

finding the AIAE Respondents in 

default pursuant to Commission Rules 

210.16(a)(2) and 210.17, 19 CFR 

210.16(a)(2) and 210.17. On July 7, 

2009, the Commission determined not 

to review the ID and indicated that, in 

addition to the ALJ’s finding of violation 

pursuant to Rule 210.17, the 

Commission presumes the facts alleged 

in the complaint to be true with respect 

to the AIAE Respondents. The 

Commission also determined to waive 

Commission Rule 210.42(a)(ii), which, 

unless the Commission orders 

otherwise, requires that the ALJ issue a 

recommended determination on remedy 

and bonding in conjunction with any 

final initial determination concerning 

violation of section 337. The 

Commission encouraged the parties to 

the investigation, interested government 

agencies, and any other interested 

parties to file written submissions on 

the issues of remedy, the public interest, 

and bonding. The parties to the 

investigation and the IA filed 

submissions and response submissions 

concerning remedy, the public interest, 

and bonding on July 22, 2009, and July 

30, 2009, respectively. No other parties 

filed submissions. 

Having examined the record in this 

investigation, including the submissions 

on remedy, the public interest, and 

bonding and responses thereto, the 

Commission has determined that the 

appropriate form of relief is a limited 

exclusion order and a cease and desist 

order. 

The limited exclusion order prohibits 

the unlicensed entry for consumption of 

composite wear components and 

products containing same that are 

covered by one or more of claims 12– 

13 and 16–21 of the ‘998 patent and that 

are manufactured abroad by or on behalf 

of, or are imported by or on behalf of, 

AIA Engineering Limited or Vega 

Industries or any of their affiliated 

companies, parents, subsidiaries, or 

other related business entities, or their 

successors or assigns. 

The cease and desist order covers 

products that infringe claims 12–13 and 

16–21 of the ‘998 patent and is directed 

to defaulting domestic respondent Vega 

Industries and any of its principals, 

stockholders, officers, directors, 

employees, agents, licensees, 

distributors, controlled (whether by 

stock ownership or otherwise) and 

majority owned business entities, 

successors, and assigns. 

The Commission has also determined 

that the public interest factors 

enumerated in 19 U.S.C. 1337(d) and (f) 

do not preclude issuance of the aforementioned remedial orders, and that the 

bond during the Presidential period of 

review shall be set at 100 percent of the 

entered value for any covered composite 

wear components and products 

containing same. 

The authority for the Commission’s 

determinations is contained in section 

337 of the Tariff Act of 1930, as 

amended (19 U.S.C. 1337), and in 

sections 210.49—210.50 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 210.49–210.50). 

By order of the Commission. 

mstockstill on DSKH9S0YB1PROD with NOTICES


5804 Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 

maximum of five minutes. If reasonable 

accommodation is required, please 

contact the BLM’s Prineville District at 

(541) 416–6889 as soon as possible. 

FOR FURTHER INFORMATION CONTACT: 

Christina Lilienthal, Public Affairs 

Specialist, 3050 NE Third, Prineville, 

OR 97754, (541) 416–6889 or e-mail: 

christina_lilienthal@blm.gov. 

Dated: January 29, 2010. 

Deborah J. Henderson-Norton, 

District Manager, Prineville District Office. 

[FR Doc. 2010–2426 Filed 2–3–10; 8:45 am] 

BILLING CODE 4310–33–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 337–TA–665] 

In the Matter of: Certain 

Semiconductor Integrated Circuits and 

Products Containing Same; Notice of 

Commission Determination To Review 

in Part a Final Initial Determination 

Finding No Violation of Section 337 

and on Review To Take No Position on 

One Issue; Termination of the 

Investigation With a Finding of No 

Violation 

AGENCY: U.S. International Trade 

Commission. 

ACTION: Notice. 

SUMMARY: Notice is hereby given that 

the U.S. International Trade 

Commission has determined to review 

in part the final initial determination 

(‘‘ID’’) issued by the presiding 

administrative law judge (‘‘ALJ’’) on 

October 14, 2009, finding no violation of 

section 337 of the Tariff Act of 1930, 19 

U.S.C. 1337, in this investigation. On 

review, the Commission has determined 

to take no position on one issue, and to 

terminate this investigation with a 

finding of no violation. 

FOR FURTHER INFORMATION CONTACT: 

Sidney A. Rosenzweig, Esq., Office of 

the General Counsel, U.S. International 

Trade Commission, 500 E Street, SW., 

Washington, DC 20436, telephone (202) 

708–2532. Copies of non-confidential 

documents filed in connection with this 

investigation are or will be available for 

inspection during official business 

hours (8:45 a.m. to 5:15 p.m.) in the 

Office of the Secretary, U.S. 

International Trade Commission, 500 E 

Street, SW., Washington, DC 20436, 

telephone (202) 205–2000. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

The public record for this investigation 

may be viewed on the Commission’s 

electronic docket (EDIS) at http:// 

edis.usitc.gov. Hearing-impaired 

persons are advised that information on 

this matter can be obtained by 

contacting the Commission’s TDD 

terminal on (202) 205–1810. 

SUPPLEMENTARY INFORMATION: The 

Commission instituted Inv. No. 337– 

TA–665 on December 24, 2008, based 

on a complaint filed by Qimonda AG of 

Munich, Germany (‘‘Qimonda’’). 73 FR 

79165 (Dec. 24, 2008). The complaint 

alleged a violation of section 337 in the 

importation, sale for importation, and 

sale within the United States after 

importation of certain semiconductor 

integrated circuits and products 

containing same by reason of 

infringement of various claims of U.S. 

Patent Nos. 5,213,670 (‘‘the ’670 

patent’’); 5,646,434 (‘‘the ’434 patent’’); 

5,851,899 (‘‘the ’899 patent’’); 6,495,918 

(‘‘the ’918 patent’’); 6,593,240 (‘‘the ’240 

patent’’); 6,714,055 (‘‘the ’055 patent’’); 

and 6,103,456 (‘‘the ’456 patent’’). The 

complaint further alleged that there 

exists a domestic industry with respect 

to each of the asserted patents. The 

complaint named the following 

respondents: LSI Corporation of 

Milpitas, California (‘‘LSI’’); Seagate 

Technology of the Cayman Islands; 

Seagate Technology (US) Holdings Inc. 

of Scotts Valley, California; Seagate 

Memory Products (US) Corporation of 

Scotts Valley, California; and Seagate 

(US) LLC of Scotts Valley, California 

(collectively ‘‘Seagate’’). Qimonda 

accuses of infringement certain LSI 

integrated circuits, as well as certain 

Seagate hard disk drives that contain the 

accused LSI integrated circuits. 

The ALJ conducted an evidentiary 

hearing from June 1–9, 2009. Prior to the 

hearing, Qimonda tacitly withdrew 

three of the asserted patents: The ’055 

patent, the ’240 patent, and the ’456 

patent. Qimonda did not present 

evidence regarding those patents at the 

hearing, and did not include any 

analysis of those patents in its posthearing briefing. 

On October 14, 2009, the ALJ issued 

his final ID. The ID formally withdrew 

the ’055 patent, the ’240 patent, and the 

’456 patent from the investigation. The 

ALJ found that based on his claim 

constructions, Qimonda had not 

demonstrated that it practices any of the 

patents in suit. Accordingly, the ALJ 

ruled that an industry does not exist in 

the United States that exploits any of 

the four remaining asserted patents, as 

required by 19 U.S.C. 1337(a)(2). The 

ALJ ruled that certain LSI products 

infringe certain claims of the ’918 

patent, but that no accused products 

infringe any of the other asserted 

patents. The ALJ ruled that all of the 

asserted claims of the ’918 patent, and 

some of the asserted claims of the ’434 

patent, are invalid under 35 U.S.C. 102, 

but that the asserted claims of the ’670 

and ’899 patents are not invalid. 

On October 27, 2009, Qimonda filed 

a petition for review of the ID. Qimonda 

did not petition for review of the ALJ’s 

finding of no violation of section 337 as 

to the ’670 patent. Thus, only three 

patents—the ’434, ’899, and ’918 

patents—remain in suit. On November 

5, 2009, the Respondents and IA filed 

responses to Qimonda’s petition. 

Having examined the record of this 

investigation, including the ALJ’s final 

ID, the petition for review, and the 

responses thereto, the Commission has 

determined to review the final ID in 

part. Specifically, the Commission has 

determined to review and to take no 

position on whether U.S. Patent No. 

6,424,051 to Shinogi anticipates, under 

35 U.S.C. 102, any of the asserted claims 

of the ’918 patent. See Beloit Corp. v. 

Valmet Oy, 742 F.2d 1421, 1422–23 

(Fed. Cir. 1984). 

The Commission has determined not 

to review the remainder of the ID. 

Accordingly, the Commission has 

terminated this investigation with a 

finding of no violation. 

The authority for the Commission’s 

determination is contained in section 

337 of the Tariff Act of 1930, as 

amended (19 U.S.C. 1337), and in 

sections 210.42–46 of the Commission’s 

Rules of Practice and Procedure (19 CFR 

210.42–46). 

By order of the Commission. 

Issued: January 29, 2010. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. 2010–2319 Filed 2–3–10; 8:45 am] 

BILLING CODE 7020–08–P 

INTERNATIONAL TRADE 

COMMISSION 

[Inv. No. 332–509; Inv. No. 332–510] 

Small and Medium-Sized Enterprises: 

U.S. and EU Export Activities, and 

Barriers and Opportunities 

Experienced by U.S. Firms and Small 

and Medium-Sized Enterprises: 

Characteristics and Performance 

AGENCY: United States International 

Trade Commission. 

ACTION: Notice of time and place of 

additional public hearings in St. Louis, 

MO, and Portland, OR, and reaffirming 

of time and place of Washington, DC 

hearing. 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 5805 

SUMMARY: The Commission will hold a 

public hearing on these investigations in 

St. Louis, MO, beginning at 9:30 a.m. on 

March 10, 2010 at the Hilton St. Louis 

at the Ballpark, and in Portland, OR, 

beginning at 9:30 a.m. on March 12, 

2010 at the Holiday Inn Portland 

Airport. As previously announced, the 

Commission will also hold a public 

hearing on these investigations in 

Courtroom A at the U.S. International 

Trade Commission Building, 500 E 

Street, SW., Washington, DC, beginning 

at 9:30 a.m. on Tuesday, February 9, 

2010 (and continuing on February 10, 

2010, if needed). 

ADDRESSES: All written correspondence 

should be addressed to the Secretary, 

United States International Trade 

Commission, 500 E Street, SW., 

Washington, DC 20436. The public 

record for these investigations may be 

viewed on the Commission’s electronic 

docket (EDIS) at http://www.usitc.gov/ 

secretary/edis.htm. 

FOR FURTHER INFORMATION CONTACT: 

Project Leaders Justino De La Cruz (202– 

205–3252 or justino.delacruz@usitc.gov) 

or Laura Bloodgood (202–708–4726 or 

laura.bloodgood@usitc.gov) for 

information specific to these 

investigations. For information on the 

legal aspects of these investigations, 

contact William Gearhart of the 

Commission’s Office of the General 

Counsel (202–205–3091 or 

william.gearhart@usitc.gov). The media 

should contact Margaret O’Laughlin, 

Office of External Relations (202–205– 

1819 or margaret.olaughlin@usitc.gov). 

Hearing-impaired individuals may 

obtain information on this matter by 

contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background Information: The 

hearings relate to the second and third 

of a series of three investigations that 

the Commission is conducting under 

section 332(g) of the Tariff Act of 1930 

(19 U.S.C. 1332(g)) at the request of the 

United States Trade Representative 

(USTR). The Commission received the 

request for the investigations on October 

6, 2009. The Commission delivered its 

report to the USTR on the first 

investigation, No. 332–508, Small and 

Medium-Sized Enterprises: Overview of 

Participation in U.S. Exports, on 

January 12, 2010, and it is available to 

the public at www.usitc.gov. The 

Commission is scheduled to deliver its 

reports to the USTR on the second and 

third investigations, investigation No. 

332–509, Small and Medium-Sized 

Enterprises: U.S. and EU Export 

Activities, and Barriers and 

Opportunities Experienced by U.S. 

Firms, and investigation No. 332–510, 

Small and Medium-Sized Enterprises: 

Characteristics and Performance, by 

July 6, 2010, and October 6, 2010, 

respectively. Notices announcing 

institution of the three investigations 

were published in the Federal Registers 

of October 28, 2009 (74 FR 55581); 

December 1, 2009 (74 FR 62812); and 

December 11, 2009 (74 F.R. 65787). The 

second and third notices also 

announced the Washington, DC hearing 

and the intent to hold additional 

hearings in St. Louis, MO and Portland, 

OR. 

Public Hearings: The times and places 

of the three hearings and deadlines for 

filing requests to appear and any pre- or 

post-hearing briefs or statements or 

summaries of testimony are as follows: 

Washington, DC: 

The hearing will be held in 

Courtroom A at the U.S. International 

Trade Commission Building, 500 E 

Street, SW., Washington, DC, beginning 

at 9:30 a.m. on Tuesday, February 9, 

2010 (and continuing on February 10, 

2010, if needed). 

January 26, 2010: Deadline for filing 

requests to appear. 

January 28, 2010: Deadline for filing 

pre-hearing briefs, statements, or 

summaries of testimony. 

February 9, 2010: Public hearing 

(Washington, DC). 

February 10, 2010: Public hearing, 

second day if needed. 

February 23, 2010: Deadline for filing 

post-hearing briefs or statements. 

St. Louis, MO: 

The hearing will be held at the Hilton 

St. Louis at the Ballpark, One South 

Broadway, St. Louis, MO 63102, 

beginning at 9:30 a.m. local time on 

Wednesday, March 10, 2010. 

February 24, 2010: Deadline for filing 

requests to appear. 

February 26, 2010: Deadline for filing 

pre-hearing briefs, statements, or 

summaries of testimony. 

March 10, 2010: Public hearing (St. 

Louis, MO). 

March 26, 2010: Deadline for filing posthearing briefs or statements. 

Portland, OR: 

The hearing will be held at the 

Holiday Inn Portland Airport, 8439 NE 

Columbia Boulevard, Portland, OR 

97220, beginning at 9:30 a.m. local time 

on Friday, March 12, 2010. 

February 26, 2010: Deadline for filing 

requests to appear. 

March 2, 2010: Deadline for filing prehearing briefs, statements, or 

summaries of testimony. 

March 12, 2010: Public hearing 

(Portland, OR). 

March 26, 2010: Deadline for filing posthearing briefs or statements. 

The above hearings will be open to 

the public. Accordingly, persons 

testifying should not include 

confidential business information in 

their testimony. Any person desiring to 

submit confidential business 

information to the Commission in these 

investigations should do so in writing in 

accordance with the procedures set out 

in the ‘‘Written Submissions’’ section 

below. 

To assist the Commission in the 

preparation of the two reports, the 

Commission is particularly interested in 

obtaining information and views on the 

following: 

• The most significant constraints 

that U.S. SMEs face in their efforts to 

export. 

• The strategies that SMEs have 

adopted to address or overcome those 

constraints. 

• The benefits to SMEs of increased 

export opportunities from free trade 

agreements or other trading 

arrangements. 

• The U.S. free trade agreements or 

other trading arrangements that have 

been most beneficial to SMEs that 

export. 

• The characteristics of SMEs that 

export services. 

• How exporting affects SME 

business performance. 

• The extent to which U.S. SMEs 

have global operations. 

• How SMEs based in the United 

States differ in their exporting activities 

from SMEs based in the European 

Union and other leading economies. 

In the event that as of the close of 

business on the deadline for filing 

requests to appear no witnesses have 

filed requests to appear at a hearing, that 

hearing will be canceled. Any person 

interested in attending a hearing as an 

observer or non-participant may call the 

Office of the Secretary (202–205–2000) 

after the deadline for filing requests to 

appear for information concerning 

whether that hearing will be held. 

Notice of Appearance: Written 

requests to appear at the Commission 

hearings must be filed with the 

Secretary to the Commission in 

Washington, DC by 5:15 p.m. Eastern 

Time of the filing deadline for the 

hearing at which the person wishes to 

appear. The request, which may be in 


srobinson on DSKHWCL6B1PROD with NOTICES
5806 Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 

the form of a letter and which should be 

on company or other appropriate 

stationery, should identify the hearing 

at which the person wishes to appear, 

the investigation to which their 

testimony pertains (it could be both 

investigations), their name, title, and 

company or other organizational 

affiliation (if any), address, telephone 

number, e-mail address, and industry or 

main line of business of the company if 

any they are representing. Requests to 

appear must be made by post mail or 

delivered in person (see ‘‘ADDRESSES’’). 

The Commission will also accept 

requests to appear filed by e-mail to 

SMEhearings@usitc.gov, or through 

Laura Bloodgood at 

laura.bloodgood@usitc.gov. The 

Commission does not accept requests 

filed by fax. 

Pre- and Post-Hearing Briefs And 

Statements, Summaries: Participants are 

encouraged to provide a pre-hearing 

brief or statement or, in lieu thereof, 

may provide a one-page summary of the 

testimony they plan to present. Such 

summaries will be placed in the public 

record and therefore should not include 

any confidential business information. 

Any confidential business information 

included in a pre-hearing brief or 

statement should be submitted in 

accordance with the procedures set 

forth below under ‘‘Written 

Submissions.’’ Post-hearing briefs and 

statements would generally be for the 

purpose of responding to matters raised 

at the hearing, including questions 

asked by the Commissioners or 

testimony presented by other interested 

parties. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning these 

investigations. All written submissions 

should be addressed to the Secretary to 

the Commission, and all such 

submissions (other than pre- and posthearing statements) should be received 

not later than 5:15 p.m. Eastern Time, 

March 26, 2010. One signed original (or 

a copy so designated) and fourteen (14) 

copies of each document must be filed. 

In the event that confidential treatment 

of a document is requested, at least four 

(4) additional copies must be filed, in 

which the confidential information 

must be deleted (see below for further 

information regarding confidential 

business information). Written 

submissions may be filed by post mail 

or delivered in person (see ADDRESSES), 

or filed using the Commission’s 

electronic filing procedure described 

below. 

To use the Commission’s electronic 

filing procedure, filers must first be 

registered users of the Commission’s 

Electronic Document Information 

System (EDIS), accessible from the 

USITC Web site (http://www.usitc.gov/ 

secretary/edis.htm). The Commission’s 

rules for electronic filing are available in 

its Handbook on Electronic Filing 

Procedures (http://www.usitc.gov/ 

secretary/fed_reg_notices/rules/ 

handbook_on_electronic_filing.pdf). All 

written submissions must conform with 

the provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Persons with 

questions regarding electronic filing and 

EDIS should contact the Office of the 

Secretary (202–205–2000). 

Any submissions that contain 

confidential business information must 

also conform with the requirements of 

section 201.6 of the Commission’s Rules 

of Practice and Procedure (19 CFR 

201.6). Section 201.6 of the rules 

requires that the cover of the document 

and the individual pages be clearly 

marked as to whether they are the 

‘‘confidential’’ or ‘‘non-confidential’’ 

version, and that the confidential 

business information be clearly 

identified by means of brackets. All 

written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. 

In his request letter, the USTR stated 

that his office intends to make the 

Commission’s reports available to the 

public in their entirety, and asked that 

the Commission not include any 

confidential business information or 

national security classified information 

in the reports that the Commission 

transmits to his office. Any confidential 

business information received by the 

Commission in these investigations and 

used in preparing this report will not be 

published in a manner that would 

reveal the operations of the firm 

supplying the information. 

By order of the Commission. 

Issued: January 29, 2010. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. 2010–2260 Filed 2–3–10; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Notice of Lodging of Modification of 

Consent Decree Under the 

Comprehensive Environmental 

Response, Compensation and Liability 

Act 

Notice is hereby given that on January 

28, 2010, a proposed Amended Consent 

Decree in United States v. Nassau 

Metals Corporation, Inc., Civil Action 

No. 3: 96–CV–562, D.J. Ref. 90–11–3– 

1057A was lodged with the United 

States District Court for the Middle 

District of Pennsylvania. 

In this action the United States sought 

reimbursement of response costs 

incurred in connection with the release 

or threatened release of hazardous 

substances at the C&D Recycling 

Superfund Site, Luzerne County, 

Pennsylvania (the ‘‘Site’’). The Consent 

Decree obligates the Settling Defendant 

to reimburse $753,222 of the United 

States’ past response costs paid in 

connection with the Site, and to pay 

future response costs to be incurred by 

the United States at the Site as well. 

The Department of Justice will receive 

for a period of thirty (30) days from the 

date of this publication comments 

relating to the Consent Decree. 

Comments should be addressed to the 

Assistant Attorney General, 

Environment and Natural Resources 

Division, and either e-mailed to 

pubcomment-ees.enrd@usdoj.gov or 

mailed to P.O. Box 7611, U.S. 

Department of Justice, Washington, DC 

20044–7611, and should refer to United 

States v. Nassau Metals Corporation, 

Inc., Civil Action No. 3: 96–CV–562, D.J. 

Ref. 90–11–3–1057A. 

The Consent Decree may be examined 

at the Office of the United States 

Attorney, Middle District of 

Pennsylvania, 228 Walnut Street, Suite 

220, Harrisburg, PA 11754, and at U.S. 

EPA Region 3. During the public 

comment period, the Consent Decree 

may also be examined on the following 

Department of Justice Web site, http:// 

www.usdoj.gov/enrd/ 

Consent_Decrees.html. A copy of the 

Consent Decree may also be obtained by 

mail from the Consent Decree Library, 

P.O. Box 7611, U.S. Department of 

Justice, Washington, DC 20044–7611 or 

by faxing or e-mailing a request to Tonia 

Fleetwood (tonia.fleetwood@usdoj.gov), 

fax no. (202) 514–0097, phone 

confirmation number (202) 514–1547. In 

requesting a copy from the Consent 

Decree Library, please enclose a check 

in the amount of $3.50 (@ 25 cents per 

page reproduction cost) payable to the 

U.S. Treasury or, if by e-mail or fax, 

forward a check in that amount to the 

Consent Decree Library at the stated 

address. 

