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[House Report 110-312]
[From the U.S. Government Publishing Office]

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-312

======================================================================
 
                     SBA TRADE PROGRAMS ACT OF 2007

                                _______
                                

 September 4, 2007.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Ms. Velazquez, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2992]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 2992) to amend the Small Business Act to improve 
trade programs, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Purpose of the Bill and Summary..................................5
 II. Background and Need for Legislation..............................6
III. Hearings.........................................................7
 IV. Committee Consideration..........................................8
  V. Committee Votes..................................................8
 VI. Section-by-Section Analysis of H.R. 2992.........................8
VII. Congressional Budget Office Cost Estimate.......................12
VIII.Committee Estimate of Costs.....................................14

 IX. Oversight Findings..............................................14
  X. Statement of Constitutional Authority...........................14
 XI. Compliance With Public Law 104-4................................14
XII. Congressional Accountability Act................................14
XIII.Federal Advisory Committee Statement............................14

XIV. Statement of No Earmarks........................................15
 XV. Performance Goals and Objectives................................15
XVI. Changes in Existing Law Made by the Bill, as Reported...........15

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``SBA Trade Programs 
Act of 2007''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                  TITLE I--SMALL BUSINESS TRADE POLICY

Sec. 101. Develop and implement small business trade policies.
Sec. 102. Establish an annual small business trade strategy.
Sec. 103. Track small business exports and trade resource utilization.

                  TITLE II--TRADE COMPLIANCE PROGRAMS

Sec. 201. Trade Remedy and Dispute Assistance Initiative.
Sec. 202. Patent Assistance and Intellectual Property Protections 
Initiative.

      TITLE III--TRADE ADJUSTMENT ASSISTANCE FOR SMALL BUSINESSES

Sec. 301. Trade Adjustment Assistance Financing Initiative.
Sec. 302. Technical resources for trade adjustment assistance.

                      TITLE IV--EXPORT ASSISTANCE

Sec. 401. Increase Small Business Administration participation at 
Export Assistance Centers.
Sec. 402. Increase access to capital for small and medium-sized 
exporters.
Sec. 403. Clerical amendment.

                TITLE V--AUTHORIZATION OF APPROPRIATIONS

Sec. 501. Authorization of appropriations.

                  TITLE I--SMALL BUSINESS TRADE POLICY

SEC. 101. TRADE POLICY FOR SMALL BUSINESS.

  Section 22 of the Small Business Act (15 U.S.C. 649) is amended by 
adding at the end the following:
  ``(h) Role in Trade Policy.--
          ``(1) Recommendations.--The director of the Office shall 
        present recommendations regarding small business exporters to 
        trade negotiators.
          ``(2) Development of trade policies.--The director of the 
        Office shall assist in the development of trade policies that 
        increase opportunities for small businesses in domestic and 
        foreign markets, including the removal of trade barriers.
          ``(3) Implementation of trade policies.--The director of the 
        Office shall assist in the implementation of trade policies 
        through relationships developed with Federal trade 
        policymakers, particularly the United States Trade 
        Representative, and transnational organizations, such as the 
        Organization for Economic Co-operation and Development.
          ``(4) Small exporter promotion programs.--The director of the 
        Office shall establish programs that will boost the export 
        opportunities of entrepreneurs and encourage transnational 
        organizations, such as the Organization for Economic Co-
        operation and Development, small exporter organizations, and 
        ministries of foreign governments to support and publicize 
        these programs.
          ``(5) Strategic alliances.--
                  ``(A) Congressional notification.--The director of 
                the Office shall notify the Committee on Small Business 
                of the House of Representatives and the Committee on 
                Small Business and Entrepreneurship of the Senate of 
                pending strategic alliances.
                  ``(B) Follow-up activities.--The director of the 
                Office shall ensure that planned and documented follow-
                up activities for strategic alliances increase trade 
                opportunities for small businesses.
                  ``(C) Strategic alliance defined.--In this paragraph, 
                the term `strategic alliance' means a working 
                relationship, entered into between the Small Business 
                Administration and foreign national ministries 
                representing small business concerns, for the purpose 
                of strengthening trade between United States small 
                businesses and foreign small businesses by establishing 
                overseas networks and buyers.''.

SEC. 102. ESTABLISH AN ANNUAL SMALL BUSINESS TRADE STRATEGY.

  Section 22 of the Small Business Act (15 U.S.C. 649), as amended by 
this Act, is further amended by adding at the end the following:
  ``(i) Annual Small Business Trade Strategy.--
          ``(1) In general.--The director of the Office shall develop 
        and maintain a small business trade strategy that is 
        contributed as part of the National Export Strategy developed 
        by the Department of Commerce that includes at least the 
        following components:
                  ``(A) Strategies to increase small business export 
                opportunities. The strategies shall include a specific 
                strategy to increase small business export 
                opportunities to the Asia Pacific Region.
                  ``(B) Recommendations to increase the competitiveness 
                of domestic small business industries in the global 
                economy.
                  ``(C) Recommendations to protect small businesses 
                from unfair trade practices, including intellectual 
                property violations.
                  ``(D) Strategies to expand small business 
                representation in United States trade policy formation 
                and implementation.
                  ``(E) Coordination efforts with the Trade Promotion 
                Coordinating Committee of the Department of Commerce, 
                as well as with Federal agencies that also provide 
                trade financing to small businesses, such as the 
                Overseas Private Investment Corporation and the Export-
                Import Bank.
          ``(2) Report.--At the beginning of each fiscal year, the 
        director shall submit to the Committee on Small Business of the 
        House of Representatives and the Committee on Small Business 
        and Entrepreneurship of the Senate a report on the small 
        business trade strategy required by paragraph (1). The report 
        shall cover, at a minimum, each of the components required by 
        paragraph (1) and shall include specific policies and 
        objectives and timelines to implement those policies and 
        objectives.''.

