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86–510 2014

SMALL BUSINESS TRADE AGENDA: STATUS AND 

IMPACT OF INTERNATIONAL AGREEMENTS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON AGRICULTURE, ENERGY AND 

TRADE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JANUARY 28, 2014 

Small Business Committee Document Number 113–052 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMEYER, Missouri 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Richard Hanna ................................................................................................ 1 

Hon. Patrick Murphy ............................................................................................... 2 

WITNESS 

Mr. James Sanford, Assistant United States Trade Representative for Small 

Business, Market Access and Industrial Competitiveness, Office of the 

United States Trade Representative, Washington, DC .................................... 4 

APPENDIX 

Prepared Statements: 

Mr. James Sanford, Assistant United States Trade Representative for 

Small Business, Market Access and Industrial Competitiveness, Office 

of the United States Trade Representative, Washington, DC .................. 20 

Questions and Answers for the Record: 

Questions and Answers to Mr. Sanford from Representative Tipton .......... 24 

Questions and Answers to Mr Sanford from Representative Mulvaney ...... 26 

Additional Material for the Record: 

Statement for the Record of Terence P. Stewart, Managing Partner, Law 

Offices of Stewart and Stewart .................................................................... 29 

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(1) 

SMALL BUSINESS TRADE AGENDA: STATUS 

AND IMPACT OF INTERNATIONAL 

AGREEMENTS 

TUESDAY, JANUARY 28, 2014 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Richard Hanna [chairman of the subcommittee] presiding. 

Present: Representatives Hanna, Mulvaney, Luetkemeyer, 

Huelskamp, and Murphy. 

Chairman HANNA. Good morning, everyone. Mr. Murphy is on 

his way, but in the interest of time I think we will just proceed, 

at least with my opening statement and then the ranking member 

will have an opportunity when he gets here to read his own. 

Mr. Tipton is the normal chairman of this Committee. He has a 

family situation and is home in his district. I agreed to take his 

place, which I am pleased to do, but I know he wished he could be 

here. It is a subject that he is very familiar with and feels strongly 

about. 

I want to thank the assistant trade representative for taking the 

time to participate in today’s hearing. Mr. Sanford, thanks for 

being here. 

This hearing comes at a point in time when we have a number 

of trade policy initiatives in the pipeline, including the possible renewal of the Trade Promotion Authority (TPA). In addition, later 

on today the president will deliver his State of the Union Address 

outlining his vision and priorities for the upcoming year. I know 

many businesses are interested to hear if the president will make 

trade a priority. 

Last year, our Committee held a hearing with a diverse panel of 

small businesses on their international trade policy priorities and 

how to best increase exports and create new jobs here in the 

United States. All of our witnesses stress the importance of international trade agreements to help grow their exporting capacity 

and better compete in the global market. They pointed to various 

multilateral and bilateral agreements as opportunities to open new 

markets for their products and services. These agreements will 

help remove complex trade barriers, protect their intellectual property, and streamline the trade process. As you know, the administration has estimated the Trans-Pacific Partnership (TPP) will help 

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spur our exports, rapidly growing the Asian market, and create an 

estimate 3.5 million jobs right here in the United States. 

Our Committee understands the importance of these trade agreements and the opportunities they could provide for small firms. In 

2012, my home state of New York exported over $81 billion in 

goods which helps to support thousands of good-paying jobs. 

This brings me to a couple of key points. First, when conducting 

trade negotiations, the USTR needs to work in close coordination 

with Congress and small business to ensure that the stakeholders 

are prepared to take advantage of such agreements. If the administration seeks to renew trade promotion authority, they need to 

build and gain the trust of Congress and the private sector to ensure that their issues and concerns are being addressed. And second, I encourage the USTR to work more closely with federal and 

state trade agencies to communicate those opportunities to domestic exporters and to help address their current export barriers. Increasing agency coordination will help support small business firms 

increase their exports to those countries and therefore create new 

jobs and hopefully good paying jobs. 

Today we will hear directly from the Office of the United States 

Trade Representative on the status of current negotiations and how 

they are working to help small firms export. And as I have said before, we need leadership from the administration to make these 

agreements a priority. We cannot sit on the sidelines while other 

countries negotiate trade agreements that put our businesses and 

our competitiveness at a disadvantage. 

Again, I want to thank our witness today for his participation. 

I now yield to Ranking Member Murphy for his opening remarks. 

Mr. MURPHY. I would like to thank the acting chair, Mr. 

Hanna, for your opening statement, and I want to wish you a 

Happy Birthday. We know you just celebrated that. 

I appreciate the honorable assistant USTR for his presence here 

today. I am looking forward to hearing and making sense of what 

this administration’s ambitious trade agenda means for small businesses. 

With three-quarters of the world’s purchasing power located outside the United States, access to foreign markets is no longer optional but essential for businesses of all sizes to grow and create 

jobs. Studies consistently demonstrate that when given a fair 

chance, small business can benefit significantly from trade. Indeed, 

98 percent of U.S. firms that export have fewer than $500 employees. These companies are responsible for fully one-third of American-made products that are sold abroad. When small and medium 

sized firms are able to take the leap and begin selling their products abroad, there are important tangible economic benefits here at 

home. Businesses that export their products abroad create twice as 

many jobs as those that do not. Workers at globally engaged firms 

make wages 15 percent higher than employees of companies that 

have not reached into foreign markets. 

In Florida, international trade has long been an important component of our economy. The Port of Palm Beach, just next door to 

my district, Florida’s 18th District, generates over $261 million in 

economic activity for the greater region. This includes 2,500 direct 

and indirect jobs related to the port and shipping industries and 

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more than $12 million in local and state taxes. Statewide, cargo activity associated with Florida seaports accounts for nearly 100,000 

port-related jobs, supports more than 454,000 other jobs, while generating $24 billion in personal income and $66 billion in business 

activity. 

While small businesses are increasingly looking to foreign markets as a growth opportunity, there remain a number of hurdles. 

The vast majority of small businesses that do export send their 

products to only one market, often, our Canadian neighbors. For 

small companies to fully reap the benefits of trade, it is important 

they diversify and tap into rapidly emerging economies in Latin 

America, Asia, and other parts of the world. Small firms that have 

not yet begun exporting spend months preparing before they start 

and make significant expenditures, often more than 8 percent of 

their operating budget laying the groundwork. Without the scale 

and resources of their larger competitors, entrepreneurs often turn 

to government technical assistance and other guidance when determining how to best capitalize on trade opportunities. 

In that regard, it is important this Committee fully understand 

how government-managed programs are meeting small business 

owners’ needs. Also, it is important to understand where government falls short or is counterproductive. Whether it is access to 

capital, research on foreign markets, or similar services, these initiatives must be efficient and effective in helping entrepreneurs 

compete abroad. With a range of export assistance initiatives scattered throughout different agencies, including the SBA, it is vital 

that we ensure they are functioning and complementary and not 

duplicative manner. Likewise, this Committee has an important 

role to play in examining how various free trade agreements impact small firms’ export efforts. Too often, trade agreements have 

made small businesses’ needs an afterthought rather than a central 

pillar of discussion. While small firms stand to benefit from trade 

agreements that open new markets, an influx of new imports can 

serve to undermine local manufacturers and producers. Likewise, 

foreign markets often present a maze of new regulations that are 

difficult to navigate for smaller companies. It is critical that future 

trade agreements take into account these difficulties. 

In a global economy, companies can no longer afford to think 

only locally. With job creation remaining the top priority for American people, trade and exporting of U.S. goods remains a promising 

avenue for spurring growth and creating good-paying jobs right 

here at home. 

To achieve that goal, export assistance programs need to function 

smoothly, and any future trade agreements are cognizant of the 

unique challenges small firms face as they work to sell their products abroad. It is my hope that today’s hearing can shed important 

light on these topics. 

Thank you again for being here, and I yield the balance of my 

time. 

Chairman HANNA. Thank you. 

I want to take a moment and welcome some young people and 

their professors from Colgate University, one of our country’s premier universities in my district. Thank you guys for being here. 

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Our first and only witness today is Jim Sanford, Assistant U.S. 

Trade Representative for Small Business, Market Access, and Industrial Competitiveness. In his role, he manages U.S. trade policy 

activities relating to small exporters. Mr. Sanford has 17 years of 

experience working for the U.S. government on trade policy. 

Thank you, sir, for being here. We look forward to your testimony. You may begin. 