Maureen Katz, 

Assistant Chief, Environmental Enforcement 

Section, Environment and Natural Resources 

Division. 

[FR Doc. 2010–2261 Filed 2–3–10; 8:45 am] 

BILLING CODE 4410–15–P 


srobinson on DSKHWCL6B1PROD with NOTICES

Federal Register / Vol. 74, No. 237 / Friday, December 11, 2009 / Notices 65787 

analysis of impacts on the human 

environment, which we included in the 

draft comprehensive conservation plan 

and environmental assessment (Draft 

CCP/EA). The CCP will guide us in 

managing and administering Tensas 

River NWR for the next 15 years. 

Alternative C is the foundation for the 

CCP. 

The compatibility determinations for 

wildlife observation and photography, 

environmental education and 

interpretation, fishing, field trials, 

boating, bottomland hardwood forest 

management, trapping, all-terrain 

vehicle use, cooperative farming, 

research studies, horse/mule special 

use, and fire management are available 

in the CCP. 

Background 

The National Wildlife Refuge System 

Administration Act of 1966 (16 U.S.C. 

668dd–668ee) (Administration Act), as 

amended by the National Wildlife 

Refuge System Improvement Act of 

1997, requires us to develop a CCP for 

each national wildlife refuge. The 

purpose for developing a CCP is to 

provide refuge managers with a 15-year 

plan for achieving refuge purposes and 

contributing toward the mission of the 

National Wildlife Refuge System, 

consistent with sound principles of fish 

and wildlife management, conservation, 

legal mandates, and our policies. In 

addition to outlining broad management 

direction on conserving wildlife and 

their habitats, CCPs identify wildlifedependent recreational opportunities 

available to the public, including 

opportunities for hunting, fishing, 

wildlife observation, wildlife 

photography, and environmental 

education and interpretation. We will 

review and update the CCP at least 

every 15 years in accordance with the 

Administration Act. 

Comments 

Approximately 200 copies of the Draft 

CCP/EA were made available for a 30- 

day public review period as announced 

in the Federal Register on February 4, 

2009 (74 FR 6053). Ten respondents, 

consisting of the Service, the Louisiana 

Department of Wildlife and Fisheries, 

the Louisiana Department of 

Environmental Quality, and local 

citizens, submitted written comments 

by mail or e-mail. 

Selected Alternative 

After considering the comments we 

received, and based on the professional 

judgment of the planning team, we 

selected Alternative C to implement the 

CCP. The primary focus of the CCP is to 

optimize the biological potential of 

historical habitats by utilizing 

management actions which emphasize 

natural ecological processes to foster 

habitat functions and wildlife 

populations. We will enhance the 

biological program by inventorying and 

monitoring so that adaptive 

management can be implemented 

primarily for migratory birds, but other 

species of wildlife will benefit as well. 

We will manage bottomland 

hardwood forests based on an inventory 

that defines current conditions and that 

can be conducted in a logical and 

feasible manner. Bottomlands will be 

managed to increase opening of the 

canopy cover and to increase structural 

and vegetation diversity. Water control 

structures and pumping capability will 

be improved to enhance moist-soil and 

cropland management for the benefit of 

wintering waterfowl. Invasive species of 

plants will be mapped and protocols for 

control will be established with the 

addition of a forester. Partnerships will 

continue to be fostered for several 

biological programs, hunting 

regulations, law enforcement issues, and 

research projects. 

Forest management, reforestation, and 

resource protection at Tensas River 

NWR will be intensified. We will 

provide a full-time law enforcement 

officer, an equipment operator, a 

maintenance mechanic, and a wildlife 

technician. We will develop and begin 

to implement a Cultural Resources 

Management Plan. 

Within 3 years, we will develop a 

Visitor Services Plan to be used in 

expanding public use facilities and 

opportunities on the refuge. This stepdown management plan will provide 

overall long-term direction and 

guidance in developing and running a 

larger public use program on the refuge. 

We will increase opportunities for 

visitors by improving and/or adding 

facilities, such as photo blinds, 

observation sites, and trails, as well as 

improving access and roads. 

The CCP will increase bottomland 

hardwood forest habitat restoration and 

management, improve general refuge 

and visitor center access, meet the 

recovery goals of the threatened 

Louisiana black bear, integrate 

management with regional watershed/ 

ecosystem plans, improve resident and 

migratory wildlife species quality and 

abundance, and improve opportunities 

for wildlife-dependent public use. 

Authority 

This notice is published under the 

authority of the National Wildlife 

Refuge System Improvement Act of 

1997, Public Law 105–57. 

Dated: July 20, 2009. 

Cynthia K. Dohner, 

Acting Regional Director. 

[FR Doc. E9–29530 Filed 12–10–09; 8:45 am] 

BILLING CODE 4310–55–P 

INTERNATIONAL TRADE 

COMMISSION 

[Inv. No. 332–510] 

Small and Medium-Sized Enterprises: 

Characteristics and Performance 

AGENCY: United States International 

Trade Commission. 

ACTION: Institution of investigation and 

scheduling of hearing. 

SUMMARY: Following receipt of a request 

on October 6, 2009, from the United 

States Trade Representative (USTR) 

under section 332(g) of the Tariff Act of 

1930 (19 U.S.C. 1332(g)), the 

Commission instituted investigation No. 

332–510, Small and Medium-Sized 

Enterprises: Characteristics and 

Performance, to prepare the third in a 

series of three reports requested by the 

USTR relating to small and mediumsized enterprises. 

DATES: January 26, 2010: Deadline for 

filing requests to appear at the public 

hearing. 

January 28, 2010: Deadline for filing 

pre-hearing briefs and statements. 

February 9, 2010: Public hearing 

(Washington, DC). 

February 23, 2010: Deadline for filing 

post-hearing briefs and statements. 

May 28, 2010: Deadline for filing 

written submissions. 

October 6, 2010: Transmittal of 

Commission report to the USTR. 

ADDRESSES: All Commission offices, 

including the Commission’s hearing 

rooms, are located in the United States 

International Trade Commission 

Building, 500 E Street, SW., 

Washington, DC. All written 

submissions should be addressed to the 

Secretary, United States International 

Trade Commission, 500 E Street, SW., 

Washington, DC 20436. The public 

record for this investigation may be 

viewed on the Commission’s electronic 

docket (EDIS) at http://www.usitc.gov/ 

secretary/edis.htm. 

FOR FURTHER INFORMATION CONTACT: 

Project Leaders Laura Bloodgood (202– 

708–4726 or laura.bloodgood@usitc.gov) 

or William Deese (202–205–2626 or 

william.deese@usitc.gov) for 

information specific to this 

investigation. For information on the 

legal aspects of this investigation, 

contact William Gearhart of the 

Commission’s Office of the General 


jlentini on DSKJ8SOYB1PROD with NOTICES
65788 Federal Register / Vol. 74, No. 237 / Friday, December 11, 2009 / Notices 

Counsel (202–205–3091 or 

william.gearhart@usitc.gov). The media 

should contact Margaret O’Laughlin, 

Office of External Relations (202–205– 

1819 or margaret.olaughlin@usitc.gov). 

Hearing-impaired individuals may 

obtain information on this matter by 

contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background: In his letter the USTR 

requested, under the authority of section 

332(g) of the Tariff Act of 1930, that the 

Commission provide three reports 

during the next 12 months relating to 

small and medium-sized enterprises 

(SMEs). In this notice the Commission 

is instituting the third of three 

investigations under section 332(g) for 

the purpose of preparing the third 

report, which is to be transmitted to the 

USTR by October 6, 2010. The 

Commission published notices of 

institution of the first investigation, 

investigation No. 332–508, in the 

Federal Register of October 28, 2009 (74 

FR 55581) and the second investigation, 

investigation No. 332–509, in the 

Federal Register of December 1, 2009 

(74 FR 62812). 

As requested, in the third report the 

Commission will, to the extent possible: 

1. Examine U.S. SMEs engaged in 

providing services, including the 

characteristics of firms that produce 

tradable services, the growth in these 

services exports, and the differences 

between SME and large services 

exporters; 

2. Identify how data gaps might be 

overcome to further enhance our 

understanding of SMEs in services 

sector exports; 

3. For both goods and services 

exports, identify trade barriers (nontariff 

barriers and tariffs) that may 

disproportionately affect SME export 

performance, as well as possible 

linkages between exporting and SME 

performance; and 

4. Provide insights on the degree to 

which SMEs operate as multinationals, 

as affiliate firms, or as contributors of 

indirect exports to international trade 

through sales to larger exporting firms. 

The USTR requested that the 

Commission deliver the second report 

by October 6, 2010. 

Public Hearing: The Commission will 

hold a joint public hearing in 

connection with this investigation and 

investigation No. 332–509 at the U.S. 

International Trade Commission 

Building, 500 E Street, SW., 

Washington, DC, beginning at 9:30 a.m. 

on Tuesday, February 9, 2010 (and 

continuing on February 10, 2010, if 

needed). Requests to appear at the 

public hearing should be filed with the 

Secretary no later than 5:15 p.m., 

January 26, 2010, in accordance with 

the requirements in the ‘‘Submissions’’ 

section below. Persons wishing to 

appear should indicate in their request 

to appear whether they plan to provide 

testimony with respect to investigation 

No. 332–509, investigation No. 332–510, 

or both investigations. All pre-hearing 

briefs and statements should be filed not 

later than 5:15 p.m., January 28, 2010; 

and all post-hearing briefs and 

statements responding to matters raised 

at the hearing should be filed not later 

than 5:15 p.m., February 23, 2010. In the 

event that, as of the close of business on 

January 26, 2010, no witnesses are 

scheduled to appear at the hearing, the 

hearing will be canceled. Any person 

interested in attending the hearing as an 

observer or non-participant may call the 

Office of the Secretary (202–205–2000) 

after January 26, 2010, for information 

concerning whether the hearing will be 

held. The Commission is also 

considering holding additional hearings 

in Portland, Oregon and St. Louis, 

Missouri. Notice of the time, date, and 

place of those hearings will be 

published at a later date. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning this 

investigation. All written submissions 

should be addressed to the Secretary, 

and all such submissions (other than 

pre- and post-hearing briefs and 

statements) should be received not later 

than 5:15 p.m., May 28, 2010. All 

written submissions must conform with 

the provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Section 201.8 

requires that a signed original (or a copy 

so designated) and fourteen (14) copies 

of each document be filed. In the event 

that confidential treatment of a 

document is requested, at least four (4) 

additional copies must be filed, in 

which the confidential information 

must be deleted (see the following 

paragraph for further information 

regarding confidential business 

information). The Commission’s rules 

authorize filing submissions with the 

Secretary by facsimile or electronic 

means only to the extent permitted by 

section 201.8 of the rules (see Handbook 

for Electronic Filing Procedures, 

http://www.usitc.gov/secretary/ 

fed_reg_notices/rules/documents/ 

handbook_on_electronic_filing.pdf). 

Persons with questions regarding 

electronic filing should contact the 

Office of the Secretary (202–205–2000). 

Any submissions that contain 

confidential business information must 

also conform with the requirements of 

section 201.6 of the Commission’s Rules 

of Practice and Procedure (19 CFR 

201.6). Section 201.6 of the rules 

requires that the cover of the document 

and the individual pages be clearly 

marked as to whether they are the 

‘‘confidential’’ or ‘‘non-confidential’’ 

version, and that the confidential 

business information be clearly 

identified by means of brackets. All 

written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. 

In his request letter, the USTR stated 

that his office intends to make the 

Commission’s reports available to the 

public in their entirety, and asked that 

the Commission not include any 

confidential business information or 

national security classified information 

in the reports that the Commission 

transmits to his office. Any confidential 

business information received by the 

Commission in this investigation and 

used in preparing this report will not be 

published in a manner that would 

reveal the operations of the firm 

supplying the information. 

By order of the Commission. 

Issued: December 7, 2009. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. E9–29518 Filed 12–10–09; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

Importer of Controlled Substances; 

Notice of Application 

Pursuant to 21 U.S.C. 958(i), the 

Attorney General shall, prior to issuing 

a registration under this Section to a 

bulk manufacturer of a controlled 

substance in schedule I or II, and prior 

to issuing a regulation under 21 U.S.C. 

952(a)(2), authorizing the importation of 

such a substance, provide 

manufacturers holding registrations for 

the bulk manufacture of the substance 

an opportunity for a hearing. 

Therefore, in accordance with 21 CFR 

1301.34(a), this is notice that on October 

20, 2009, Tocris Cookson, Inc., 16144 

Westwoods Business Park, Ellisville, 

Missouri 63021–4500, made application 


jlentini on DSKJ8SOYB1PROD with NOTICES
6220 Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Notices 

INTERNATIONAL TRADE 

COMMISSION 

Agency Form Submitted for OMB 

Review 

AGENCY: United States International 

Trade Commission. 

ACTION: In accordance with the 

provisions of the Paperwork Reduction 

Act of 1995 (44 U.S.C. Chapter 35), the 

Commission has submitted a request for 

approval of a questionnaire to the Office 

of Management and Budget for review. 

Purpose of Information Collection: 

The forms are for use by the 

Commission in connection with 

investigation No. 332–510, Small and 

Medium-Sized Enterprises: 

Characteristics and Performance, 

instituted under the authority of section 

332(g) of the Tariff Act of 1930 (19 

U.S.C. 1332(g)). This investigation was 

requested by the U.S. Trade 

Representative (USTR). The 

Commission expects to deliver the 

results of its investigation to the USTR 

by October 6, 2010. 

Summary of Proposal 

1. Number of forms submitted: 1. 

2. Title of form: Business Firm 

Questionnaire. 

3. Type of request: New. 

4. Frequency of use: Industry 

questionnaire, single data gathering, 

scheduled for 2010. 

5. Description of respondents: U.S. firms in 

the services and manufacturing sectors. 

6. Estimated number of respondents: 9000. 

7. Estimated total number of hours to 

complete the form per respondent: 2 hours. 

8. Information obtained from the form that 

qualifies as confidential business information 

will be so treated by the Commission and not 

disclosed in a manner that would reveal the 

individual operations of a firm. 

Additional Information or Comment: 

Copies of the forms and supporting 

documents may be obtained from 

project leaders William Deese 

(william.deese@usitc.gov or 202–205– 

2626) or Erland Herfindahl 

(erland.herfindahl@usitc.gov or 202– 

205–2374). Comments about the 

proposal should be directed to the 

Office of Management and Budget, 

Office of Information and Regulatory 

Affairs, Room 10102 (Docket Library), 

Washington, DC 20503, ATTENTION: 

Docket Librarian. All comments should 

be specific, indicating which part of the 

questionnaire is objectionable, 

describing the concern in detail, and 

including specific suggested revision or 

language changes. Copies of any 

comments should be provided to Steve 

McLaughlin, Chief Information Officer, 

U.S. International Trade Commission, 

500 E Street, SW., Washington, DC 

20436, who is the Commission’s 

designated Senior Official under the 

Paperwork Reduction Act. 

Persons with mobility impairments 

who will need special assistance in 

gaining access to the Commission 

should contact the Secretary at 202– 

205–2000. Hearing impaired individuals 

are advised that information on this 

matter can be obtained by contacting 

our TTD terminal (telephone no. 202– 

205–1810). Also, general information 

about the Commission can be obtained 

from its internet site (http:// 

www.usitc.gov). 

By order of the Commission. 

Issued: January 27, 2010. 

Marilyn Abbott, 

Secretary to the Commission. 

[FR Doc. 2010–2210 Filed 2–5–10; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Notice of Lodging of Consent Decree 

Under the Comprehensive 

Environmental Response, 

Compensation and Liability Act 

Notice is hereby given that on January 

27, 2010, a proposed Consent Decree in 

United States et al. v. Chevron U.S.A. 

Inc., Civil Action No. 10–cv–00375– 

EMC was lodged with the United States 

District Court for the Northern District 

of California. 

The Consent Decree settles claims for 

natural resource damages under the 

Comprehensive Environmental 

Response, Compensation and Liability 

Act, 42 U.S.C. 9601 et seq., and certain 

state law claims, that arose in 

connection with historic discharges of 

hazardous substances into Castro Cove 

from a refinery owned by Chevron 

U.S.A. Inc. which is located in 

Richmond, California. Under the 

Consent Decree, the defendant will pay 

$2,850,000 jointly to the state and 

federal natural resource trustees for 

natural resource damages and will pay 

the natural resource trustees for any 

unreimbursed assessment costs incurred 

by the State and Federal natural 

resource trustees. 

The Department of Justice will receive 

for a period of thirty (30) days from the 

date of this publication comments 

relating to the Proposed Consent Decree. 

Comments should be addressed to the 

Assistant Attorney General, 

Environment and Natural Resources 

Division, and either e-mailed to 

pubcomment-ees.enrd@usdoj.gov or 

mailed to U.S. Department of Justice, 

P.O. Box 7611, Washington, DC 20044– 

7611, and should refer to United States 

et al. v. Chevron U.S.A. Inc., D.J. Ref. # 

90–11–3–09726. 

During the public comment period, 

the Consent Decree may be examined on 

the following Department of Justice Web 

site, http://www.usdoj.gov/enrd/ 

Consent_Decrees.html. A copy of the 

Consent Decree may also be obtained by 

mail from the Consent Decree Library, 

P.O. Box 7611, U.S. Department of 

Justice, Washington, DC 20044–7611 or 

by faxing or e-mailing a request to Tonia 

Fleetwood (tonia.fleetwood@usdoj.gov), 

fax no. (202) 514–0097, phone 

confirmation number (202) 514–1547. In 

requesting a copy from the Consent 

Decree Library, please enclose a check 

in the amount of $5.00 (25 cents per 

page reproduction cost) payable to the 

U.S. Treasury or, if by e-mail or fax, 

forward a check in that amount to the 

Consent Decree Library at the stated 

address. 

Maureen Katz, 

Assistant Chief, Environmental Enforcement 

Section, Environment and Natural Resources 

Division. 

[FR Doc. 2010–2567 Filed 2–5–10; 8:45 am] 

BILLING CODE 4410–15–P 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

[Docket No. OSHA–2009–0024] 

Information Collection Requirements 

for the Variance Regulations; 

Submission for Office of Management 

and Budget’s (OMB) Approval of 

Information Collection (Paperwork) 

Requirements 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor. 

ACTION: Request for public comment. 

SUMMARY: OSHA solicits comments 

concerning its proposal to obtain OMB 

approval for the information collection 

requirements contained in Sections 

6(b)6(A), 6(b)6(B), 6(b)6(C), 6(d), and 16 

of the Occupational Safety and Health 

Act of 1970, and 29 CFR 1905.10, 

1905.11, and 1905.12. These statutory 

and regulatory provisions specify the 

requirements for submitting 

applications to OSHA for temporary, 

experimental, permanent, and national 

defense variances. 

DATES: Comments must be submitted 

(postmarked, transmitted, or received) 

by April 9, 2010. 