SEC. 103. TRACK SMALL BUSINESS EXPORTS AND TRADE RESOURCE UTILIZATION.

  Section 22 of the Small Business Act (15 U.S.C. 649), as amended by 
this Act, is further amended by adding at the end the following:
  ``(j) Tracking System.--
          ``(1) In general.--The director of the Office shall develop a 
        system to track small business exports and the use by small 
        businesses of Federal trade promotion resources. The director 
        shall ensure that the system is consistent through each Federal 
        agency member of the Trade Promotion Coordinating Committee.
          ``(2) Design emphasis.--The director shall give particular 
        attention, in designing the system, to the tracking of data on 
        the trade of services by small exporters, in consultation with 
        the Department of Commerce.
          ``(3) Implementation.--The director shall work in 
        consultation with members of the Trade Promotion Coordinating 
        Committee to ensure that the system is implemented and that the 
        results of the system are reported annually in the National 
        Export Strategy conducted by the Trade Promotion Coordinating 
        Committee.''.

                  TITLE II--TRADE COMPLIANCE PROGRAMS

SEC. 201. TRADE REMEDY AND DISPUTE ASSISTANCE INITIATIVE.

  Section 22 of the Small Business Act (15 U.S.C. 649), as amended by 
this Act, is further amended by adding at the end the following:
  ``(k) Trade Remedy and Dispute Assistance Initiative.--The director 
of the Office shall design, and the district offices of the 
Administration shall implement, a program that provides technical 
assistance, counseling services, and reference materials to assist 
small businesses navigate the trade dispute and remedy processes. The 
program shall include--
          ``(1) information on available resources, procedures, and 
        requirements for trade remedy investigations;
          ``(2) an approach for district office staff to provide one-
        on-one assistance to small businesses involved in these 
        activities; and
          ``(3) an identification of legal resources and other tools to 
        ensure small businesses can navigate the trade dispute and 
        remedy processes affordably.''.

SEC. 202. PATENT ASSISTANCE AND INTELLECTUAL PROPERTY PROTECTIONS 
                    INITIATIVE.

  Section 22 of the Small Business Act (15 U.S.C. 649), as amended by 
this Act, is further amended by adding at the end the following:
  ``(l) Patent Assistance and Intellectual Property Protections 
Initiative.--In consultation with the United States Patent and 
Trademark Office and the United States Copyright Office, the Office 
shall design counseling services, including identifying legal resources 
for small businesses to secure intellectual property protection in 
foreign countries. To implement the program, the Office shall 
collaborate with district office staff to provide on-on-one assistance 
to small businesses involved in these activities.''.

      TITLE III--TRADE ADJUSTMENT ASSISTANCE FOR SMALL BUSINESSES

SEC. 301. TRADE ADJUSTMENT ASSISTANCE FINANCING INITIATIVE.

  Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended--
          (1) in paragraph (2)(D) by inserting after ``paragraph 
        (14)(A),'' the following: ``or to participate in a loan made 
        under paragraph (16),''; and
          (2) in paragraph (16)--
                  (A) in subparagraph (D) by striking clauses (i) and 
                (ii) and inserting the following:
                          ``(i) is impacted by--
                                  ``(I) increased competition with 
                                foreign firms in the relevant market; 
                                or
                                  ``(II) unfair trade practices, 
                                particularly intellectual property 
                                violations; and
                          ``(ii) is injured by such impacts.''; and
                  (B) by adding at the end the following:
                  ``(E) Outreach and marketing.--The Administration 
                shall increase outreach and marketing of international 
                trade loans to district offices and private lenders.''.

SEC. 302. TECHNICAL RESOURCES FOR TRADE ADJUSTMENT ASSISTANCE.

  Section 22 of the Small Business Act (15 U.S.C. 649), as amended by 
this Act, is further amended by adding at the end the following:
  ``(m) Technical Resources for Trade Adjustment Assistance.--
          ``(1) In general.--The director of the Office shall establish 
        a comprehensive set of services to assist small business 
        readjustment, including access to training, technology, 
        marketing assistance, and research and information on domestic 
        and global markets.
          ``(2) Implementation.--The Administrator shall, by 
        regulation, establish such requirements as may be necessary to 
        carry out paragraph (1).
          ``(3) Outreach.--The Office shall work with the district 
        offices and the outreach business assistance centers of the 
        Administration, including Small Business Development Centers, 
        Women's Business Centers, and SCORE, to offer the set of 
        services established under paragraph (1) to small businesses in 
        their local communities.''.

                      TITLE IV--EXPORT ASSISTANCE

SEC. 401. INCREASE SMALL BUSINESS ADMINISTRATION PARTICIPATION AT 
                    EXPORT ASSISTANCE CENTERS.

  Section 22 of the Small Business Act (15 U.S.C. 649), as amended by 
this Act, is further amended by adding at the end the following:
  ``(n) Trade Finance Positions.--
          ``(1) Additional trade finance specialists.--
                  ``(A) In general.--The Office, over the 1-year period 
                beginning on the date of the enactment of this 
                subsection, shall increase the number of trade finance 
                specialists at Export Assistance Centers by at least 6 
                and thereafter shall maintain the number of such trade 
                finance specialists at or above that number. Candidates 
                for the positions are required to have sufficient 
                qualifications and experiences.
                  ``(B) Authorization of appropriations.--There are 
                authorized to be appropriated to carry out subparagraph 
                (A) such sums as may be necessary.
          ``(2) Filling vacant positions.--The Office, over the 3-month 
        period beginning on the date of the enactment of this 
        subsection, shall fill all trade finance positions that have 
        been vacant since 2003. Candidates for the positions are 
        required to have sufficient qualifications and experiences.
          ``(3) Filling gaps in high-export-volume areas.--The director 
        of the Office shall--
                  ``(A) not later than 1 year after the date of the 
                enactment of this subsection, carry out a national 
                study to compare the rate of exports from each State 
                and major metropolitan region to the availability of 
                Administration staff participating in Export Assistance 
                Centers in such State or region;
                  ``(B) not later than 2 years after such date of 
                enactment, design a formula to eliminate gaps between 
                supply of, and demand for, such staff in areas with 
                high export volumes; and
                  ``(C) request the additional staff that are required 
                to eliminate such gaps and place them in those 
                areas.''.