STATEMENT OF JIM SANFORD, ASSISTANT U.S. TRADE REPRESENTATIVE FOR SMALL BUSINESS, MARKET ACCESS, AND 

INDUSTRIAL COMPETITIVENESS, OFFICE OF THE UNITED 

STATES TRADE REPRESENTATIVE 

Mr. SANFORD. Thank you. Representative Hanna, Ranking 

Member Murphy and members of the Subcommittee, thank you for 

convening this hearing and for the opportunity to testify on the 

work of the Office of U.S. Trade Representative to expand exports 

for U.S. small businesses. 

Under President Obama’s leadership, USTR is working closely 

with our interagency partners to help American businesses of all 

sizes seize export opportunities and acquire the resources necessary 

to succeed in the global marketplace. USTR is pursuing a robust 

trade agenda that supports small businesses and broader economic 

growth by tearing down barriers and creating overseas opportunities for U.S. farmers, ranchers, manufacturers, and services providers of all sizes. We are working to level the playing field so that 

our workers and businesses can compete and prosper in the global 

economy, and we are also vigorously enforcing our trade rights and 

insisting that countries fulfill their commitments. 

First, the United States currently has in place free trade agreements with 20 countries. These trade deals have broken down barriers and pried open markets for U.S. products from agriculture to 

manufacturing to services. 

Secondly, USTR is pursuing new trade agreements that, when 

combined with existing FTAs, will represent two-thirds of global 

trade. In the Asia-Pacific region, USTR is negotiating the TransPacific Partnership (TPP) with 11 other countries—Australia, 

Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, 

Peru, Singapore, and Vietnam. The TPP will cut tariffs and break 

down non-tariff barriers, resulting in significant economic benefits 

for the United States. In fact, the Peterson Institute projects that 

the TPP will generate an additional $123 billion in U.S. exports. 

The TPP will provide new market access, streamline customs procedures, increase regulatory transparency, and strengthen intellectual property rights protections. These outcomes will be of particular benefit to small businesses. 

USTR is also negotiating the Transatlantic Trade and Investment Partnership (T–TIP). This is an agreement with the European Union. T–TIP will be a high standard, comprehensive trade 

agreement aimed at strengthening a partnership that already supports $1 trillion in two-way annual trade, $4 trillion in investment, 

and 13 million jobs on both sides of the Atlantic. 

In the WTO, we are working to expand U.S. export opportunities 

around the globe. The recently concluded WTO Trade Facilitation 

Agreement, once implemented, will reduce red tape and bureauSBREP-219 with DISTILLER

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cratic delay for goods shipped around the world. Again, U.S. small 

businesses will be among the biggest beneficiaries of this deal. 

USTR is also leading efforts in Geneva to advance negotiations to 

substantially liberalize trade in information technology products, 

services, and environmental goods. These plurilateral agreements, 

once implemented and completed, will help level the playing field 

and significantly expand opportunities for American technology and 

services firms of all sizes. 

Of course, to actively and effectively pursue these initiatives, the 

Administration will need trade promotion authority. We welcome 

the introduction of the bipartisan Congressional Trade Priorities 

Act of 2014 as an important step towards Congress updating its 

important role in trade negotiations. We look forward to working 

with Democrats and Republicans in Congress throughout the legislative process to pass TPA legislation with as broad bipartisan support as possible. 

Third, USTR is pursuing important initiatives in regional fora to 

address challenges that face small business exporters. In the AsiaPacific Economic Cooperation or APEC forum, for example, the 

United States and other members are advancing initiatives to assist U.S. companies to participate in global supply chains, address 

localization barriers, and promote greater regulatory coherence. In 

the Western Hemisphere, USTR is collaborating with other agencies, including Departments of Commerce and, State, and the 

Small Business Administration to connect more small businesses to 

regional partners and to foster entrepreneurship. 

Fourth, USTR is also vigorously enforcing our trade agreements. 

The Interagency Trade Enforcement Center (ITEC) significantly 

enhances the Administration’s capabilities to aggressively challenge unfair trade practices around the world. 

And finally, we are working to communicate more effectively how 

our trade policy initiatives can benefit U.S. small businesses. Ambassador Froman and the entire USTR team continue outreach to 

small businesses around the country to highlight export opportunities that we have created and to learn more about the new trade 

challenges and how we may help. USTR is committed to partnership with other federal agencies to help small businesses compete 

and succeed in the global economy. 

Thank you for this opportunity to testify about USTR’s efforts. 

Chairman HANNA. Both Mr. Mulvaney and Mr. Luetkemeyer 

and Mr. Huelskamp, I know that at least two of them have engagements, and I am grateful that they are here. So in the interest of 

time I am going to ask Mr. Mulvaney to ask whatever question he 

may have first. 

Mr. MULVANEY. Thank you, Mr. Chairman. I appreciate that 

accommodation. 

Thank you, Mr. Sanford. Let us skip over TPA and talk about 

the Trans-Pacific Partnership for a little bit. And I am satisfied 

that generally speaking it is going to benefit small businesses, not 

only in my district but across the nation. I generally favor most of 

the concepts that are contained in the Trans-Pacific Partnership, 

but I want to talk specifically about Vietnam. Because when you 

go down the list of countries that are in this discussion, I do not 

know much about Brunei, I fully admit that, but I know a little bit 

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about Vietnam, and it seems like this is probably the most closed 

economy in the T–TIP, and perhaps that we have discussed having 

a large trade agreement with in a long time. 

Tell me how you intend to deal with, number one, currency manipulation in Vietnam in relationship to the Trans-Pacific Partnership, and number two, with the large number of state-owned enterprises in this communist nation. 

Mr. SANFORD. Thank you, Congressman. 

This TPP is obviously a major priority for Ambassador Froman 

and USTR right now. We are working very hard to conclude that 

negotiation. Currency is an important issue. We appreciate the interest the Congress and many stakeholders have in this particular 

issue. This is an issue that we continue to consult with Congress 

about how we possibly address this within the context of TPP. 

Mr. MULVANEY. Give me some ideas. One of the questions I get 

back home from the folks who are going to now be competing for 

business in Vietnam, which they like, and they will be competing 

with firms from Vietnam, which they believe will make them better, but they keep asking me, Mr. Mulvaney, how are you all going 

to deal with the fact that these currencies do not freely trade? How 

do you all propose to address that? 

Mr. SANFORD. Let me say, this is an issue that the Treasury 

is the lead on, so I defer to Treasury. They are part of this discussion that we are having about how we may try to address this. But 

unlike USTR where we are developing the trade policy, when it 

comes to currency manipulation and currencies issues—— 

Mr. MULVANEY. Is there any language in the drafts that you 

have seen that specifically address this currency manipulation in 

the Trans-Pacific Partnership? 

Mr. SANFORD. Not with which I am familiar, but that is not 

something I am working on to be candid with you. 

Mr. MULVANEY. Okay. Secondly, the number of state-owned enterprises, again, many of my businesses are happy to compete with 

other folk who are trying to make a profit. It sort of changes the 

analysis when you are starting to compete with a company that is 

owned by the government and is not driven by that same profit motive. What protections, if any, are you all providing for in the 

Trans-Pacific Partnership to deal with state-owned enterprises generally, or specifically, in Vietnam? 

Mr. SANFORD. Well, Congressman, as you probably know, there 

is an ongoing discussion or negotiation on provisions that would 

apply to state-owned enterprises, disciplines that would in effect 

constrain the activities of these state-owned enterprises. That is 

ongoing negotiation. But this is clearly a priority for us in the context of TPP with countries like Vietnam, and frankly it will be a 

priority for us even in negotiations with T–TIP because our interest 

is in ensuring that throughin negotiations we do in the future visa`-vis third countries have these disciplines that we are building up. 

Mr. MULVANEY. Would you agree with me generally, Mr. Sanford, that competing with another profit-based business is different 

than competing with a state-owned enterprise? 

Mr. SANFORD. I would agree, and that is why we are putting 

a premium on developing some strong provisions in TTP that could 

help discipline the activities—— 

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Mr. MULVANEY. I am going to ask you a brief question about 

a local issue which is textiles in Vietnam. I do not know if you are 

familiar with it. If you are not, please just tell me. But we are dealing with a situation here where Vietnam wants to institute a new 

rule called the Single Transformation rule, which essentially says 

that they can bring something in from China, possibly heavily subsidized, make a very small change to it, and then export it into the 

United States under the terms of the Trans-Pacific Partnership. 

Are you concerned about that backdoor to cheap Chinese imports, 

subsidized imports? And if so, what are you doing about it? 

Mr. SANFORD. Obviously, textiles is a particularly sensitive negotiation that we are having with Vietnam in terms of the market 

access. I am not intimately involved with the textiles negotiations. 

I have a colleague who is the chief textile negotiator. 