ADDRESSES: Submit comments as 

follows: 

• Electronically: Submit comments 

and attachments electronically at 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES


APPENDIX C 

List of Industries Covered in Datasets

TABLE C.1 Services industries included in Census cross-border dataset 

Services industry 

2002 

NAICS 

code 

Newspaper, periodical, book, and directory publishers 5111 

Software publishers 5112 

Motion picture and video production 51211 

Motion picture and video distribution 51212 

Postproduction services and other motion picture and video industries 51219 

Sound recording industries 5122 

Radio and television broadcasting 5151 

Cable and other subscription programming 5152 

Internet publishing and broadcasting 5161 

Wired telecommunications carriers 5171 

Wireless telecommunications carriers (except satellite) 5172 

Telecommunications resellers 5173 

Satellite telecommunications 5174 

Cable and other program distribution 5175 

Other telecommunications 5179 

Internet service providers and web search portals 5181 

Data processing, hosting, and related services 5182 

Other information services 5191 

National commercial banks (banking) 5221101 

State commercial banks (banking) 5221102 

Savings institutions (federally chartered) 5221201 

Savings institutions (not federally chartered) 5221203 

Securities and commodity contracts intermediation and brokerage 5231 

Investment banking and securities dealing 52311 

Securities brokerage 52312 

Commodity contracts dealing 52313 

Commodity contracts brokerage 52314 

Securities and commodity exchanges 523210 

Miscellaneous intermediation 523910 

Portfolio management 523920 

Investment advice 523930 

Commercial and industrial machinery and equipment rental and leasing 5324 

Lessors of nonfinancial intangible assets (except copyrighted works) 533 

Legal services 5411 

Accounting, tax preparation, bookkeeping, and payroll services 5412 

Architectural, engineering, and related services 5413 

Specialized design services 5414 

Computer systems design and related services 5415 

Management, scientific, and technical consulting services 5416 

Scientific research and development services 5417 

Advertising and related services 5418 

Other professional, scientific, and technical services 5419 

Office administrative services 5611 

Facilities support services 5612 

Employment services 5613 

C-3 
TABLE C.1 Services industries included in Census cross-border dataset—Continued 

Services industry 

2002 

NAICS 

code 

Business support services 5614 

Travel arrangement and reservation services 5615 

Investigation and security services 5616 

Services to buildings and dwellings 5617 

Other support services 5619 

Waste collection 5621 

Waste treatment and disposal 5622 

Remediation and other waste management services 5629 

Performing arts companies 7111 

Electronic and precision equipment repair and maintenance 8112 

Commercial and industrial machinery and equipment (except automotive and electronic) 

repair and maintenance 8113 

Personal and household goods repair and maintenance 8114 

C-4 
TABLE C.2 Industries included in USITC questionnaire 

Services industry 

2007 

NAICS 

code 

Support activities for mining 2131 

Electric power generation, transmission and distribution 2211 

Natural gas distribution 2212 

Nonresidential building construction 2362 

Utility system construction 2371 

Other heavy and civil engineering construction 2379 

Motor vehicle and motor vehicle parts and supplies merchant wholesalers 4231 

Furniture and home furnishing merchant wholesalers 4232 

Lumber and other construction materials merchant wholesalers 4233 

Professional and commercial equipment and supplies merchant wholesalers 4234 

Metal and mineral (except petroleum) merchant wholesalers 4235 

Electrical and electronic goods merchant wholesalers 4236 

Hardware, and plumbing and heating equipment and supplies merchant wholesalers 4237 

Machinery, equipment, and supplies merchant wholesalers 4238 

Miscellaneous durable goods merchant wholesalers 4239 

Paper and paper product merchant wholesalers 4241 

Drugs and druggists' sundries merchant wholesalers 4242 

Apparel, piece goods, and notions merchant wholesalers 4243 

Grocery and related product merchant wholesalers 4244 

Farm product raw material merchant wholesalers 4245 

Chemical and allied products merchant wholesalers 4246 

Petroleum and petroleum products merchant wholesalers 4247 

Beer, wine, and distilled alcoholic beverage merchant wholesalers 4248 

Miscellaneous nondurable goods merchant wholesalers 4249 

Wholesale electronic markets and agents and brokers 4251 

Automobile dealers 4411 

Other motor vehicle dealers 4412 

Electronics and appliance stores 4431 

Electronic shopping and mail-order houses 4541 

Scheduled air transportation 4811 

Nonscheduled air transportation 4812 

Rail transportation 4821 

Deep sea, coastal, and Great Lakes water transportation 4831 

Inland water transportation 4832 

General freight trucking 4841 

Charter bus industry 4855 

Pipeline transportation of natural gas 4862 

Support activities for air transportation 4881 

Support activities for water transportation 4883 

Freight transportation arrangement 4885 

Couriers and express delivery services 4921 

Newspaper, periodical, book, and directory publishers 5111 

Software publishers 5112 

Motion picture and video industries 5121 

Sound recording industries 5122 

C-5 
TABLE C.2 Industries included in USITC questionnaire—Continued

Services industry 

2007 

NAICS 

code 

Radio and television broadcasting 5151 

Cable and other subscription programming 5152 

Wired telecommunications carriers 5171 

Wireless telecommunications carriers (except satellite) 5172 

Satellite telecommunications 5174 

Data processing, hosting, and related services 5182 

Nondepository credit intermediation 5222 

Activities related to credit intermediation 5223 

Securities and commodity contracts intermediation and brokerage 5231 

Securities and commodity exchanges 5232 

Other financial investment activities 5239 

Insurance carriers 5241 

Other investment pools and funds 5259 

Lessors of real estate 5311 

General rental centers 5323 

Lessors of nonfinancial intangible assets (except copyrighted works) 5331 

Architectural, engineering, and related services 5413 

Computer systems design and related services 5415 

Management, scientific, and technical consulting services 5416 

Scientific research and development services 5417 

Advertising, public relations, and related services 5418 

Management of companies and enterprises 5511 

Office administrative services 5611 

Facilities support services 5612 

Employment services 5613 

Travel arrangement and reservation services 5615 

Investigation and security services 5616 

Waste collection 5621 

Junior colleges 6112 

Colleges, universities, and professional schools 6113 

Business schools and computer and management training 6114 

Technical and trade schools 6115 

Other schools and instruction 6116 

Medical and diagnostic laboratories 6215 

Manufacturing industry 

2007 

NAICS 

code 

Animal foods 3111 

Grain and oilseed milling products 3112 

Sugar and confectionery products 3113 

Fruit and vegetable preserves and specialty foods 3114 

Dairy products 3115 

Meat products and meat packaging products 3116 

Seafood products prepared, canned and packaged 3117 

Foods, n.e.s.o.i. 3119 

C-6 
C-7 

TABLE C.2 Industries included in USITC questionnaire—Continued

Manufacturing industry 

2007 

NAICS 

code 

Beverages 3121 

Tobacco products 3122 

Fibers, yarns, and threads 3131 

Fabrics 3132 

Finished and coated textile fabrics 3133 

Textile furnishings 3141 

Other textile products 3149 

Knit apparel 3151 

Apparel 3152 

Apparel accessories 3159 

Leather and hide tanning 3161 

Footwear 3162 

Other leather products 3169 

Sawmill and wood products 3211 

Veneer, plywood, and engineered wood products 3212 

Other wood products 3219 

Pulp, paper, and paperboard mill products 3221 

Converted paper products 3222 

Printed matter and related product, n.e.s.o.i. 3231 

Petroleum and coal products 3241 

Basic chemicals 3251 

Resin, synthetic rubber, and artificial and synthetic fibers and filaments manufacturing 3252 

Pesticides, fertilizers and other agricultural chemicals 3253 

Pharmaceuticals and medicines 3254 

Paints, coatings, and adhesives 3255 

Soaps, cleaning compounds, and toilet preparations 3256 

Other chemical products and preparations 3259 

Plastics products 3261 

Rubber products 3262 

Clay and refractory products 3271 

Glass and glass products 3272 

Cement and concrete products 3273 

Lime and gypsum products 3274 

Other nonmetallic mineral products 3279 

Iron and steel and ferroalloy 3311 

Steel products from purchased steel 3312 

Alumina and aluminum and processing 3313 

Nonferrous metal (except aluminum) and processing 3314 

Foundries 3315 

Crowns, closures, seals and other packing accessories 3321 

Cutlery and handtools 3322 

Architectural and structural metals 3323 

Boilers, tanks, and shipping containers 3324 

Hardware 3325 

Springs and wire products 3326 

Bolts, nuts, screws, rivets, washers and other turned products 3327 
TABLE C.2 Industries included in USITC questionnaire—Continued

Manufacturing industry 

2007 

NAICS 

code 

Other fabricated metal products 3329 

Agriculture and construction machinery 3331 

Industrial machinery 3332 

Commercial and service industry machinery 3333 

Ventilation, heating, air-conditioning, and commercial refrigeration equipment 3334 

Metalworking machinery 3335 

Engines, turbines, and power transmission equipment 3336 

Other general purpose machinery 3339 

Computer equipment 3341 

Communications equipment 3342 

Audio and video equipment 3343 

Semiconductors and other electronic components 3344 

Navigational, measuring, electromedical, and control instruments 3345 

Magnetic and optical media 3346 

Electric lighting equipment 3351 

Household appliances and miscellaneous machines, n.e.s.o.i. 3352 

Electrical equipment 3353 

Electrical equipment and components, n.e.s.o.i. 3359 

Motor vehicles 3361 

Motor vehicle bodies and trailers 3362 

Motor vehicle parts 3363 

Aerospace products and parts 3364 

Railroad rolling stock 3365 

Ships and boats 3366 

Transportation equipment, n.e.s.o.i. 3369 

Household and institutional furniture and kitchen cabinets 3371 

Office furniture (including fixtures) 3372 

Furniture related products, n.e.s.o.i. 3379 

Medical equipment and supplies 3391 

Miscellaneous manufactured commodities 3399 

C-8 
TABLE C.3 Industries included in BEA foreign affiliate dataset 

Industries 

2002

NAICS 

code 

Mining and agriculture, forestry, fishing, and hunting 11 and 21 

Manufacturing 31-33 

Wholesale trade 42 

Information 51 

Finance (except depository institutions) and insurance 52 

Professional, scientific, and technical services 54 

Other services industriesa 22; 23; 44; 

45; 48; 49; 

53; 55; 56; 

62; 72; and 

81 a

”Other industries” consists of the following NAICS sectors: utilities, construction; retail trade; 

transportation and warehousing; real estate and rental and leasing; management of companies 

and enterprises; administration, support, and waste management; health care and social 

assistance; accomodation and food services; and miscellaneous services. 

C-9 
TABLE C.4 Industries included in Census datasets on goods exports by firm size and relatedparty exports 

Industries 

2002 

NAICS 

code 

Oilseeds and grains 1111 

Vegetables and melons 1112 

Fruits and tree nuts 1113 

Mushrooms, nursery and related products 1114 

Other agricultural products 1119 

Cattle 1121 

Swine 1122 

Poultry and eggs 1123 

Sheep, goats and fine animal hair 1124 

Farmed fish and related products 1125 

Other animals 1129 

Forestry products 1132 

Timber and logs 1133 

Fish, fresh, chilled or frozen and other marine products 1141 

Oil and gas 2111 

Coal and petroleum gases 2121 

Metal ores 2122 

Nonmetallic minerals 2123 

Animal foods 3111 

Grain and oilseed milling products 3112 

Sugar and confectionery products 3113 

Fruit and vegetable preserves and specialty foods 3114 

Dairy products 3115 

Meat products and meat packaging products 3116 

Seafood products prepared, canned and packaged 3117 

Bakery and tortilla products 3118 

Foods, nesoi 3119 

Beverages 3121 

Tobacco products 3122 

Fibers, yarns, and threads 3131 

Fabrics 3132 

Finished and coated textile fabrics 3133 

Textile furnishings 3141 

Other textile products 3149 

Knit apparel 3151 

Apparel 3152 

Apparel accessories 3159 

Leather and hide tanning 3161 

Footwear 3162 

Other leather products 3169 

Sawmill and wood products 3211 

Veneer, plywood, and engineered wood products 3212 

Other wood products 3219 

Pulp, paper, and paperboard mill products 3221 

Converted paper products 3222 

Printed matter and related product, n.e.s.o.i. 3231 

C-10 
TABLE C.4 Industries included in Census datasets on goods exports by firm size and relatedparty exports―Continued 

Industries 

2002 

NAICS 

code 

Petroleum and coal products 3241 

Basic chemicals 3251 

Resin, synthetic rubber, and artificial and synthetic fibers & filaments manufacturing 3252 

Pesticides, fertilizers and other agricultural chemicals 3253 

Pharmaceuticals and medicines 3254 

Paints, coatings, and adhesives 3255 

Soaps, cleaning compounds, and toilet preparations 3256 

Other chemical products and preparations 3259 

Plastics products 3261 

Rubber products 3262 

Clay and refractory products 3271 

Glass and glass products 3272 

Cement and concrete products 3273 

Lime and gypsum products 3274 

Other nonmetallic mineral products 3279 

Iron and steel and ferroalloy 3311 

Steel products from purchased steel 3312 

Alumina and aluminum and processing 3313 

Nonferrous metal (except aluminum) and processing 3314 

Foundries 3315 

Crowns, closures, seals and other packing accessories 3321 

Cutlery and handtools 3322 

Architectural and structural metals 3323 

Boilers, tanks, and shipping containers 3324 

Hardware 3325 

Springs and wire products 3326 

Bolts, nuts, screws, rivets, washers and other turned products 3327 

Other fabricated metal products 3329 

Agriculture and construction machinery 3331 

Industrial machinery 3332 

Commercial and service industry machinery 3333 

Ventilation, heating, air-conditioning, and commercial refrigeration equipment 3334 

Metalworking machinery 3335 

Engines, turbines, and power transmission equipment 3336 

Other general purpose machinery 3339 

Computer equipment 3341 

Communications equipment 3342 

Audio and video equipment 3343 

Semiconductors and other electronic components 3344 

Navigational, measuring, electromedical, and control instruments 3345 

Magnetic and optical media 3346 

Electric lighting equipment 3351 

Household appliances and miscellaneous machines, n.e.s.o.i. 3352 

Electrical equipment 3353 

Electrical equipment and components, n.e.s.o.i. 3359 

Motor vehicles 3361 

C-11 
C-12 

TABLE C.4 Industries included in Census datasets on goods exports by firm size and related 

party exports―Continued 

Industries 

2002 

NAICS 

code 

Motor vehicle bodies and trailers 3362 

Motor vehicle parts 3363 

Aerospace products and parts 3364 

Railroad rolling stock 3365 

Ships and boats 3366 

Transportation equipment, n.e.s.o.i. 3369 

Household and institutional furniture and kitchen cabinets 3371 

Office furniture (including fixtures) 3372 

Furniture related products, n.e.s.o.i. 3379 

Medical equipment and supplies 3391 

Miscellaneous manufactured commodities 3399 

Software, n.e.s.o.i. 5112 

Waste and scrap 9100 

Used or second-hand merchandise 9200 

Goods returned to Canada 9800 

Special classification provisions, n.e.s.o.i. 9900 
APPENDIX D 

Additional Chapters 3 and 4 Tables 

Share of 

establishmentsa

Share of 

employeesa 

Share of 

total 

revenuea 

Share of 

total export 

revenuea

Export revenue 

as a share of 

total 

establishment 

revenue

Export revenue as 

a share of total 

revenue for 

establishments 

reporting exported 

services

SME share of total

a. All establishments 82.8 42.7 33.6 (

b

) (b) (b)

b. Establishments with receipts/revenue from 

exported services 65.0 35.1 29.2 37.6 1.0 6.5

Classes of SMEs

0-19 share of SME total

a. All establishments 87.1 37.6 37.7 (

b

) (b) (b)

b. Establishments with receipts/revenue from 

exported services 80.1 23.4 20.8 27.0 0.8 6.0

20-99 share of SME total

a. All establishments 8.5 31.5 31.1 (

b

) (b) (b)

b. Establishments with receipts/revenue from 

exported services 13.9 36.0 32.3 35.5 1.1 7.9

100-499 share of SME total

a. All establishments 4.5 30.9 31.2 (

b

) (b) (b)

b. Establishments with receipts/revenue from 

exported services 6.1 40.4 46.6 37.0 1.1 8.3

 bNot applicable.

 aAdding large firm shares to SME shares would equal 100 percent; classes of SME shares add up to 100 percent.

TABLE D.1 Shares of revenue and exported services, subset of services industries, 2007

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. The data include selected subsectors in the 

following NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and rental leasing), 54 (professional, scientific, and 

technical services), 56 (administrative and support and waste management and remediation services), 71 (arts, entertainment, and recreation), 

and 81 (other services (except public administration)). 

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

D-3 
Share of 

establishmentsa

Share of 

employeesa 

Share of 

total 

revenuea 

Share of total 

export revenuea

Export revenue 

as a share of 

total 

establishment 

revenue

Export revenue as 

a share of total 

revenue for 

establishments 

reporting exported 

services

SME share of total

a. All establishments 83.4 43.5 34.3 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 70.8 32.5 23.9 37.3 0.7 4.6

Classes of SMEs

0-19 share of SME total

a. All establishments 86.6 37.7 39.2 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 77.6 21.7 20.7 28.0 0.6 5.4

20-99 share of SME total

a. All establishments 8.8 31.6 31.3 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 15.4 35.7 32.7 30.0 0.6 5.8

100-499 share of SME total

a. All establishments 4.6 30.7 29.5 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 6.9 41.7 45.2 41.1 0.9 7.9

 aAdding large firm shares to SME shares would equal 100 percent; classes of SME shares add up to 100 percent.

 b

Not applicable.

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

TABLE D.2 Shares of revenue and exported services, subset of services industries, 2002

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. The data include selected subsectors in the 

following NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and rental leasing), 54 (professional, scientific, and 

technical services), 56 (administrative and support and waste management and remediation services), 71 (arts, entertainment, and 

recreation), and 81 (other services (except public administration)). 

D-4 
(1) 

Number of 

establishments

(2) 

Number of 

employees

(3) Total revenue 

($1,000)

(4) Export revenue 

from exported 

services ($1,000)

(5) Export 

revenue as a share 

of all establishment 

revenue (percent) 

(4b / 3a) 

(6) Export revenue 

as a share of total revenue 

for establishments 

reporting exported services 

(percent) (4b / 3b) 

Less than 500 employees (SMEs)

a. All establishments 1,280,672 10,136,141 1,142,185,778

b. Establishments with receipts/revenue 

from exported services

42,961 636,970 127,077,940 24,525,111

Share of total (%) 3.4 6.3 11.1

Export/revenue ratio 2.1 19.3

500 or more employees (large companies)

a. All establishments 254,672 13,183,617 2,187,961,391

b. Establishments with receipts/revenue 

from exported services 17,755 1,324,217 404,027,698 41,165,744

Share of total (%) 7.0 10.0 18.5

Export/revenue ratio 1.9 10.2

Sum of SMEs and large companies

a. All establishments 1,535,344 23,319,758 3,330,147,169

b. Establishments with receipts/revenue 

from exported services 60,716 1,961,187 531,105,638 65,690,855

Share of total (%) 4.0 8.4 15.9

Export/revenue ratio 2.0 12.4

Classes of SMEsb

0-19 employees

a. All establishments 1,109,651 3,820,448 448,054,616

b. Establishments with receipts/revenue 

from exported services

33,349 138,291 26,345,996 6,868,319

Share of total (%) 3.0 3.6 5.9

Export/revenue ratio 1.5 26.1

20-99 employees

a. All establishments 112,656 3,199,103 357,128,880

b. Establishments with receipts/revenue 

from exported services

6,630 227,388 41,566,697 7,362,601

Share of total (%) 5.9 7.1 11.6

Export/revenue ratio 2.1 17.7

100-499 employees

a. All establishments 58,365 3,116,440 336,980,458

b. Establishments with receipts/revenue 

from exported services

2,982 265,381 57,390,844 10,083,617

Share of total (%) 5.1 8.5 17.0

Export/revenue ratio 3.0 17.6

TABLE D.3 Revenue from exported services, subset of services industries, 2002a

 bData for "Classes of SMEs" may not add to totals listed under "Less than 500 employees" due to the suppression of sectoral/industry data for some disaggregated classes 

of SMEs.

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. The data include selected subsectors in the following NAICS sectors: 51 

(information), 52 (finance and insurance), 53 (real estate and rental leasing), 54 (professional, scientific, and technical services), 56 (administrative and support and waste 

management and remediation services), 71 (arts, entertainment, and recreation), and 81 (other services (except public administration)). 

 a

An exported service is a product (e.g., service performed, license agreement) that is performed for, or sold or transferred to, a customer or client (individual, government, 

business establishment, etc.) located outside the United States (i.e., outside the 50 States, District of Columbia, U.S. Commonwealth Territories, or U.S. possessions). 

Included are products provided to unaffiliated and affiliated foreign firms (e.g., foreign parent firms, subsidiaries, branches). Excluded are products provided to domestic 

subsidiaries of foreign firms. Some industries in the information sector include exports of services and goods.

D-5 
2002 2007 Growth(%) 2002 2007 Growth(%)

Less than 500 employees (SMEs)

a. All establishments 1,280,672 1,391,916 8.7 10,136,141 10,737,066 5.9

b. Establishments with 

receipts/revenue from exported 

services 42,961 52,035 21.1 636,970 712,765 11.9

500 or more employees (large companies)

a. All establishments 254,672 288,577 13.3 13,183,617 14,400,930 9.2

b. Establishments with 

receipts/revenue from exported 

services 17,755 28,083 58.2 1,324,217 1,316,738 -0.6

Sum of SMEs and large 

a. All establishments 1,535,344 1,680,493 9.5 23,319,758 25,137,996 7.8

b. Establishments with 

receipts/revenue from exported 

services 60,716 80,118 32.0 1,961,187 2,029,503 3.5

Classes of SMEs

0-19 employees

a. All establishments 1,109,651 1,211,861 9.2 3,820,448 4,041,509 5.8

b. Establishments with 

receipts/revenue from 

exported services 33,349 41,662 24.9 138,291 166,669 20.5

20-99 employees

a. All establishments 112,656 117,802 4.6 3,199,103 3,378,925 5.6

b. Establishments with 

receipts/revenue from 

exported services 6,630 7,222 8.9 227,388 256,318 12.7

100-499 employees

a. All establishments 58,365 62,253 6.7 3,116,440 3,316,355 6.4

b. Establishments with 

receipts/revenue from 

exported services 2,982 3,151 5.7 265,381 288,183 8.6

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. The data include selected 

subsectors in the following NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and rental 

leasing), 54 (professional, scientific, and technical services), 56 (administrative and support and waste management and 

remediation services), 71 (arts, entertainment, and recreation), and 81 (other services (except public administration)). 

TABLE D.4 Growth of number of establishments and employees, subset of services industries, 2002 and 2007

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Number of establishments Number of employees

D-6 
2002 2007 Growth(%) 2002 2007 Growth(%)

Less than 500 employees (SMEs)

a. All establishments 1,142,185,778 1,567,451,560 37.2

b. Establishments with 

receipts/revenue from exported 

services 127,077,940 208,526,835 64.1 24,525,111 46,696,428 90.4

500 or more employees (large companies)

a. All establishments 2,187,961,391 3,103,898,563 41.9

b. Establishments with 

receipts/revenue from exported 

services 404,027,698 506,479,845 25.4 41,165,744 77,567,473 88.4

Sum of SMEs and large 

a. All establishments 3,330,147,169 4,671,350,123 40.3

b. Establishments with 

receipts/revenue from exported 

services 531,105,638 715,006,680 34.6 65,690,855 124,263,901 89.2

Classes of SMEs

0-19 employees

a. All establishments 448,054,616 590,661,292 31.8

b. Establishments with 

receipts/revenue from 

exported services 26,345,996 43,310,163 64.4 6,868,319 12,586,731 83.3

20-99 employees

a. All establishments 357,128,880 487,750,274 36.6

b. Establishments with 

receipts/revenue from 

exported services 41,566,697 67,378,938 62.1 7,362,601 16,565,029 125.0

100-499 employees

a. All establishments 336,980,458 488,951,394 45.1

b. Establishments with 

receipts/revenue from 

exported services 57,390,844 97,247,167 69.4 10,083,617 17,268,093 71.2

TABLE D.5 Growth of revenue and exported services, subset of services industries, 2002 and 2007

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. The data include selected 

sub-sectors in the following NAICS sectors: 51 (information), 52 (finance and insurance), 53 (real estate and rental leasing), 

54 (professional, scientific, and technical services), 56 (administrative and support and waste management and remediation 

services), 71 (arts, entertainment, and recreation), and 81 (other services (except public administration)). 