SEC. 402. INCREASE ACCESS TO CAPITAL FOR SMALL AND MEDIUM-SIZED 
                    EXPORTERS.

  Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended--
          (1) in paragraph (2)(D) by amending the heading to read as 
        follows: ``Participation under export working capital and 
        international trade programs''; and
          (2) in paragraph (3)--
                  (A) in subparagraph (A) by striking ``subparagraph 
                (B)'' and inserting ``subparagraphs (B) and (C)'';
                  (B) by redesignating subparagraphs (B) and (C) as (C) 
                and (D), respectively;
                  (C) by inserting after subparagraph (A) the 
                following:
                  ``(B) if the total amount outstanding and committed 
                (by participation or otherwise) solely for the purposes 
                provided in paragraphs (14)(A) and (16) to the borrower 
                from the business loan and investment fund established 
                by this Act would exceed $2,250,000 (or if the gross 
                loan amount would exceed $3,000,000), except as 
                provided in subparagraph (C);''; and
                  (D) in subparagraph (C) (as so redesignated) by 
                striking ``$1,750,000, of which not more than 
                $1,250,000'' and inserting ``$2,250,000, of which not 
                more than $1,600,000''.

SEC. 403. CLERICAL AMENDMENT.

  Section 22(c)(5) of the Small Business Act (15 U.S.C. 649) is amended 
by striking the period at the end and inserting a semicolon.

                TITLE V--AUTHORIZATION OF APPROPRIATIONS

SEC. 501. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated such sums as may be necessary 
to carry out this Act and the amendments made by this Act.

                         I. Purpose and Summary

    As market barriers fall across the globe due to trade 
liberalization, small businesses have benefited from the 
increased availability of foreign goods and access to vast new 
markets. However, these firms face significant challenges as a 
result of globalization, including the need for greater levels 
of financing for exports as well as resources to stay 
competitive against foreign producers. Consequently, the Small 
Business Administration (SBA) has largely focused on removing 
obstacles to small firms' success in domestic markets. H.R. 
2992, the SBA Trade Programs Act of 2007, amends key sections 
of the Small Business Act to enhance the agency's institutional 
focus on the global pressures and opportunities for small 
businesses operating in a market without borders. The 
legislation targets resources for the agency's export 
assistance programs and establishes a new mandate to help small 
businesses prepare for competition against increasing foreign 
competitors in domestic and global markets.
    H.R. 2992 modernizes the agency's trade programs through 
four components. Title I provides for the agency's increasing 
role integrating small business needs into international trade 
commitments and national policies. It also mandates that the 
agency develop and coordinate the implementation of a small-
business based trade strategy and a system to track these 
firms' benefits from the use of Federal trade promotion 
resources. Title II helps to ensure that small businesses can 
participate in a level playing field in the globalized economy 
by creating tools to prepare against unfair trade practices, 
such as intellectual property violations. Trade remedy and 
dispute assistance tools are created as well as technical 
assistance for firms to safeguard their patents, trademarks and 
copyrights in foreign countries. Title III establishes trade 
adjustment assistance resources for small firms dislocated due 
to global economic trends. A comprehensive set of services will 
be developed by the agency's Office of International Trade, 
including technical and financial resources to aid firms update 
their enterprises and remain at the cutting edge of their 
industries. Title IV was designed to facilitate export 
transactions by small firms and to reduce the risk to private 
banks for lending to small firms for overseas transactions. 
Financing and technical assistance resources at the agency are 
expanded for eligible small and medium sized exporters. The 
legislation, overall, establishes a comprehensive set of 
resources at the agency to help small firms overcome 
significant trade barriers while new markets are opened. 
Through the bill, it is expected that these firms will have 
additional resources to access new markets and opportunities to 
expand their enterprises.

                II. Background and Need for Legislation

    Although small businesses have demonstrated success and 
interest in retaining a share of global markets, their 
corporate counterparts continue to perform at a significant 
advantage in the current integrated economic structure. This is 
most clearly demonstrated by the fact that although small and 
medium sized businesses represent nearly all U.S. exporters, 
they only generate 30 percent of revenues from these 
activities. It is likely that this imbalance will continue as 
large firms have experienced faster growth rates in export-
based revenues, 72 percent, than smaller firms, 54 percent. 
Therefore, these businesses face challenges growing in foreign 
markets even as the economy becomes globalized.
    Small firms have recognized the limits to their 
competitiveness with larger firms in world markets and have 
responded accordingly. Recent surveys have found a direct 
relationship between the size of a firm and its rate of 
``internationalization''--the larger the firm, the more likely 
it is to trade in foreign markets. Small firms are consequently 
losing critical opportunities and becoming less competitive as 
a result, even though they would particularly benefit from 
expansion into new markets, thereby increasing their consumer 
demand, return on investment, and resources for constant 
innovation.
    There are several obstacles creating an unequal playing 
field for small businesses as the economy becomes globalized. 
These must be addressed to ensure all firms, especially those 
with significant potential to benefit from international 
engagement, can succeed in domestic and global markets.