Mr. MULVANEY. Then let me cut you off, Mr. Sanford, and I appreciate that. If you do not know, you do not know. I accept that 

answer. 

Let me deal with something maybe you do know more about, 

which is one of the largest complaints I get from small businesses 

back home when they deal with exporting is something you mentioned in your written testimony, which is the difficulty of dealing 

with non-tariff barriers. Their stuff gets stuck at the border, and 

you speak a couple different places in your testimony about what 

you are doing to help sort of level the playing field, increase transparency. Can you take the last minute of your time, please, and tell 

us a little bit more about what you are doing to help small businesses in that realm? 

Mr. SANFORD. Yeah, I think this is something we are trying to 

tackle in a number of different forums, whether it is TPP. In APEC 

we have done some work in terms of trying to come up with uniform documentation, for instance. The WTO Trade Facilitation 

Agreement, which was just done to provide more transparency in 

terms of documentation requirements, sets certain timeframes in 

which materials need to be—your exports need to be released. So 

I think what I would say is this is a topic that we recognize as particularly disadvantageous for small businesses, and whatever policy 

vehicles we may be able to address this in, whether it is a formal 

negotiation like the WTO Trade Facilitation Agreement or TPP, we 

are pursuing it there, but also in contexts like APEC. 

Mr. MULVANEY. At the risk of overstaying my time, I would 

simply encourage you on behalf of many members who have spoken 

to me, make sure that those efforts are real and they have teeth. 

I recognize the fact we pay lip service to it, and I think that is a 

good first step. But if we are not actively enforcing the rules on 

non-tariff barriers, our small businesses will continue to struggle. 

One of the reasons they do not export to many countries or many 

businesses within a specific country is it is just too hard to do. 

Mr. SANFORD. Yes. I was focusing more on the customs angle, 

but I think the bigger issue is the non-tariff barriers and that is 

something, especially when you look at something like the regulatory requirements that countries may have, we recognize this as 

a fundamental challenge for small businesses where they may lack 

the in-house resources to fully understand what is required in 

terms of complying with the foreign regulations, let alone getting 

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the product tested. If they do not have guaranteed future exports, 

there is some cost up front that can deter them from making those 

kinds of sales. So I just want to emphasize that this is a particular 

priority for us. We understand that these are challenges for all 

firms, but things like the customs challenges or a lot of these nontariff barriers, we recognize these are particularly disproportionately impacting small businesses, and whatever we can do is most 

helpful for them. 

Mr. MULVANEY. Thank you, Mr. Sanford. 

Mr. Chairman, thank you again. I apologize for going over time. 

Chairman HANNA. No, you are fine. 

Mr. Luetkemeyer. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman, for your indulgence. 

Mr. Sanford, following up on Mr. Mulvaney’s questions, to me 

one of the concerns I have is the enforcement. I mean, we can do 

great things with the—and I will get into some questions in a 

minute with regards to some of the treaties that we negotiate—but 

at the end of the day, if we do not enforce the provisions of that 

to protect our people, our companies, especially small businesses 

who do not have the resources to go out there and take some of the 

things that are hurting our small businesses, like dumping, for instance, or the currency manipulation, what are you doing specifically to enforce some of the contracts, some of the treaties that are 

out here to be able to allow the contracts that go on between the 

small businesses and their suppliers or their purchasers to make 

sure that there is an even playing field, they do not become taken 

advantage of, and that the treaty is worthwhile? 

Mr. SANFORD. Congressman, I fully agree. This has certainly 

been a priority for us to focus more resources on enforcement activities. And I think in the last four years or so there has certainly 

been an uptick in terms of enforcement activities at USTR. 

One thing I would particularly point to, because again, we recognize many small businesses lack the resources to put together the 

information that is required to bring a case, for instance, is the 

ITEC or the Interagency Trade Enforcement Center that was established a couple of years ago, it is housed at USTR. It is largely 

staffed by interagency detailees, and we are continuing to expand 

its resources. The staffing and resources that they have are particularly helpful in putting together cases. And I think this is a resource that can be tapped more for small businesses that are not 

able to sort of formulate the cases themselves. 

Mr. LUETKEMEYER. Okay. How many cases have you brought? 

Mr. SANFORD. Off the top of my head I cannot—— 

Mr. LUETKEMEYER. One? Ten? 

Mr. SANFORD. No. USTR brings a number of cases. I do not 

know what the count may be. 

Mr. LUETKEMEYER. We are getting a lot of generalities here 

this morning, Mr. Sanford. I would like some specifics. I really am 

concerned about this enforcement part because I think—I have got 

a company that I am very familiar with and we have a dumping 

problem and we cannot get it solved. And so there has to be an enforcement mechanism here to be able to allow fair trade that has 

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been negotiated through this treaty, and yet it is not happening. 

And so what are we doing? 

Mr. SANFORD. Let me make an distinction. 

Mr. LUETKEMEYER. Give me an example of a case that you 

have taken to whatever court or whatever mitigation group there 

is? 

Mr. SANFORD. I am happy to follow up with you, Congressman, 

with more details. One thing I would make a distinction is I think 

you are talking about dumping cases and I have been talking about 

disputes under say WTO provisions that—— 

Mr. LUETKEMEYER. Well, we will take intellectual property 

then. That is another area that is a grave, grave concern. I mean, 

the Chinese are going all over the place with this and there are a 

lot of other countries that are getting involved in it as well. I mean, 

we get information in this Committee about the number of attacks 

on the computer systems of the various companies, and now the 

large companies, their credit card divisions are being broken into. 

So IPR is an extremely important thing. What are we doing to 

protect—to pushback on some of the countries that are doing these 

things? 

Mr. SANFORD. Well, we have the special 301 provision that is 

a trade tool that is available to us. 

Mr. LUETKEMEYER. Are you executing it? Are you following up 

on it? 

Mr. SANFORD. Yes. Right now there is a process going forward 

looking at Ukraine. And there are very strong concerns about their 

lack of intellectual property protections. 

Mr. LUETKEMEYER. Are you pursuing a case against them or 

are we—— 

Mr. SANFORD. Well, yeah, I mean, there is a possibility of taking some trade actions. I do not want to get into the details because decisions have not been made, but yes. 

Mr. LUETKEMEYER. Are we taking action against anybody? Do 

you have any actions pending? 

Mr. SANFORD. Congressman, I am not the expert on IPR. I am 

more than happy to take questions you may have and follow up. 

Mr. LUETKEMEYER. Can you point to any enforcement action, 

sir, under anything that you are aware of? Are we taking any enforcement action? 

Mr. SANFORD. Congressman, we have a number of disputes in 

the WTO. They are ongoing right now, in IP and outside of IP. 

Mr. LUETKEMEYER. Okay. One more quick question. 

One of the things that if the president does not have trade promotion authority, sometimes I am wondering are we playing on the 

same field when we negotiate contracts, negotiate treaties with 

other countries because if he does not have authority and the other 

country knows he does not, are they taking advantage of that from 

a standpoint that they have got our country over a barrel from a 

negotiating standpoint? 

Mr. SANFORD. Well, we certainly can continue to negotiate. We 

will need the TPA to do the deal at the end of the day. I think that 

having TPA does strengthen our hand as trade negotiators so that 

there is less risk that our trade partners are withholding the final 

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movements they can make subject to us being able to demonstrate 

we can complete a deal. 

Mr. LUETKEMEYER. One more quick question. Well, my time 

is already expired here. I appreciate the indulgence of the chairman. 

You have a number of priorities with regards to things that you 

try and push with regards to small business. Where does ag figure 

in that list of priorities? 

Mr. SANFORD. That is part of what we are trying to do. 

Mr. LUETKEMEYER. Is it number one? Number five? Number 

10? Where on the list would ag fall within your list of priorities? 

Mr. SANFORD. I am not making a differentiation on that. One 

of the things we are trying to do is that we are ensuring that small 

business interests, whether it is in manufacturing, services, or agriculture is being reflected in our trade policy activities. And as has 

been pointed out by the acting chair or ranking member, you know, 

98 percent of our exporters right now are small businesses. So 

much of what we are focused on is of great benefit to small businesses. We are looking at how we can ensure that we are doing 

even a better job at that. 

Mr. LUETKEMEYER. Thank you, Mr. Chair. 

Chairman HANNA. Mr. Murphy. 

Mr. MURPHY. Thank you. Again, thank you for your time. 

I just want to talk just for a minute about some of the barriers 

to entry for these small businesses, because after the recent trade 

deals it seems pretty obvious that the big corporations have the infrastructure, that they can easily take advantage of some of the 

free trade agreements. But sadly, it seems that it is our government that has actually become a burden for a lot of the small businesses. And I do not want to argue against the valid role that our 

government should play in supporting and guiding and even 

cheerleading for American companies. But what happens when this 

sort of patchwork of export programs and agencies becomes too 

burdensome for the small businesses and what are your suggestions and ideas for how we could perhaps streamline that going forward? 

