U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

87–948 2014

UNFAIR TRADE PRACTICES: ADDRESSING 

BARRIERS FACING SMALL BUSINESS EXPORTERS 

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 

MAY 22, 2014 

Small Business Committee Document Number 113–070 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


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 

SBREP-219 with DISTILLER

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Scott Tipton ..................................................................................................... 1 

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

WITNESSES 

Mr. Milton Magnus, President, M&B Metal Products Company, Inc., Leeds, 

AL, testifying on behalf of the American Wire Producers Association ............ 4 

Mr. Peter Jhones, Legal Advisor, Spyderco, Golden, CO ..................................... 6 

Mr. Don Shawcroft, Owner, Jon B. Shawcroft Ranches, Alamosa, CO, testifying on behalf of the Colorado Farm Bureau ................................................... 8 

Mr. Timothy C. Brightbill, Partner, Wiley Rein, LLP, Washington, DC ............ 10 

APPENDIX 

Prepared Statements: 

Mr. Milton Magnus, President, M&B Metal Products Company, Inc., 

Leeds, AL, testifying on behalf of the American Wire Producers Association ............................................................................................................ 20 

Mr. Peter Jhones, Legal Advisor, Spyderco, Golden, CO .............................. 30 

Mr. Don Shawcroft, Owner, Jon B. Shawcroft Ranches, Alamosa, CO, 

testifying on behalf of the Colorado Farm Bureau ..................................... 47 

Mr. Timothy C. Brightbill, Partner, Wiley Rein, LLP, Washington, DC ..... 53 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

SBREP-219 with DISTILLER

SBREP-219 with DISTILLER

(1) 

UNFAIR TRADE PRACTICES: ADDRESSING 

BARRIERS FACING SMALL BUSINESS EXPORTERS 

THURSDAY, MAY 22, 2014 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 9:31 a.m. in Room 

2360, Rayburn House Office Building, Hon. Scott Tipton [chairman 

of the Subcommittee] presiding. 

Present: Representatives Tipton, Luetkemeyer, Bachus, Meng 

and Murphy. 

Chairman TIPTON. Well, good morning. I want to thank everyone 

for taking time to be able to be here, and this hearing will come 

to order. 

I would like to be able to thank our witnesses for taking time 

away from your full-time jobs for this important hearing and we do 

look forward to your testimony. 

As we celebrate World Trade Month, this is an ideal time to review our trade policy initiatives and the effects on small businesses 

here in the United States. 

Currently there are a variety of trade policy initiatives in the 

pipeline, including ongoing negotiations with Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnerships and the 

possible renewal of Trade Promotion Authority. These initiatives 

will directly or indirectly affect the way small firms compete and 

operate in the global economy. Exports are a significant contributor 

to the United States economy, helping to support millions of good 

paying jobs in trade and competing industries. 

In 2013, the United States exported nearly $2.3 trillion in goods 

and services, an all-time high. Small businesses account for a substantial share of this value. According to statistics from the United 

States Census Bureau, approximately 97 percent of exporting businesses are small and medium sized businesses. 

While legal trade can confirm many benefits for small businesses 

and the economy, the opposite is true, when foreign nations and 

companies refuse to play by the established rules. Particularly unfair and predatory trade practices like dumping and intellectual 

property theft can result in substantial monetary harm to small 

businesses in trade competing industries. In addition, an inability 

to be able to protect your intellectual property rights can stifle the 

SBREP-219 with DISTILLER

2 

innovation necessary to come up with further technological advances. 

Remedies exist for small businesses to fight these unfair trade 

practices. Unfortunately in too many cases, the cost and complexity 

involved in fighting unfair foreign trade practices are beyond the 

means of most small businesses. 

A recent report from the Government Accountability Office highlighted some of these challenges, noting that the cost of pursuing 

antidumping and countervailing duty cases at between $1- and $2 

million. I have no doubt that the U.S. small businesses can compete with any company in the world. As we review the current 

trade agenda, we need to take a dual approach of improving coordination of domestic Federal agencies and strengthening our enforcement against unfair trade practices to ensure a level playing field 

for all small businesses. 

Again I want to thank our witnesses for participating in today’s 

hearing, and I would like to recognize our ranking member for his 

opening statement. 

Mr. Murphy. 

Mr. MURPHY. Thank you, Mr. Chairman. I want to thank you for 

putting this all together today, and thank you for calling this very 

important hearing. 

I also want to thank the witnesses for being here and testifying 

on this very important issue. I am sure we all wish that votes were 

not interfering this morning, but I am looking forward to listening 

to your comments and understanding how unfair trade practices 

are hurting American small businesses and what we can do to alleviate these problems. 

Reducing trade barriers and expanding free movement of capital, 

goods and services has transformed the U.S. economy and enabled 

the rise of global economy that has created new markets and expanded American access to emerging markets. The resiliency of 

small businesses has accounted for two-thirds of all new jobs created. 

In 2011 alone, small businesses accounted for 97 percent of the 

total number of U.S. exports. Over 200,000 small businesses are 

sending American products to every corner of the globe, reducing 

our trade deficit to the lowest levels in a decade and spurring a revival in the U.S. manufacturing sector. Although small firms have 

increased exporting in recent years, they still face several challenges accessing foreign markets. The main barrier seems to be the 

lack of information and an unclear understanding of where to start. 

Nearly half of small business exports spend a minimum of three 

months to nearly 10 percent of their annual operating revenue just 

preparing to export. 

The Export-Import Bank and the Small Business Administration 

have been vital to promoting the success of these companies by providing needed capital, one-on-one counseling, and access to foreign 

markets. I am hopeful that idealogical crusades do not get in the 

way of reauthorizing Ex-IM so that small business owners can continue to be at the forefront of global trading. While the Federal 

Government offers numerous trade promotion programs, more collaboration and outreach is necessary to ensure these services are 

accessible by the firms that need them the most. 

SBREP-219 with DISTILLER

3 

Unfair trade practices remain a major concern of U.S. workers as 

America debates new trade liberalization agreements in TPP, TTIP 

and TISA. These agreements have the potential to open new avenues for exporting around the world by lowering tariffs and harmonizing regulations. 

The benefits are not without cost however, and some provisions 

remain controversial. It is our job here in Congress to promote U.S. 

interests and see that our trade objectives are met. As negotiations 

progress, we will be watching closely. Issues such as currency manipulation, unacceptable labor and environmental standards, anticompetitive state-sponsored subsidies, dumping of goods in the U.S. 

below market value, and intellectual property rights violations, are 

all serious problems that need to be addressed to preserve American small business competitiveness in the global stage. Hopefully, 

this hearing will provide insight into addressing these obstacles. 

Again, I want to thank the chairman, and I want to thank the 

witnesses; and I apologize that votes are going to take us away this 

morning. 

Thank you. 

Chairman TIPTON. Thank you, Mr. Murphy. 

If the committee members have an opening statement prepared, 

I ask that they submit it for the record. 

I would like to be able to take a moment to be able to explain 

our timing lights for you. Each of you will have five minutes to be 

able to deliver your testimony. The light will start out as green. 

When you have one minute remaining, the light will turn yellow, 

and finally at the end of your five minutes, it will turn red. I would 

ask that you would try to adhere to the time limit if you can, and 

we will let you summarize at that point. 

I would now like to yield to our colleague, Mr. Bachus, so that 

he may introduce our first witness. 

Mr. BACHUS. Thank you, Chairman Tipton, also Ranking Member Murphy, for allowing me this privilege. 

Milton Magnus is a spokesman for both his company and the 

American Wire Products Association. He serves as their president. 

He is President of M&B Metal Products in Leeds, Alabama. He is 

a third leading job supplier or employer in that town of 12,000 people. I can’t imagine Leeds without M&B Hangers. What they do is 

they produce coat hangers. You will find that he is a very knowledgeable witness about the impact of unfair and illegal trade practices and their devastating effect on small and medium sized businesses that are really the backbone of our economy. They supply 

70 percent of our jobs. 

He has just about been put out of business by illegal dumping 

from China. That is the bottom line. Most of his competitors in the 

United States are out of business, and the incredible thing is they 

put them out of business, the American companies, and then they 

buy their equipment and sometimes take it to China or just put it 

out of production. They buy it because they—and they have eliminated most of the domestic production. 