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Total revenue ($1,000)

Export revenue from 

exported services ($1,000) 

D-7 
(1) 

Number of 

establishments

(2) 

Number of 

employees

(3) Total revenue 

($1,000)

(4) Export 

revenue 

from 

exported 

services 

($1,000)

(5) Export 

revenue as a 

share of all 

establishment 

revenue 

(percent) 

(4b / 3a) 

(6) Export revenue 

as a share of total 

revenue for 

establishments 

reporting exported 

services (percent) 

(4b / 3b) 

Less than 500 employees (SMEs)

a. All establishments 76,684 882,056 173,862,363

b. Establishments with receipts/revenue from 

exported services 8,615 177,094 46,464,861 8,462,544

Share of total (%) 11.2 20.1 26.7

Export/revenue ratio 4.9 18.2

500 or more employees (large companies)

a. All establishments 59,749 2,480,515 885,775,209

b. Establishments with receipts/revenue from 

exported services 8,017 381,839 155,576,583 30,748,792

Share of total (%) 13.4 15.4 17.6

Export/revenue ratio 3.47 19.8

a. All establishments 136,433 3,362,571 1,059,637,572

b. Establishments with receipts/revenue from 

exported services 16,632 558,933 202,041,444 39,211,336

Share of total (%) 12.2 16.6 19.1

Export/revenue ratio 3.7 19.4

Classes of SMEs

0-19 employees

a. All establishments 60,356 241,217 43,542,101

b. Establishments with receipts/revenue 

from exported services 6,086 29,889 7,324,051 1,472,276

Share of total (%) 10.1 12.4 16.8

Export/revenue ratio 3.38 20.1

20-99 employees

a. All establishments 10,597 314,596 57,597,800

b. Establishments with receipts/revenue 

from exported services 1,722 64,352 15,023,872 2,858,347

Share of total (%) 16.3 20.5 26.1

Export/revenue ratio 5.0 19.0

100-499 employees

a. All establishments 5,731 326,243 72,722,462

b. Establishments with receipts/revenue 

from exported services 807 82,853 24,116,938 4,131,921

Share of total (%) 14.1 25.4 33.2

Export/revenue ratio 5.7 17.1

 a

An exported service is a product (e.g., service performed, license agreement) that is performed for, or sold or transferred to, a customer or client 

(individual, government, business establishment, etc.) located outside the United States (i.e., outside the 50 States, District of Columbia, U.S. 

Commonwealth Territories, or U.S. possessions). Included are products provided to unaffiliated and affiliated foreign firms (e.g., foreign parent firms, 

subsidiaries, branches). Excluded are products provided to domestic subsidiaries of foreign firms. Some industries in the information sector include exports 

of services and goods.

TABLE D.6 Information services: Revenue from exported services, 2007a

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS.

Sum of SMEs and large companies

D-8 
Share of 

establishmentsa

Share of 

employeesa 

Share of 

total 

revenuea 

Share of total 

export 

revenuea

Export revenue 

as a share of 

total 

establishment 

revenue

Export revenue as a 

share of total revenue 

for establishments 

reporting exported 

services

SME share of total

a. All establishments 56.2 26.2 16.4 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 51.8 31.7 23.0 21.6 0.8 4.2

Classes of SMEs

0-19 share of SME total

a. All establishments 78.7 27.4 25.0 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 70.6 16.9 15.8 17.4 0.9 3.2

20-99 share of SME total

a. All establishments 13.8 35.7 33.1 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 20.0 36.3 32.3 33.8 1.6 6.2

100-499 share of SME total

a. All establishments 7.5 37.0 41.8 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from exported 

services 9.4 46.8 51.9 48.8 2.4 8.9

 aAdding large firm shares to SME shares would equal 100 percent; classes of SME shares add up to 100 percent.

 b

Not app.

TABLE D.7 Information services: Shares of revenue and exported services, 2007

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS. 

D-9 
(1) 

Number of 

establishments

(2) 

Number of 

employees

(3) Total revenue 

($1,000)

(4) Export revenue 

from exported 

services ($1,000)

(5) Export revenue 

as a share of all 

establishment 

revenue (percent) 

(4b / 3a) 

(6) Export revenue as 

a share of total 

revenue for 

establishments 

reporting exported 

services (percent) (4b / 

3b) 

Less than 500 employees (SMEs)

a. All establishments 801,243 4,794,860 722,387,061

b. Establishments with 

receipts/revenue from exports 

services 33,697 398,606 89,541,569 18,818,232

Share of total (%) 4.2 8.3 12.4

Export/revenue ratio 2.6 21.0

500 or more employees (large companies)

a. All establishments 49,232 2,945,150 509,567,136

b. Establishments with 

receipts/revenue from exports 

services 2,852 413,794 111,538,111 19,164,141

Share of total (%) 5.8 14.1 21.9

Export/revenue ratio 3.76 17.2

a. All establishments 850,475 7,740,010 1,231,954,197

b. Establishments with 

receipts/revenue from exports 

services 36,549 812,400 200,989,680 37,982,373

Share of total (%) 4.3 10.5 16.3

Export/revenue ratio 3.1 18.9

Classes of SMEs

0-19 employees

a. All establishments 730,849 2,310,199 338,388,815

b. Establishments with 

receipts/revenue from exports 

services 27,886 103,648 23,386,543 5,891,225

Share of total (%) 3.8 4.5 6.9

Export/revenue ratio 1.74 25.2

20-99 employees

a. All establishments 51,132 1,456,184 217,681,719

b. Establishments with 

receipts/revenue from exports 

services 4,044 141,949 30,242,659 6,152,180

Share of total (%) 7.9 9.8 13.9

Export/revenue ratio 2.8 20.3

100-499 employees

a. All establishments 19,262 1,028,477 166,316,527

b. Establishments with 

receipts/revenue from exports 

services 1,767 153,009 35,822,367 6,774,827

Share of total (%) 9.2 14.9 21.5

Export/revenue ratio 4.1 18.9

TABLE D.8 Professional, scientific and technical services: Revenue from exported services, 2007a

 aAn exported service is a product (e.g., service performed, license agreement) that is performed for, or sold or transferred to, a customer or client (individual, 

government, business establishment, etc.) located outside the United States (i.e., outside the 50 States, District of Columbia, U.S. Commonwealth Territories, 

or U.S. possessions). Include products provided to unaffiliated and affiliated foreign firms (e.g., foreign parent firms, subsidiaries, branches). Exclude 

products provided to domestic subsidiaries of foreign firms.

Sum of SMEs and large companies

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS.

D-10 
Share of 

establishmentsa

Share of 

employeesa 

Share of total 

revenuea 

Share of total 

export revenuea

Export revenue 

as a share of 

total 

establishment 

revenue

Export revenue as a 

share of total 

revenue for 

establishments 

reporting exported 

services

SME share of total

a. All establishments 94.2 62.0 58.6 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from 

exported services 92.2 49.1 44.5 49.5 1.5 9.4

Classes of SMEs

0-19 share of SME total

a. All establishments 91.2 48.2 46.8 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from 

exported services 82.8 26.0 26.1 31.3 0.8 6.6

20-99 share of SME total

a. All establishments 6.4 30.4 30.1 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from 

exported services 12.0 35.6 33.8 32.7 0.9 6.9

100-499 share of SME total

a. All establishments 2.4 21.5 23.0 (

b

) (b) (b)

b. Establishments with 

receipts/revenue from 

exported services 5.2 38.4 40.1 36.0 0.9 7.6

 aAdding large firm shares to SME shares would equal 100 percent; classes of SME shares add up to 100 percent.

 b

Not app.

TABLE D.9 Professional, scientific and technical services: Shares of revenue and exported services, 2007

Sources: USDOC, Census, Service Sector Statistics Division; and USITC staff calculations.

Note: Data are from the 2002 and 2007 Economic Census and are tabulated by 2002 NAICS.

D-11 
D-12 

TABLE D.10 Derivation of percentages reported in table 4.5 

All variables below are derived using three variables reported in table 4.5: (1) U.S. 

exports of goods not associated with multinationals; (2) U.S. exports of goods by parents 

of multinationals to unaffiliated persons; (3) sales of affiliates to foreign persons.

Variable

Derived using variables listed above 

using the following formula: 

Percentage of pure foreign sales through 

unaffiliated exports ((1) + (2))/((1)+(2)+(3)) 

Percentage of pure foreign sales through 

foreign affiliates (3)/((1)+(2)+(3)) 

Percentage of pure foreign sales of 

multinationals through unaffiliated exports (2)/((2)+(3)) 

Percentage of pure foreign sales of 

multinationals through foreign affiliates (3)/((2)+(3)) 

Source: USDOC, BEA, International Investment Division; USITC calculations. 

Percentages are approximate and subject to caveats. 
APPENDIX E 

Business Firm Questionnaire

OMB No. 3117-0219/USITC No. 332-510; Expiration Date: 8/31/2010 

No response is required if currently valid OMB control number is not displayed 

BUSINESS FIRM QUESTIONNAIRE 

UNITED STATES INTERNATIONAL TRADE COMMISSION 

ATTENTION: SME Project Team 

Office of Industries, Room 511 

500 E Street, SW, Washington, DC 20436 

FAX: 202-205-2217 

The U.S. International Trade Commission, or Commission, (www.usitc.gov) has been requested by the 

Office of the U.S. Trade Representative (USTR) to report on competitive conditions affecting U.S. 

business interactions with foreign clients. The Commission designed this questionnaire to collect 

information to fulfill this request. By completing this questionnaire, you will provide valuable 

information concerning U.S. businesses and their ability to compete internationally. The Commission 

will report its findings to the USTR on October 6, 2010, and the USTR has indicated it intends to make 

this report available to the public. Questionnaire data used in the Commission’s report will be aggregated 

and presented in such a manner that the individual operations or responses of any one responding firm 

cannot be identified. 

RESPONSE TO THIS QUESTIONNAIRE IS REQUIRED BY LAW. 

READ ALL INSTRUCTIONS AND DEFINITIONS TO DETERMINE WHETHER THIS 

QUESTIONNAIRE APPLIES TO YOUR FIRM. 

THE COMPLETED QUESTIONNAIRE MUST BE RETURNED TO THE 

COMMISSION NO LATER THAN APRIL 2, 2010. 

The information called for in this questionnaire is for use by the Commission in connection with its 

investigation No. 332-510, Small and Medium-Sized Enterprises: Characteristics and Performance,

notice of which was published in the Federal Register of December 11, 2009. The information is 

requested under the authority of section 332(g) of the Tariff Act of 1930 (19 U.S.C. § 1332(g)). 

Completing the questionnaire is mandatory and failure to reply as directed can result in a subpoena or 

other order to compel the submission of records or information in your possession (19 U.S.C. § 1333(a)). 

If you need further information about this questionnaire, please contact one of the project leaders listed 

below:

William Deese (202-205-2626) 

Erland Herfindahl (202-205-2374) 

Please complete this questionnaire for your firm as a whole. If this is not possible, or is unreasonably 

burdensome, then individual business units or groups of business units within your firm can provide 

separate responses, but you must ensure that all of your firm’s activities are reflected in questionnaire 

responses and that there is no double counting of such activities. If you have joint venture business units, 

these should, in general, provide their own responses, but contact one of the project leaders if you need 

further guidance. 

This questionnaire can be downloaded from the Commission’s Web site at: 

http://www.usitc.gov/documents/usitc.questionnaire.doc
Confidential Business Information 

USITC Business Firm Questionnaire 2 of 16 

WHO MUST COMPLETE THIS QUESTIONNAIRE 

Your firm must complete this questionnaire if any of items A, B, or C below applied at 

any time during 2005-2009. 

A. Manufactured goods: Your firm produced products in the United States. 

B. Services: Your firm provided services from operations in the United States, or 

provided services through affiliates in foreign countries. 

C. Intellectual property: Your firm had income from royalties, license fees, or other 

intellectual property-related sources related to the production of manufactured goods 

or the provision of services. 

If items A, B, or C apply to your firm, check the “Yes” box on page 3 and follow the 

instructions provided there. 

If A, B, and C do not apply to your firm, check the “No” box on page 3 and follow the 

instructions provided there. 

This questionnaire was reviewed by industry participants to ensure that data requests are sufficient, 

meaningful, and as limited as possible. Public reporting burden for this questionnaire is estimated to 

average 2 hours per response. Send comments regarding the accuracy of this burden estimate or any other 

aspect of this collection of information, including suggestions for reducing the burden, to the address or 

fax number on the cover page. 
Confidential Business Information 

USITC Business Firm Questionnaire 3 of 16 

FIRM INFORMATION 

Firm name 

Address 

City State Zip code 

Web site address 

Read the text in the “Who must complete this questionnaire” box on page 2. If items A, B, or 

C apply to your firm, check the “Yes” box below. Otherwise, check the “No” box. 

YES

Read the instructions and definitions carefully, complete all parts of the 

questionnaire that apply to you, sign the certification, and return the entire 

questionnaire to the Commission at the address or fax number on the cover 

page, no later than April 2, 2010. See page 5 for other submission options. 

NO

Sign the certificate below, and promptly return this page to the Commission at 

the address or fax number on the cover page. See page 5 for other submission 

options. 

BUSINESS FIRM QUESTIONNAIRE CERTIFICATION 

The undersigned certifies that the information herein supplied in response to this questionnaire is 

complete and correct to the best of his/her knowledge and belief and understands that the information 

submitted is subject to audit and verification by the Commission. Section 332(g) of the Tariff Act of 

1930 (19 U.S.C. 1332(g)) provides that the Commission may not release information which the 

Commission considers to be confidential business information, unless the party submitting the 

confidential business information had notice, at the time of submission, that such information would be 

released by the Commission, or such party subsequently consents to the release of the information. The 

USTR, the requestor of this investigation, has requested that the Commission provide a nonconfidential 

(public) report. Consequently, the Commission will not release information gathered in this questionnaire 

in a form that reveals confidential business information of individual firms. 

The undersigned acknowledges that information submitted in this questionnaire response and throughout 

this investigation may be used by the Commission, its employees, and contract personnel who are acting 

in the capacity of Commission employees, for developing or maintaining the records of this investigation 

or related proceedings for which this information is submitted, or in internal audits and in investigations 

relating to the programs and operations of the Commission pursuant to 5 U.S.C. Appendix 3. The 

undersigned understands that all contract personnel will sign nondisclosure agreements. 

 

Name and title of Authorized Official Date (MM/DD/YY) 

 

Signature of Authorized Official* Telephone (xxx-xxx-xxxx) Fax (xxx-xxx-xxxx) 

*If submitting an electronic version of this certificate to the Commission, check this box in lieu of a 

written signature to indicate that the authorized official listed has certified the information provided. 
Confidential Business Information 

USITC Business Firm Questionnaire 4 of 16 

INSTRUCTIONS 

This questionnaire is intended for firms that have manufacturing or service operations, or have 

intellectual property revenues. The Commission requires information from all such firms 

regardless of the number of employees they have or amount of their revenues. 

This questionnaire is composed of 4 sections. Each section has a group of related questions. Not all 

sections apply to every firm. For example, section III must be completed only by firms that deal with 

foreign clients. 

All information submitted on this questionnaire will be treated as confidential business 

information. In the Commission’s report, information will be combined with other responses so 

that it will not reveal the operations of your firm. Further, this questionnaire does not request 

information that relates to sensitive issues such as specific business plans or trade secrets. 

Keep a copy of your submission for your records. 

IF THE INFORMATION REQUESTED IS NOT READILY AVAILABLE FROM YOUR 

RECORDS, CAREFUL ESTIMATES ARE ACCEPTABLE. 

Use space provided in section IV at the end of the questionnaire if space provided for each question is not 

sufficient. Also include any other information you feel is relevant to the Commission's investigation in 

this section. 

DEFINITIONS

1. Firm: 

An individual proprietorship, partnership, joint venture, association, corporation (including any 

subsidiary corporation), business trust, cooperative, trustee in bankruptcy, or receiver under decree 

of any court. 

2. Revenues: 

Income generated from the sale or license of goods or services, including royalties, fees, or other 

intellectual property-related income, associated with the main operations of your firm before any 

costs or expenses are deducted. Revenue is usually shown as the top item in an income (profit and 

loss) statement from which all charges, costs, and expenses are subtracted to arrive at the net 

income of the firm. 

3. Employees:

The number of people employed by your firm that were on your payroll on December 31 of each of 

the following years: 2005-2009. This includes paid full- and part-time employees in executive, 

production, management, sales, or administrative positions. Employees on sick leave, holidays, and 

vacations are also included. 

A part-time employee is one that works less than 35 hours a week. 
Confidential Business Information 

USITC Business Firm Questionnaire 5 of 16 

Do not include temporary staffing obtained from a staffing service; contractors, subcontractors, 

independent contractors; full or part time leased employees; and personnel related to purchased 

services, such as janitorial, guard or landscape services. 

4. Intellectual property: 

Refers to creations of the mind including inventions and discoveries, literary and artistic works, 

symbols and designs, and formulas and know-how that are potentially protectable under patent, 

copyright, trademark, trade secret, or contract law. 

Intellectual property revenues include royalties, license fees, and all other income received from 

the sale or transfer, in whole or in part, of any of the rights associated with intellectual property. 

5. Foreign client: 

A client whose normal base of operation is not in one of the 50 states, Washington, D.C, or 

Puerto Rico. 

6. Services: 

Includes “cross border” and/or affiliate transactions. “Cross border” transactions occur when a 

firm provides services to clients in another country, with people, information, or money crossing 

national boundaries in the process. Affiliate transactions occur when a firm provides services to 

foreign clients through affiliates established in a foreign country. 

Other definitions are shown in certain specific sections of this questionnaire. 

ELECTRONIC COMPLETION METHOD AND SUBMISSION INSTRUCTIONS 

Please consider completing this questionnaire electronically in Microsoft Word, following the instructions 

below.

Download the questionnaire from the Commission’s Web site at: 

http://www.usitc.gov/documents/usitc.questionnaire.doc 

Open the file in Microsoft Word for Windows. Contact one of the project leaders shown on the cover 

page if this file is incompatible with your firm’s computer operating system or version of Word. 

Entry areas are indicated as gray boxes in this electronic version. These boxes turn black as they are 

selected. Enter the requested information for each question that applies to your firm. Use Tab key to 

advance from box to box. Use Shift and Tab keys, simultaneously, to go back to a previous box. 

Click on any box to go immediately to that box. Use scroll keys to navigate through areas with no 

entry boxes. 

Other than in these boxes, you will not be able to add information to or change the questionnaire. 

Boxes will expand to accommodate responses.

Certain boxes require numeric information. If text is entered, it will be changed to a default numeric 

value after moving to the next entry box. 
Confidential Business Information 

USITC Business Firm Questionnaire 6 of 16 

 After you have completed the questionnaire electronically in Word, you have four submission options: 

1. Attach the electronic version to an email message and send it to jeremy.wise@usitc.gov. Please note 

that submitting the questionnaire response by e-mail will subject your firm's confidential business 

information (CBI) to transmission over an unsecured environment and to possible disclosure to third 

parties. Any risk of disclosure of CBI during transmission is assumed by your firm and not the 

Commission. However, once the e-mail is received, the questionnaire response will be stored in the 

Commission's secured environment and will receive the safeguards described in the certification on 

page 3. 

2. Use the Commission’s secure file upload site. Type https://dropbox.usitc.gov/ in your web browser, 

and press enter. Complete the requested information in the form that appears. 

For the PIN entry box, please type: SME 

Then click on the “Next” button. On the second page, click on the “Browse” button, navigate to your 

completed questionnaire file, and click on “Open.” (the file path and name will appear in the box). 

Then click on “Submit.” 

3. Copy the electronic version onto removable computer media such as a CD and send by express mail 

service to the address listed below. 

4. Print the completed questionnaire and send by express mail service to the address below: 

UNITED STATES INTERNATIONAL TRADE COMMISSION 

ATTENTION: SME Project Team 

Office of Industries, Room 511 

500 E Street, SW, Washington, DC 20436 

If you wish to discuss any security concerns about submitting your completed questionnaire, please 

contact one of the project leaders shown on the cover page. 

WRITTEN COMPLETION METHOD AND SUBMISSION INSTRUCTIONS 

Download the questionnaire from the Commission’s Web site at: 

http://www.usitc.gov/documents/usitc.questionnaire.doc 

Open the file in Microsoft Word and print the document. Contact one of the project leaders shown on the 

cover page if this file is incompatible with your firm’s computer operating system or version of Word. 

Type or write in the requested information for each question that applies to your firm. Submit the 

completed form by express mail service to the Commission using the address below: 

UNITED STATES INTERNATIONAL TRADE COMMISSION 

ATTENTION: SME Project Team 

Office of Industries, Room 511 

500 E Street, SW, Washington, DC 20436 
Confidential Business Information 

USITC Business Firm Questionnaire 7 of 16 

SECTION I. GENERAL QUESTIONS 

I.1. Who at your firm should be contacted regarding the information provided in this questionnaire? 

 

Name Title 

 

Telephone (xxx-xxx-xxxx) E-mail address 

I.2. Report below the actual number of hours required and the cost to your firm of completing this 

questionnaire, including all preparatory activities. 

 Hours Dollars 

I.3. Is your firm owned in whole or part by any other firm(s)? 

 Yes 

 No 

 If yes, provide the following for the three leading owners, based on equity share: 

Firm name City, State (if domestic), and Country Equity share (%) 

 

 

 
Confidential Business Information 

USITC Business Firm Questionnaire 8 of 16 

I.4. Does your firm have an ownership share in any other firm(s)? 

 Yes 

 No 

If yes, provide the following for the three leading firms you own, based on your equity share: 

Firm name City, State (if domestic), and Country Equity share (%) 

 

 

 

I.5. In what year was your firm established (4 digits)? Give the year that your manufacturing or service 

operations began, or when you started receiving intellectual property revenues. Disregard any 

ownership changes. 

Year (YYYY) 

I.6. Please provide your firm’s revenues for the indicated years. 

Revenues are income generated from the sale of goods or services, including 

royalties, license fees, or other intellectual property-related income associated with 

the main operations of your firm before any costs or expenses are deducted. 

Revenue is shown usually as the top item in an income (profit and loss) statement 

from which all charges, costs, and expenses are subtracted to arrive at the net 

income of the firm. 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO, 

ENTER 0. IF A VALUE IS UNKOWN, LEAVE ENTRY BLANK.