Mr. SANFORD. Well, I think, obviously, we do not have an export promotion program at USTR. I think our interest is in ensuring that we are linking the trade policy work we are doing with the 

other federal agencies that have export financing or trade promotion programs, and then doing a better job linking, as you noted, 

at the state level or local level to various programs they may have. 

Mr. MURPHY. So does that happen before the trade agreement 

is finalized? Does it happen during negotiations? After an agreement has been approved? Are you looking back on some of our previous deals saying, ‘‘Oh, here is how we can improve,’’ and perhaps 

what are some of those things you have learned? 

Mr. SANFORD. Yeah. I mean, it is an ongoing process with consultations with various advisory committees that we have, both 

from industry as well as state and local representatives. 

Mr. MURPHY. Do you have a monthly meeting where you get all 

the agencies together or every six months? 

Mr. SANFORD. Well, we have an active interagency trade policy 

staff committee that is our full interagency. There is also an interSBREP-219 with DISTILLER

11 

agency that is led by Commerce—the Trade Promotion Coordinating Committee, which is more on the promotion side rather 

than the policy side for part of that as well. And they interface 

with the states and some of their organizations. 

So I think there are two steps. One is during our formulation of 

our negotiating priorities and our negotiation, we need that active 

engagement and input from the various stakeholders we have. And 

then further down the road in terms of the outreach to make stakeholders aware of the opportunities that these agreements provide, 

that is another area where we really need to be able to tap into 

the state and local. 

Mr. MURPHY. Most committees talk about burdensome regulations and I agree with that in most cases, but one of the things 

that I really noticed in my one year here is that a lot of the agencies are not even communicating; that they do not talk. So I think 

we would all be open, Republican or Democrat, to hearing any suggestions you have if we could facilitate those meetings, or any ideas 

you have to improve communications. I think that would really 

help a lot of the small businesses. 

Mr. SANFORD. Yeah. Let me point back to the Trade Promotion 

Coordinating Committee, which has been an interagency process 

that was established some years ago and then has had a greater 

role in recent years after the National Export Initiative was 

launched four or five years ago. And I want to stress that is an active interagency process where you have OPEC and Ex-Im Bank 

and SBA, so you have got various finance elements. You have also 

got the Department of Commerce and its export promotion activities, both domestically and overseas. And there has been a lot of 

effort to better coordinate those activities. And then I would say 

from a USTR standpoint, figure out how we can, you know, if these 

FTAs are providing the new opportunities, we would like to see the 

finance agencies and the promotion agencies essentially promoting 

those new opportunities as part of this process. 

Mr. MURPHY. I want to talk just briefly about that Colombia 

Free Trade Agreement. We were told that this was going to improve labor practices, labor rights in Colombia, but from what I can 

tell that has not happened to the extent that we were told. What 

is different about this deal? What are we going to do to improve 

it so we can actually enforce it? Is it an enforcement issue? Is it 

because the labor provisions were written too weakly or there are 

exploitable loopholes? Was it sequestration that underfunded some 

of the agencies that could not actually go after them? What can we 

learn and what can we improve in TPP so labor practices are improved everywhere; that it is not a race to the bottom? 

Mr. SANFORD. Well, certainly the labor provisions in any of our 

FTAs is a priority for us. I mean, Colombia is a relatively very recent FTA and folks are still working on the implementation of 

these, ensuring the provisions are being applied. I am not familiar 

with what the issues may be there, if things are being investigated 

or not. But happy to follow up if you have specific questions on 

that. 

Mr. MURPHY. Switching over to Ag. It is a very important part 

of my district, and really, our country. And while I will continue 

to review TPA, I am interested in whether some of the agricultural 

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12 

provisions have been improved since 2002, and what are the key 

differences that would mean for some of the Florida farmers? We 

have a lot of specialty crops, especially citrus. 

Mr. SANFORD. Are you speaking in terms of our active negotiations? 

Mr. MURPHY. What has improved since the 2002 Trade Promotion Authority? 

Mr. SANFORD. Well, I mean, obviously this is a particular export priority for us, this whole area of agriculture. We are working 

hard to eliminate duties on all agricultural items in our trade 

deals. That is certainly what we are doing at TPP and we will be 

working to do in T-TIP, for instance. What I would stress is that 

there is even more attention being paid to sort of the non-tariff barriers, the SPS barriers that present some bigger challenges. As you 

know, even when we can eliminate the duties, it does not necessarily mean our products have access to that market. 

So that is where I think we are trying to come up with ways 

that, for instance, if you look at T–TIP, which is earlier on in terms 

of the negotiation, one of our big challenges there was needing to 

find science-based decision-making; that as you probably know, we 

have major products that have been banned from that market. So 

this is not simply an issue of eliminating the duties but figuring 

out ways to discipline the SPS provisions, ensuring there is transparency in the development of these, that we have input into them, 

that they are science-based. That is a major focus of us right now. 

Mr. MURPHY. A lot of my farmers are worried about some of 

their seasonal crops and the perishability of goods like tomatoes, 

and other specialty crops. Has perishability been brought up and 

how has this improved for American farmers? 

Mr. SANFORD. Not specifically because I do not work on the agricultural items, but I think this is something, perhaps the WTO 

Trade Facilitation Agreement can help as well speeding up customs 

clearance and things like this. 

Mr. MURPHY. How can TPP open up some Asian markets for 

citrus specifically? 

Mr. SANFORD. Well, the WTOTF was just done, so that is not 

even implemented at this point. But no, I do not. Sorry. 

Mr. MURPHY. We constantly talk about infrastructure, and I 

think we all agree we need to improve it. And one of the obstacles 

for our exports is our aging infrastructure. We talk continually 

about how we need to better use our harbor maintenance trust 

fund to maintain our ports and our highway trust fund will soon 

be unable to meet the demand for road maintenance. Can you talk 

briefly about the impact of infrastructure and the importance of 

maintaining it and improving it as far as that relates specifically 

to trade? 

Mr. SANFORD. Yeah, I think having a strong infrastructure is 

fundamental to being competitive when it comes to exports. So I 

think this is something that is important for us if we are looking 

to be expanding our exports, that our ports have the facilities to 

export; that we have the transportation systems in place to be able 

to transport product from field or factory to port; that we have the 

infrastructure that allows products to clear customs quickly so 

things do not get stuck on the dock. I think that this is a considerSBREP-219 with DISTILLER

13 

ation when foreign firms are looking to build plants here in terms 

of judgment of how competitive the place is. Do you have the adequate infrastructure to support the export of products in the 

United States? So I think this is tied up in our ability to fully take 

advantage of the new trade opportunities that our trade agreements yield. 

Mr. MURPHY. All right. Thank you. 

Chairman HANNA. Mr. Huelskamp. 

Mr. HUELSKAMP. Thank you, Mr. Chairman. I appreciate the 

opportunity to visit. I am from Western Kansas where agriculture 

is a main export industry, and I want to follow up on a few questions from my colleagues about your list of priorities as the office 

of USTR. How do you put together a list of priorities? I mean, these 

are multi-faceted agreements that deal with a wide range of exports and sometimes certain industries feel like they may or may 

not be at the top of the list of your priorities. So can you describe 

that prioritization process and then where agriculture might fit in 

that list? 

Mr. SANFORD. Sure. I mean, I think if you step back, when we 

are formulating an approach we are going to take in a trade agreement, we have an extensive consultation with the public. You 

know, put out a Federal Register. Get a sense of what the challenge is, what issues our stakeholders feel we should address. We 

have congressional mandated advisory committee systems that we 

consult with or advisors in terms of priorities. There is an interagency process, of course, and very importantly consulting with 

Congress in terms of priorities and views and things that you 

would like to see addressed in this. And then obviously, I have got 

my political leadership who have guidance they want to provide in 

this process as well. So it is an active and ongoing consultation 

process with a variety of different stakeholders of which Congress 

is a very important part. 

Mr. HUELSKAMP. But when we look back over actual historical 

statements from your political leadership and those in the party, 

there is a real concern that perhaps agriculture is not a main or 

a top priority. You know, if you are going to pick and choose, let 

us deal with barriers to other districts that might have more political access. I am just trying to have you describe exactly where is 

the biggest potential for export growth? And where do you expect 

that this would have the biggest bang for the buck in terms of the 

agreements you are proposing that we move forward on? 