Our office has worked with him for years. He has hired private 

investigators. He has documented with pictures, transshipping, 

dumping, where they actually put on a box that it is made in Vietnam, and they ship it directly from China. He has had pictures of 

SBREP-219 with DISTILLER

4 

where they claim the production is in Vietnam, and all it is, is a 

small shack with absolutely nothing there—and let me say this; I 

have always voted for free trade. I have been an advocate of free 

trade, but this sort of foolishness turns people against fair trade 

and makes people resist it. And if we are going to continue to be 

a trading Nation and negotiate these agreements, which I think we 

have to, the bottom line is we have to enforce them. 

Some of our competitors don’t play by the rules, don’t even make 

a pretense of doing it and some of us, I think, have been the advocates of free trade with some countries unless they change their 

ways, I am afraid we just can’t, there is just no way to promote 

trade with people who don’t play by the rules. 

So thank you again. Mr. Murphy and I are both going back to 

Financial Services for a markup, so thank you for the privilege of 

testifying. 

And he will tell a horrifying story. Unfortunately, several of his 

colleagues in the business are no longer in business because they 

just simply didn’t survive what he has gone through. 

Thank you. 

Chairman TIPTON. Thank you, Mr. Bachus. 

And Mr. Magnus, thank you for appearing here today, and we 

appreciate you and look forward to your testimony. 

STATEMENTS OF MILTON MAGNUS, PRESIDENT, M&B METAL 

PRODUCTS COMPANY, INC., LEEDS, AL, TESTIFYING ON BEHALF OF THE AMERICAN WIRE PRODUCERS ASSOCIATION; 

PETER JHONES, LEGAL ADVISOR, SPYDERCO, GOLDEN, CO; 

DON SHAWCROFT, OWNER, JON B. SHAWCROFT RANCHES, 

ALAMOSA, CO, TESTIFYING ON BEHALF OF THE COLORADO 

FARM BUREAU; AND TIMOTHY C. BRIGHTBILL, PARTNER, 

WILEY REIN, LLP, WASHINGTON, D.C. 

STATEMENT OF MILTON MAGNUS 

Mr. MAGNUS. Thank you, Chairman Tipton. 

Thank you, Representative Bachus for your words and your 

friendship. 

I am testifying today to explain the constant struggles small and 

medium size manufacturers face with unfair trade. In 2002 my 

company, along with two other U.S. hanger producers, saw a flood 

of Chinese-made hangers entering the United States at below our 

cost. We decided to file a Section 421 trade case, which is one avenue for relief for U.S. producers that are being harmed by imports 

from China. We were successful in our trade case at the ITC, but 

unlike an antidumping or countervailing duty case, a Section 421 

case has to go to the President for approval. 

Unfortunately no relief was granted. Shortly after that, Cleaners 

Hanger Company, an American company which was the largest 

garment hanger producer in the world, filed for Chapter 7 bankruptcy. Then it seemed like dominoes. All of the remaining U.S. 

hanger producers with the exception of M&B either went out of 

business or closed their U.S. operations and imported all their 

hangers from China. 

Over the next few years we struggled having to close our plant 

in South Hill, Virginia and lay off 85 hardworking Americans. We 

SBREP-219 with DISTILLER

5 

continued our struggle, but the Chinese were relentless, and eventually we had to either import 100 percent of our hangers or fight 

by filing an antidumping petition against China. We chose to fight. 

On July 31, 2007, we filed an antidumping petition against Chinese hangers. When we filed we were almost out of business, and 

we really didn’t know how we were going to pay the substantial 

legal fees and other costs to file this case, but we proceeded. After 

a long and demanding process before the ITC and Commerce, 

dumping duties ranging from 16 to 187 percent were imposed on 

imported hangers from China. Things improved, and we were able 

to pass along raw material increases. But just as we were hiring 

again, increase in our production, the same producers that were 

shipping hangers from China were working on illegal schemes to 

avoid dumping duties by shipping their hangers through other 

countries or simply just changing the company of origin on the paperwork. 

We filed over 30 e-allegations with Customs with specific information about these illegal schemes. We met with Customs officials 

on a number of times detailing what was happening, but we saw 

no progress. 

We then hired an investigator at great cost to our small company 

and sent him to Taiwan and Vietnam to visit these so-called new 

factories that were shipping hundreds of millions of hangers to the 

United States. He didn’t find any hanger factories, but he did receive detailed offers from Chinese producers to illegally transship 

hangers to the United States through Taiwan and Vietnam avoiding the dumping duties that should have been collected. 

When our investigator returned, we took him, his reports and 

our attorneys and met with Customs, as well as Immigrations and 

Customs Enforcement, or ICE, to detail the schemes. I felt really 

good when we left the meeting, but with the exception of one small 

importer transshipping Chinese hangers through Mexico, nothing 

happened. 

We then filed anti-circumvention petitions against two so-called 

hanger producers in Vietnam. We won those cases, too, but with 

the help of the Chinese producers, hanger imports from Taiwan 

and Vietnam continued to grow. We had no choice but to file an 

antidumping case against Taiwan and antidumping and countervailing duty cases against Vietnam. We won those cases as well, 

but immediately hangers started appearing from Laos and Malaysia. We have been told these hangers are made in Vietnam or 

China and transshipped to the United States. We decided not to 

file any more e-allegations or send investigators to these countries 

to bring back proof of duty evasion because we saw no results from 

our previous efforts. 

M&B along with U.S. producers suffering from the same evasion 

schemes formed a coalition to try to get meaningful legislation 

passed to address these illegal activities. The Enforcing Orders and 

Reducing Customs Evasion, or ENFORCE Act, creates a procedure 

at Customs to investigate claims of evasion including timelines for 

Customs to make determinations and apply the appropriate duties 

as well as regular and timely reports that will not only deter future 

evasion, but add transparency, accountability and oversight where 

there currently is none. The provisions of ENFORCE passed the 

SBREP-219 with DISTILLER

6 

Senate Finance Committee by voice vote and have been included in 

the Senate Customs Reauthorization bill. The complimentary bill 

in the House, introduced by Representatives Long and Sanchez, 

has a bipartisan group of 46 cosponsors. 

There are many other industries that face the same struggles 

with cheating, illegal transshipping, and evasion of their orders. 

They include industries making nails, innersprings, threaded rod, 

PC strand, wire shelving, and many more. We all produce with a 

high degree of integrity, which includes paying our workers a fair 

wage with good benefits, being environmentally responsible, paying 

taxes, and providing a return on investments. Without meaningful 

relief from ongoing duty evasion schemes, it will be difficult to 

maintain our U.S. production. 

Thank you for your time, and I welcome any questions. 

Chairman TIPTON. Thank you, Mr. Magnus. 

Our next witness is Mr. Peter Jhones. He serves as legal advisor 

to Spyderco, a manufacturer of utility knives based in Golden, Colorado. Spyderco is a family-owned enterprise started in 1981 and 

currently exports its products to over 60 countries. 

Mr. Jhones, thank you for appearing here today, and we look forward to your testimony. Please begin. 

STATEMENT OF PETER JHONES 

Mr. JHONES. Thank you. 

Chairman Tipton, Ranking Member Murphy, members of the 

Subcommittee, thank you for your invitation to appear today. 

I am Peter Jhones, Manager of Research and Development at 

Spyderco, Inc. The company has designed and manufactured and 

distributed some of the highest quality and most innovative folding 

knives and related products in the world. Spyderco was built from 

nothing by its founder Sal Glesser and his family. It now employs 

more than 80 individuals in Golden, Colorado, generates $20 million annually, and has been awarded more than 190 pieces of intellectual property worldwide. 

Customers have come to rely upon the high performance, superior engineering and ergonomic designs of Spyderco’s products. 

These customers include virtually all of this country’s military 

branches, special services, law enforcement personnel, and are in 

service at every level of state and local law enforcement. We sell 

our products through the United States and to 57 countries around 

the world. A significant portion of our manufacturing is performed 

in Golden, and we are in the process of tripling that capacity. 

The safety and reliability of the tools used by our country’s servants should not be called into question. However, that is exactly 

what is now happening. An alarming increase in counterfeits, 

knock-offs and infringing product is flooding the United States 

market by Chinese companies. The Chinese counterfeits are anything but an exact duplicate of a genuine item. These products are 

made of inferior materials, demonstrate poor manufacturing techniques, making for a dangerous and unreliable tool for service personnel and the consumer alike. These copies have achieved a level 

of outward appearance that makes it difficult for even our own 

staff to tell a genuine product from a fake. 