Year Revenues in full figure dollars 

2005 

2006 

2007 

2008 

2009 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO,

ENTER 0. IF A VALUE IS UNKNOWN, LEAVE ENTRY BLANK.
Confidential Business Information 

USITC Business Firm Questionnaire 9 of 16 

I.7. Please provide the number of people employed by your firm for the indicated years. 

Include employees that were on your payroll on December 31 for the years 

indicated below. Include paid full- and part-time employees, including executive, 

production, management, sales, and administrative personnel. Also include 

employees on sick leave, holidays, and vacations. 

A part-time employee is one that works less than 35 hours a week. 

Exclude temporary staffing obtained from a staffing service; contractors, 

subcontractors, independent contractors; full- or part-time leased employees; and 

personnel related to purchased services, such as janitorial, guard or landscape 

services.

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO, 

ENTER 0. IF A VALUE IS UNKOWN, LEAVE ENTRY BLANK. 

Year Full time (number) Part-time (number) 

2005 

2006 

2007 

2008 

2009 

I.8. For any year during 2005-09, did your firm purchase or obtain goods, services, or intellectual 

property from firms with less than 500 employees to produce goods, services, or intellectual 

property that were directly sold or licensed to foreign clients? 

 Yes 

 No 

 Don’t know 

If yes, please report these purchases as a percentage of the value of your total purchases during this 

time.

 Less than 5 percent 

 From 5 percent up to 15 percent 

 From 15 percent up to 50 percent 

 50 percent or greater 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO,

ENTER 0. IF A VALUE IS UNKNOWN, LEAVE ENTRY BLANK.
Confidential Business Information 

USITC Business Firm Questionnaire 10 of 16 

I.9. For any year during 2005-09, did your firm sell or license manufactured goods, services, or 

intellectual property to firms with more than 500 employees to produce goods, services, or 

intellectual property that were directly sold or licensed to foreign clients? 

 Yes 

 No 

 Don’t know 

If yes, please report these sales as a percentage of the value of your total sales during this time. 

 Less than 5 percent 

 From 5 percent up to 15 percent 

 From 15 percent up to 50 percent 

 50 percent or greater 

I.10. For any year during 2005-09, did your firm sell or license manufactured goods, services, or 

intellectual property to wholesalers or similar entities that sold or licensed your products in foreign 

markets? 

 Yes 

 No 

 Don’t know the final market 

If yes, please report these sales as a percentage of the value of your total sales during this time. 

 Less than 5 percent 

 From 5 percent up to 15 percent 

 From 15 percent up to 50 percent 

 50 percent or greater 

I.11. Please indicate the North American Industry Classification System (NAICS) 4-digit classification 

code for your top three lines of business in 2009. A list and definition of NAICS codes can be 

found at http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2007. For example, if your 

firm’s top line of business in 2009 was college education services, you would enter 6113 for rank 1 

in the space below. 

Rank NAICS code (4-digit) 

1 

2 

3 
Confidential Business Information 

USITC Business Firm Questionnaire 11 of 16 

SECTION II. BUSINESS IMPEDIMENTS 

II.1. During 2005-2009, did your firm sell, or consider selling, goods, services, or intellectual property to 

foreign clients? 

 Yes Continue with this section below. 

 No Proceed to section III. 

II.2. For each impediment below, please indicate, from 1 to 5, the extent to which it has affected your 

existing sales, or potential sales, to foreign clients. If sales not impeded, check 1; if the 

impediment has had a major effect on sales to foreign clients in your primary foreign market, 

check 5. If you have not encountered the impediment in your business, check the “not 

encountered” box. If you have no knowledge about the impediment, do not check a box. 

Check one box per row to indicate 

severity of impediment on sales

# Impediment 

Not

encountered

No

impediment 

 Moderate 

 impediment 

Major

impediment

1 Obtaining financing 1 2 3 4 5 

2 Foreign regulations 1 2 3 4 5 

3 Difficulty locating sales prospects 1 2 3 4 5 

4 Foreign sales not sufficiently 

profitable 1 2 3 4 5 

5 Language or cultural barriers 1 2 3 4 5 

6 Insufficient intellectual property 

protection 1 2 3 4 5 

7 High tariffs 1 2 3 4 5 

8 Unable to find foreign partner firm 1 2 3 4 5 

9 U.S. regulations 1 2 3 4 5 

10 Difficulty establishing affiliates in 

foreign market 1 2 3 4 5 

11 Visa issues 1 2 3 4 5 

12 Customs procedures 1 2 3 4 5 

13 Difficulty in receiving or processing 

payments for goods or services 1 2 3 4 5 

14 Lack of trained staff to manage 

international business activities 1 2 3 4 5 

15 U.S. taxation issues 1 2 3 4 5 

16 Foreign taxation issues 1 2 3 4 5 

17 Lack of government support 

programs 

 1 2 3 4 5 

18 Preference for local goods or 

services in foreign market 1 2 3 4 5 

19 Transportation/shipping costs 1 2 3 4 5 

20 Other (specify below) 1 2 3 4 5 

 Specify: 

21 Other (specify below) 1 2 3 4 5 

 Specify: 

22 Other (specify below) 1 2 3 4 5 

 Specify: 
Confidential Business Information 

USITC Business Firm Questionnaire 12 of 16 

II.3. Please indicate the three most significant impediments affecting your firm’s ability to do business 

with existing or potential foreign clients. Use the impediment number in the first column of the 

table in question II.2. For example, if transportation costs present the most significant impediment, 

please enter the number 19 for rank 1 in the space below. 

Rank 

Put impediment number from 

question II.2 in this column 

1 

2 

3 
Confidential Business Information 

USITC Business Firm Questionnaire 13 of 16 

SECTION III. FOREIGN CLIENT INFORMATION 

III.1. During 2005-2009, did your firm sell or license manufactured goods, services or intellectual 

property to foreign clients? 

 Yes Continue with this section below. 

 No Proceed to section IV. 

III.2. Please provide your revenues derived from selling or licensing manufactured goods, services, or 

intellectual property to foreign clients. 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO, 

ENTER 0. IF A VALUE IS UNKOWN, LEAVE ENTRY BLANK. 

ANNUAL REVENUES SHOULD NOT EXCEED THE TOTAL 

REVENUES REPORTED IN QUESTION I.6.

Year

Revenue from sales to 

foreign clients in full 

figure dollars 

2005 

2006 

2007 

2008 

2009 

III.3. Please provide your revenues derived from selling or licensing manufactured goods, services, or 

intellectual property to foreign clients in each of the following countries or regions. 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO, 

ENTER 0. IF A VALUE IS UNKOWN, LEAVE ENTRY BLANK. 

THE SUM OF REVENUES FOR EACH YEAR SHOULD MATCH THE 

YEARLY FIGURES REPOTRED IN QUESTION III.2. 

Revenue from foreign clients in full figure dollars 

Year Canada Mexico EU27

Other 

Europe1 China

Other 

Asia2

Latin

America

(besides 

Mexico)3 Other4

2005 

2006 

2007 

2008 

2009 

1

 Including Russia. 

2

 Including Middle Eastern, East Asian, and South Asian countries. 

3

 Including Central American and Caribbean countries. 

4

 Including Australia, New Zealand, African countries, and all other countries not provided for in the 

preceding columns. 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO,

ENTER 0. IF A VALUE IS UNKNOWN, LEAVE ENTRY BLANK.

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO,

ENTER 0. IF A VALUE IS UNKNOWN, LEAVE ENTRY BLANK.

ANNUAL REVENUES SHOULD NOT EXCEED THE TOTAL

REVENUES REPORTED IN QUESTION I.6.

THE SUM OF REVENUES FOR EACH YEAR SHOULD MATCH THE

FIGURES REPORTED IN QUESTION III.3.
Confidential Business Information 

USITC Business Firm Questionnaire 14 of 16 

III.4. Please indicate how your firm markets its manufactured goods, services, or intellectual property, as 

a share of total revenue. Please base you responses on 2009 data. 

CAREFUL ESTIMATES ARE ACCEPTABLE. SHARE(S) SHOULD 

SUM TO 100 PERCENT.

Marketing method 

Share of total revenue 

(percent) 

Domestic markets 

Foreign markets: 

Physically or electronically shipped manufactured good or service to 

unrelated foreign client 

Foreign client traveled to the United States to purchase good or service 

from your firm 

Through affiliates (of any type, i.e., manufacturers, distributors, etc.) 

established by your firm in a foreign market 

Your firm’s employees traveled to foreign market to deliver the good or 

service 

Provided intellectual property to firms in foreign markets 

Through licensed contracted foreign production with non-affiliated firms 

for products sold in countries other than the United States 

Other (Please specify: ) 

Total (domestic and foreign market figures must sum to 100 percent) 100 

If 2009 data are not available, please use the most recent data available, 

and indicate here the year your responses are based on. 

CAREFUL ESTIMATES ARE ACCEPTABLE. SHARE(S) SHOULD

SUM TO 100 PERCENT.
Confidential Business Information 

USITC Business Firm Questionnaire 15 of 16 

III.5. If your firm delivers part or all of its manufactured goods, services, or intellectual property through 

an affiliate in a foreign market, please check one box below that describes the affiliate. Check only 

one box. 

 Sales office affiliate without production activities or core service provision 

 Affiliate with production activities or core service provision 

 Both of the above 

 Other 

III.6. Please indicate how your firm has attracted foreign clients. Rank in order of success, 1 being the 

most successful, 2 next, and so on. If unknown, leave spaces blank.

Method Rank (1, 2, etc.) 

Foreign client initiated contact with firm directly 

Business relationship extending more than 5 years in the past 

Trade shows in U.S. or foreign market 

Personal relationship with clients abroad 

Your firm’s Web site 

Other marketing methods by your firm 

Assistance or information provided by a U.S. state or federal government agency 

Assistance or information provided by a private firm 

Other (Please specify: ) 

III.7. Have your relationships with foreign clients spurred your firm to hire additional employees in the 

United States during 2005-2009? 

 Yes Please complete this question. 

 No Proceed to section IV. 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO, 

ENTER 0. IF A VALUE IS UNKOWN, LEAVE ENTRY BLANK. 

Total number of additional full-time 

employees hired in the United States 

during 2005-2009 due to 

relationships with foreign clients 

Total number of additional part-time 

employees hired in the United States 

during 2005-2009 due to 

relationships with foreign clients 

 

CAREFUL ESTIMATES ARE ACCEPTABLE. IF A VALUE IS ZERO,

ENTER 0. IF A VALUE IS UNKNOWN, LEAVE ENTRY BLANK.
Confidential Business Information 

USITC Business Firm Questionnaire 16 of 16 

SECTION IV. OTHER INFORMATION 

IV.1. If you would like to elaborate on any of your responses, or provide any additional pertinent 

information, use the space below. Specify if the additional information applies to a specific 

question number. If information is general in nature, leave “Question no.” column blank. 

Question no. Additional information 

 

 

 

 
APPENDIX F 

Description of USITC Questionnaire 

Methodology

F-3 

Description of USITC Questionnaire 

Methodology 

In his letter to the Chairman of the U.S. International Trade Commission, the U.S. Trade 

Representative requested that the Commission investigate the role of U.S. SMEs in trade 

using, among other sources, primary data collected through questionnaires. In order to 

comply with this request, the Commission developed a questionnaire to collect primary 

data on the operations of U.S. SMEs. The Commission field-tested its questionnaire with 

firms in December 2009 and submitted it to the Office of Management and Budget 

(OMB) for clearance in January 2010. After receiving OMB clearance in February 2010, 

the Commission sent the questionnaire to a sample of 9,000 U.S. firms. 

Sample Population

The sample population was drawn from Orbis, a commercial database that consolidates 

firm-level statistical information. For comparison purposes, the Commission sent the 

questionnaire to both large firms and SMEs in the tradable services and manufacturing 

industries. Both firms with international clients and firms with only domestic clients were 

included in the sample. The sample population was stratified (divided into different 

classes of firms) by employment size categories, exporter or nonexporter status, and 

services or manufacturing sectors. Within each of the strata, the Commission employed a 

simple random sample without replacement technique.1

 Table F.1 summarizes the 

number of firms sampled in each stratum and the total number of firms in the Orbis 

database for each stratum. 

In constructing its sample population, the Commission sought to exclude industries in 

which SMEs rarely conduct business with foreign clients or in which transactions with 

foreign clients are difficult for firms to quantify. For instance, most SME bakeries do not 

export because their products are perishable and have low value per weight. And while 

SME dry cleaners may conduct business with foreign clients by establishing affiliates 

abroad or by selling to foreign citizens who use their services while temporarily in the 

United States, the former is extremely rare and the later is difficult for firms to quantify. 

The Commission used information in the Orbis database on the percentage of SMEs by 

industry that identify their sales territory as including international customers to define 

which industries would be included in the sample population.2

The total number of firms in each stratum included in the Orbis dataset is not comparable 

with the total population of firms in similar employee and industry categories reported by 

the U.S. Census Bureau, because of differences in the methods used by Orbis and Census 

to categorize and consolidate firm-level data. For the U.S. economy as a whole, however, 

Census reported approximately 6 million employer firms and 21 million non-employer 

 1

 This process randomly selected a fixed number of firms in each stratum. 

2

 Industries in which less than 0.2 percent of SMEs identified their sales territory as international were 

excluded from the sample population. Based on this criteria, all manufacturing industries were included in the 

sample, aside from bakeries and tortilla manufacturing (NAICS 3118). For a list of included service 

industries, please see appendix C. 
F-4 

TABLE F.1 Number of firms by stratum contained in Orbis database and number of firms sampled by USITC

 Non-exporting firms Exporting firms 

Exporters and nonexporters 

 

Firms in 

Orbis 

Firms 

sampled 

Firms in 

Orbis 

Firms 

sampled 

Firms in 

Orbis 

Firms 

sampled 

SME Manf 0-19 employees 489,240 500 1,902 500 

SME Manf 20-99 employees 48,443 500 11,442 500 

SME Manf 100-499 employees 6,441 500 5,136 500 

Large Manf 500+ employees 2,886,365 1500 

SME Serv 0-19 employees 2,878,640 500 7,725 500 

SME Serv 20-99 employees 141,377 500 13,421 500 

SME Serv 100-499 employees 19,502 500 3,861 500 

Large Serv 500+ employees 3,634,091 1500 

Source: Orbis database.

firms in 2006.3 The Orbis database currently reports data on approximately 15 million 

U.S. firms, or roughly one-half of all U.S. firms.4

 According to officials with Bureau van 

Djik, the publisher of Orbis, the database contains more complete information regarding 

large publicly traded firms than small privately held firms. 

Response Rate

Based on the Commission’s legal authority under section 333(a) of the Tariff Act of 1930 

(19 U.S.C. 1333(a)), the questionnaire was mandatory for all firms to complete. Besides 

the initial mailing, firms included in the sample received two follow-up mailings 

reminding them to complete the questionnaire. The Commission received 3,200 

completed and timely questionnaires. In addition, 755 responses by firms that indicated 

that the questionnaire did not apply to them, and 569 questionnaires were returned as 

undeliverable by the U.S. Post Office.5

 Table F.2 reports response rate by stratum. 

Analysis of Questionnaire Responses

Once the Commission received completed questionnaires, they were reviewed by 

Commission staff, who ensured firms had properly reported all data. In cases where data 

were missing or appeared to be incorrect, staff contacted respondent firms to provide 

corrected data. In cases where individual firms were unable or unwilling to provide data, 

 3

 Census, Nonemployer Statistics 2006; Census, Statistics of U.S. Businesses 2006. In its Statistics of 

U.S. Businesses dataset, which provides information on the number of firms by industry, Census defines a 

firm as a business organization consisting of one or more domestic establishments in the same state and 

industry that were specified under common ownership or control. Under this definition, a large enterprise that 

has multiple establishments engaged in different industries, in different states, may be counted as more than 

one firm. In Orbis, however, an enterprise would be counted as one firm regardless of how many states or 

industries it operates in. 4

 Even for economy-wide statistics, a precise comparison of firm counts by Census and Orbis is not 

feasible due to differences in timing of reporting (Census publishes its firm counts for discrete years, while 

firm counts for Orbis are updated on a continual basis). 5

 In certain cases firms may have been correct that the questionnaire did not apply to them, and in other 

cases firms mistakenly certified that the questionnaire did not apply to them, such as when firms incorrectly 

assumed that the questionnaire applied only to exporters, or when certain services firms, such as wholesalers, 

did not recognize that their firms qualified as services firms. 
F-5 

TABLE F.2 Number of respondents to USITC questionnaire 

Number of 

employees 

Number of 

firms that 

responded 

Exporting services firms 0-19 184 

 20-99 173 

 100-499 154 

 

Non-exporting services firms 0-19 279 

 20-99 201 

 100-499 184 

 

Large services firms ≥500 380 

 

Exporting manufacturing firms 0-19 193 

 20-99 274 

 100-499 296 

 

Non-exporting manufacturing firms 0-19 140 

 20-99 167 

 100-499 106 

 

Large manufacturing firms ≥500 469 

 

Total 3200 

Source: Compiled from USITC questionnaire. 

the Commission imputed data for total revenue and total employment to a limited extent, 

by using data in previous or subsequent years. 

Weighting

Due to sampling design, the raw survey data are not self-weighted. As table F.1 shows, 

relative to Orbis population numbers, large firms were oversampled. Similarly, SMEs in 

general represent only two-thirds of surveyed firms, while they accounted for 99.9 

percent of firms in the United States.6

 Sampling weights, defined as the inverse 

probability of inclusion by stratum, were constructed to correct for this and make the 

sample more closely reflect the population. 

Weights were also constructed to account for survey nonresponse. Two approaches were 

followed in making this adjustment. The first uses the inverse response rate by each of 

the 14 strata as the correction factor for nonresponse. The underlying assumption is that 

all firms within a given stratum have the same probability of responding to the survey, 

though this probability may vary across strata. 

The second approach models survey response given some information available for both 

respondents and nonrespondents. In addition to the data on size, NAICS, and exporting 

status used to define strata, the geographic location of all surveyed firms is observed from 

the sampling frame. This information is used to regress a response indicator on a 

comprehensive set of indicator variables for sampling strata and U.S. states. Estimated 

 6 Census, Statistics of U.S. Businesses; Census, Nonemployer Statistics.
F-6 

probabilities, or propensity scores, from this analysis were used to match firms into three 

equal-sized classes (low, medium, and high probability). This matching was done 

separately for six superstrata, in order to preserve counts at the superstrata and higher 

levels.7

Response probabilities from either approach were combined with the sampling weights in 

order to form final weights that account for both survey design and nonresponse. The 

estimation of the logistic regression model in the second approach suggests that, after 

controlling for stratum, response rates tend to vary for certain states, making the final 

weights from the propensity score approach the preferred weights. The preferred 

weighting scheme was used to generate statistics reported in this report. Nonetheless, the 

two sets of final weights were subject to various sensitivity checks and were found to 

yield comparable results. 

Bibliography 

Bureau van Dijk, Orbis Companies Database. 

U.S. Bureau of the Census (Census). Nonemployer Statistics 2006. 

http://www.census.gov/econ/nonemployer/index.html. 

———. Statistics of U.S. Businesses 2006. http://www.census.gov/econ/susb/. 

 7

 The super-strata were formed according to strata by aggregating the SME strata with 0–19 employees, 

20–99 employees, and 100–499 employees into a single SME super-stratum. 
APPENDIX G 

Discussion of Firm Characteristics Based 

on Questionnaire Results 

Introduction

This appendix uses data collected through a USITC questionnaire to discuss the 

primary characteristics of U.S. SMEs in the manufacturing and services sectors 

that export or sell their goods and services abroad through foreign affiliates. 

These characteristics include number of employees, revenue, the major country 

and regional markets for the firms’ exports, and the major marketing methods 

used by SMEs. This information is presented from a comparative standpoint and 

notes the major differences between manufacturing and services SMEs, as well 

as between SMEs and large firms, vis-à-vis the characteristics mentioned above. 

This appendix examines important trends among exporting SMEs as identified in 

questionnaire responses and secondary research. It also presents data on firms’ 

opinions on trade impediments and the results of some statistical tests concerning 

the responses by different groups to the questions on trade impediments. 

There was a wide variation in the way firms responded to individual survey 

questions. In some cases, reporting firms did not respond, or left the answers 

blank, to certain questions. Because of these factors, many estimates derived 

from the statistical analyses of questionnaire responses include large standard 

errors. For this reason, when discussing the primary characteristics of exporting 

SMEs, it is difficult to make clear distinctions among certain classes of firms 

based on survey results.1

Comparisons Related to Revenue and Employment in 

Exporting SMEs

In 2009, average revenues among SME exporters of services were slightly less 

than $6.0 million (table G.1). By contrast, large services exporters recorded 

average revenues of $142.3 million in 2009. Average revenues for exporting 

SMEs in the manufacturing sector were far lower in 2009 ($3.9 million) than 

revenues for large manufacturers that exported ($1.4 billion). SMEs that did not 

export in 2009, including both manufacturing and services firms, reported 

average revenues of $6.6 million. 

Exporting services SMEs experienced revenue growth of 19 percent during 

2005–09, which was approximately the same as the revenue growth for large 

services firms that exported. Average revenues among SME manufacturers that 

exported during 2005–09 grew by 37 percent, compared to 6 percent for large 

manufacturers that exported. Differences in growth rates in both sectors were not 

statistically significant. Nonexporting SMEs experienced a 7 percent growth rate 

in average revenues over the same period. 

From 2008 to 2009, average revenue decreased for manufacturers of all sizes 

whether or not they exported. SME and large service exporters both experienced 

revenue growth of 9 percent, but the trends for SME services firms were more 

 1

 Information in this appendix supplements data from Census and BEA presented in chapter 3, 

but does not represent official U.S. trade statistics. Tables in this appendix report standard errors, 

which provide an indication of the variability of the data in computing a particular statistic and can 

be used for tests of significance. 