Mr. SANFORD. Well, I think we are not looking at singling out 

specific areas. 

Mr. HUELSKAMP. When you negotiate these agreements, that 

is exactly what you do. These are not free trade agreements in 

which there are no barriers. 

Mr. SANFORD. Right. 

Mr. HUELSKAMP. There are thousands of pages of restrictions 

and lowering of restrictions. There are winners and losers in each 

of these agreements. My question is how do you decide and where 

does our culture fit in that? Because if you look at the export 

growth, we can talk about a lot of industries but it is an absolute 

fact that the export growth that is happening, our surplus is because of agriculture. That is the number one arena, and I see it as 

SBREP-219 with DISTILLER

14 

the number one potential. So what you see as the potential, obviously maybe that is a political calculation. I am just curious. How 

do you prioritize? And you are asking us, Congress, you want this 

input. I am asking what is your thought process and where does 

agriculture fit in that prioritization process. 

Mr. SANFORD. You are absolutely right. I mean, we are a powerhouse. The United States is a powerhouse when it comes to exports of agricultural products. We have a comparative advantage 

and we negotiate these comprehensive agreements. 

So I think to touch on something I was touching on earlier, you 

know, we are getting to the point where we have eliminated or continue to eliminate many of these duties and the problems we are 

facing are really on the regulatory side in many cases. It is the SPS 

barriers that we are trying to tackle. So the big challenge we have 

there is how do we come up with new provisions that can constrain 

the mischief that some of our trading partners may come up with 

that are keeping our products out of the market. 

Mr. HUELSKAMP. I agree. Let me give some specific examples. 

We had issues with Japan for a number of years. 

Mr. SANFORD. Sure. 

Mr. HUELSKAMP. And finally we reached an agreement I think 

successfully, but I am worried about South Korea restricting imports of our beef, current restrictions on meat going into Russia. 

Can you describe a little bit more of what is going on in those arenas? And certainly there are non-tariff barriers and they are not 

based on scientific standards, world standards, but they continue 

to fester out there and restrict the ability of American farmers and 

ranchers to get into places that want to buy our stuff. So what are 

we doing about these two particular countries and how does that 

play into these agreements in the future? 

Mr. SANFORD. Yeah. I am not intimately familiar. I do not work 

on agriculture, but obviously now we have Russia in the WTO and 

they are subject to those new disciplines. It is early on in that process. I know we had some challenges in getting some, I think, beef 

and some other poultry with Russia in recent years. I believe some 

of that may have gotten cleaned up as far as their accession process, but in fact, if there are unjustified measures they are taking 

then it is maybe something we need to take a look at in terms of 

the WTO commitments that they have made. Likewise, we now 

have in place an FTA with Korea, and if, in fact, experts need to 

take a look at these actions or these measures they have taken, but 

are they consistent with the WTO? Are they consistent with the 

FTA commitments? That is something, you know, we have a tool, 

and it may be something we need to look at. 

Mr. HUELSKAMP. I agree. We do have a tool—frustration from 

folks that actually raise our ag exports as how long it takes. We 

are expected to open our markets up to their stuff and then we 

spend years trying to sell what is the safest product in the world, 

and everybody knows the games that are being played there. And 

my concern is as we move forward because again, that is where the 

potential is. 

And what I have not heard from you though is the answer to 

that first question. So what is the number one priority? When you 

look at these, and again, you are going in a room, you are negotiSBREP-219 with DISTILLER

15 

ating hundreds and hundreds of different industries, and if you 

give for one industry, you take from another perhaps. I mean, that 

is the agreement. So I am just trying to figure what the thought 

process is as we move forward and say, hey, I want this authority, 

and I understand that. I am a supporter of that. But I do not understand how you prioritize and decide, for instance in my case agriculture, but in other cases how you prioritize those negotiations. 

Mr. SANFORD. Well, I guess we have objectives we are trying 

to achieve. They are quite broad. As part of a negotiation, obviously 

there are challenges and choices and compromises one must make 

as you are going forward. But up front we formulate what our negotiating objectives are and, in fact, that is something we do communicate with the Hill. So there is not some sense of a master list 

that says ag is here and IPR is here. I think to your point, I am 

trying to be responsive, is that during the negotiation, obviously it 

is going to depend on the context, and there may be some compromises that one needs to make. 

Mr. HUELSKAMP. I think, Mr. Chairman, if we might have 

time at the end I would like to ask a couple more follow-up questions. 

I would like to see that list of objectives, and I have not heard 

those here. I think Mr. Luetkemeyer asked a number of questions 

trying to get a sense of what the goals were, where the greatest 

potential was. The president announces he is going to double exports, but of course, every president says that. They all say that. 

This is what you are all going to agree on that, but again, there 

is a lot of hard work there. I have not seen the objectives. I mean, 

do you have a list of those? Have those been formulated by the administration? And where are those at? 

Mr. SANFORD. Well, I guess what I am thinking of is when we, 

for instance, that we launched negotiations to T-TIP, we sent a letter to the Hill which laid out what our negotiating objectives were 

comprehensively, and so that is what I am thinking of. And that 

came through. 

Mr. HUELSKAMP. How did agriculture fit in that? Was agriculture mentioned at all in the objectives? 

Mr. SANFORD. Of course it was. I do not have the language in 

front of me, but our objectives would be to eliminate duties on agricultural products and address all of these SPS problems we may 

be facing. 

Mr. HUELSKAMP. These have been facing for decades with the 

EU. 

Mr. SANFORD. Sure. 

Mr. HUELSKAMP. And they continue to grow every day and 

they are nonscientific. I mean, we had this battle with Japan and 

beef, and we are still, I think, and we have another issue coming 

with Brazil. 

Mr. SANFORD. Right. 

Mr. HUELSKAMP. When the department announced on December 23rd we are going to start importing beef from areas of Brazil 

that have foot-and-mouth disease, very little discussion on that. 

And so folks in agriculture are wondering where they fit in the 

prioritization scheme because, again, there are winners and losers, 

and I am a big supporter of open and free trade. But again, there 

SBREP-219 with DISTILLER

16 

are losers. I mean, you heard from some of my colleagues, and they 

want assurances of how you determine who the winners and losers 

are on these agreements. 

Mr. SANFORD. Right. I totally agree. We have, you mentioned, 

the challenges in Europe. This has been going on for some time. 

I am well aware of that. That is why I think T–TIP provides this 

new opportunity. If we are able to come up with some new provisions, new disciplines that we can extract and impose on the Europeans, then it helps provide more access for U.S. agricultural products and do away with some of the barriers you are facing right 

now. It would be more leverage than we have right now. 

Mr. HUELSKAMP. Okay. Thank you, Mr. Chairman. I yield 

back. 

Chairman HANNA. Do you get the message? 

Mr. SANFORD. Got the message. Yes. I appreciate that. 

Chairman HANNA. There are deep concerns in agriculture. A 

number of the questions, which I will not repeat, are associated 

with that. 

In my own district, we hear daily about the TPP. It would be 

easy to be dismissive and say it is misinformation or wrongheaded, 

but in the absence of real information about it, we do not really do 

that. The Trans-Pacific Partnership Agreement estimates 3.5 million new jobs. However, as I just said, so many of my constituents 

believe just the opposite. They look at other agreements and they 

have their opinions about them. Part of the job of the administration is going to be to sell this. Right? I mean, that is kind of why 

it is done the way it is done because if you open it up to the light 

of day on a regular basis you would probably get nowhere but take 

a long time to do it. 

So if you agree with that, how do you unwind all that? What is 

your plan to sell this plan, not just to Congress, but to small business unions and the American public? That is an enormous part of 

this problem. 

Mr. SANFORD. Right. No, I think there is an enormous education process that is necessary in terms of outreach, and I think 

that is something that we will need to leverage all resources to 

communicate that. As you know, it is an active negotiation. You 

cannot negotiate this in public, so there are always things that people do not know. But there are enormous benefits to this agreement, and we need to continue consulting with Congress as I think 

Ambassador Froman has been stepping up and doing more of that, 

but to work with the stakeholders more broadly. It has been a 

while since we had a big trade agreement completed, and these 

agreements tend to go on for a while. I think part of this is people 

are not quite sure when this is going to end and when they are 

going to see some concrete benefits from this. But one of the things 

we need to do is working with the Hill more, work with our interagency process, work with the stakeholders, and get the proponents 

or the beneficiaries of these agreements to be more vocal and to 

sort of get their views out there as well, so it is not simply those 

that may be critical of the agreement. 

Chairman HANNA. You have seen some of the information out 

there that we get that we cannot find a basis in reality but peoSBREP-219 with DISTILLER

17 

ple—and I would suggest to you that this is building momentum. 