SBREP-219 with DISTILLER

7 

Spyderco does its best to police the marketplace seeking to remove copies from the stream of commerce. For the most part 

Spyderco has been successful in these activities, stemming the flow 

of counterfeit goods being sold through United States sales entities. 

However, it is having difficulty stopping the sales of counterfeit 

products sold through Chinese distribution outlets. Indeed, the 

bulk of these copies are entering the stream of commerce through 

online auction sites, primarily Alibaba, TaoBao and DHgate. These 

Chinese owned sites have a very poor or no response to requests 

to remove auctions of infringing goods. 

In contrast, the famous online auction house eBay has developed 

their Verified Rights Owner program to combat just this issue. Although utilizing more of a storefront format, Amazon.com also 

keeps a tight rein on infringing products preventing their entrance 

into the Amazon.com stream of commerce. 

Costs associated with trying to remove unauthentic products 

from Chinese sales Web sites is now prohibitive. As with all small 

business operations, availability of funds to fight an infringement 

war are restricted. Every dollar diverted for an effort to protect the 

marketplace from unsafe counterfeits and patent infringements 

takes money from corporate activities such as research and development, increasing production capacity, additional employees, machinery acquisition, wage increases, et cetera. As a result copies of 

many of our core products are now available on these sites at significantly lower prices than for which our genuine products can be 

offered. 

As I am sure we all realize, it is impractical for U.S. Customs 

and Border Patrol to inspect every package coming into this country. If all manufacturers selling products in America, domestic and 

international alike, were subject to the same intellectual property 

enforcement standards, this problem would be alleviated. All internet auction sites should be required to have an infringement notification and removal system that works. This would level the playing 

field between the U.S. and Chinese owned internet auction and 

commerce sites. It would also provide an ideal point for IP holders 

to review and stop the offer for sale of infringing items being put 

into commerce worldwide. 

Spyderco agrees it is important for the United States to continue 

embracing free trade principles with our trading partners. However, it is imperative that these partners respect and enforce American intellectual property rights regardless of importation venue. 

Spyderco respectfully requests this Subcommittee and the United 

States Congress to implement laws and treaties which require all 

Web sites viewable within the United States to publish and enforce 

strong intellectual property protection mechanisms and to require 

trading partners to respect and enforce American intellectual property rights. 

Thank you. 

Chairman TIPTON. Thank you, Mr. Jhones. Good to see a fellow 

Coloradan here. 

And it is now a pleasure of mine to also be able to introduce another fellow Coloradan and also a constituent of mine who has a 

product that I think it is important for any of us who like to be 

able to eat in this country. 

SBREP-219 with DISTILLER

8 

Representing a lot of our farm and ranch communities in terms 

of his property in Alamosa, Colorado, our next witness is Mr. Don 

Shawcroft. He is owner of Jon B. Shawcroft Ranches in Alamosa, 

Colorado. If you haven’t been there, one of the most beautiful 

places in the country and certainly a delight to visit. 

In addition to operating a small cattle operation, Mr. Shawcroft 

also serves as President of the Colorado Farm Bureau and has 

been a great advocate on behalf of our farm and ranch community, 

and I appreciate you taking the time to be able to be here today 

to testify; and please continue. 

STATEMENT OF DON SHAWCROFT 

Mr. SHAWCROFT. Thank you, Chairman Tipton, members of the 

Subcommittee. Thank you for holding this hearing. 

I am Don Shawcroft, President of the Colorado Farm Bureau, a 

fourth generation rancher from the San Luis Valley of southern 

Colorado and a board member of the American Farm Bureau Federation. Farm Bureau is, in fact, the largest agricultural based 

grassroots organization in the country with a membership of over 

6 million farm and ranch families growing everything imaginable 

from alligators, to children, to grandchildren, and even to zucchini. 

Trade is vitally important to agriculture on the U.S. economy. 

According to USDA’s Economic Research Service, the $136.4 billion 

of agricultural exports in 2011 produced an additional $176 billion 

of economic activity in the United States, including 637,000 jobs in 

the non-farm sector. Ag exports helped offset some of the nonagricultural U.S. trade deficit and are a significant market for Ag 

products from Colorado and the rest of the Nation. 

Agricultural trade could and will be more significant if and when 

it is unfounded upon and the SPS issues a non-tariff trade barriers 

and these things are eliminated. For example, Mexico has been 

using sanitary and phytosanitary measures to block the importation of U.S. potatoes into Mexico’s cities beyond those cities that 

are near our common border, where we have been able to in the 

past. However, I am pleased to announce that through the hard 

work of negotiation now, over time Colorado potatoes will be allowed into Mexican cities with populations of 100,000 or more. 

Early estimates give the indication that revenue from potatoes 

could be as high as $80 million, a truly fourfold increase over the 

present situation. This is a prime example of how SPS issues are 

used to prevent agricultural trade and how they can be overcome 

with science and negotiation and have a direct impact on American 

farmers. I ask you today to do all you can to eliminate all SPS 

issues and other barriers to agricultural trade. 

As was mentioned, when it comes to trade, currently there are 

three Ts that are in action and things that can be done. One is 

TTIP, or Transatlantic Trade and Investment Partnership Agreement. The other is the TPP, Trans-Pacific Partnership Agreement, 

and the other is key as well, Trade Promotion Authority. The TTIP 

negotiations between the U.S. and the European Union are an opportunity to deal with many substantial issues that impede U.S. 

and EU trade in agriculture, such as longstanding barriers against 

conventionally raised U.S. beef, ongoing restrictions against U.S. 

SBREP-219 with DISTILLER

9 

poultry and pork, and actions that limit U.S. export of goods produced using biotechnology. 

The U.S. and the EU are major international trading partners in 

agriculture. Ten years ago, the EU was the third largest designation for U.S. Ag products, but over the last decade, this growth has 

been the slowest among our top ten agricultural destinations. The 

EU is now the fifth largest export, and in 2013 we exported to 

them $11.5 billion of agricultural and food products, while they exported to us $17 billion of Ag products. This market needs to be 

increased, and the TTIP is an opportunity to do so. 

The other trade agreement, the TPP, deals with, of course, specific countries, and in particular one of those important ones is 

Japan. Japan is currently the fourth largest export market to the 

United States with over $14 billion of trade. This is important because Japan continues to do things that restrict the trade based on 

SPS as well as non-tariff barriers. The tariffs going into Japan 

need to be reduced. That is something that can be done with this 

agreement, and hopefully that will, in fact, happen. 

The last and perhaps the most important thing is the Trade Promotion Authority. If we negotiate these other agreements and the 

Trade Promotion Authority is not available to quickly and effectively put a stamp of approval by Congress on these agreements, 

much of that effort can be wasted. I highly encourage you to support the current Trade Priorities Act of 2014, which is H.R. 3830. 

It is a necessary and critical component for a successful trade policy agenda. 

While there are many challenges that yet remain, I again thank 

you, Chairman Tipton, and the members of this Subcommittee for 

the opportunity to testify to you today on this important issue. 

American agriculture drastically needs more market access that is 

free of SPS and non-tariff trade barriers. American farmers and 

ranchers are the most productive in the world. With market access, 

we can continue to provide high quality products to markets 

throughout the world. 

I look forward to answering any questions you may have. Again, 

thank you. 

Chairman TIPTON. Don, thank you for your testimony. 

And I would now like to be able to yield to my colleague, Ms. 

Meng, for purposes of introduction of our final witness. 

Ms. MENG. Thank you, Mr. Chairman. 

It is my pleasure to introduce Tim Brightbill. Mr. Brightbill is 

a partner in the international trade practice of Wiley Rein, LLP, 

in Washington, D.C., where he represents clients on all aspects of 

international trade law and policy, including import trade remedies, global trade policy, and trade negotiations. He is also an adjunct Professor at Georgetown University Law Center and has provided advice to the U.S. Government on ongoing trade agreement 

negotiations such as the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership. 

He is a graduate of Northwestern University and Georgetown 

University Law Center. From 1994 to 1995, he served as counsel 

to the House Committee on Small Business. 

Welcome back, Mr. Brightbill. 

SBREP-219 with DISTILLER

10 

STATEMENT OF TIMOTHY C. BRIGHTBILL 

Mr. BRIGHTBILL. Thank you, Congresswoman. I appreciate that. 

Chairman Tipton, Ranking Member Murphy, members of the 

Subcommittee, thank you for the opportunity to testify before you 

today on the issue of unfair trade practices and barriers facing 

small business exporters. 