Transaction costs

    With fewer resources to expend on training and compiling 
information on international agreements, foreign transactions 
are more difficult for these firms. Due to their limited 
production, small exporters have higher transaction costs and 
therefore are constrained in the volume and risk that they can 
undertake in international commercial opportunities. 
Consequently, they consistently enter fewer foreign markets 
than large firms. In 2002, 62 percent of these firms posted 
sales to only one foreign market, while more than half of large 
firms exported to five or more markets. A limitation for small 
businesses integration into world markets is their lack of 
adequate connections abroad and resources to develop buyers for 
goods. In fact, larger firms are twice as likely as small firms 
to have affiliates abroad to process exports into foreign 
markets. Consequently, these firms have fewer opportunities to 
identify and market their goods to foreign consumers.

Regulatory obstacles

    Small businesses also struggle with the numerous customs 
requirements, which limit their access to foreign markets. A 
study this year by the Organization of Economic Cooperation and 
Development indicated that regulatory complexity across markets 
impedes free trade and investment. This is especially true for 
small businesses that must expend a disproportionate amount of 
their resources processing local, federal, and international 
regulations compared to their corporate counterparts. The 
disproportionate burden of complex regulations impedes small 
firms from taking full advantage of the system of free trade.

Import effects

    Small firms are also impacted by the elimination of market 
barriers, such as tariffs, due to trade commitments that allow 
foreign producers to gain increased access to domestic 
consumers. With higher per-unit expenses, they face steep 
competition from low-cost producers. As imported products have 
grown exponentially in the United States, many of these firms 
and the industries they dominate have disappeared from local 
and national economies.
    To ensure small firms can thrive in a globalized 
marketplace, the legislation readies the SBA to meet the needs 
of those entrepreneurs that are adjusting to rapidly changing 
economic conditions. The SBA Trade Programs Act of 2007 
establishes a comprehensive set of resources and tools at the 
agency so that domestic assistance programs also reflect the 
international-oriented demands of small businesses.

                             III. Hearings

    On June 13, 2007, the Committee on Small Business held a 
hearing on the impacts of US trade policies upon small 
businesses. Witnesses representing manufacturing, service, and 
agricultural sectors discussed foreign and domestic market 
access issues facing small firms as a result of trade 
liberalization. The hearing also highlighted the implications 
of inadequate representation for this sector in the negotiation 
and implementation of international commitments. On July 5, 
2007, a hearing was held to examine the current legislation, 
which was designed to address these issues. The testimony 
underscored the need for enhanced export assistance and the 
creation of trade compliance resources at the agency, which 
were included in the legislation. The purpose of the hearings 
was to examine and design small business-based trade policies 
that support these firms' competitiveness in the globalized 
economy while improving the nation's trade balance.

                      IV. Committee Consideration

    The Committee on Small Business, a quorum being present, 
met in open session on July 19, 2007 to consider H.R. 2992.

                           V. Committee Votes

    The Committee on Small Business ordered H.R. 2992 reported 
to the House, as amended by an amendment in the nature of 
substitute, by a voice vote at 10:18 a.m.

              VI. Section-by-Section Analysis of H.R. 2992

Section 1. Short title; table of contents

    This section includes a short title and the table of 
contents.

                                TITLE I

Section 101. Trade policy for small business

    This section formalizes SBA's role assisting in the 
development and implementation of trade policy. Commensurate 
with international policy, the agency's mandate is expanded to 
represent small business needs in relationships between the 
Office of International Trade (OIT) and federal trade policy 
makers, particularly the U.S. Trade Representative (USTR) and 
transnational organizations, such as the Organization for 
Economic Cooperation and Development. It is also the task of 
the OIT Director to establish programs that will boost 
entrepreneurs' exports and direct small exporter organizations 
and Ministries of foreign governments to enact these 
initiatives. Strategic Alliances, which the agency has 
increasingly established with Ministries of foreign governments 
representing small businesses, have also been formalized 
through the bill. These agreements, their purpose, and 
expectations are defined by the legislation to ensure they 
benefit small U.S. businesses.
    In its implementation of the requirement, the Committee 
intends that the agency will establish recommendations on trade 
policies in order to expand opportunities for small businesses 
rather than establishing a separate trade policy. Further, the 
agency is expected to increase its responsibility to represent 
these firms in the decision-making and implementation process 
for trade policies. This is consistent with the existing 
framework in which the USTR serves to coordinate and negotiate 
trade policy for all U.S. industries, including small 
businesses.
    SBA is expected to serve a similar role in policy making as 
many other federal agencies, including the U.S. Departments of 
Commerce and Agriculture. The agency should increase its 
efforts to reflect small business needs in the globalizing 
economy particularly due to the industry's lack of 
representation through a formal negotiator at the USTR. As 
additional international agreements are implemented, the SBA is 
responsible for filling gaps in the representation of small 
businesses in order for these firms to benefit from the system 
of free trade.

Section 102. Establish an annual small business trade strategy

    The agency's OIT is mandated to develop an annual small 
business trade strategy in coordination with and to inform the 
nation's plans for global economic integration. The strategy 
will be in the form of a report and include at least the 
following components: strategies to increase exports, including 
priority markets and industries; plans to increase the 
competitiveness of domestic small business industries in the 
global economy; plans to protect small businesses from unfair 
trade practices, including intellectual property violations and 
import dumping; strategies to expand small business 
representation in US trade policy formation and implementation; 
and coordination efforts with other trade-related Federal 
agencies, such as the Overseas Private Investment Corporation 
and the U.S. Export-Import Bank. To increase its effectiveness, 
the report must include specific policies and a timeline for 
the implementation of its objectives.
    In compliance with international obligations restricting 
export subsidies, a component within the agency's mandated 
small business trade strategy was modified to focus upon the 
removal of trade barriers rather than providing assistance to 
firms contingent upon overseas sales. SBA's limited role in 
determining unfair trade practices is reflected by restricting 
the actions that the agency can take against import dumping.
    The plan should be designed and enacted by the beginning of 
the fiscal year to be coordinated with budget decisions. This 
will ensure that the agency effectively employs its resources 
to meet the objectives of the trade strategy. The Committee 
also expects the agency to consider and implement the trade 
strategy in collaboration with appropriate state officials and 
their trade promotion programs.