You probably sense that yourself. Is that right? 

Mr. SANFORD. Yeah. I think it varies from negotiation to negotiation. I think there has been much more focus on TPP because 

that has been outstanding for some time, but we have seen this in 

the past in WTO in Seattle if you go back that far. So, yes. 

Chairman HANNA. You made mention earlier about labor conditions in Colombia. This might be somewhat of a practical and a little bit of a philosophical question, too. How realistic is it for us to 

expect countries to honor our view of what that means? And how 

realistic is it for us to actually set out to enforce our notion of what 

right and wrong is in these countries? Is it a practical expectation? 

I mean, whether you approve of it or not, is it a reasonable thing 

to attempt to do in these kinds of negotiations or you just set out 

guidelines and hope for the best? 

Mr. SANFORD. Well, I think it is back to what our negotiating 

objectives are. And so we are going to continue pursuing environmental and labor provisions in the agreements that we negotiate. 

Where we end up on that is a matter of negotiation with our trade 

partners, but that is our objective going in and we have certain expectations on being able to deliver on that. 

Chairman HANNA. How much do they conflict with one another? 

I mean, let us be honest. We know that 95 percent of the world’s 

population, et cetera, you know, China’s middle class is growing. At 

some point they are going to demand a lot more of what we do. Of 

course, they are the world’s largest polluter. They have a reputation, as Mr. Mulvaney indicated, this kind of backdoor deals and 

defiance of intellectual property rules. How do you balance those 

social issues in the environment which is also important? How do 

you go about doing that in a world where I guess our main goal 

is to sell goods and services? How do you manage that leverage? 

Mr. SANFORD. Well, you mentioned China, for instance. China 

may have an interest in joining TPP at some point, so if they were 

to join TPP, they would be buying into provisions that have been 

negotiated beforehand. That would provide a fair amount of leverage in getting what we want from them. It would help level the 

playing field. 

Chairman HANNA. So you do think you have some opportunities 

to make some differences on issues that might be more nuanced or 

at least you have less direct labor or less direct leverage because 

it is not necessarily dollars and sense we are talking about but only 

indirectly that? 

Mr. SANFORD. Yes, I think so, and I think the kinds of agreements we are conducting or negotiating, it is not static. We talked 

about SOEs earlier. Well, that is not something we talked about 

developing disciplines in the past on. So there is continuing to be 

more effort on some of these newer issues, I guess. In environment 

we are doing more. And I think the other thing is that simply rather than just these bilateral deals, when people are looking at potentially joining larger deals, like joining TPP or something, then 

there potentially is more leverage to have them sign on to provisions they would not have been willing to do bilaterally with us. 

Chairman HANNA. Sure. 

SBREP-219 with DISTILLER

18 

One last question. In your experience, and this Committee is all 

about small business and the opportunities that you are going to 

present with these agreements and that lie therein, what are the 

three barriers for small business exporters that you see that you 

can work out and address through the USTR? 

Mr. SANFORD. Well, I think it is sort of probably themes. One 

of the biggest sets of issues that we hear from stakeholders is sort 

of non-tariff issues, many of which are regulatory. Not understanding what the foreign regulations are, not understanding necessarily how they can demonstrate their products comply with 

those regulations, not having the in-house resources to figure these 

issues out, and therefore, perhaps passing up sales that they would 

otherwise have. Just not willing to pursue that. That in general is 

a very large topic and that is something that we are trying to address in our trade negotiations. 

Another big issue is simply the SMEs. Small businesses often 

simply do not know how to take advantage of the opportunities 

that our agreements provide. 

Chairman HANNA. Do you have a plan for that? 

Mr. SANFORD. Well, this gets back a bit to the discussions we 

were having about the TPCC and the interagency process. I mean, 

I think there is more scope for directing a lot of the finance programs and the export promotion programs, direct SMEs to take advantage of these countries in which we have FTAs with, for instance. The FTAs provide opportunities that are particularly beneficial to small businesses, and I think many small businesses are 

not making differentiation between countries in which we have 

FTAs and we do not. And there may be very big differences in 

terms of their ability to sell in those markets. And again, I think 

that is how having a better interface between the policy outcomes 

and the promotion works; they are working in concert. 

Chairman HANNA. When do you think we will see this agreement? 

Mr. SANFORD. The TPP? 

Chairman HANNA. Yes. 

Mr. SANFORD. Well, we are certainly trying to get it done in the 

very near term this year, but I guess what I would stress is that 

substance is going to drive the timetable rather than otherwise. 

And so it is more important that we get the agreement right, get 

the provisions we are pressing for, but we are very hopeful to get 

this done early this year. 

Chairman HANNA. Thank you. It is interesting how at a meeting like this you can carry on for four or five minutes and you use 

nothing but acronyms. 

Thank you, sir, for being here. 

As we start to consider various trade legislation and agreements, 

it is important that the administration keeps our Committee updated on the status and impact of small businesses. Will the USTR 

and the administration commit to periodically updating our Committee and how businesses are advancing in trade negotiations? I 

am assuming that is a yes answer? 

Mr. SANFORD. Happy to do that. Yes. 

Chairman HANNA. We appreciate that. 

SBREP-219 with DISTILLER

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Again, I look forward to working with you and my colleagues in 

Washington of identifying new solutions to assist small exporters. 

As we have said before, more exports should equal more and better 

jobs for this country. That is all our goals. 

I ask unanimous consent that members have five legislative days 

to submit statements and supporting materials for the record. 

Hearing no objection, so ordered. 

This hearing is now adjourned. And thank you very much, sir. 

Mr. SANFORD. Thank you. 

[Whereupon, at 11:01 a.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

Testimony of James Sanford 

Assistant U.S. Trade Representative 

for Small Business, Market Access and Industrial 

Competitiveness 

Before the Small Business Subcommittee on Agriculture, 

Energy, and Trade 

January 28, 2014 

Chairman Hanna, Ranking Member Murphy, and Members of 

the Subcommittee, thank you for convening this hearing, and for 

the opportunity to testify on the work of the Office of the U.S. 

Trade Representative (USTR) to expand exports for U.S. small 

businesses. 

Under President Obama’s leadership, USTR is working closely 

with our interagency partners to help American businesses of all 

sizes seize export opportunities and acquire the resources necessary 

to succeed in the global marketplace. 

America’s small businesses are key engines of our nation’s economic growth, job creation, and innovation. Our small businesses 

already play a major role in international trade—accounting for 

nearly 98 percent of all U.S. exporters. Direct and indirect exports 

by U.S. small businesses support millions of American jobs and account for nearly 40 percent of the total value of U.S. exports of 

goods and services. Nearly 300,000 U.S. small businesses exported 

in 2011—with exports of $440 billion, an increase of 14 percent 

from 2010. 

While these trends are encouraging, we can help our small businesses do more. There is still significant potential for export 

growth. Only a small fraction of U.S. small businesses are currently exporting. In fact, the United States lags behind many 

economies in this regard. And, most small exporters sell their goods 

to only one foreign country and to only one customer in that country. 

To expand export opportunities for small businesses and make it 

easier for them to take advantage of these opportunities, USTR is 

pursuing a robust trade agenda that supports small businesses and 

broader economic growth by tearing down barriers and creating 

new overseas opportunities for U.S. farmers, ranchers, manufacturers, and service providers of all sizes. We are working to level the 

playing field so that our workers and businesses can compete and 

SBREP-219 with DISTILLER

21 

win in a global economy. And, we are also vigorously enforcing our 

trade rights and insisting that countries fulfill their commitments. 

First, the United States currently has in place free trade agreements (FTAs) with 20 other countries. These trade deals have broken down barriers and pried open markets for U.S. products from 

agriculture to manufacturing to services. This helps all our small 

businesses—including those that export directly, as well as those 

that add value throughout the supply chain—by eliminating tariffs, 

increasing transparency in customs procedures, creating more predictable regulatory and legal frameworks, and promoting stronger 

intellectual property rights protection and enforcement. In addition, we are using the bilateral committees established under these 

FTAs to engage on ways we can help small businesses to take advantage of the export opportunities they provide. 

Second, USTR is pursing new trade agreements that when combined with existing FTAs, will represent two-thirds of global trade. 

We are also working on key multilateral deals that will have important benefits for small services providers and clean technology 

companies. 

• In the Asia-Pacific region, USTR is negotiating the Trans-Pacific Partnership (TPP) with eleven other countries (Australia, 

Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, 

Peru, Singapore and Vietnam). The TPP will have significant economic benefits for the United States. It will cut tariffs and break 

down non-tariff barriers—resulting in an increase in U.S. exports. 