I practiced international trade law for almost 20 years, and my 

practice has always focused on helping American companies, American industries, and American workers. I have worked with a variety of industries, including manufacturing of everything from steel 

to solar panels, to school notebooks, to heavy forged hand tools. I 

also work with many companies that provide services, both here 

and abroad. My job is to help these companies grow, prevent unfair 

trade practices from harming them, and to help eliminate trade 

barriers overseas. 

Small businesses face enormous challenges in the area of international trade. Trade laws and regulations are complicated. Trade 

remedy cases are expensive, as you have heard, and trade barriers 

are becoming more pervasive and more challenging all the time. As 

a result, it is probably not surprising how few small businesses are 

able to become substantial exporters of goods or services. 

Let me list several of the challenges facing U.S. small business 

exporters. First, dumping and subsidies. These are two of the most 

pervasive unfair trade practices. Foreign manufacturers often sell 

below cost to enter the U.S. market and take market share away 

from domestic competitors. 

Subsidies and government ownership of foreign competitors facilitate this kind of unfair pricing. Small businesses are forced to 

choose between cutting prices to match foreign competition or giving up sales and market share. Notably the antidumping and countervailing duty laws that address these practices are complex, and 

the requirements for filing trade remedy cases are difficult even for 

large companies. 

There are many steps that Congress and the Commerce Department could take to make the trade laws simpler and easier to use 

for small businesses. I would be happy to discuss those specific 

ideas later this morning. 

I would also like to endorse the comments of Mr. Magnus regarding the ENFORCE Act, which we hope will be passed and signed 

into law this year. 

Second is currency manipulation. This is a serious problem that 

harms all U.S. exporting businesses, large and small. The Peterson 

Institute for International Economics has called currency manipulation the biggest subsidy of them all and estimates that currency 

actions by China and more than 20 other countries have increased 

the U.S. trade deficit by $200 billion to $500 billion per year and 

that the United States has lost 1 million to 5 million jobs as a result of foreign currency manipulation. If Congress wanted to take 

one trade-related action that would create new American jobs, it 

would be to pass legislation to investigate currency manipulation 

as a countervailable subsidy. 

Third is intellectual property theft. This is a pervasive problem. 

It demands a serious response from the U.S. Government and law 

enforcement. The United States took an important step this week 

SBREP-219 with DISTILLER

11 

by filing criminal charges against the Chinese military for cyber 

hacking. The U.S. companies targeted are at the heart of American 

manufacturing of steel, aluminum, solar and others, and I applaud 

the Administration for taking that step; but the reality is that the 

Chinese government sees no difference between military espionage 

and corporate IP and trade secret theft, and there are thousands 

of U.S. companies that are victims of these activities. As one expert 

has stated, there are two kinds of U.S. companies, those that know 

they have been hacked and those that just haven’t figured it out 

yet. 

Fourth is the rise of state-owned and state-controlled enterprises, 

another factor that is very harmful to small business exporters. 

U.S. companies should not be forced to compete with foreign governments, and while China is a big problem in this area, there are 

many other economies that are problems as well. We need to include strong, enforceable disciplines on state-owned enterprises in 

all new trade agreements including the TPP and the TTIP agreement. I would be happy to discuss that later today as well. Finally, 

we need to address the growing use of non-tariff barriers to shut 

down trade. This can involve obvious measures like export taxes, 

but also more subtle barriers like Customs regulations, import licenses, and burdensome standards and certification requirements, 

even SPS requirements as Mr. Shawcroft just noted. 

The United States has been very successful in reducing tariffs 

worldwide, but those that want to protect their markets are continually looking for new ways to shut out foreign competition. 

So thank you again to the Committee and the Subcommittee for 

addressing this important issue today, and I would be happy to answer any questions. 

Chairman TIPTON. Well, thank you all for your testimony here 

this morning. I appreciate you again taking the time to be able to 

be here. 

I would like to begin some of our questioning, and Mr. Shawcroft, 

I would like to be able to begin with you. 

A number of Nations have imposed trade restrictions on GMO 

crops, citing safety concerns. Do you believe science supports these 

claims or are some of our trading partners claiming safety as a dubious excuse to be able to limit the export of American products? 

Mr. SHAWCROFT. I think you have stated the problem precisely. 

The science does not back up these claims. In fact, it is just the 

opposite. Science proves that these GMO products are safe. They 

have been through a rigorous testing, and it goes back to a precautionary type of approach that in particular the EU takes upon 

these things, and that that is it is trying to prove the negative. 

If there is no evidence that, in fact, they do not cause this, instead of saying, well, the use of this product does cause X, Y and 

Z, if you do have the proof that it does not cause those kinds of 

things, that is a precautionary principle, and that is I think true 

in the GMO case as well as other things that the EU is concerned 

about. We are extremely about the GMO case because there is a 

tremendous opportunity for increased corn and soybean export to 

the EU, and that’s an important issue. 

Chairman TIPTON. I appreciate that, and while we are on the 

issues for the San Luis Valley, you mentioned how potato growers 

SBREP-219 with DISTILLER

12 

were able to successfully challenge unfair Mexican SPS standards 

that restricted American potato exports. In this case, is it an 

outlier, or is the WTO dispute resolution mechanisms, are those 

adequate to be able to address agricultural product barriers in a 

timely manner? 

Mr. SHAWCROFT. I think that it is an effective avenue, but it does 

take time and it does take money, just the same as the other issues 

that have been discussed here by the other witnesses. The cost is 

tremendous, and I applaud Mr. Magnus for going through the effort of challenging those things rather than just lying down and 

going on his own way and doing something else. 

WTO is a process. We need to support that process. We need to 

make it something that is workable in a more expeditious manner, 

just the same as TTIP and TPP need to have those types of provisions where actions can be taken and that they can be enforced and 

again, in a timely and effective manner. 

Chairman TIPTON. Do you believe that some of the future multilateral trade agreements such as the proposed TPP and TTIP 

should adopt similar SPS resolution mechanisms? 

Mr. SHAWCROFT. I believe they need to. If they were to follow the 

lead of the WTO and say that those SPS issues can only be resolved based on science and that they need to have a level of reasonability to their implication and the implementation, I think 

that’s important. 

Chairman TIPTON. You know, and I think you brought up an important point. Mr. Magnus, how much money did you spend in 

terms of trying to be able to defend yourself? 

Mr. MAGNUS. An enormous amount. It is an ongoing process. We 

have to go through administrative reviews every year, and that is 

expensive also. It is well over $1 million to file a trade case, and 

then it is a quarter of a million dollars just to maintain them. 

Chairman TIPTON. Just out of your pocket? 

Mr. MAGNUS. The Government doesn’t pay for it, yes, sir. It is 

out of my pocket. 

Chairman TIPTON. It is out of your pocket. The bottom line either 

way you are paying for it, even if the Government pays for it, so 

you have still got that challenge. 

Mr. MAGNUS. Yes sir. 

Chairman TIPTON. Mr. Jhones, I appreciate you taking the time 

to be able to be here and a lot of great opportunities certainly for 

small businesses, small businesses like mine, to be able to take advantage of the websites and to be able to reach out of our different 

areas to be able to sell some of our products, but it also appears 

that as you noted in your testimony, ripe with opportunities to be 

able to counterfeit some of these products. 

eBay has its Verified Owner Rights program in place to be able 

to prevent these counterfeits, but many other forum websites, as I 

know you are aware, do not. 

What actions do you believe that the government should take to 

be able to prevent Web sites from carrying counterfeit products? 

Mr. JHONES. Well, we have found the huge bulk of our patent infringements coming in over Chinese websites, auction sites; and 

what we would like to see is just to have the same expectations of 

SBREP-219 with DISTILLER

13 

those websites as far as being able to have an infringing product 

taken off of it, the sale of infringing product. 

eBay responds to us now within eight hours if we notify them of 

an infringement that is being sold as an auction. Alibaba we almost 

don’t get any response. Alibaba, DHgate will make us prove our IP 

rights to an item that is on sale on their website, whereas eBay 

they will just allow us to say we will take liability for the case. If 

we say we have these pieces of intellectual property and we are 

willing to sign off on the liability issue for eBay, eBay will respond 

to us right away and does so. They are quite good about that. 

Chairman TIPTON. You know, I am curious, Mr. Jhones, have you 

been able to do any sort of an estimate in terms of what you have 

lost in terms of counterfeiting? 