G-3 
TABLE G.1 Primary characteristics of questionnaire respondents, 2009a

Average 

number of

years in 

operation 

Average revenues 

($1,000) 

Average 

number of 

employees 

Average 

growth in 

revenues 

2007–08 (%) 

Average 

growth in 

revenues 

2008–09 (%) 

Average growth 

in number of 

employees 

2007–08 (%) 

Average 

growth in 

number of 

employees 

2008– 

09 (%) 

Average growth 

in revenue 

2005–09 (%) 

Average 

growth in 

employment 

2005–09 (%) 

Exporting firms  Services  SMEs (employees<500) 15 (2.4) 5,952 (1,404) 11 (1.7) 6 (11.3) 9 (9.3) -2 (4.0) -4 (0.9) 19 (6.5) 0 (1.5) 

 Empl.<20 13 (2.5) 392 (131) 5 (1.5) 5 (12.4) 9 (12.1) -3 (4.4) -5 (1.3) 20 (7.0) -1 (1.6) 

 Empl. 20–99 25 (3.5) 20,800 (1,771) 45 (3.8) 16 (7.0) 5 (6.2) 6 (5.0) -3 (1.5) 16 (4.8) 6 (2.3)  Empl. 100–499 32 (2.3) 68,300 (10,200) 205 (14.8) 10 (2.4) -9 (6.2) 3 (4.5) -3 (1.4) 9 (2.3) 5 (2.2) 

 Large firms (employees>500) 44 (3.9) 142,312 (118,445) 5,391 (2,654) 11 (4.8) 9 (5.2) 6 (1.3) -3 (0.9) 19 (6.8) 9 (2.3) 

 Manufacturing 

 SMEs (employees<500) 14 (3.1) 3,887(702) 14 (2.5) 11 (3.6) -9 (3.1) 2.4 (7.3) -9 (0.6) 37 (22.2) 9 (4.5) 

 Empl. <20 15 (3.3) 1,881(532) 5 (1.2) 24 (5.9) -7 (5.8) 3 (8.6) -7 (1.4) 96 (76.0) 10 (5.2)  Empl. 20–99 28 (2.7) 7,811 (998) 39 (2.4) -1 (2.3) -16 (3.7) -2 (1.8) -10 (1.1) -4 (9.6) 4 (2.4)  Empl. 100–499 43 (3.2) 55,022 (5,969) 195 (11.7) 8 (2.3) -6 (5.0) 6 (4.5) -8 (1.0) 26 (11.5) 4 (1.5) 

 Large firms (employees>500) 52 (2.3) 1,398,043 (254,440) 4,704 (764) 9 (1.7) -12 (1.3) 0 (1.2) -7 (0.6) 6 (0.9) 1 (0.7) 

Nonexporting firms 

 SMEs (employees<500) 20 (1.7) 6,569 (3,451) 13 (3) 6 (5.1) -8 (5.2) -1 (3.1) -7 (0.6) 7 (3.2) 5 (2.0) 

Source: Data compiled from responses to USITC questionnaire. Note: Averages are calculated using sampling weights. For further discussion of sampling weights, see appendix F. 

aNumbers in parentheses denote standard deviations. 

G-4 
variable. Exporting services SMEs with 100 to 499 employees experienced a 

revenue decline in 2009 of 9 percent. Among manufacturers that exported, 

average revenue declined by 9 percent and 12 percent for SMEs and large firms, 

respectively. Non-exporting SMEs across all sectors experienced a decline in 

revenue from 2008 to 2009 of 8 percent. 

Employment trends during recent years were also quite diverse. During 2005–09, 

exporting services SMEs experienced no net employment growth. 

Exporting SME manufacturers experienced net employment growth of 9 percent 

(see table G.1). Employment growth in large services firms was notably higher 

(9 percent) than in services SMEs, whereas large manufacturing firms 

experienced lower employment growth (1 percent) than their SME counterparts 

(9 percent). 

Characteristics of Foreign Client Sales2 of Exporting 

SMEs 

Foreign Client Revenue Trends

In general, manufacturing firms earned more revenue from foreign client sales, 

including both exports and foreign affiliate sales, than services firms during the 

subject period. In 2009, revenue from foreign client sales accounted for 

23 percent of total firm revenue for manufacturing SMEs and 24 percent for large 

manufacturing firms. This was substantially more than the shares achieved by 

their SME and large services firm counterparts (table G.2).3

 The foreign client 

revenue share of both services and manufacturing SMEs grew substantially 

(46 percent) during 2005–09, with the largest jump (89 percent) in foreign 

revenue share experienced by services SMEs with 100 to 499 employees. 

Manufacturers’ foreign client sales appeared more vulnerable to the effects of the 

global economic recession, however, than did those of services firms. Between 

2008 and 2009, the foreign client revenues of services SMEs decreased by 

4 percent, and of manufacturing SMEs, by 8 percent. Large services firms 

achieved a revenue increase of 20 percent in 2009, whereas large manufacturing 

firms experienced a revenue decrease of 7 percent. These numbers track findings 

of a 2009 World Bank study examining the effects of the global economic 

recession on services trade. The study found that, in general, U.S. services 

 2 Foreign client sales are sales by U.S. firms to clients whose normal base of operation is not in 

one of the 50 U.S. states, Washington, DC, or Puerto Rico. 3

 European Commission, 2003 Observatory of European SMEs, 2003, 19. A study on 

internationalization by SMEs conducted by the European Commission in 2003 suggests a 

relationship between the export intensity of SMEs, measured as the share of firm revenue attributed 

to foreign client sales, and firm size. The study found that, generally, smaller SMEs have fewer 

opportunities than larger SMEs to enter foreign markets. However, among SMEs that are already 

engaged in international activities, export intensity varies only slightly between small and mediumsized firms. The study included firms in both the services and manufacturing sectors. 

G-5 
G-6 

TABLE G.2 Exporting profile of questionnaire respondents, 2009a

Average revenues 

from exports 

Export 

revenue as a 

share of total 

revenue 

Growth in export 

revenue over 

previous year

Average 

annual growth 

in export 

revenue, 

2005–09

Thousand $ (%)

Services

SMEs (employees<500) 869 (211) 19 (10) -4 (12) 46 (17)

Empl. <20 548 (188) 20 (11) -7 (13) 40 (23)

Empl. 20–99 2,471 (816) 16 (4) 34 (23) 55 (13)

Empl. 100–499 13,300 (5,756) 14 (3) -5 (5) 89 (33)

Large firms (employees>500) 142,300 (70,000) 9 (3) 20 (12) 65 (34)

Manufacturing

SMEs (employees<500) 12 (292) 23 (6) -8 (9) 46 (11)

Empl.<20 590 (340) 25 (6) -15 (9) 38 (14)

Empl. 20–99 1,100 (245) 10 (2) 36 (20) 65 (24)

Empl. 100–499 6,818 (936) 13 (2) 35 (17) 70 (18)

Large firms (employees>500) 571,800 (144,000) 24 (1) -7 (4) 48 (20)

Source: Data compiled from responses to USITC questionnaire. 

a

Numbers in parentheses denote standard deviations.

exports, as well as those from other countries, were less affected by the recession than 

exports of manufactured goods.4

Leading Foreign Markets

In 2009, the leading foreign markets by revenue share for U.S. services SMEs were Canada, 

Mexico, and the EU. Canada generated the single largest share of foreign client sales for U.S. 

services SME exporters within each employment category (table G.3). The EU stood second 

in terms of foreign revenue share among services SMEs with 20 to 99 employees and with 

100 to 499 employees. For services SMEs with less than 20 employees, Mexico ranked 

second in terms of foreign revenue share and the EU, third. For large services firms, foreign 

revenue share was highest in the EU, followed by “other Europe” and Canada.5

 Like services 

SMEs, manufacturing SMEs’ drew their highest share of foreign revenue from Canada; 

Canada was followed, however by “other Asia,” with the EU again coming in third. For large 

manufacturers, the three largest sources of foreign revenue were Canada, the European 

Union, and “other Asia,” with Mexico following closely behind. 

Marketing Channels 

Services SMEs, like manufacturing SMEs, earn a higher portion of foreign client revenues 

through cross-border exports (70 percent) than through any other channel of delivery (table 

G.4). The share of foreign revenues received through cross-border exports by services SMEs 

is greatest for firms with less than 20 employees (72 percent) and smallest for firms with 100 

to 499 employees (45 percent). Overall, as services SMEs become larger, the share of foreign 

revenues accounted for by cross-border exports decreases, while the share accounted for by 

affiliate transactions generally increases. Indeed, among large services firms, affiliate 

transactions accounted for 63 percent of foreign revenues in 2009, compared to 17 percent 

for cross-border exports. Among SMEs in the manufacturing sector, the share of foreign 

 4

 Borchert and Mattoo, “The Crisis-Resilience of Services Trade,” April 2009, 2–5. 5

 The category “other Europe” includes Russia. 
G-7 

TABLE G.3 Primary foreign markets for questionnaire respondents: Market share by country or region, 2009a (%) 

Canada Mexico EU27 

Other 

Europeb China 

Other 

Asiac

Latin 

Americad Othere

Services 

SMEs (employees <500) 35 (12) 18 (12) 16 (8) 2 (1) 4 (2) 12 (6) 3 (1) 11 (7) 

Empl. <20 35 (13) 20 (13) 15 (9) 2 (1) 4 (2) 12 (7) 2 (2) 11 (1) 

Empl. 20–99 31 (7) 2 (1) 25 (7) 1 (1) 6 (4) 14 (5) 15 (8) 6 (4) 

Empl. 100–499 28 (4) 9 (5) 27 (4) 4 (2) 2 (1) 18 (6) 4 (1) 8 (2) 

Large firms (employees 

>500) 13 (7) 2 (1) 41 (7) 19 (8) 2 (1) 8 (3) 8 (1) 6 (3) 

Manufacturing 

SMEs (employees <500) 31 (8) 5 (3) 20 (10) 8 (5) 3 (2) 24 (15) 8 (4) 2 (1) 

Empl. <20 30 (9) 4 (3) 19 (11) 9 (5) 3 (3) 27 (17) 7 (5) 1 (1) 

Empl. 20–99 34 (6) 8 (2) 25 (10) 1 (1) 4 (1) 9 (2) 11 (5) 8 (3) 

Empl. 100–499 37 (4) 9 (3) 25 (6) 2 (1) 3 (1) 13 (3) 6 (2) 4 (1) 

Large firms (employees 

>500) 30 (2) 11 (2) 24 (2) 3 (1) 6 (1) 14 (1) 6 (1) 6 (1) 

Source: Data compiled from responses to USITC questionnaire. 

a

Numbers in parentheses denote standard deviations. Data within rows do not add up to 100 percent because of 

rounding errors. b

Includes Russia. 

c

Includes Middle Eastern, East Asian, and South Asian countries. d

Includes Central American and Caribbean countries. e

Includes Australia, New Zealand, African countries, and other countries not included in the preceding columns. 
TABLE G.4 Foreign client revenue share by method of delivery, 2009

Physically or 

electronically shipped 

good or service 

Foreign client 

traveled to the 

U.S. Via affiliates 

Employees 

traveled to foreign 

market

Provided 

intellectual 

property to firms 

in foreign markets 

Licensed 

contracted foreign 

production with 

non-affiliated 

firms for products 

sold outside the 

U.S. Other 

Total foreign 

client revenue 

share 

 ——Percent—— 

Services firms  Empl.<20 72 6 8 6 0 0 9 100  Empl. 20–99 51 13 17 10 7 2 1 100  Empl. 100–499 45 9 15 22 2 1 5 100 

 Employees<500 70 6 8 7 1 0 8 100  Employees≥500 17

G-8 6 63 7 1 0 5 100 

Manufacturers 

 Empl.<20 72 0 23 1 0 0 3 100  Empl. 20–99 58 6 22 6 1 3 5 100  Empl. 100–499 57 4 22 5 1 9 1 100 

 Employees<500 71 1 23 2 0 1 3 100  Employees≥500 48 2 44 2 1 2 1 100 Source: Data compiled from responses to USITC questionnaire. Note: Because some questionnaire respondents replied to only part of the question used to capture data for this table (i.e., they ranked some, but not all of the delivery methods identified above), no 

statistical analysis was performed on the data. In addition, the data presented in this table are not comparable to data on cross-border trade and affiliate transactions presented in chapter 4 of this report because of differences in coverage and methodologies used to capture and report data. For more detail regarding questionnaire methodology, see appendix C.
G-9 

revenue attributed to cross-border exports also decreased with firm size. For large 

manufacturing firms, foreign revenues were almost evenly divided between cross-border 

exports (48 percent) and affiliate transactions (44 percent). 

Perceptions of Trade Impediments

This section presents the results of statistical difference of proportions tests that were used to 

test whether the proportion of SMEs rating a given trade impediment as “more burdensome” 

(4 or 5) was statistically larger than the proportion of large firms doing so. These results were 

discussed in chapter 6 of this report. Table G.5 presents the results for manufacturers, and 

table G.6 presents the results for services firms. One-sided tests of whether the SME 

proportion was larger than that of large firms were performed. In cases where the result was 

highly significant (the SME proportion is greater), the chi-squared test statistic is large, and 

the p-value (which is an estimate of the probability of obtaining a test statistic this large) has 

been rounded off to 0. In cases where the large-firm proportion exceeded that of the SME, 

the p-values are 1. 

Mann-Whitney tests were also performed on the ratings of impediments as an alternative 

means of analysis. This test uses rankings to compare the relative location of the entire 

distributions of SME and large firm responses and works well with ordinal discrete data, 

such as the 1–5 responses. If the distribution of SME responses is shifted to the right of (i.e., 

is greater than) the distribution of large-firm responses, there will be a large negative MannWhitney statistic. 6 This would be the case if SMEs find the impediments to be more 

burdensome than large firms. The results are reported in table G.7. For manufacturing, the 

null hypothesis of no significant difference between responses of SMEs and large firms was 

not rejected for six impediments: difficulty locating sales, foreign regulations, foreign sales 

not sufficiently profitable, foreign taxation, preference for local goods, and U.S. taxation. In 

other words, the test cannot determine whether SMEs’ responses indicated a greater burden 

than large firms in these instances. The null hypothesis was rejected (implying that the 

distribution of SME responses is shifted to the right) for the other barriers reported by the 

manufacturing sector and for all of the barriers reported by the services sector. The results 

are broadly similar to the proportions of firms that responded with a 4 or 5; however, they are 

not identical.7

 6

 This is a one-tailed test, and firms that reported not encountering the impediment were not 

included. 7

 Because the Mann-Whitney test is based on overall rankings, it would not be expected to 

provide identical results to the tests of proportions. 
G-10 

SME proportion Large proportion Chi-square P-value

Customs procedures 27.25 9.12 219.6 0

Difficulty establishing affiliates in foreign markets 18.55 5.89 123.1 0

Difficulty in receiving or processing payments 33.25 6.75 427.5 0

Difficulty locating sales prospects 11.53 6.11 36.2 0

Foreign regulations 25.78 23.67 3.2 0.0377

Foreign sales not sufficiently profitable 8.51 12.59 27.0 1

Foreign taxation issues 3.85 16.95 544.0 1

High tariffs 35.58 13.73 256.5 0

Insufficient IP protection 6.81 13.93 83.8 1

Lack of government support programs 29.24 10.27 175.9 0

Lack of trained staff 15.62 7.20 70.7 0

Language/cultural barriers 17.82 4.12 173.0 0

Obtaining financing 32.02 14.84 133.6 0

Preference for local goods/services in foreign market 35.58 17.36 178.2 0

Transportation/shipping costs 38.40 27.90 66.6 0

U.S. regulations 40.21 9.34 526.0 0

U.S. taxation issues 1.87 7.95 235.0 1

Unable to find foreign partners 12.47 4.11 64.6 0

Visa issues 6.08 2.03 28.9 0

TABLE G.5 Results of difference of proportion tests between SMEand large manufacturers rating impediments as a 4 or 5 

Source: USITC staff calculation from questionnaire data.

SME proportion Large proportion Chi-square P-value

Customs procedures 17.25 6.72 62.8 0

Difficulty establishing affiliates in foreign markets 42.36 7.71 379.4 0

Difficulty in receiving or processing payments 41.64 9.47 401.7 0

Difficulty locating sales prospects 23.38 31.72 44.1 0

Foreign regulations 29.95 27.11 2.9 0.0442

Foreign sales not sufficiently profitable 43.07 12.82 431.0 1

Foreign taxation issues 53.11 14.42 553.4 1

High tariffs 30.13 10.88 115.4 0

Insufficient IP protection 53.3 5.11 580.1 1

Lack of government support programs 27.4 2.55 205.5 0

Lack of trained staff 19.69 9.81 71.5 0

Language/cultural barriers 34.27 7.11 320.7 0

Obtaining financing 43.33 8.3 394.5 0

Preference for local goods/services in foreign market 25.08 10.64 89.9 0

Transportation/shipping costs 29.03 9.26 150.3 0

U.S. regulations 25.56 11.18 93.4 0

U.S. taxation issues 42.68 9.98 391.4 1

Unable to find foreign partners 27.98 3.58 262.7 0

Visa issues 30.51 8.82 169.7 0

TABLE G.6 Results of difference of proportion tests between SME and large services firms rating impediments as a 4 or 5 

Source: USITC staff calculation from questionnaire data.
G-11 

TABLE G.7 Test of whether SMEs rated impediments to trade higher than large firms

Manufacturing Services 

 

MannWhitney Pvalue MannWhitney Pvalue 

Customs procedures -22.5068 0 -12.8831 0 

Difficulty establishing affiliates in foreign markets -22.6787 0 -23.8881 0 

Difficulty in receiving or processing payments -10.3412 0 -21.6171 0 

Difficulty locating sales prospects 1.2079 0.8864 -5.0956 0 

Foreign regulations 13.8813 1.0000 -6.4947 0 

Foreign sales not sufficiently profitable -0.1650 0.4345 -13.7799 0 

Foreign taxation issues 5.9352 1.0000 -21.3172 0 

High tariffs -13.2658 0 -12.9276 0 

Insufficient IP protection -6.1967 0 -26.1382 0 

Lack of government support programs -2.7492 0.0030 -23.2069 0 

Lack of trained staff -2.1025 0.0178 -6.5338 0 

Language/cultural barriers -13.2402 0.0000 -8.1571 0 

Obtaining financing -3.8472 0.0001 -23.4189 0 

Preference for local goods/services in foreign market 4.9503 1.0000 -22.0046 0 

Transportation/shipping costs -11.3867 0 -19.8052 0 

U.S. regulations -18.3836 0 -11.1296 0 

U.S. taxation issues 15.6875 1.0000 -12.7754 0 

Unable to find foreign partners -8.0572 0 -8.5608 0 

Visa issues -17.7163 0 -8.9873 0 

Source: USITC staff calculation from questionnaire data.

Bibliography 

European Commission, 2003 Observatory of European SMEs: Internationalisation of SMEs, Luxembourg: 

Enterprise Publications, 2004. 

Borchert, Ingo and Aaditya Mattoo, “The Crisis-Resilience of Services Trade,” The World Bank, Policy 

Research Working Paper no. 4917, April 2009. 

APPENDIX H 

The Indirect Contribution of SMEs to U.S. 

Exports: Conceptual Model and Estimation 

Method

H-3 

Data Requirements and Methodology 

for Indirect Exports Analysis

Official statistics on exports of SMEs underestimate the full contribution of SMEs toward 

exports. To properly estimate the value-added exports produced by SMEs, the Commission 

has constructed a model that separates the contribution of value added by SMEs to gross 

exports from the value added from other sources. The results are reported in Chapter 5, and 

the methodology is detailed in this appendix. 

The analysis in this report extends the methodology of the input-output (IO) modeling 

literature to accommodate firms of different sizes. IO tables, compiled by the U.S. Bureau of 

Economic Analysis (BEA) based on U.S. Economic Census and administrative data, provide 

an estimate of how much of each product made in the economy is used as an intermediate 

input in each industry, along with the value contributed by factors of production such as labor 

and capital. The BEA publishes these data on a detailed industry basis, but does not provide 

them by firm size. In order to obtain SMEs’ indirect exports, the Commission divided annual 

IO tables published by the BEA into SME- and large firm-specific accounts. The major 

innovation in this approach is to conduct this separation by partitioning out each element in 

the IO table into SME-specific and large firm-specific elements. This is done for both inputs 

and outputs so that each inter-industry transaction cell in the original table is split into four 

cells. Other studies in the literature have used a similar methodology to partition IO tables 

published by national statistical agencies into sub-accounts, such as splitting Chinese IO 

tables into processing and normal export accounts.1

Estimating indirect exports by SMEs requires considerably more data disaggregated by firm 

size than are currently available. In principle, the following types of data, divided by firm 

size, are required: sales/receipts, payroll, employment, net taxes on production and imports, 

imports, use of intermediate inputs, and exports. Of these, good-quality sector-level 

production data are largely available from the Economic Census. Export data are unevenly 

covered, with certain sectors (such as manufacturing) covered comprehensively and several 

services sectors lacking any documented breakdown. No firm size-specific disaggregation is 

available for either import data or inter-industry transaction flows. As a result of these data 

gaps, this analysis relied on assumptions of some firm size-specific activities, thereby 

introducing additional uncertainty to the modeling exercise. A final issue was the level of 

aggregation: the BEA annual IO data are available for about 65 industries, whereas the export 

data available by firm size are generally more aggregated. The additional aggregation reduces 

the accuracy of estimates, particularly detailed industry-specific analysis. 

Conceptual Model

Recent literature demonstrates that only a small percentage of SMEs directly participate in 

international trade (Bernard et al., 2007). However, SMEs may engage in such trade 

indirectly by providing intermediate goods and services to exporters of all sizes. IO models 

are often used to quantify the extent of this indirect engagement in international trade in terms 

of value-added creation and employment. This study extends the traditional IO model to 

separately track the IO coefficients of large firms and SMEs. A formal approach to estimate 

the data that are not available will be described in the next section. 