Section 103. Track small business exports and trade resource 
        utilization

    A new mandate requires the agency to ensure federal trade 
promotion resources benefit small businesses. The OIT Director 
is responsible for creating a system to track small business 
exports and use of federal trade promotion resources. 
Methodological consistency across all agencies is required in 
the survey; for example, by tracking the number of small and 
medium sized business export sales transactions per year 
facilitated through each federal entity of the Trade Promotion 
Coordinating Committee (TPCC). Particular attention will be 
given to designing a system that tracks data on the trade of 
services by small exporters in consultation with the Department 
of Commerce. The Director of OIT shall also work in 
consultation with TPCC members to implement the system and 
report the results annually in the National Export Strategy, 
conducted by the TPCC.
    The Committee expects the agency to immediately begin, 
following the legislation's enactment, examining ways to 
develop the system and coordinate its results with TPCC 
members. For data that is not accessible, the agency must work 
with the Department of Commerce to develop, compile, and 
distribute relevant information regarding small business 
exports.

                                TITLE II

Section 201. Trade remedy and dispute assistance initiative

    SBA's OIT is responsible for providing technical assistance 
to small businesses involved in trade remedy investigations or 
prosecuting trade dispute cases. The Division is required to 
design counseling services and reference materials to assist 
small businesses navigate the trade dispute and remedy 
processes. To implement the program, OIT staff will train 
district staff to provide one-on-one assistance to small 
businesses involved in these activities.
    It is not the expectation of the Committee that the SBA 
will supersede other federal agency's responsibilities to 
enforce trade laws. Instead, the agency is required to fill 
gaps in services which assist small business file trade 
disputes and request trade remedy investigations. The Committee 
recognizes that the President has given responsibility of 
filing and prosecuting trade disputes to USTR, the Department 
of Commerce is the lead agency for dealing with unfair trade 
laws, dumping, and unfair foreign government subsidies. Yet, 
the SBA is capable of providing appropriate tools which can 
ensure small firms can prosecute their rights and protect their 
assets against unfair trade practices.

Section 202. Patent assistance and IP protections initiative

    In consultation with the U.S. Patent and Trademark Office, 
the OIT will design counseling services, including identifying 
legal resources, to small businesses taking legal action to 
secure their patent rights in foreign countries. OIT staff and 
district staff will collaborate on the implementation of this 
program to serve small businesses involved in these activities.
    A portion of the section's terminology has been modified to 
clarify that the agency is required to assist small businesses 
secure intellectual property protection available in foreign 
markets. Through its network of service providers that small 
businesses currently patronize, the Committee expects the 
agency to effectively implement this provision by providing the 
outreach and training to assist these firms. Further, given the 
particular obstacles small businesses face identifying legal 
resources in their pursuit of patent protections, the agency's 
staff must have the expertise needed to effectively address 
these firms' needs.

                               TITLE III

Section 301. Trade adjustment assistance financing initiative

    Eligibility requirements for International Trade Loans are 
expanded through this provision to include those firms impacted 
by unfair trade practices. The 90-percent guarantee for the 
Export Working Capital program shall apply to International 
Trade Loans.
    Updates to the provision's standards for financing 
assistance ensure its compliance with the Antidumping Act and 
the World Trade Organization's regulatory framework. Import 
dumping as a specific category for lending assistance is 
eliminated. This will ensure that the appropriate agencies 
maintain the authority for determining injuries from this trade 
practice. The specific financing assistance category for firms 
impacted by currency devaluation practices is also removed to 
ensure the bill conforms to the current countervailing duty law 
which does not recognize this action as creating an unfair 
subsidy. The committee, however, expects the agency to ensure 
that all small businesses impacted by unfair trade practices 
are eligible for trade adjustment financing assistance.

Section 302. Technical resources for trade adjustment assistance

    SBA's OIT is required to design a comprehensive set of 
services to assist small businesses readjust to global economic 
conditions, including the creation of programs that provide 
assistance to dislocated firms and employees: Management and 
technical training; access to technology; marketing assistance; 
as well as research on domestic and global markets. These 
initiatives will be posted for public comment. These adjustment 
tools are to be provided to small businesses through OIT's 
collaboration with the agency's outreach business assistance 
centers, including its Small Business Development Centers, 
Women's Business enters, and SCORE program.
    Although the Trade Adjustment Act is scheduled to be 
reauthorized later this year, the Committee believes that all 
eligible small businesses deserve access to these resources in 
a timely manner. Further, this section guarantees that these 
resources will be available to all eligible small businesses.

                                TITLE IV

Section 401. Increase access to capital for small and medium sized 
        exporters

    Loan sizes are increased for small businesses' trade 
related transactions. SBA participation in trade-related loans 
through either the International Trade or Export Working 
Capital programs or a combination of both is raised from $1.5 
million to $2.25 million; gross amounts are increased from $2 
million to $3 million.
    Raising the loan limits will ensure that the SBA works in 
collaboration with the U.S. Export-Import Bank in providing 
adequate financing to small exporting firms. Given the Export-
Import Bank's erratic financing levels to small businesses, 
despite its statutory mandate to provide 20% of lending 
resources to these firms, the Committee expects the SBA to 
ensure that entrepreneurs receive the level of funding 
necessary to undertake profitable export transactions.