Mr. JHONES. We had that discussion just before I came here. Our 

financial losses are probably not what would be considered to be 

significant. Where we really, really have concerns is with losses 

with our reputation. 

For example, a customer will buy a product off of a Chinese 

website, or a secondary sale that’s occurred from a product that we 

know came in through a Chinese website but was sold for example, 

at a store or flea market or a secondary sale, and then they are 

calling us saying what is your customer service going to do for this, 

it is broken. It has wounded me. It is falling apart. It is a poor 

product, and then our reputation winds up on the line because we 

have to tell that person that is not our product. It is a clone. We 

are aware those are out there. We apologize. We are working to 

cure that market, to close that market up, but that is not our product. And you can imagine that creates quite a bit of animosity in 

the customer-business relationship. 

Chairman TIPTON. I can imagine. I don’t want to belabor this, 

but I am a little curious given what you just commented where 

somebody wounds themselves. Have you had the threat of a lawsuit when it wasn’t your product? 

Mr. JHONES. Well, no, because you know, it is not our product. 

We are not in the chain of liability. But, of course, we still have 

concern for the consumer. We have concern for the people that 

thought that they bought our product. We have a high-end product. 

As I mentioned, a lot of our products find their way into service 

in this country in law enforcement and in all of our country’s servants, and we are really quite concerned that some of those people 

are going to get a hold of inferior product, and they are not going 

to meet the standards and the expectations that they have. 

Chairman TIPTON. All right, well, I appreciate that. 

Mr. Brightbill, certainly hearing some of these comments, I 

would ask you that they would probably appreciate it to be able to 

provide some free legal counsel on some of these issues. But what 

is the first thing that you would tell a small business company like 

Spyderco or M&B Metal Products if they came to you asking for 

help with intellectual property theft and dumping? 

Mr. BRIGHTBILL. Well, I think there are a range of options available. It is true that the trade remedy cases are very expensive. 

They can be time-consuming. There are other ways to address the 

problems, sometimes in negotiations, although that can be difficult. 

There was the reference to negotiations with Mexico. There are 

SBREP-219 with DISTILLER

14 

agencies that are out there willing to put some effort in, whether 

it is Customs and Border Protection, Commerce Department, the 

U.S. Trade Representative. We have had good results sometimes 

just on a bilateral level talking to another country, flagging a barrier that they have imposed without having to bring a full case. 

So, although sometimes trade remedy cases are necessary, there 

are other ways sometimes to address the same problem and hopefully get some results for companies that shouldn’t have to pay for 

this, and the Government can support them on it. 

Chairman TIPTON. Okay. I appreciate that. 

Mr. Magnus, I thought it was curious in your testimony to where 

you were able to stop the illegal importation through legal remedy 

and awareness, but then it would pop up coming out of a different 

country as well and it kind of reeked of Whack-A-Mole. You put 

one down, and another would pop up somewhere else. 

You referenced that transshipping is a way that they are using 

to be able to avoid the tariffs and trade laws. Do you have some 

recommendations that you could make to Congress on how to best 

and most effectively combat that. 

Mr. MAGNUS. We do and we have in the ENFORCE Act. The ENFORCE Act sets timelines, makes accountability where there is 

none, and involves the private sector as well as Customs. It is a 

tough job for Customs, but it is a black hole when we give them 

something because we never hear back from them. We have detailed it with the ENFORCE Act. Senator Wyden endorsed it, and 

his staffers even in a half a day were able to set up illegal transshipping schemes from China on hangers. They emailed the Chinese producers to say, yes, we can’t ship it from China, but we can 

ship it from another country, and this is your price. They don’t respect our trade laws, and the provisions of the ENFORCE Act that 

we have put before both the Senate and the House details some 

steps to be taken. 

Chairman TIPTON. Yes, I am certainly aware of the ENFORCE 

Act. Any of the other gentlemen, do you have any other comments 

or thoughts in terms of how Congress can start to be pushing back 

to make sure that our businesses, our jobs, are going to be able to 

be protected? 

Mr. SHAWCROFT. I would suggest that the principle of trust but 

verify is a very important aspect in all of these negotiations. As 

was mentioned or referred to the Mexico situation and potatoes, 

that took a long time. That was a slow process, and now what has 

to happen is we have to trust those Mexican officials and what they 

have said they will do but, follow through and make sure they, in 

fact, do that. I think that’s an important aspect. 

Chairman TIPTON. Mr. Brightbill. 

Mr. BRIGHTBILL. Sure. With regard to Mexico, I wanted to point 

out that a couple of industries we work with, notably the steel industry, is facing a similar problem where Mexico has introduced a 

new import licensing system that is holding up steel shipments at 

the border and greatly increasing costs for U.S. companies that are 

trying to export, large companies and small companies. 

And then just to highlight the ENFORCE Act one more time, we 

have had a couple of cases as well where the circumvention begins 

even before the trade case is over. We have brought cases on school 

SBREP-219 with DISTILLER

15 

notebooks from China. Before you know it, they are allegedly coming from Taiwan or some other country. 

Another case we brought on steel grating, subway grating like 

you walk on here in Washington, before the case had even ended, 

all the exports from China had disappeared and they started showing up from Malaysia. The only problem is Malaysia doesn’t make 

bar grating. So, this is the kind of problem that companies face 

every day, and while Customs might bring a big enforcement action 

after four or five years, what we really need is enforcement of the 

antidumping duties right from the start, and that is where the ENFORCE Act could really be valuable to companies and industries 

like ours. 

Chairman TIPTON. Well, I appreciate again, gentlemen, your 

comments. I would like to yield to my colleague, Ms. Meng for her 

questions. 

Ms. MENG. Thank you. 

I have a question for Mr. Brightbill. Trade assistance is administered by 20 different Federal agencies, each of which is tasked with 

their own mission, their own set of policies, and their own competing resources. What in your opinion would be the quickest and 

most cost effective means of improving coordination between these 

agencies and harmonizing their export strategies? And anyone is 

free to answer. 

Mr. BRIGHTBILL. Thank you for that question. I think this committee and subcommittee have done a good job flagging the issue 

that there are lots of resources out there, but they overlap, and the 

missions are not always clear to companies out there just trying to 

figure out how do I send my products abroad to other countries. 

So, I think there is a way to streamline and simplify and try to 

not have so many different agencies trying to provide aid so that 

its understandable to the companies who aren’t familiar with all of 

these different programs and efforts; so I think this committee has 

done a good job flagging that as a place to start. 

Ms. MENG. And we frequently hear that small businesses make 

up nine out of every ten businesses that export goods from the 

U.S., but when it comes to the negotiating process for these trade 

agreements, the interests of the small business community often 

takes a back seat to that of the larger multinational corporations. 

Is there anything that can be done to elevate the concerns of these 

small businesses in going multilateral trade negotiations? 

Mr. BRIGHTBILL. I would just say to that that there is a system 

of industry trade advisory committees that provide input to the 

trade negotiators. I sit on one of those committees relating to services, and there is a specific small business committee that is open. 

Now that is one way that some of the views can get across, but I 

do think the process needs to be more transparent. 

We are negotiating very significant, gold standard free trade 

agreements. I think if the American public and American businesses knew a little more of what was being negotiated, they would 

support them strongly, and they would be enacted into law once we 

reach these final agreements. But in the meantime when the process is not particularly transparent, it is very difficult to build support for them. 

Ms. MENG. Yes. 

SBREP-219 with DISTILLER

16 

Mr. SHAWCROFT. Yes. Thank you. 

I would also like to comment the value on behalf of small businesses in agricultural, organizations like the American Farm Bureau and Colorado Farm Bureau who stand up for the needs of 

those individuals and those small businesses in those negotiations, 

that type of representation is important. 

Ms. MENG. Thank you. 

And as the U.S. continues to negotiate with its 11 partner Nations on the terms of the TPP trade agreement, as you know the 

Administration has been less than forthcoming with specifics with 

trade talks resuming this week. What protections are vital for your 

industries in any new agreement with Pacific Rim countries? 

Mr. SHAWCROFT. Yes. Thank you. 

I would just say that foremost is the concerns that have been expressed here today, the idea of having provisions there that antidumping cannot happen, make sure that those countervailing 

issues are resolved and particularly for agricultural, the non-tariff 

type barriers, and the tariff barriers, the SPS, sanitary and 

phytosanitary issues in agricultural, those types of things need to 

be in that agreement specifically and that there needs to be a viable and easily accessed enforcement tool in those agreements. 