 1

 Koopman, Wang, and Wei, “How Much of Chinese Exports Is Really Made in China?” 2008. 
H-4 

The IO table makes explicit the value of intermediate goods and services used by each 

industry in the economy. Rows represent supply of goods and services, while columns 

represent their use. Superscripts L and S represent large firms and SMEs respectively; 

represent the value of intermediate good i supplied by large firms and used by large firms 

in sector j. Similarly, is the value of intermediate good i supplied by large firms and used 

by SMEs in sector j; , the value of intermediate good i supplied by SMEs and used by 

large firms in sector j; and , the value of intermediate good i supplied by SMEs and used 

by SMEs in sector j. Value added―the value added by factors of production―is divided by 

firm size: represents the direct value added by large firms in industry j and represents 

direct value added by SMEs in industry j. 

LL

ij z

LS

ij z

SL

ij z

SS

ij z

L

j v Sj v

The expanded IO table with separate accounts for SMEs is displayed in figure H.1. Capital 

letters indicate block matrices whose dimensions are noted along the rows and columns. 

The direct IO coefficients for this expanded IO model can be written as: 

][][ L

j

LL

LL ij

ij

LL

x

z

aA  , ][][ L

j

SL

SL ij

ij

SL

x

z

aA  , ][][ L

j

L

vL j

j

L

v x

v

aA  ,

],[][],[][],[][ S

j

S

vS j

j

S

S v

j

SS

SS ij

ij

SS

S

j

LS

LS ij

ij

LS

x

v

aA

x

z

aA

x

z

aA    

where i represents a row and j represents a column. The elements and represent, 

respectively, large-firm and SME gross outputs in sector j. The matrices 

L

j x Sj x

LL A , LS A , SL A , 

and SS A represent the direct IO coefficients, while and are row vectors 

representing value added of the production sectors. The expanded IO model can be formally 

described by the following system of equations: 

L AvS Av





 































 



 





















S

L

S

L

SL SS

LL LS

S

L

Y

Y

X

X

AA

AA

X

X , (1)

uAuAuA L

v

LL SL  (2)

uAuAuA S

v

SL SS  (3)
FIGURE H.1: Input-output table with separate production account for SMEs

Intermediate use 

Production by 

large firms (L) 

Production by 

SMEs(S) 

Final use 

(C+I+G+E) 

Total supply 

Gross output + total 

imports 

DIM 1,2,..., N 1,2,..., N 4 2 

Production by 

large firms (L) 

1 

. 

. 

. 

N 

LL Z LS Z L Y LL X  M

Intermediate 

Inputs 

Production by 

SMEs(S) 

1 

. 

. 

. 

N 

SL Z SS Z S Y SS X  M

Value-added 

3 L V S V

Gross output 1 L X S X

where u is a 1-by-N unit vector. Equations (2) and (3) are adding-up constraints for the IO 

coefficients. Rearranging (1) yields: 





















 



 





















 







  



 



 

S

L

SL SS

LL LS

S

L

SL SS

LL LS

S

L

Y

Y

BB

BB

Y

Y

AIA

AAI

X

X

1

, (4) 

Each block in B denotes the N-by-N block Leontief inverse matrix. The Leontief inverse 

matrix, or total requirements matrix, gives the amount of each firm size’s gross output 

required for a one-unit increase in final demand (including exports) of each product by firm 

size. YL and YS

 are N-by-l vectors that denote the use of final goods by consumers, the 

government, investment and exports from large firms and SMEs respectively. 

Applying the algebra of the partitioned matrix inverse, the analytical solution for the Leontief 

inverse matrix can be expressed as: 





 





 

   



 





  

  

1 1 1

1 1 1

)( ( ))(

( ))( )(

SS LLSL SS SL LL LS

LL LS SS SL LSLL LL

SL SS

LL LS

BAAI AAIAAI

AAIAAI AIAB

BB

BB (5) 

Using (5), the value of total gross exports can be decomposed into its value-added sources by 

firm sizes. For example, the indirect value added produced by SMEs but embodied in large 

firms’ exports can be computed as: 

S ' 1 ' '1 IV )( )( L

SLSSS LL

vL

S SS LLSL

vL

SLS

v EAIABAEBAAIAEBA       . (6) 

where is the row vector of exports by large firms. Value added is contributed by several 

factors of production, including capital, labor, and land. The individual contributions of each 

factor can also be estimated—for example, the payments to labor (and the number of jobs) 

supported by value added exported indirectly through large firms. Let be total

EL

k Lj

H-5 
employment of firm size k in sector j. Define ][][ k

j

k

k j

lj

k

l

x

L

aa  as the direct labor 

coefficients (the labor required per unit of output) for each firm size in sector j, is a 

diagonal matrix of labor coefficients for firm size k. Substituting for in equation (6) 

yields an estimate for the indirect employment effect of large firms’ exports on SMEs.

k Al

S AlS Av

Estimation Method

Equation (6) allows the Commission to compute the indirect value-added and employment 

effects on SMEs of large firms’ exports for each industry as well as on an aggregate basis. 

However, statistical agencies typically report only a traditional IO matrix A, and not the 

disaggregated block matrices ALL, ALS, ASL and ASS separately. Therefore, it is necessary to 

develop a method to estimate them based on available information. The method proposed is a 

quadratic programming model based on combining information disaggregated by firm size 

from the Economic Census and conventional IO tables (that do not contain information on 

firm size) from the BEA. 

IO tables include data on sector-level total output, value added, imports, and exports. The 

Economic Census provides data on total sales/receipts and annual payroll data broken down 

by large firms and SMEs. SBA also publishes estimates of GDP by industry and business size 

on a 2-digit NAICS industry basis. Total sales/receipts data in the Economic Census were 

used to allocate gross output to each firm size within a sector, while annual payroll data from 

the Economic Census were used to split labor and non-labor components of the value added. 

For some industries, there are data on exports broken down by firm size. When such data are 

available, they are used to split the sector-level export data of the BEA annual IO tables. 

There are also data available on shares of imports by firm type in the Linked-Longitudinal 

Trade Transaction Database (LFTTD) analogous to the share of exports by firm types 

obtained from the Census Bureau. However, these data are confidential and could not be 

accessed in time to be used in this report. Instead, the imports by large firms and SMEs were 

treated as variables in the model rather than as known parameters. 

The following data are observable from the standard IO table (not disaggregated by firm 

size):

: gross output of sector i; i x

: goods i used as intermediate inputs in sector j; ij z

: value added in sector j; j v

: total exports of sector i goods; i e

: total imports of sector i goods; and mi

: total final demand excluding exports of goods i. i y

H-6 
Using these data from the IO table to determine sector-level totals ensures that the balancing 

conditions in official IO accounts are always satisfied, and that the extended IO table with 

separate accounts that are split for large firms and SMEs can be aggregated back to the 

standard IO table. Data for , , and are split by firm size based on information from 

the Economic Census; together with data for , , and from the BEA annual IO 

tables, they enter the programming model as constants. 

i x j v i e

ij z mi i y

It is necessary to estimate transactions [zij

LL], [zijLS], [zijSL], and [zijSS], as well as sector-level 

domestic final demand [yj

L

], and [yj

S

], since such detailed firm size-specific information 

cannot be obtained from the Economic Census. This estimation is cast as a constrained 

optimization problem. Initial values are selected based on certain proportionality assumptions 

(discussed in the next section) and using the data available from the Economic Census and 

the BEA annual IO tables. However, these initial values are not guaranteed to satisfy various 

economic and statistical restrictions on the data. Using the notation previously defined, the 

programming model is specified by the objective function in equation (7), subject to the 

seven constraints given in equations (8) through (14). The initial values for the same variables 

in equation (7) are denoted with an additional zero. Variables without a zero (the z’s, y’s and 

m’s) are unknowns that are solved for by using the model. Symbols with a zero in equations 

(8) through (14) represent parameters in the model and are kept constant during the 

optimization process. 

 

  

  

 



 



  

   

   

   

K

j

S

j

S

j

S

j

L

j

L

j

L

j K

j

K

j

S

j

S

j

S

j

L

j

L

j

L

j K

j=1

SS

ij

SS

ij

SS

ij K

=i

K

=i

K

i

K

j

SL

ij

SL

ij

SL

ij

LS

ij

LS

ij

LS

j K

j

K

=1i

LL

ij

LL

ij

LL

ij K

i

K

j

m

mm

m

mm 

y

yy

y

yy

 +

z

zz

 + 

z

zz

z

zz zzz

 = S 

1

2 2

1

1

2 2 2

11

1 1

2 2

1

2

1 1

0

)0(

0

)0(

0

)0(

0

)0(

0

)0(

)0(

0

)0(

0

)0( Min

 (7) 

L

mx =eyzz i

L

i

L

i

L

i

LS

ij

K

j

LL

ij    

 00)( 1

 (8) 

 mx =eyzz S

i

S

i

S

i

S

i

SS

ij

K

j

SL

ij  



  00)( 1

 (9) 

 x =vzz 

L

j

L

j

SL

ij

K

j

LL

ij 00)( 1

  

 (10)

 x =vzz S

j

S

j

SS

ij

K

i

LS

ij 00)( 1

  

 (11)

 zzzzz ij

SS

ij

SL

ij

LS

ij

LL

ij  = 0 (12)

 yyy i

S

i

L

i  = 0 (13) 

i mmm Si

L

i  = 0 (14) 

H-7 
H-8 

 

These seven constraints have straightforward economic interpretations. Equations (8) and (9) 

are supply and use balancing (row sum) constraints for the expanded IO account. They state 

that total gross output by each type of firm in sector, i plus their respective imports, must 

equal the sum of their use of intermediate inputs, their exports, and their delivery to final 

domestic users in that sector. Equations (10) and (11) are production and cost balancing 

(column sum) constraints for the expanded IO account. They define the value of gross output 

by each type of firm in sector j as the sum of intermediate inputs and primary factors used in 

the production process. Equations (12) to (14) are a set of adding-up constraints to ensure that 

the solution from the model sums to official statistics in the BEA annual IO tables on sectorlevel inter-industry transactions, domestic final demand, and imports. 

Data Sources and Model Variable Initialization

The model parameters and initial values of model variables are derived by combining 

industry level IO data from the most recent versions of the BEA annual IO tables with 

information on gross output, annual payroll, and employment from the 2002 and 2007 

Economic Censuses.2

 There are 65 NAICS industries and 67 goods and services in the BEA 

annual make and use tables. They were first aggregated into 20 industries and 22 goods and 

services to match the sector classification of gross output (total sales or receipts), 

employment, and annual payroll information received from the Census Bureau. The 

aggregated version of the BEA annual make and use tables was converted into symmetric 

industry-by-industry IO tables based on the “fixed product sales structure” assumption 

(Model D).3

 Each industry’s gross output in the resulting symmetric industry-by-industry IO 

table was split into large firms and SMEs based on their share of total sales or receipts, 

computed from the 2002 and 2007 Economic Censuses. The labor compensation and nonlabor components of value added in the symmetric industry-by-industry IO tables (net taxes 

on production and imports and operating surplus) were allocated by firm size based on annual 

payroll data from the Economic Census. Total intermediate inputs by industry and firm types 

were obtained by subtracting total value added from the corresponding gross outputs. 

Thus all the parameters x0k

j and v0kj in the model, as well as each sector’s total intermediate 

inputs were obtained from reliable data sources, which constrain the model solution to a 

convex set. To allocate each sector’s total intermediate inputs (x0k

j - v0kj) by firm size into 

transactions within and between the two firm size categories and within and between 

industries and initialize all the z0ij’s, two additional assumptions are made: 

(1) The splitting of each use industry’s total intermediate inputs into each firm size is based 

on their respective shares in total intermediate inputs. The shares are listed in column (5) of 

table H.1. For example, large firms used 81.5 percent of total manufacturing intermediate 

inputs in 2002; the remaining 18.5 percent was used by SMEs. These shares are derived 

from official data listed in table H.1. The inputs from all other sectors used in the manu2

 Updated versions of the BEA annual IO tables were released on May 25, 2010, as part of a comprehensive 

revision of the annual industry accounts. Statistics for all years were prepared for industries defined according to 

the 2002 NAICS. 3

 Model D is one of the four basic transformation models used to convert supply and use tables into symmetric 

IO tables. Because one industry may produce multiple products, it assumes each product has its own specific sales 

structure, irrespective of the industry in which it is produced. Here “sales structure” means the proportions of a 

product sold to the respective intermediate and final users. It retains the links to the national accounts data and 

basic statistics, and requires fewer resources to compile than other models. The transformation of the values along 

the columns of the use matrix can be expressed as the pre-multiplication of the use matrix with a transformation 

matrix, which is the inverse of the product mix of an industry. Refer to Chapter 11, “Transformation of Supply and 

Use Tables to Symmetric Input-Output Tables” in Eurostat Manual of Supply, Use and Input-Output Tables, 2008 

edition for technical details.
H-9 

TABLE H.1 Data from Economic Census used to split the BEA annual Input-Output tables (%)

NAICS Description Gross output Value-added Inter. Inputs Exports 

Employment 

(1,000) 

(1) (2) (3) (4) (5) (6) (7) 

Firm size Large SMEs Large SMEs Large SMEs Large SMEs Large SMEs 

2002 

11 Agriculture, forestry, fishing, and hunting 17.2 82.8 16.4 83.6 17.8 82.2 42.0 58.0 24 157 

21 Mining 76.6 23.4 64.7 35.3 93.1 6.9 81.6 18.4 261 204 

22 Utilities 85.1 14.9 88.0 12.0 81.3 18.7 47.6 52.4 538 111 

23 Construction 20.5 79.5 18.0 82.0 23.1 76.9 80.2 19.8 946 5,361 

31, 32, 33 Manufacturing 75.2 24.8 63.5 36.5 81.5 18.5 85.3 14.7 8,299 6,095 

42 Wholesale trade 58.8 41.2 42.8 57.2 98.5 1.5 34.5 65.5 2,181 3,679 

44, 45 Retail trade 52.4 47.6 51.0 49.0 56.2 43.8 43.8 56.2 8,459 6,361 

48, 49a Transportation and warehousing 64.8 35.2 64.9 35.1 64.6 35.4 40.7 59.3 2,090 1,491 

51 Information 83.6 16.4 77.4 22.6 90.3 9.7 83.4 16.6 2,632 904 

52 Finance and insurance 82.8 17.2 72.5 27.5 96.6 3.4 29.1 70.9 4,451 1,963 

53 Real estate and rental and leasing 37.3 62.7 33.3 66.7 47.5 52.5 19.0 81.0 630 1,387 

54 Professional, scientific, and technical 

services 

39.6 60.4 38.3 61.7 42.4 57.6 46.2 53.8 2,523 4,523 

55 Management of companies and 

enterprises 

84.6 15.4 90.3 9.7 72.5 27.5 78.6 21.4 2,536 377 

56 Administrative and waste management 

services 

54.0 46.0 59.8 40.2 43.1 56.9 38.3 61.7 5,014 3,286 

61 Educational services 58.5 41.5 58.3 41.7 59.0 41.0 78.6 21.4 1,427 1,275 

62 Health care and social assistance 55.4 44.6 53.5 46.5 58.3 41.7 78.6 21.4 7,755 7,145 

71 Arts, entertainment, and recreation 36.0 64.0 30.3 69.7 45.1 54.9 2.0 98.0 608 1,193 

72 Accommodation and food services 43.9 56.1 44.0 56.0 43.9 56.1 78.6 21.4 3,962 6,087 

81 Other services, except government 15.9 84.1 17.1 82.9 14.1 85.9 32.3 67.7 750 4,670 

Total 61.2 38.8 54.4 45.6 66.7 33.3 69.5 30.5 56,034 56,366 

2007 

11 Agriculture, forestry, fishing, and hunting 17.2 82.8 17.9 82.1 16.8 83.2 42.0 58.0 28 144 

21 Mining 76.6 23.4 64.7 35.3 89.3 10.7 81.6 18.4 419 282 

22 Utilities 82.9 17.1 86.9 13.1 76.9 23.1 47.6 52.4 512 110 

23 Construction 21.6 78.4 18.8 81.2 24.4 75.6 80.2 19.8 1,077 6,190 

31, 32, 33 Manufacturing 76.0 24.0 62.2 37.8 82.8 17.2 84.3 15.7 7,402 5,918 

42 Wholesale trade 57.5 42.5 45.1 54.9 86.4 13.6 37.2 62.8 2,329 3,636 

44, 45 Retail trade 56.6 43.4 55.1 44.9 60.4 39.6 43.8 56.2 9,621 6,139 

48, 49a Transportation and warehousing 64.6 35.4 67.3 32.7 61.6 38.4 40.7 59.3 2,777 1,618 

51 Information 83.5 16.5 77.9 22.1 89.6 10.4 78.4 21.6 2,522 877 

52 Finance and insurance 81.6 18.4 72.7 27.3 90.7 9.3 63.4 36.6 4,414 2,135 

53 Real estate and rental and leasing 40.7 59.3 35.7 64.3 51.8 48.2 52.8 47.2 721 1,503 

54 Professional, scientific, and technical 

services 

42.5 57.5 43.8 56.2 39.6 60.4 50.5 49.5 3,185 4,995 

55 Management of companies and 

enterprises 

85.1 14.9 91.2 8.8 73.9 26.1 78.6 21.4 2,738 384 

56 Administrative and waste management 

services 

54.2 45.8 62.6 37.4 38.6 61.4 36.6 63.4 6,259 3,724 

61 Educational services 62.5 37.5 60.3 39.7 66.8 33.2 78.6 21.4 1,676 1,364 

62 Health care and social assistance 57.5 42.5 56.2 43.8 59.5 40.5 78.6 21.4 8,808 7,990 

71 Arts, entertainment, and recreation 39.0 61.0 32.7 67.3 48.3 51.7 23.3 76.7 695 1,313 

72 Accommodation and food services 46.3 53.7 46.6 53.4 45.9 54.1 78.6 21.4 4,710 6,855 

81 Other services, except government 16.7 83.3 18.8 81.2 13.3 86.7 38.4 61.6 843 4,677 

Total 61.7 38.3 56.1 43.9 66.9 33.1 71.6 28.4 60,737 59,867 

Source: 2002 and 2007 Economic Census, special tabulation by U.S Census Bureau, except intermediate inputs and exports. 

a

Except NAICS industry 491. 

b

Column (3) was computed from total sales or receipts; Column (4) was computed from annual payroll; Column (5) was computed based on the 

difference between gross output and value-added after splitting the symmetric industry-by-industry IO tables generated from the BEA annual make and use 

tables according to (3) and (4). In column (6), manufacturing and wholesale trade are based on USITC publication 4125; NAICS industries 51–54, 56, 71, 

and 81 are based on the Survey of U.S. Service Firms conducted by the U.S. Census Bureau. Other sector shares were based on the OECD Trade by 

Enterprise Characteristics Database (pre-release version). 
facturing industry are then assumed to be split between large firms and SMEs in the same 

81.5/18.5 proportion. 

(2) The share of intermediate inputs from each source industry is determined by the 

proportion of each firm size’s gross output share in the producing industry. For example, if 

SMEs produce 20 percent of the country's total electricity, then 20 percent of intermediate 

electricity input used by both large firms and SMEs will be provided by SMEs. 

The splits generated by the application of these two assumptions can be written in 

mathematical notation as follows: 

ij

jj

L

j

L

j

i

L

LL i

ij z

vx

vx

x

x

z 0

)00(

)00(

0

0 0 

  (15) 

ij

jj

L

j

L

j

i

L

LS i

ij z

vx

vx

x

x

z 0

)00(

)00(

0

0 0 

  (16) 

ij

jj

S

j

S

j

i

S

SS i

ij z

vx

vx

x

x

z 0

)00(

)00(

0

0 0 

  (17) 

ij

jj

L

j

L

j

i

S

SL i

ij z

vx

vx

x

x

z 0

)00(

)00(

0

0 0 

  (18) 

 Total domestic demand (private consumption, government spending, fixed capital 

investment, and inventory changes) of sector i in the symmetric industry-by-industry IO 

tables was split into products produced by large firms and SMEs in a similar way: 

L

i

L

i

N

i

ij

i

L

L i

i

L

i mez

x

x

xy 000

0

0 0

1

   

 (19) 

S

i

S

i

N

i

ij

i

S

S i

i

S

i mez

x

x

xy 000

0

0 0

1

   

 (20) 

The underlying assumption is that the supply of intermediate products for domestic use from 

each firm type in a particular sector is proportional to their gross output in that industry. 

From equations (15) to (20), it is clear that the additional information needed to make the 

model fully initialized and operational is the relative proportion of large firms and SMEs in 

the nation’s exports and imports at the sector level.

The figures for export share by large firms and SMEs for manufacturing and wholesale 

industries were obtained from “A Profile of U.S. Exporting Companies,” 2002 and 2007, 

published by U.S. Department of Commerce, U.S. Census Bureau, Foreign Trade Division.4

Data for seven additional service sectors (2002 NAICS 51–54, 56, 71, and 81) came from the 

U.S. Census. The remaining 10 sectors were split based on export data obtained from the 

OECD Trade by Enterprise Characteristics Database (pre-release version). Annual payroll, 

 

H-10 

4

 There data were also presented in the Commission’s January 2010 report on SMEs. 
employment, and receipts data by firm size were obtained from the U.S. Census Bureau via 

the SBA Office of Advocacy.5

 All data used in splitting the BEA annual IO tables are listed 

in table H.1. Parameters in table H.1 mainly used data from the 2002 and 2007 Economic 

Censuses, which are more reliable because of the large sample size; however, using annual 

payroll data only to split total value-added may underestimate SMEs’ share. 

Since it was not possible to obtain information on import shares by firm size, assumptions 

were made based on the available literature. Bernard et al. (2007) point out that there is a 

strong correlation (0.87) between sectors with high shares of importing firms and those with 

high shares of exporters: 41 percent of exporting firms are importers, while 79 percent of 

importers also export. Therefore, the model is initialized by assuming that the SME shares of 

imports are identical to the shares of exports in each sector. Imports by firm type are treated 

as variables, while exports are treated as parameters in the estimation model, so that the 

impact of such an assumption on the estimation results will be minimized by the optimization 

procedure.6

Because U.S. firms use many inputs from foreign suppliers, these foreign inputs subsequently 

become part of the value of U.S. gross exports. To avoid overestimating the contribution of 

SMEs to U.S. exports, imported content needs to be subtracted from the official gross exports 

statistics. Imported content (i.e., foreign value added) of U.S. gross exports is computed by 

adopting the measure proposed by Hummels, Ishii, and Yi in 2001.7

1 Import exports grossin content )(  M D AIuA , (21) 

where AM and AD are the imported and domestic IO coefficient matrices. 