Section 402. Expand participation at U.S. Export Assistance Centers 
        (USEACs)

    As domestic small businesses look for new markets and 
industries face increased competition for foreign competitors, 
the legislation expands technical assistance for overseas 
transactions. This reverses the decline in the agency's 
resources which have helped to maintain these firms' 
competitiveness in global markets, particularly against foreign 
companies receiving some form of national export subsidies. The 
legislation provides for the re-establishment of six trade 
finance specialists administered by the SBA previously serving 
in the Department of Commerce's U.S. Export Assistance Centers 
(USEAC). These staff will specifically assist small exporters 
to address financing challenges the sector faces, including 
identifying private lending resources and designing a financing 
strategy for overseas transactions. The agency is required to 
fulfill this requirement within the first year after the 
enactment of the legislation.
    The agency's dwindling technical assistance resources for 
small businesses in high export volume areas have been 
reinforced through the section. Trade finance specialist 
positions that have been vacant for several years, including 
staff designated for USEACs located in New Orleans and New York 
City must be filled immediately. These regions have critical 
connections to global markets and have been constrained in 
exporting activities as a result of inadequate technical 
assistance for small businesses.
    Reducing gaps in the agency's supply of finance counseling 
for overseas transactions will be facilitated by the additional 
responsibility for the OIT Director to study, design, and 
implement a formula for the maintenance of new trade finance 
specialists. This will ensure that small businesses in regions 
with significant international ports and small exporter 
populations have access to financing and technical assistance 
in order to affordably and conveniently export their goods. 
Funds are authorized to fulfill this section, as needed.
    The Committee expects that the agency requests adequate 
funding as authorized in the legislation to hire and maintain 
the trade finance specialists. Candidates for the trade finance 
specialist positions must possess sufficient qualifications and 
experiences. It is further expected that the agency permanently 
reverses its decline of these resources and instead expand this 
program.

             VII. Congressional Budget Office Cost Estimate

                                                     July 26, 2007.
Hon. Nydia M. Velazquez,
Chairwoman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Madam Chairwoman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2992, the SBA 
Trade Programs Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

H.R. 2992--SBA Trade Programs Act of 2007

    Summary: H.R. 2992 would require the Small Business 
Administration's (SBA's) Office of International Trade (OIT) to 
develop policies and programs to increase the capacity of small 
businesses to engage in trade with foreign countries. The bill 
also would authorize SBA to increase the number of trade 
finance specialists working in SBA's export assistance centers. 
Finally, the bill would make several changes to the 7(a) loan 
program to ease the financial requirements for loan guarantees 
to small businesses engaged in international trade. Assuming 
appropriation of the necessary amounts, CBO estimates that 
implementing H.R. 2992 would cost $2 million in 2008 and $19 
million over the 2008-2012 period. Enacting H.R. 2992 would not 
affect direct spending or revenues.
    H.R. 2992 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no cost on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2992 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).

------------------------------------------------------------------------
                                      By fiscal year, in millions of
                                                 dollars--
                                 ---------------------------------------
                                   2008    2009    2010    2011    2012
------------------------------------------------------------------------
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Additional Staff:
    Estimated Authorization            3       3       3       3       3
     Level......................
    Estimated Outlays...........       2       3       3       3       3
Tracking System:
    Estimated Authorization            1       2       1       1       1
     Level......................
    Estimated Outlays...........       *       2       1       1       1
      Total:
        Estimated Authorization        4       5       4       4       4
         Level..................
        Estimated Outlays.......       2       5       4       4      4
------------------------------------------------------------------------
Note: * = Less than $500,000

    Basis of estimate: For this estimate, CBO assumes that H.R. 
2992 will be enacted near the beginning of 2008, that 
appropriations will be provided in each fiscal year, and that 
spending will follow historical patterns. Based on information 
from SBA, CBO estimates that implementing H.R. 2992 would cost 
$2 million in 2008 and $19 million over the 2008-2012 period, 
assuming appropriation of the necessary amounts.

Additional Staff

    H.R. 2992 would direct SBA to fill certain positions, which 
support trade financing for small businesses, that have been 
vacant since 2003. Further, SBA would be required to increase 
the number of trade finance specialists working at its export 
assistance centers within a year of enactment of the bill. 
Based on information from SBA, CBO estimates that ten 
additional staff positions (four to fill vacancies plus six 
authorized by the bill) would cost $1 million in 2008 and $9 
million over the 2008-2012 period.
    The bill would require SBA's Office of International Trade 
to develop strategies and programs to aid small businesses that 
are engaged in or affected by international trade. Based on 
information from SBA, CBO expects that an additional seven 
positions would be added to the OIT to develop programs that 
provide technical assistance and counseling in areas such as 
trade disputes and remedies as well as intellectual property 
protection. CBO estimates that the additional OIT staff would 
cost $1 million in 2008 and $5 million over the 2008-2012 
period.

Tracking System

    H.R. 2992 would require SBA to develop a system to track 
the volume of exports produced by small businesses. Based on 
information from SBA, CBO expects that the agency would test 
the tracking system using a pilot program in the first year, 
and move to full development of the system 2 years after 
enactment of the bill CBO estimates that developing and 
maintaining the system would cost less than $500,000 in 2008 
and $5 million over the 2008-2012 period.

SBA Loans

    Finally, the bill would make changes to the 7(a) loan 
guarantee program, specifically, increasing the guarantee 
amount and the maximum loan limit for loans that would be used 
for international trade or foreign market development. Based on 
information from SBA, CBO expects that these more advantageous 
loan terms would not have a significant effect on the cost of 
the program because of the small number of international trade 
loans. Further, because the 7(a) program operates at a zero 
subsidy (that is, the estimated cost of providing loan 
guarantees is covered by fees charged to borrowers and 
lenders), CBO estimates that implementing these changes would 
have no significant effect on the budget.
    Intergovernmental And Private-Sector Impact: H.R. 2992 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no cost on State, local, or 
tribal 
governments.
    Estimate prepared by: Federal Costs: Susan Willie; Impact 
on state, local, and tribal governments: Elizabeth Cove; Impact 
on the Private Sector: Jacob Kuipers.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                   VIII. Committee Estimate of Costs

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 2992. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

                         IX. Oversight Findings

    In accordance with clause (2)(b)(1) of rule X of the Rules 
of the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 2992 are incorporated 
into the descriptive portions of this report.