Mr. BRIGHTBILL. Congresswoman, I would just add to that. 

The issue of state-owned enterprises is a critical one. We have 

not had SOE provisions in a free trade agreement before. We need 

strong, enforceable disciplines there. Companies should not have to 

compete with foreign governments, and they shouldn’t have to compete with foreign government investments, whether or not it is 

coming here or in a third country, and so we need strong, enforceable disciplines. State-owned enterprises should not receive preferential legal or regulatory treatment. They shouldn’t receive subsidies, and we should have a way to be able to ask questions of 

these state-owned enterprises and get information. That is the 

least we can do in a free trade agreement like the TPP or the 

TTIP. 

Ms. MENG. If the TPP is ratified, would U.S. beef producers create more jobs as a result of it, or would the benefits flow mainly 

to foreign producers? 

Mr. SHAWCROFT. I would certainly expect that in agricultural, in 

particular beef, that the advantage would be to us. There is much 

of the beef production today goes internationally because, quite 

frankly, most American consumers are not interested in consuming 

that part of the animal, as well as particularly the impact of the 

high-end cuts when it comes to steaks and prime rib roasts and 

those types of things in the beef trade. 

That demand is, in fact, global and so those products move across 

the world. The more demand that there is with growing economies 

and emerging economies around the world, I can see that, I would 

certainly hope, at least and believe, in fact, that those prices would 

increase because of this agreement once they were ratified by Congress. 

Ms. MENG. Question for Mr. Magnus or again anyone is welcome. 

When I talk to small firms in my district, the barrier they most 

commonly raise is not necessarily stiff tariffs on exports but finding 

affordable credit to support their export business. Do you believe 

SBREP-219 with DISTILLER

17 

that the Government’s current mix of trade financing programs 

meets the needs of small firms? 

Mr. MAGNUS. I will have to decline answering that. I am not 

fully versed on that. Most of our trade issues are dumping coming 

this way, not being able to export. Because many other Nations 

don’t have dumping duties on Chinese hangers, it is very difficult 

for us to compete in foreign countries because of the low-priced 

Chinese hangers in foreign countries. 

Mr. BRIGHTBILL. On the financing issue, there are financing programs available through the Government. I think this committee 

has emphasized private investment in private financing as well, 

which is important. One concern we have is when Ex-Im Bank provides financing abroad, in areas where there is already overcapacity, like steel or raw materials that then goes into steel coming back here, so that is a particular concern where the financing 

is subsidizing or benefitting excess capacity abroad that then is 

going to come back here and compete with U.S. companies. 

So, but in general I think there are financing options available. 

It is still difficult for companies and small businesses in particular 

to get credit. Many of my clients which are in a weakened condition 

when they are bringing these dumping cases, also have difficulty 

in terms of financing and credit to grow their businesses, so that 

is still of an important area of concern. 

Ms. MENG. Thank you. 

I yield back, Mr. Chairman. 

Chairman TIPTON. And I appreciate the question, particularly on 

some of the access to capital issues. 

We have got a bill that I am cosponsoring called Capital Access 

to Main Street to be able to actually allow banks to eliminate some 

of the regulatory requirements to be able to do a look-back on 

seven years of financial statements, P and Ls, balance sheets, to 

be able to make a good business decision. When we talk about are 

farm and ranch community, the crops can be flooded out, frozen or 

burned, but in that fourth year when the commodity prices are up, 

it is going to come back. We just need to be able to free up some 

of these banking options and let bankers be bankers, I think frankly to be able to address some of that. 

Since we have got just a couple of minutes I think before votes 

are going to be called, Mr. Magnus, your company has filed more 

than 30 e-allegations with the Customs service once you discovered 

that Chinese manufacturers were circumventing the antidumping 

duties. What kind of response did you receive from the agency? 

Mr. MAGNUS. We received none except when we would meet with 

them they would say that we received your e-allegations but because of the laws we cannot report on what we are doing on them. 

So they really, once you file an e-allegation, you have no idea 

whether they look at it, whether they act on it, or whether they 

throw it in the trash can. 

Chairman TIPTON. So the answer is nothing. 

Mr. MAGNUS. Nothing. 

Chairman TIPTON. Absolutely nothing. 

Mr. MAGNUS. Absolutely nothing. 

Chairman TIPTON. Would you remind me again how many Americans you employ? 

SBREP-219 with DISTILLER

18 

Mr. MAGNUS. In Alabama we employ between 80 and 90. 

Chairman TIPTON. Okay, great. That is some good information 

for us. 

And, Mr. Jhones, has your company attempted to be able to avail 

itself of any of the intellectual property remedies through the ITC, 

and have you been made aware of some remedies that are potentially available to you. 

Mr. JHONES. We have pretty much fairly recently have become 

aware of the ITC. We have a quite cyclical sales. Fourth quarter 

is quite high for us. If we were to request Customs to stop a shipment of infringing product and they were to stop one of our shipments, remembering that these are clones, that could very well put 

Spyderco out of business. 

It is a very large concern with us and we have had some of the 

same responses to our concerns with Customs that Mr. Magnus has 

had. We haven’t had a lot of response. We have had, quite frankly, 

rumors; and competitors in our industry discuss the same problem, 

and they feel like Customs is somewhat unresponsive to them. 

We have a large fear that if we were to request assistance there, 

that some of our stuff would get stopped, and we wouldn’t have the 

ability to continue business basically. Our American production 

will not support us at this time, although we are trying to get that 

ramped up. So it is a bit of a fearsome situation. 

Chairman TIPTON. So you aren’t feeling a lot of support in that 

area? 

Mr. JHONES. No. Sorry. 

Chairman TIPTON. No. That is good for us actually to be able to 

know. 

You know what, it took this administration more than two years 

to be able to submit the Korea, Panama and Columbia free trade 

agreements to the Congress, and during that period of time, these 

Nations that just cited the ratified trade agreements with other 

Nations, resulting in American farmers losing a substantial market 

share to their competitors. 

Mr. Shawcroft, do we need to be able to guard against something 

similar happening while we negotiate this Trans-Pacific partnership and Transatlantic agreements? 

Mr. SHAWCROFT. We do. I am not real sure what you can do to 

keep other people from taking advantage of an opportunity other 

than to move quicker and, in fact, for Congress to take action and 

approve a trade promotion agreement. 

So that once those negotiations have taken place, it can be ratified quickly without a lot of discussion about what the individual 

terms of it are. I know it is sometimes somewhat perceived as a 

two-edged sword when you have a trade promotion authority because not everybody will be happy with it, but it is something that 

we have to rely on those negotiators; and if there is a little bit of 

emphasis that it needs to be done quickly by Congress and for example, yourselves in these Subcommittee, who can influence the 

expeditiousness of that, I think it needs to be done. 

Chairman TIPTON. Well, thank you. 

And, gentleman, I would like to take you all for taking the time. 

Ms. Meng, did you have any other further questions to follow-up 

on. 

SBREP-219 with DISTILLER

19 

I want to thank for taking the time to be here. This has provided 

us with some good information in terms of the responsiveness and 

lack thereof by the government in terms of being able to protect 

American jobs and to be able to expand those opportunities to create more jobs. I know in our district that’s a number one issue, jobs 

and the economy, the people are concerned about and our opportunities to be able to export. We have the empirical evidence when 

those are present, and we have the opportunity to be able to do it 

in a fair way. We actually benefit the American consumer and certainly American families in that process. 

You have all provided some very important insight to that and 

how unfair foreign trade practices are actually impacting our small 

businesses. This insight will assist us in Congress in our efforts to 

be able to ensure that foreign nations and companies play by the 

rules so that we are going to be able to compete on a level playing 

field, which is I think all that we ask for. 

I would like to able to ask for unanimous consent that members 

and the public have five legislative days to be able to submit comments and supporting materials into the hearing record. 

Hearing no objection, so ordered, and this hearing is now adjourned. Thank you again, gentleman, for your time. 

[Whereupon, at 10:30 a.m., the subcommittee was adjourned.] 

SBREP-219 with DISTILLER

20 

A P P E N D I X 

Milton Magnus Testimony 

House Committee on Small Business 

May 22, 2014 

Good Morning, my name is Milton Magnus, and I am President 

of M&B Metal Products Company, Inc. of Leeds, Alabama. We 

manufacture wire Garment Hangers in Alabama. I am also the 

President of the American Wire Producers Association, an association of U.S. companies that purchase steel wire rod and produce 

wire and wire products of all types. I am testifying today to explain 

the constant struggles that small and medium size manufacturers 

face with unfair trade. 