Two methods can be used to split the import matrix AM from the symmetric industry-byindustry IO coefficient matrix A computed above: the proportionality method described by 

the National Research Council8

 (2006), and converting the BEA annual imports use tables 

into symmetric industry-by-industry imports IO tables based on the fixed product sales 

structure assumption (Model D). The first method was used in generating the main results 

presented in Chapter 5. This method produced estimates of U.S. jobs supported by exports 

that were very similar to those recently reported by the U.S. Department of Commerce. The 

second method produced a higher estimate of imported value added and is used in the 

sensitivity analysis below. 

It would be possible to split both AM and AD by firm type (large firm and SME) if reliable 

data on imports by firm types were to become available. Since the Commission does not have 

access to such data, this analysis applied the same AM matrix to each type of firms. Thus the 

Commission assumed that both large firms and SMEs use the same proportion of imported 

intermediate inputs in their production process to derive the estimates reported in this report. 

This quadratic programming model is implemented in GAMS (Brooke et al., 2005). The main 

results are presented in Chapter 5 of this report. 

H-11 

 5

 Data available at http://www.sba.gov/advo/research/data.html#us. 6

 The imports only enter the estimation model in equations (19) and (20). Because of the large size of the U.S. 

economy, imports only make up a relative small portion of the total absorption (supply). For example, the import 

proportion was 7 percent in 2002 and 9 percent in 2007 based on the BEA annual use tables. 7

 Hummels, Ishii, and Yi, “The Nature and Growth of Vertical Specialization,” 2001. 

8

 National Research Council, “Analyzing the U.S. Content,” 2006. 
H-12 

Sensitivity Analysis

As has been noted, gaps exist for firm size-specific data. In order to provide some indication 

about how these gaps affect model results, sensitivity analysis was performed on several key 

assumptions. Three sensitivity scenarios are examined below. The first scenario tests 

assumptions about the split of value added between large firms and SMEs. The second tests 

the assumptions about intermediate input flows across firm sizes. The third tests assumptions 

about imports. In each of the three cases, the results indicate that the model is not extremely 

sensitive to the assumption under examination. 

Alternative Value-Added Assumption

The first sensitivity scenario examined the value-added parameter assumptions. The SBA 

commissioned a study in 2007 to estimate the small business share of GDP.9

 The values 

reported in this study—in particular, the breakdown by firm size of the noncompensation 

component of value added—present an alternative to the value-added parameters used in the 

current study. The SBA estimates of SMEs’ GDP shares are used to split data for j v , by firm 

size and NAICS industry. The SBA estimates that SMEs account for a higher share of the 

non-labor component of value added, including taxes paid and profit earned, than calculated 

by the methodology presented in this report.10 Parameters in table H.2 are based on valueadded shares for SMEs from the SBA report. The result, displayed in table H.2, is a 4 

percentage point increase in the share of value-added exports by SMEs. In the new scenario, 

45 percent of total value-added exports are attributable to SMEs compared with 41 percent in 

the original scenario. These results indicate that the model is robust to such parameter 

changes: despite a fairly substantial change to the underlying assumptions of the data, the 

results changed only slightly, and the overall message regarding the importance of SMEs in 

exports is unchanged. 

This section compares in further detail the results of the value-added parameters estimated by 

the SBA with those obtained in our baseline analysis. The Commission decomposed U.S. 

gross exports by source of value added based on the model parameters listed in table H.1—

the baseline parameter values; the estimation results are reported in table H.3. A further 

decomposition of SMEs’ value-added exports is listed in table H.4. The analogous tables for 

the parameters listed in table H.2 which come from the SBA report, are reported in tables H.5 

and H.6. 

Alternative Intermediate Input Assumptions

The second sensitivity scenario checks the intermediate-inputs assumptions. The data for the 

IO tables are not collected by firm size, so the values for purchases and sales of intermediate 

inputs by firm size and sector are unknown. They therefore must be estimated, based on the 

shares of sector revenue by firm size at the aggregate level, which are known. These values 

are entered into the constrained optimization model as initial values. To test the sensitivity of 

the results to such an initialization, the Commission performed a sensitivity analysis. In order 

to do so, it was necessary to obtain sensible values for alternate assumptions. This was done 

 9

 Kobe, The Small Business Share of GDP, 1998–2004, 2007. 10 The share of taxes and net capital income receipts are reversed. In the current study, the share of 

noncompensation components of GDP from SMEs is 43.9 percent, less than the share from large firms. In the 

SBA study, the SME share of taxes and net income are substantially higher, 55.3 percent. These results are driven 

by the assumption that noncorporate businesses are all small businesses. 
TABLE H.2 Data from SBA: GDP by business size used to split the BEA annual Input-Output tables (%)

NAICS Description Gross output 

Value-added 

compensation 

to labor 

Value-added 

non labor 

component Inter. Inputs Exports 

(1) (2) (3) (4) (5) (6) (7) 

Firm size Large SMEs Large SMEs Large SMEs Large SMEs Large SMEs 

2002 

11 Agriculture, forestry, fishing, and 

hunting 58.8 41.2 43.5 56.5 53.9 46.1 84.7 15.3 34.5 65.5 

21 Mining 52.4 47.6 51.9 48.1 53.9 46.1 51.5 48.5 43.8 56.2 

22 Utilities 64.8 35.2 65.9 34.1 44.9 55.1 71.4 28.6 40.7 59.3 

23 Construction 83.6 16.4 77.7 22.3 81.4 18.6 87.8 12.2 83.4 16.6 

31, 32, 33 Manufacturing 71.5 28.5 72.7 27.3 45.2 54.8 87.7 12.3 29.1 70.9 

42 Wholesale trade 37.3 62.7 33.4 66.6 18.5 81.5 82.7 17.3 19.0 81.0 

44, 45 Retail trade 39.6 60.4 38.2 61.8 11.5 88.5 61.9 38.1 46.2 53.8 

48, 49a Transportation and warehousing 70.3 29.7 72.0 28.0 5.0 95.0 87.9 12.1 78.6 21.4 

51 Information 54.0 46.0 60.3 39.7 25.2 74.8 58.0 42.0 38.3 61.7 

52 Finance and insurance 58.5 41.5 58.5 41.5 48.4 51.6 60.6 39.4 78.6 21.4 

53 Real estate and rental and leasing 55.4 44.6 48.9 51.1 26.0 74.0 71.6 28.4 78.6 21.4 

54 Professional, scientific, and technical 

services 36.0 64.0 30.9 69.1 16.7 83.3 53.9 46.1 2.0 98.0 

55 Management of companies and 

enterprises 43.9 56.1 44.6 55.4 38.1 61.9 46.0 54.0 78.6 

H-13 21.4 

56 Administrative and waste 

management services 15.9 84.1 17.2 82.8 9.9 90.1 17.8 82.2 32.3 67.7 

61 Educational services 56.5 43.5 51.4 48.6 45.0 55.0 70.5 29.5 69.5 30.5 

62 Health care and social assistance 58.8 41.2 43.5 56.5 53.9 46.1 84.7 15.3 34.5 65.5 

71 Arts, entertainment, and recreation 52.4 47.6 51.9 48.1 53.9 46.1 51.5 48.5 43.8 56.2 

72 Accommodation and food services 64.8 35.2 65.9 34.1 44.9 55.1 71.4 28.6 40.7 59.3 

81 Other services, except government 83.6 16.4 77.7 22.3 81.4 18.6 87.8 12.2 83.4 16.6 

Total 71.5 28.5 72.7 27.3 45.2 54.8 87.7 12.3 29.1 70.9 

2007 

11 Agriculture, forestry, fishing, and 

hunting 17.2 82.8 17.9 82.1 17.9 82.1 16.8 83.2 42.0 58.0 

21 Mining 76.6 23.4 64.7 35.3 70.2 29.8 84.9 15.1 81.6 18.4 

22 Utilities 82.9 17.1 86.9 13.1 74.0 26.0 91.8 8.2 47.6 52.4 

23 Construction 21.6 78.4 18.8 81.2 9.2 90.8 27.4 72.6 80.2 19.8 

31, 32, 33 Manufacturing 76.0 24.0 62.2 37.8 70.2 29.8 81.0 19.0 84.3 15.7 

42 Wholesale trade 57.5 42.5 45.1 54.9 54.4 45.6 76.0 24.0 37.2 62.8 

44, 45 Retail trade 56.6 43.4 55.1 44.9 54.4 45.6 61.1 38.9 43.8 56.2 

48, 49a Transportation and warehousing 64.6 35.4 67.3 32.7 47.5 52.5 69.8 30.2 40.7 59.3 

51 Information 83.5 16.5 77.9 22.1 84.8 15.2 85.1 14.9 78.4 21.6 

See footnotes at end of table. 
TABLE H.2 Data from SBA: GDP by business size used to split the BEA annual Input-Output tables (%)—Continued

NAICS Description Gross output 

Value-added 

compensation 

to labor 

Value-added 

Non labor 

component Inter. Inputs Exports 

52 Finance and insurance 70.3 29.7 72.7 27.3 43.1 56.9 81.7 18.3 63.4 36.6 53 Real estate and rental and leasing 40.7 59.3 35.7 64.3 18.3 81.7 88.3 11.7 52.8 47.2 

54 Professional, scientific, and technical 

services 42.5 57.5 43.8 56.2 14.8 85.2 60.9 39.1 50.5 49.5 

55 Management of companies and 

enterprises 66.0 34.0 62.4 37.6 4.0 96.0 88.8 11.2 78.6 21.4 

56 Administrative and waste 

management services 54.2 45.8 62.6 37.4 26.4 73.6 55.8 44.2 36.6 63.4 

61 Educational services 62.5 37.5 60.3 39.7 49.2 50.8 69.4 30.6 78.6 21.4 

62 Health care and social assistance 57.5 42.5 56.2 43.8 27.1 72.9 67.3 32.7 78.6 21.4 

71 Arts, entertainment, and recreation 39.0 61.0 32.7 67.3 17.8 82.2 57.9 42.1 23.3 76.7 

72 Accommodation and food services 46.3 53.7 46.6 53.4 37.8 62.2 49.7 50.3 78.6 21.4 

81 Other services, except government 16.7 83.3 18.8 81.2 10.0 90.0 18.2 81.8 38.4 61.6 

Total 57.5 42.5 52.9 47.1 44.7 55.3 70.7 29.3 71.6 28.4 

Source: 2002 and 2007 Economic Census and SBA report “The Small Business Share of GDP, 1998-2004”. 

aExcept NAICS industry 491. bAll shares in column (3) were computed from total sales or receipts data from the 2002 and 2007 Economic Census except NAICS 

industries 52 and 55; the 2002 shares in column (4) were taken from the SBA report except for NAICS industries 11, 21 and 3, and all 2007 shares were computed from annual payroll data from the Economic Census; the 2002 shares in column (5) were taken from the SBA report; 2007 shares were based on data from the latest year available (2004) in the same report; the missing industry (NAICS 11) was split based on 

annual payroll data from the Economic Census; column (6) shares were computed based on the difference between gross output and valueadded after splitting the symmetric industry-by-industry IO tables generated from the BEA annual make and use tables according to the 

shares in columns (3), (4), and (5). In column (7), manufacturing and wholesale trade is based on USITC publication 4125; NAICS 51–54, 56, 

71, and 81 are based on the Survey of U.S. Service Firms conducted by the U.S. Census Bureau. Other sector shares were based on the OECD Trade by Enterprise Characteristics Database (pre-release version). 

H-14 

There are inconsistencies between Economic Census receipts data and SBA value-added share data in NAICS industries 52 and 55: the 

differences between gross output and value-added becomes negative. Therefore, the average of the receipt share computed from the Economic Census and the GDP share from SBA report was used to split the gross output of these two NAICS industries in the IO tables. 
H-15 

TABLE H.3 Decomposition of U.S. gross exports by sources of value-added based on data from the Economic Census (millions of U.S. $) 

2002 2007 

Sources 

Large 

firms SMEs Government 

Second. 

goods 

and rest 

of world 

adjust. Total 

Large 

firms SMEs Government 

Second. 

goods 

and rest 

of world 

adjust. Total 

Total gross exports 560,618 246,109 2,751 97,177 906,656 961,920 382,301 4,595 152,528 1,501,344 

Direct value-added 

in exports 

201,872 167,357 1,726 0 370,955 347,608 240,587 2,808 0 591,004 

Total value-added 

exports 

443,185 356,639 9,655 0 809,478 774,447 559,708 14,662 0 1,348,816 

Decomposition (1)a

Total foreign valueadded 

75,513 60,767 736 0 137,016 158,094 114,258 1,396 0 273,748 

Total domestic 

value-added 

367,672 295,873 8,918 0 672,463 616,352 445,450 13,266 0 1,075,068 

Indirect domestic 

value-added 

165,800 128,516 7,192 0 301,508 268,744 204,863 10,458 0 484,064 

Decomposition (2)b

Total foreign valueadded 

46,193 37,173 399 0 83,765 109,732 79,305 874 0 

189,911 

Total domestic 

value-added 

396,991 319,466 9,256 0 725,713 664,715 480,403 13,787 0 

1,158,905 

Indirect Domestic 

value-added 195,119 152,110 7,529 0 354,758 317,107 239,815 10,979 0 567,901 

Source: USITC staff estimates based on BEA annual IO tables and parameters listed in table H.1. 

a

Assumes the foreign content share of U.S. gross exports was 17.0% in 2002 and 20.4% in 2007. b

Assumes the foreign content share of U.S. gross exports was 10.4% in 2002 and 14.2% in 2007. 
H-16 

TABLE H.4 Decomposition of SMEs’ value-added exports based on data from the Economic Census (millions of U.S. dollars) 

Decomposition (1)a Decomposition (2)b

2002 2007 2002 2007 

Total domestic value-added 295,873 445,450 319,466 480,403 

Direct value-added in exports 167,357 240,587 167,357 240,587 

Indirect value-added in exports 128,516 204,863 152,110 239,815 

SME value-added embodied in large firm exports 105,132 161,792 123,600 190,442 

Rest of SMEs' indirect value-added exports 23,384 43,070 28,510 49,374 

Large firm exports generated-employment for SMEs (1000) 1,329 1,669 1,441 1,804 

Source: ITC staffs estimates based on BEA annual IO tables and parameters listed in table H.1. 

a

Assumes the foreign content share of U.S. gross exports was 17.0% in 2002 and 20.4% in 2007. b

Assumes the foreign content share of U.S. gross exports was 10.4% in 2002 and 14.2% in 2007. 
TABLE H.5 Decomposition of U.S. gross exports by sources of value-added based on data from the SBA (millions of U.S. $) 

2002 2007 

Sources 

Large 

firms SMEs Government 

Second 

goods 

and rest 

of world 

adjust Total 

Large 

firms SMEs Government 

Second 

goods 

and rest 

of world 

adjust Total 

Total gross exports 560,618 246,109 2,751 97,177 906,656 961,920 382,301 4,595 152,528 1,501,344 Direct valueadded in 

exports 

200,487 171,027 1,726 0 373,241 336,063 248,327 2,808 0 587,198 

Total valueadded 

exports 

424,165 375,705 9,608 0 809,478 732,167 601,942 14,708 0 1,348,816 

Decomposition(1)a 

Total foreign 

value-added 

72,272 64,015 733 0 137,020 149,463 122,879 1,400 0 273,743 

Total domestic 

value-added 

351,893 311,690 8,875 0 672,458 582,703 479,062 13,307 0 1,075,073 

Indirect 

domestic value-added 

151,406 140,663 7,149 0 299,218 246,640 

H-17 

230,735 10,499 0 487,875 

Decomposition (2)b

Total foreign 

value-added 

44,211 39,160 397 0 83,768 103,741 85,289 877 0 189,908 

Total domestic 

value-added 

379,954 336,545 9,211 0 725,710 628,426 516,652 13,830 0 1,158,908 

Indirect 

domestic value-added 

179,467 165,518 7,485 0 352,470 292,362 268,325 11,022 0 571,710 

Source: ITC staffs estimates based on BEA annual IO tables and parameters listed in table H.2. 

aAssume the foreign content share of U.S. gross exports was 17% in 2002 and 20.4% in 2007. bAssume the foreign content share of U.S. gross exports was 10.4% in 2002 and 14.2% in 2007. 
H-18 

TABLE H.6 Decomposition of SMEs’ value-added exports based on data from the SBA (millions of U.S. $) 

Decomposition (1)a Decomposition (2)b

2002 2007 2002 2007 

Total domestic value-added 295,873 445,450 319,466 480,403 

Direct value-added in exports 171,027 248,327 171,027 248,327 

Indirect value-added in exports 140,663 230,735 165,518 268,325 

SME value-added embodied in large firm exports 114,587 161,792 181,672 213,841 

Rest of SMEs' indirect value-added exports 26,076 49,063 30,802 54,484 

Large firm exports generated-employment for SMEs 

(1000s) 

1,345 1,696 1,458 1,833 

Source: USITC staff estimates based on BEA annual IO tables and parameters listed in table H.2. 

a

Assumes the foreign content share of U.S. gross exports was 17.0% in 2002 and 20.4% in 2007. b

Assumes the foreign content share of U.S. gross exports was 10.4% in 2002 and 14.2% in 2007. 

using questionnaire results. Firms were asked to report what share of their goods and services 

was sold to large firms that were eventually sold abroad. Both SMEs and large firms 

answered this question. 

SME manufacturers reported selling about $107 billion worth of goods sold to large firms.11

By contrast, approximately $561 billion worth of large manufacturers’ sales were sold to 

other large firms. Taking these reported values as the basis for computing shares for all sales 

to large firms yields the result that approximately 15 percent of sales by manufacturing firms 

to large firms come from SMEs.12 This is 10 percentage points lower than the 25 percent 

share assumed in the baseline analysis. For services, questionnaire respondents reported that 

approximately $171 billion worth of sales were made by SMEs to large firms, while 

$243 billion worth of sales were made by large firms to other large firms. This implied a 

share of SMEs sales to large firms of 40 percent,13 or 5 percentage points lower than the 

baseline scenario. 

The sensitivity analysis was therefore conducted by selecting different sets of initial values of 

intermediate inputs: (1) a 10 percentage point decrease in the share of SME manufacturing 

sales to large firms, (2) a 5 percentage point decrease in the share of SME services sales to 

large firms, and (3) both changes from the first two scenarios. 

As can be seen in the results table (table H.7), the modified initialization does not make a 

large difference. The SME share of total export value added decreases by 1.5 percentage 

points in the combined scenario, and less in the other scenarios. Within the bounds indicated 

by the questionnaire responses, the model demonstrates that the results obtained are fairly 

robust to changes in the initial share of sales allocated between SMEs and large firms.

 11 This sales value and those that follow in this paragraph are based on a survey question that asked 

respondents to provide an estimate of the share of sales their firm had made to large firms and SMEs. Respondents 

were asked to select one of a set of possible ranges (e.g., less than 5 percent, 5 to 15 percent). The midpoint of 

each range was paired with overall sales figures reported elsewhere in the questionnaire. 12 For survey data, manufacturers are so defined if their self-reported primary NAICS category belonged to the 

manufacturing sector. 13 The survey results are used as an indication of the possible deviations from the assumptions surrounding the 

allocation of intermediate inputs by firm size. It should be noted that the survey results themselves are also subject 

to survey error and therefore do not necessarily indicate the true share values. 
H-19 

TABLE H.7 Sensitivity analysis of IO table 

Sensitivity 

Source Main results

Manufacturing 

SME share 

reduced 10%

Services 

SME share

reduced 5%

Manufacturing

 and Services

SME (share of total value) 41.5 40.5 40.9 40.0

Large 57.4 58.3 57.9 58.8

Government 1.2 1.2 1.2 1.2

Source: USITC staff calculations. 

Alternative Imported Content Assumptions

There were no reliable data on firm size-specific imports by sector; the third sensitivity 

analysis addresses this by examining a key assumption surrounding the share of imported 

content used as intermediate inputs. As mentioned above, the value of imported content needs 

to be subtracted from official export statistics to accurately estimate the value contributed by 

U.S. SMEs. The results from the third sensitivity analysis are displayed in table H.8. The 

baseline method assumed proportionality of foreign imports (i.e., that foreign imports, once 

they have entered the U.S. economy, are treated identically to domestic products in terms of 

their purchase and sale across intermediate inputs, final demand, and export). The modified 

version uses information from the import use table published by BEA. In the modified 

version, total value-added exports (direct and indirect) were about 8 percent lower. In both 

cases, however, the share of SMEs of total exports remained unchanged at 41 percent. 

Stability of the Model

The foregoing analysis indicates that the model is relatively stable with respect to changes in 

assumptions regarding its key parameters and initial values. It suggests that the key 

qualitative result—SMEs contribute a significant share of total value exported, and this share 

is greater than their share of gross exports—is unlikely to be reversed. On the other hand, the 

sensitivity analysis also indicates that there is uncertainty regarding the precise share of 

value-added SME exports and that the shares reported in this appendix and Chapter 5 should 

be seen as indicative. Finally, it should be cautioned that the sensitivity analysis is meant to 

be indicative of the possible variability of the results; it is not exhaustive, and the results 

cannot be taken to be firm bounds on the range of possible values. 

TABLE H.8 Sensitivity analysis on import assumption, 2007

Baseline Modified Import Assumption 

Source Value (billion $) Share (%) Value (billion $) Share (%)

Total value 1,159 100 1,075 100

SME 480 41 445 41

Large 665 57 616 57

Government 14 1 13 1

Source: USITC staff calculations. 
H-20 

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