                X. Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, clause 18, of the 
Constitution of the United States.

                  XI. Compliance With Public Law 104-4

    H.R. 2992 contains no unfunded mandates.

                 XII. Congressional Accountability Act

    H.R. 2992 does not relate to the terms and conditions of 
employment or access to public services or accommodations with 
the meaning of section 102(b)(3) of P.L. 104-1.

               XIII. Federal Advisory Committee Statement

    H.R. 2992 does not establish or authorize the establishment 
of any new advisory committees.

                     XIV. Statement of No Earmarks

    Pursuant to clause 9 of rule XXI, H.R. 2992 does not 
contain any congressional earmarks, limited tax benefits, or 
limited tariff benefits as defined in clause 9(d), 9(e), or 
9(f) of rule XXI.

                  XV. Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 2992 includes a number of provisions designed to 
update and to improve the Small Business Administration's 
international trade programs.

       XVI. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

SMALL BUSINESS ACT

           *       *       *       *       *       *       *

  Sec. 7. (a) Loans to Small Business Concerns; Allowable 
Purposes; Qualified Business; Restrictions and Limitations.--
The Administration is empowered to the extent and in such 
amounts as provided in advance in appropriation Acts to make 
loans for plant acquisition, construction, conversion, or 
expansion, including the acquisition of land, material, 
supplies, equipment, and working capital, and to make loans to 
any qualified small business concern, including those owned by 
qualified Indian tribes, for purposes of this Act. Such 
financings may be made either directly or in cooperation with 
banks or other financial institutions through agreements to 
participate on an immediate or deferred (guaranteed) basis. 
These powers shall be subject, however, to the following 
restrictions, limitations, and provisions:
          (1) * * *
          (2) Level of participation in guaranteed loans.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) [Participation under export working 
                capital program] Participation under export 
                working capital and international trade 
                programs.--Notwithstanding subparagraph (A), in 
                an agreement to participate in a loan on a 
                deferred basis under the Export Working Capital 
                Program established pursuant to paragraph 
                (14)(A), or to participate in a loan made under 
                paragraph (16), such participation by the 
                Administration shall not exceed 90 percent.
          (3) No loan shall be made under this subsection--
                  (A) if the total amount outstanding and 
                committed (by participation or otherwise) to 
                the borrower from the business loan and 
                investment fund established by this Act would 
                exceed $1,500,000 (or if the gross loan amount 
                would exceed $2,000,000), except as provided in 
                [subparagraph (B)] subparagraphs (B) and (C);
                  (B) if the total amount outstanding and 
                committed (by participation or otherwise) 
                solely for the purposes provided in paragraphs 
                (14)(A) and (16) to the borrower from the 
                business loan and investment fund established 
                by this Act would exceed $2,250,000 (or if the 
                gross loan amount would exceed $3,000,000), 
                except as provided in subparagraph (C);
                  [(B)] (C) if the total amount outstanding and 
                committed (on a deferred basis) solely for the 
                purposes provided in paragraph (16) to the 
                borrower from the business loan and investment 
                fund established by this Act would exceed 
                [$1,750,000, of which not more than $1,250,000] 
                $2,250,000, of which not more than $1,600,000 
                may be used for working capital, supplies, or 
                financings under section 7(a)(14) for export 
                purposes; and
                  [(C)] (D) if effected either directly or in 
                cooperation with banks or other lending 
                institutions through agreements to participate 
                on an immediate basis if the amount would 
                exceed $350,000.

           *       *       *       *       *       *       *

          (16) International trade.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) Adversely affected by international 
                trade.--For purposes of this paragraph, a small 
                business concern is adversely affected by 
                international trade if, as determined by the 
                Administrator, the small business concern--
                          [(i) is confronting increased 
                        competition with foreign firms in the 
                        relevant market; and
                          [(ii) is injured by such 
                        competition.]
                          (i) is impacted by--
                                  (I) increased competition 
                                with foreign firms in the 
                                relevant market; or
                                  (II) unfair trade practices, 
                                particularly intellectual 
                                property violations; and
                          (ii) is injured by such impacts.
                  (E) Outreach and marketing.--The 
                Administration shall increase outreach and 
                marketing of international trade loans to 
                district offices and private lenders.

           *       *       *       *       *       *       *

  Sec. 22. (a) * * *

           *       *       *       *       *       *       *

  (c) The Office shall promote sales opportunities for small 
business goods and services abroad. To accomplish this 
objective the office shall--
          (1) * * *

           *       *       *       *       *       *       *

          (5) make available to the small business community 
        information regarding conferences on exporting and 
        international trade sponsored by the public and private 
        sector[.];