In 2002, my company, M&B, along with two other U.S. hanger 

producers saw a flood of Chinese-made hangers entering the 

United States at prices below our cost. We decided to file a Section 

421 Trade Case, which is one avenue for relief for US producers 

that are being harmed by imports from China. China agreed to this 

special procedure when they entered the WTO. We were successful 

in our case at the International Trade Commission (ITC); but—unlike an antidumping or countervailing duty case—a Section 421 

case has to go to the President for approval. Unfortunately, no relief was granted to our industry. 

Shortly after that, Cleaners Hangers—an American company, 

which was the largest Garment Hanger producer in the world— 

filed for Chapter 7 bankruptcy, and all of their assets were sold at 

auction. Then it seemed like dominoes—all of the remaining US 

wire hanger producers, with the exception of M&B, either went out 

of business or closed their US operations and imported all of their 

hangers from China. Over the next few years, we struggled, having 

to close one of our US plants in South Hill, Virginia and lay off 85 

hardworking Americans. We continued our struggle for another 

year, but the Chinese were relentless, and eventually we either had 

to join the club and import 100% of our hanger sales or fight by 

filing an antidumping petition against China. We chose to fight. 

On July 31, 2007, we filed an antidumping petition against unfairly traded Chinese hangers. When we filed, we were almost out 

of business, and we really didn’t know how we were going to pay 

the substantial legal fees and other costs to file this case, but we 

proceeded anyway. At the end of a long and demanding process before the ITC and Department of Commerce dumping duties between 16% and 187% were imposed on imported hangers from 

China. 

Things improved almost immediately. We were able to pass along 

raw material increases. Our margins improved, and things were 

progressing as we had hoped. But, as we were hiring again and increasing our production, the same producers that were shipping 

SBREP-219 with DISTILLER

21 

hangers directly from China were working on illegal schemes to 

avoid dumping duties by shipping hangers through other countries, 

or simply just changing the country of origin, and they continued 

to dump hangers in the U.S. market. We filed over 30 e-allegations 

with US Customs and Border Protection (Customs) with specific information about these illegal schemes, and we met with Customs 

officials a number of times detailing that was happening, but we 

saw no progress. 

We then hired an investigator at great cost to our small company 

and sent him to Taiwan and Vietnam to visit the so-called new factories that were shipping hundreds of millions of hangers to the 

US. Guess what, he didn’t find any hanger factories. He even had 

detailed offers from Chinese producers to illegally transship Chinese hangers to the US through Taiwan and Vietnam, avoiding the 

dumping duties that should have been collected. When our investigator returned, we took him, his reports, and our attorneys and 

met with Customs as well as Immigration and Customs Enforcement, ICE, to detail the schemes. I felt really good when we left 

this meeting. Both Customs and ICE complimented us on the detailed reports and told us how much they appreciated the information. Days, weeks, and months went by, and except for a small importer in Mexico that was caught transshipping Chinese hangers 

across the border, we saw no other action being taken. 

We then filed Anti-circumvention petitions against two so-called 

hanger producers in Vietnam. We won those cases also, but with 

the help of the Chinese producers, hanger imports from Vietnam 

and Taiwan continued to grow. We had no choice but to file another antidumping petition against Taiwan, and an antidumping 

petition and countervailing duty petition against Vietnam. We won 

those cases as well, but immediately hangers started appearing 

from Laos and Malaysia. We have been told that these hangers 

were made in Vietnam or China. We decided not to file more e-allegations or send investigators to these countries to bring back proof 

of duty evasion because we had tried that but saw no results from 

our previous efforts. 

Customs continues to be a black hole when it comes to commercial enforcement to the detriment of US manufacturing and workers and at great cost to the US Treasury. 

In addition, the costs associated with fighting for our dumping 

order continue to add up. Each year Chinese producers or exporters 

can ask Commerce to recalculate their dumping margins. We are 

in the midst of our fifth review. While each review involves additional costs to our company we have to participate in order to ensure the dumping margins remain accurate and effective. As the 

result of the first four reviews, all but two Chinese hanger producers will have a dumping margin of 187%. I should be very excited by these results and begin adding employees and equipment, 

but I am very cautious because I already have heard that Chinese 

hangers are now being transshipped through Cambodia and Sri 

Lanka. I fear that we will have to start this never-ending, expensive process all over again. 

SBREP-219 with DISTILLER

22 

We also see no aggressive action on Customs to collect duties 

that are owed. In the US, we operate on a Retrospective System, 

which means the final dumping rate is determined after the products have been imported. The importer only pays an estimated 

dumping margin, or deposit, when they import the product. After 

the Administrative Review, the final dumping margin is set and 

Customs is required to either refund any excess deposit paid, with 

interest, or collect the additional duty, with interest. We have seen 

in the past that Customs is quick to return overpayment, but slow 

(many times never) collect the additional duty. This not only hurts 

the US Treasury, but it shows that Customs will NOT enforce our 

Dumping Orders. 

M&B, along with other producers experiencing the same evasion 

schemes, formed a coalition to try to get meaningful legislative and 

policy changes passed to address these illegal activities. The Enforcing Orders and Reducing Customs Evasion (ENFORCE) Act 

creates a procedure at Customs to investigate claims of evasion, including timeliness for Customs to make determinations and apply 

the appropriate duties as well as regular, timely reports that will 

not only deter future evasion but add transparency, accountability 

and oversight where there currently is none. The provisions of ENFORCE passed through the Senate Finance Committee by voice 

vote and have been included in the Senate Customs Reauthorization bill. The complimentary bill in the House, introduced by Representatives Long and Sanchez, has a bipartisan group of 46 cosponsors. 

As I said at the beginning, there are many other industries besides the garment hanger industry that face the same struggles 

with cheating, illegal transshipment, and evasion under their trade 

orders. They include the Nail industry, the innerspring industry, 

the threaded rod industry, the PC Strand industry, the wire shelving industry, and many more. 

I see manufacturing in the US as a privilege. We all produce 

with a high degree of integrity, which includes paying our workers 

a fair wage with good benefits, being environmentally responsible, 

paying income taxes, and providing a return on investments to our 

owners. Without meaningful relief to ongoing duty evasion 

schemes, it will continue to be difficult to maintain our production 

in the US. 

Thank you for your time. I welcome your questions. 

SBREP-219 with DISTILLER

23 

SBREP-219 with DISTILLER


Insert offset folio 23 here 87948.001
24 

SBREP-219 with DISTILLER


Insert offset folio 24 here 87948.002
25 

SBREP-219 with DISTILLER


Insert offset folio 25 here 87948.003
26 

SBREP-219 with DISTILLER


Insert offset folio 26 here 87948.004
27 

SBREP-219 with DISTILLER


Insert offset folio 27 here 87948.005
28 

SBREP-219 with DISTILLER


Insert offset folio 28 here 87948.006
29 

SBREP-219 with DISTILLER


Insert offset folio 29 here 87948.007
30 

Hearing on 

Combating Unfair International Trade Practices: 

Barriers and Obstacles for Small Business 

Presented to: 

U.S. House of Representatives 

Committee on Small Business 

Subcommittee on Agriculture, Energy and Trade 

On behalf of 

Spyderco, Inc. 

May 22, 2014 

By Peter H. Jhones 

SBREP-219 with DISTILLER

31 

Chairman Tipton, Ranking Member Murphy, and Members of 

the Subcommittee, thank you for the invitation to appear today. 

Spyderco Inc. Introduction 

Spyderco has designed, manufactured and distributed some of 

the highest quality and most innovative folding knives and related 

products in the world. The company was built from nothing by its 

founder Sal Glesser and his family. The company now employs 

more than 80 individuals in its Golden, Colorado facilities and generates more than $20 million dollars annually for the Colorado 

economy. Spyderco has been awarded 33 U.S. trademarks (60 overseas), 29 U.S. utility patents (11 overseas) and 48 U.S. design patents (12 overseas). 

Spyderco customers have come to rely upon the high performance, superior engineering and ergonomic designs of the Spyderco 

products they use daily. These customers include virtually all of 

this Country’s military branches. Special Services, and Federal 

Law Enforcement Agencies. Our products are also in service at 

every level of state and local law enforcement. We sell our products 

throughout the United States and to 57 countries around the 

world. A significant portion of our manufacturing is performed in 

Golden, Colorado and we are in the process of tripling that capacity. 