In fact, according to a study funded by the Peterson Institute, the 

TPP would generate an additional $123.5 billion in U.S. exports. 

These exports will support thousands of additional U.S. jobs. Just 

as importantly, the TPP will also open the region’s services market 

to highly-competitive American companies—supporting even more 

American jobs in sectors from express delivery and telecommunications to education and healthcare services. For small businesses, 

the TPP will provide new access to Asia-Pacific markets, streamline customs procedures, increase transparency and due process in 

the regulatory environment in the region, prevent barriers to the 

free flow of information and requirements to localize servers and 

other internet infrastructure, and ensure intellectual property 

rights protection and enforcement. These outcomes will be of particular benefit to small businesses. We hear from small businesses 

that they often lack the in-house resources to understand and comply with foreign regulatory or documentation requirements or to establish facilities in other countries. 

USTR is also working to help small businesses take advantage 

of the new opportunities that will be provided by the TPP, including by expanding web-based TPP information and resources for 

small businesses, and establishing a new mechanism to do this in 

the TPP. 

• USTR is also negotiating the Transatlantic Trade and Investment Partnership (T-TIP) agreement with the EU. T-TIP will be 

high-standard, comprehensive trade and investment agreement 

aimed at strengthening a partnership that already supports $1 trilSBREP-219 with DISTILLER

22 

lion in annual two-way trade, $4 trillion in investment, and 13 million jobs in both economies. 

We are working closely with stakeholders to identify EU trade 

barriers that may disproportionately impact American small businesses, so that we can address them in the T-TIP negotiations. To 

aid in this effort, the U.S.-International Trade Commission will be 

issuing a report to USTR on these barriers next month, drawing 

on input received from a public hearing and small business 

roundtables held around the United States. 

T-TIP provisions on small business will build on the existing 

U.S.-EU cooperation in this area. Since 2011, USTR has engaged 

in a series of U.S.-EU workshops organized to bring together small 

business stakeholders and government officials on both sides of the 

Atlantic to discuss common trade issues of specific interest to small 

businesses and identify areas for strengthening U.S.-EU cooperation. Through this effort, not only have we been able to better understand challenges small businesses face, we have also taken 

steps to enhance U.S.-EU cooperation on small business trade promotion activities. 

• We are working in the WTO to expand U.S. export opportunities around the globe. The recently concluded WTO Trade Facilitation Agreement is the first major multilateral trade agreement in 

two decades. Once implemented, the agreement will reduce red 

tape and bureaucratic delay for goods shipped around the world. 

Small businesses will be among the biggest beneficiaries of this 

deal, since they encounter the greatest difficulties in navigating 

complex customs systems. 

• USTR is leading efforts in Geneva to advance negotiations to 

substantially expand the scope of high-tech products subject to 

duty elimination under the Information Technology Agreement 

(ITA). And USTR is also leading negotiations in Geneva on a free 

trade agreement focused exclusively on services. The Trade in Services Agreement (TiSA) will encompass state-of-the-art trade rules 

aimed at promoting fair and open competition across a broad spectrum of service sectors. And we have just launched an initiative in 

Geneva seeking to liberalize trade in environmental goods. These 

plurilateral agreements, once completed, will help level the playing 

field and significantly expand export opportunities for American 

technology and services firms of all sizes. 

Of course, to actively and effectively pursue these initiatives, the 

Administration will need Trade Promotion Authority (TPA). We 

welcome the introduction of the Bipartisan Congressional Trade 

Priorities Act of 2014 as an important step towards Congress updating its important role in trade negotiations. We look forward to 

working with Democrats and Republicans in Congress throughout 

the legislative process to pass Trade Promotion Authority legislation with as broad bipartisan support as possible. 

The United States has the most open markets in the world, but 

our products and services still face barriers abroad. The high tariffs 

and barriers faced by our exporters are essentially high taxes that 

U.S. citizens pay to foreign governments. Such high taxes distort 

patterns of trade that benefit consumers and producers, which is 

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why the United States does not charge them. We need every tool 

we have to knock down the barriers still maintained by other governments. If we do not engage, we will continue to bear the tax imposed by the higher barriers maintained against us by other countries. 

Third, USTR is pursuing important initiatives in regional fora to 

address challenges that face small business exporters. In the AsiaPacific Economic Cooperation (APEC) forum, for example, the 

United States and other members are advancing initiatives to: assist U.S. companies, including small businesses, enter and participate in global supply chains; address local content requirements 

and other localization barriers to trade; and promote greater regulatory coherence to prevent regulatory divergences from turning 

into non-tariff barriers. 

In the Western Hemisphere, USTR is collaborating with other 

agencies, including the Departments of Commerce and State and 

the Small Business Administration, to connect more U.S. small 

businesses to regional partners and to foster entrepreneurship. The 

Small Business Network of the Americas is helping SBA-supported 

U.S. Small Business Development Centers (SBDCs) and the companies they serve connect to counterparts in Central and Latin America in order to build further trade links and networks, including 

with major markets such as Canada, Mexico, and Brazil. 

Fourth, USTR is also vigorously enforcing our trade agreements. 

The Interagency Trade Enforcement Center (ITEC) significantly 

enhances the Administration’s capabilities to challenge aggressively unfair trade practices around the world. Small businesses 

typically have fewer resources than larger companies to prepare information to enable us to coordinate potential enforcement actions. 

ITEC enhances the Administration’s ability to investigate and pursue enforcement cases critical to U.S. companies, regardless of 

their size. 

Finally, we are working to communicate more effectively how our 

trade policy initiatives can benefit U.S. small businesses. Ambassador Froman and the USTR team continue outreach to small businesses across the country to highlight export opportunities we have 

created, and to learn more about new trade challenges and how we 

might help. In response, USTR is collaborating with other agencies 

to provide more on-line tools and information to make it easier for 

small businesses to do market research and identify tariff rates for 

specific products under existing U.S. FTAs. 

USTR is committed in partnership with other federal agencies to 

helping U.S. small businesses compete and succeed in the global 

economy. Thank you for this opportunity to testify about USTR’s 

efforts to expand export opportunities for this critical segment of 

the U.S. economy. 

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Small Business Trade Agenda: Status and Impact of 

International Agreements 

January 28, 2014 

Questions for the Record (QFRs) 

Rep. Tipton 

1. Regarding Trade Promotion Authority (TPA), can 

you explain how USTR works with members of Congress 

to ensure that our issues and concerns are being addressed? How often do you reach out to Congress? 

a. On the same subject of TPA, can you explain 

how you work with small business to gather their 

input on the trade agreements? 

b. And what is the process for communicating the 

trade text to interested businesses in my district? 

We think it is critical that Congress, stakeholders, advisers, 

and the public have a robust opportunity for engagement to ensure that we’re getting the best input—and that we are also 

explaining what we are doing, how we are doing it, and why 

we are doing it. That is why during trade negotiations, we engage in hundreds of Hill consultations with Congressional 

Members and staff on all chapters of the agreement, consistently requesting input on the direction, focus, and content of 

ongoing negotiations. Any Member of Congress can see text 

upon request, with USTR staff available to provide explanations, answer questions, and receive Congressional guidance. 

We are negotiating these agreements with an eye toward 

helping small businesses benefit from new trade and investment opportunities. That’s why USTR, the Small Business Administration, and the U.S. International Trade Commission recently teamed up to convene a nationwide series of roundtables 

with small firms in over 20 cities from coast to coast this fall, 

along with a hearing in Washington DC. USTR has also 

worked with our colleagues at Department of Commerce and 

the Small Business Administration to speak with the U.S. Export Assistance Centers and Small Business Administration 

Regional Offices regarding what they are hearing from small 

businesses across the country. 

We also work closely with our Congressionally-mandated advisory committee system, including members from businesses 

large and small, labor unions, environmental groups, consumer 

groups, health groups, state and local government, and academia to obtain input on our trade agreements. Among the sixteen Industry Advisory Committees (ITACs), the ITAC for 

Small and Minority Business is one specifically designed to 

provide policy and technical advice and recommendations to 

the USTR and to the Secretary of Commerce regarding trade 

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barriers, negotiations of trade agreements, and implementation 

of existing trade agreements affecting small business. 

We also publish a notice in the Federal Register seeking 

comments from the public, including small businesses, and 

hold a public hearing before initiating negotiations. During the 

negotiations of agreements such as the Trans-Pacific Partnership Agreement, USTR conducts stakeholder events at which 

interested members of the public have the opportunity to 

present views to negotiators and receive updates on the negotiations. 