           *       *       *       *       *       *       *

  (h) Role in Trade Policy.--
          (1) Recommendations.--The director of the Office 
        shall present recommendations regarding small business 
        exporters to trade negotiators.
          (2) Development of trade policies.--The director of 
        the Office shall assist in the development of trade 
        policies that increase opportunities for small 
        businesses in domestic and foreign markets, including 
        the removal of trade barriers.
          (3) Implementation of trade policies.--The director 
        of the Office shall assist in the implementation of 
        trade policies through relationships developed with 
        Federal trade policymakers, particularly the United 
        States Trade Representative, and transnational 
        organizations, such as the Organization for Economic 
        Co-operation and Development.
          (4) Small exporter promotion programs.--The director 
        of the Office shall establish programs that will boost 
        the export opportunities of entrepreneurs and encourage 
        transnational organizations, such as the Organization 
        for Economic Co-operation and Development, small 
        exporter organizations, and ministries of foreign 
        governments to support and publicize these programs.
          (5) Strategic alliances.--
                  (A) Congressional notification.--The director 
                of the Office shall notify the Committee on 
                Small Business of the House of Representatives 
                and the Committee on Small Business and 
                Entrepreneurship of the Senate of pending 
                strategic alliances.
                  (B) Follow-up activities.--The director of 
                the Office shall ensure that planned and 
                documented follow-up activities for strategic 
                alliances increase trade opportunities for 
                small businesses.
                  (C) Strategic alliance defined.--In this 
                paragraph, the term ``strategic alliance'' 
                means a working relationship, entered into 
                between the Small Business Administration and 
                foreign national ministries representing small 
                business concerns, for the purpose of 
                strengthening trade between United States small 
                businesses and foreign small businesses by 
                establishing overseas networks and buyers.
  (i) Annual Small Business Trade Strategy.--
          (1) In general.--The director of the Office shall 
        develop and maintain a small business trade strategy 
        that is contributed as part of the National Export 
        Strategy developed by the Department of Commerce that 
        includes at least the following components:
                  (A) Strategies to increase small business 
                export opportunities. The strategies shall 
                include a specific strategy to increase small 
                business export opportunities to the Asia 
                Pacific Region.
                  (B) Recommendations to increase the 
                competitiveness of domestic small business 
                industries in the global economy.
                  (C) Recommendations to protect small 
                businesses from unfair trade practices, 
                including intellectual property violations.
                  (D) Strategies to expand small business 
                representation in United States trade policy 
                formation and implementation.
                  (E) Coordination efforts with the Trade 
                Promotion Coordinating Committee of the 
                Department of Commerce, as well as with Federal 
                agencies that also provide trade financing to 
                small businesses, such as the Overseas Private 
                Investment Corporation and the Export-Import 
                Bank.
          (2) Report.--At the beginning of each fiscal year, 
        the director shall submit to the Committee on Small 
        Business of the House of Representatives and the 
        Committee on Small Business and Entrepreneurship of the 
        Senate a report on the small business trade strategy 
        required by paragraph (1). The report shall cover, at a 
        minimum, each of the components required by paragraph 
        (1) and shall include specific policies and objectives 
        and timelines to implement those policies and 
        objectives.
  (j) Tracking System.--
          (1) In general.--The director of the Office shall 
        develop a system to track small business exports and 
        the use by small businesses of Federal trade promotion 
        resources. The director shall ensure that the system is 
        consistent through each Federal agency member of the 
        Trade Promotion Coordinating Committee.
          (2) Design emphasis.--The director shall give 
        particular attention, in designing the system, to the 
        tracking of data on the trade of services by small 
        exporters, in consultation with the Department of 
        Commerce.
          (3) Implementation.--The director shall work in 
        consultation with members of the Trade Promotion 
        Coordinating Committee to ensure that the system is 
        implemented and that the results of the system are 
        reported annually in the National Export Strategy 
        conducted by the Trade Promotion Coordinating 
        Committee.
  (k) Trade Remedy and Dispute Assistance Initiative.--The 
director of the Office shall design, and the district offices 
of the Administration shall implement, a program that provides 
technical assistance, counseling services, and reference 
materials to assist small businesses navigate the trade dispute 
and remedy processes. The program shall include--
          (1) information on available resources, procedures, 
        and requirements for trade remedy investigations;
          (2) an approach for district office staff to provide 
        one-on-one assistance to small businesses involved in 
        these activities; and
          (3) an identification of legal resources and other 
        tools to ensure small businesses can navigate the trade 
        dispute and remedy processes affordably.
  (l) Patent Assistance and Intellectual Property Protections 
Initiative.--In consultation with the United States Patent and 
Trademark Office and the United States Copyright Office, the 
Office shall design counseling services, including identifying 
legal resources for small businesses to secure intellectual 
property protection in foreign countries. To implement the 
program, the Office shall collaborate with district office 
staff to provide one-on-one assistance to small businesses 
involved in these activities.
  (m) Technical Resources for Trade Adjustment Assistance.--
          (1) In general.--The director of the Office shall 
        establish a comprehensive set of services to assist 
        small business readjustment, including access to 
        training, technology, marketing assistance, and 
        research and information on domestic and global 
        markets.
          (2) Implementation.--The Administrator shall, by 
        regulation, establish such requirements as may be 
        necessary to carry out paragraph (1).
          (3) Outreach.--The Office shall work with the 
        district offices and the outreach business assistance 
        centers of the Administration, including Small Business 
        Development Centers, Women's Business Centers, and 
        SCORE, to offer the set of services established under 
        paragraph (1) to small businesses in their local 
        communities.
  (n) Trade Finance Positions.--
          (1) Additional trade finance specialists.--
                  (A) In general.--The Office, over the 1-year 
                period beginning on the date of the enactment 
                of this subsection, shall increase the number 
                of trade finance specialists at Export 
                Assistance Centers by at least 6 and thereafter 
                shall maintain the number of such trade finance 
                specialists at or above that number. Candidates 
                for the positions are required to have 
                sufficient qualifications and experiences.
                  (B) Authorization of appropriations.--There 
                are authorized to be appropriated to carry out 
                subparagraph (A) such sums as may be necessary.
          (2) Filling vacant positions.--The Office, over the 
        3-month period beginning on the date of the enactment 
        of this subsection, shall fill all trade finance 
        positions that have been vacant since 2003. Candidates 
        for the positions are required to have sufficient 
        qualifications and experiences.
          (3) Filling gaps in high-export-volume areas.--The 
        director of the Office shall--
                  (A) not later than 1 year after the date of 
                the enactment of this subsection, carry out a 
                national study to compare the rate of exports 
                from each State and major metropolitan region 
                to the availability of Administration staff 
                participating in Export Assistance Centers in 
                such State or region;
                  (B) not later than 2 years after such date of 
                enactment, design a formula to eliminate gaps 
                between supply of, and demand for, such staff 
                in areas with high export volumes; and
                  (C) request the additional staff that are 
                required to eliminate such gaps and place them 
                in those areas.

           *       *       *       *       *       *       *

                                  
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