2. One of the top trade barriers we hear from small 

firms is the ability to understand changes in foreign regulations—mainly non-tariff barriers. That’s why I introduced H.R. 1916, the Transparent Rules Allow Direct Exporting (TRADE) for Small Business Act, which would 

require the Department of Commerce to work with 

USTR to clearly publish changes in foreign regulations 

on export.gov or a substitute website. This will provide 

a one-stop source for small firms to stay current on 

changing foreign regulations. Would the Administration 

support this initiative? And what are you doing to currently help small firms in navigating foreign barriers? 

USTR is working with other agencies to help small businesses take advantage of the opportunities that our trade 

agreements provide, including by expanding web-based information and resources for small businesses. For example, 

USTR, the Department of Commerce, and the Small Business 

Administration launched the FTA Tariff Tool. This free, online 

tool (http://export/FTA/ftatarifftool/index.asp) can help small 

businesses take better advantage of the reduction and elimination of tariffs under U.S. free trade agreements (FTAs). The 

FTA Tariff Tool was expanded to include tariff information on 

textiles and apparel products, as well as rules of origin under 

U.S. FTAs, and will eventually be expanded to include these 

provisions drawn from new regional free trade agreements 

such as the TPP agreement. 

U.S. businesses that would like to be notified of changes to 

foreign technical regulations that can affect their business and 

access to international markets can register for Notify U.S., a 

free, web-based email registration service provided by the National Institute of Standards and Technology (NIST) of the 

U.S. Department of Commerce (https://tsapps.nist.gov/notifyus/ 

data/index/index.cfm). 

3. Last August the Government Accountability Office 

(GAO) issued a report, requested by our Committee, 

which showed the federal government needs to better 

manage, collaborate and promote trade programs so 

that export resources can be more efficient. Our Committee has been focused on reducing duplication in government agencies to help small firms understand where 

to access the appropriate information. How are you 

working with the trade agencies to reduce duplication, 

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and to help prepare small firms for new export opportunities? 

USTR is committed to working in partnership with other 

federal agencies to help U.S. small businesses compete and 

succeed in the global economy. In addition to USTR’s formal 

interagency trade policy process, we work closely with interagency partners to promote small business exports through the 

Trade Promotion Coordinating Committee’s (TPCC) Small 

Business Working Group, members of which also include the 

Departments of Commerce, State, and Agriculture, the Small 

Business Administration (SBA), the U.S. Export-Import Bank, 

and others across the Government. The TPCC Small Business 

Working Group connects U.S. small businesses to trade information and resources to help them begin or expand their exports and take advantage of existing trade agreements. Moreover, our newest FTAs, such as the Transatlantic Trade and 

Investment Partnership (T-TIP) and Trans-Pacific Partnership 

(TPP), will include chapters specifically designed to promote information sharing and cooperative activities to benefit smalland medium-sized enterprises (SMEs). This will allow U.S. 

SMEs to leverage the full benefits and opportunities provided 

by the agreements. 

4. Another report issued by the Government Accountability Office (GA), and appropriately titled, ‘‘Small 

Business Administration Needs to Improve Collaboration to Implement Its Expanded Role,’’ explains the duplication and lack of coordination from the SBA. In your 

opinion, what role should SBA play in the overall trade 

promotion function? 

USTR is engaged with SBA on a range of activities to communicate more effectively how our trade policy initiatives can 

benefit U.S. small businesses. For example, SBA has been a 

key partner in reaching out to small businesses through 

roundtables around the United States to obtain their input on 

Trans-Atlantic Trade and Investment Partnership negotiations 

(T-TIP) and trade barriers that may disproportionately impact 

small businesses exporting to the European Union. SBA is also 

a key partner, along with other agencies, to provide more online tools and information to make it easier for small businesses to do market research and identify tariff rates for specific products under existing U.S. FTAs. 

Rep. Mulvaney 

1. Some countries participating in the Trans-pacific 

Partnership (TPP) Agreement have a vast number of 

SOEs that have the financial backing and support of 

their national government and may have goals other 

than achieving a profit. Naturally, many small firms 

cannot compete with a SOE over the long term. How is 

USTR working to ensure that the small businesses in my 

district will not face unfair competition against a state 

owned enterprise? Please provide information specific 

to the TPP negotiations and draft language, as well as 

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any other initiatives USTR is undertaking with respect 

to SOEs generally. 

The goal of the TPP agreement is to level the playing field 

for U.S. workers and companies, including small businesses. 

That is why the TPP agreement includes new disciplines to address unfair competition from State-owned enterprises (SOEs). 

These issues have become increasingly serious concerns for 

U.S. industry and workers. We are seeking for the first time 

ever to establish clear rules through the TPP agreement that 

ensure that SOEs that are engaged in commercial activities 

that are competing with commercial firms are not receiving unfair advantages from the governments that own them. We are 

also working to increase transparency, so we know the extent 

of government participation in and support of SOEs. At the 

same time, we are drafting the obligations in a way that does 

not limit our own ability—or that of other TPP countries—to 

provide essential public services through SOEs. 

2. How is USTR addressing currency manipulation in 

Vietnam in regard to the TPP? 

Currency is an issue we care a great deal about and we understand Members of Congress in both the House and Senate 

do as well. The Treasury Department has the lead, but we are 

consulting with Congress and other TPP partners on the best 

way to address the issue of currency. 

3. Vietnam is insisting on a flexible rule of origin—or 

‘‘single transformation’’—for textiles in TPP. This would 

allow Vietnam to continue to buy Chinese governmentsubsidized components for its apparel for duty free export to the U.S. The U.S. has insisted on the yarn forward rule of origin, which has governed the U.S.’s free 

trade agreements for the past 25 years. 

a. Is USTR concerned that adopting a flexible rule of 

origin could allow China to use Vietnam as a ‘‘backdoor’’ 

to sell its textile products to the U.S. market? Why or 

why not? 

b. With respect to the U.S.’s proposed rule of origin, 

which USTR has advised us will include a ‘‘short supply’’ list, what is USTR doing to ensure that that list of 

exceptions does not swallow the rule and leave open an 

avenue for Chinese components? 

c. How does the USTR plan to address enforcement of 

the textiles provisions of the TPP, both generally and 

with respect to China specifically? 

Overall, our objectives for the TPP agreement on textiles and 

apparel are to encourage and promote regional production and 

trade for the textile sector, to advance regional economic integration, and to obtain significant market access opportunities 

for our industries. We are also seeking special customs enforcement procedures and commitments, as we have in past agreements, so that we can ensure the integrity of the agreement. 

We recognize that this requires a careful balancing of interests 

in the sector. 

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In the TPP agreement, we are seeking a high-standard rule 

of origin, and the ‘‘yarn-forward’’ approach is at the core of our 

proposal. In order to ensure the yarn-forward approach works 

effectively, we are considering categories where limited exceptions would be appropriate in cases of insufficient production 

of inputs in the TPP countries. These products, found to be in 

‘‘short supply’’, have been vetted with our domestic industry 

and our import community, as well as those of our TPP partners, to assure that these rules navigate a deliberate and careful space where they provide opportunities for apparel production while encouraging opportunities for yarn and textile producers to export. In addition, we are seeking to ensure that the 

benefits of the TPP agreement are limited to the countries that 

will be party to the agreement through carefully crafted rules 

of origin and the inclusion of special customs procedures to ensure the proper enforcement of those rules and other related 

commitments. 

4. Most of our prior free trade agreements have included extended duty phase-out periods of 10 years or 

longer for sensitive textile products to ensure appropriate transition times for U.S. textile producers and 

workers. What is USTR’s negotiating position with respect to phase out periods for sensitive textiles in the 

TPP and what is USTR doing to achieve these extended 

phase out periods? If extended phase-outs are not 

achieved, I have concerns about the impact that may 

have on industry my district and state. 

We worked in close consultation with the U.S. industry and 

other stakeholders as we developed our proposal for tariff 

elimination for textiles and apparel in the TPP agreement. Our 

approach to tariff elimination in the TPP agreement provides 

meaningful access to our TPP partners while providing sufficient time for our domestic industry and existing global partners to adapt. This proposal specifically addresses transition 

periods and the need to appropriately consider sensitive textile 

and apparel products. We will continue to consult with interested stakeholders on these issues, and will follow-up with you 

on matters of concern. 

Our proposal in the TPP agreement also contains textile-specific 

commitments to ensure strong and effective customs cooperation 

and enforcement, as well as a textile-specific safeguard mechanism 

that would allow parties to respond quickly to any damaging increases in imports under the TPP agreement by providing temporary tariff relief to domestic producers. Both of these provisions 

were developed in response to domestic textile industry concerns 

and have been an integral part of our recent free trade agreements. 

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