Unfair Practices: Chinese Counterfeits 

The safety and reliability of the tools used by our country’s servants should not be called into question. However, that is exactly 

what is now happening. An alarming increase in clones, knock-offs 

and infringing product made by Chinese companies is flooding the 

U.S. market. The Chinese counterfeit knives of which we have become aware, are anything but an exact duplicate of our genuine 

items. These products are made using inferior materials and demonstrate poor engineering techniques. They make for a dangerous 

and unreliable tool for service personnel and consumer alike. The 

problem is these copied products have reached a level of outward 

appearance which makes it difficult even for our own staff to tell 

a genuine Spyderco knife from a fake. 

Obstacles and Solutions 

Spyderco does its best to police the marketplace, seeking to remove copies from the stream of commerce. For the most part, 

Spyderco has been successful in these activities, stemming the flow 

of counterfeit product being sold through U.S. based sales entities. 

However, we are having difficulty stemming he sales of counterfeit 

product sold through Chinese distribution outlets. Indeed, the bulk 

of these copies are entering the stream of commerce through online auction sites; primarily Alibaba, TaoBao and DHgate. The first 

appearing page of a ‘‘Spyderco’’ search of DHgate and Alibaba is attached. No item therein is an authenic Spyderco Inc. product. 

These Chinese owned sites have incredibly poor or absolutely no response to requests to remove auctions of counterfeit goods. In contrast, the famous on-line auction house eBay has developed their 

Verified Rights Owner (VeRO) program to combat just this issue. 

Utilizing more of a storefront format, Amazon.com also keeps a 

SBREP-219 with DISTILLER

32 

tight rein on infringing products, preventing their entrance into the 

Amazon.com stream of commerce. 

The costs associated with trying to remove unauthentic products 

from Chinese sales websites are now prohibitive. As with all small 

business operations, availability of funds to fight an infringement 

war are limited. Every dollar diverted for the effort to protect the 

marketplace from unsafe clones and patent infraingements, takes 

money’s slated to be invested in corporate activities; increasing production capacity, research and development, additional employees, 

machinery acquisition, wage increases, etc. As a result, copies of 

many of our core products are now available on these sites at significantly lower prices than for which our authentic products can 

be offered. 

As I am sure we all realize, it is impractical for U.S. Customs 

and Border Patrol to inspect every package for IP infringements. 

If all manufactuers selling products into America, domestic and 

international alike, were subject to the same intellectual property 

enforcement standards, this problem would be alleviated. All internet auction sites should be required to have an infringement notification and removal system that works. This would level the playing 

field between the U.S. and Chinese owned internet auction and 

commerce sites. It would also provide an ideal point for IP holders 

to review and stop the offer-for-sale of infringing items being put 

into commerce worldwide. 

Spyderco agrees that it is important for the U.S. to continue embracing free trade principles with our trading partners. However, 

it is imperative that these partners respect and enforce American 

intellectual property rights. Spyderco respectfully requests this 

Subcommittee and the United States Congress to implement laws 

and treaties which require all websites viewable within the United 

States to publish and enforce strong Intellectual Property protection mechanisms similar to the eBay VeRO system, and to require 

our trading partners to respect and enforce American intellectual 

property rights. 

Thank you 

SBREP-219 with DISTILLER

33 

SBREP-219 with DISTILLER


Insert offset folio 33 here 87948.008
34 

SBREP-219 with DISTILLER


Insert offset folio 34 here 87948.009
35 

SBREP-219 with DISTILLER


Insert offset folio 35 here 87948.010
36 

SBREP-219 with DISTILLER


Insert offset folio 36 here 87948.011
37 

SBREP-219 with DISTILLER


Insert offset folio 37 here 87948.012
38 

SBREP-219 with DISTILLER


Insert offset folio 38 here 87948.013
39 

SBREP-219 with DISTILLER


Insert offset folio 39 here 87948.014
40 

SBREP-219 with DISTILLER


Insert offset folio 40 here 87948.015
41 

SBREP-219 with DISTILLER


Insert offset folio 41 here 87948.016
42 

SBREP-219 with DISTILLER


Insert offset folio 42 here 87948.017
43 

SBREP-219 with DISTILLER


Insert offset folio 43 here 87948.018
44 

SBREP-219 with DISTILLER


Insert offset folio 44 here 87948.019
45 

SBREP-219 with DISTILLER


Insert offset folio 45 here 87948.020
46 

SBREP-219 with DISTILLER


Insert offset folio 46 here 87948.021
47 

STATEMENT OF DON SHAWCROFT 

PRESIDENT-COLORADO FARM BUREAU 

before the 

COMMITTEE ON SMALL BUSINESS 

SUBCOMMITTEE ON AGRICULTURE, ENERGY AND 

TRADE 

U.S. HOUSE OF REPRESENTATIVES 

MAY 22, 2014 

SBREP-219 with DISTILLER

48 

1http://www.ers.usda.gov/data-products/agricultural-trade-multipliers/2011-data-overview.aspx#.U3OS7YFdVyl 2http://www.cpr.org/news/story/new-trade-deal-mexico-good-news-colo-potato-farmers 

Chairman Tipton, members of the subcommittee, thank you for 

holding this hearing. 

My name is Don Shawcroft, President of the Colorado Farm Bureau. I am a rancher from the San Luis valley in Colorado. I am 

a board member of the American Farm Bureau Federation. Farm 

Bureau is the largest agriculture based grassroots organization in 

the country. Our membership is made up of 6 million farmers and 

ranchers growing everything you can think of—from alligators to 

zucchini and everything in between. 

Trade is vitally important to agriculture. According to the Economic Research Service (ERS) at the United States Department of 

Agriculture (USDA), 

‘‘U.S. agricultural exports generated employment, income, 

and purchasing power in both the farm and nonfarm sectors. 

ERS estimates that each dollar of agricultural exports stimulated another $1.29 in business activity in 2011. The $136.4 

billion of agricultural exports in 2011 produced an additional 

$176 billion in economic activity for a total economic output of 

$312.3 billion. Every $1 billion of U.S. agricultural exports in 

2011 required 6,800 American jobs throughout the economy. 

Calendar year 2011 agricultural exports required 923,000 fulltime civilian jobs, which included 637,000 jobs in the nonfarm 

sector. The agricultural export surplus helped to offset some of 

the nonagricultural trade deficit.’’ 1

These are not just high level impacts either. On the ground farmers and ranchers in Colorado, Kansas, Iowa and states all over the 

United States feel the positive impact of trade. However, with 

every positive, there is always a negative. One challenge that we 

are facing in agriculture is the use of non-tariff trade barriers. 

This issue can be illustrated through Mexico’s use of SanitaryPhytosanitary (SPS) measures to block the importation of U.S. potatoes into Mexico. This issue caused hardship for U.S. potato 

growers and Colorado potato growers specifically. Colorado farmers 

send about seven truckloads of potatoes a day to Mexico—that’s 

nearly 2,000 truckloads a year for only 5 percent of all the potatoes 

shipped.2 However, I am happy to announce that through work and 

negotiation Colorado potatoes will now be allowed to be export potatoes to Mexican cities with populations of 100,000 or more. Early 

estimates give the indication that revenue from potatoes could be 

as high at $80 million, a four-fold increase. This is money that 

comes back to farmers. 

I provided this example because it is a good illustration of how 

SPS issues are used to prevent agriculture trade and the negative 

impacts that it can have at the farmgate. 

While potatoes are a success story of how science has prevailed, 

agriculture still see impacts of SPS barriers being used against 

U.S. products. There continue to be simmering issues between the 

European Union (EU) and the U.S. pertaining to the production of 

SBREP-219 with DISTILLER

49 

3http://www.fas.org/sgp/crs/row/R40449.pdf 

beef and the use of hormones. This ban is an example of how SPS 

measures and non-tariff barriers are used as disguised protectionism, primarily intended to restrict imports from other countries.3

However, the Transatlantic Trade and Investment Partnership is 

a mechanism that can help to alleviate this problem. Farm Bureau 

supports efforts to increase agricultural trade flows and remove 

trade barriers that currently exist between the United States and 

the European Union. 

The Transatlantic Trade and Investment Partnership (TTIP) negotiations between the U.S. and the EU must deal with the many 

substantive issues that impede U.S.-EU agricultural trade, such as 

long-standing barriers against conventionally raised U.S. beef, ongoing restrictions against U.S. poultry and pork, and actions that 

limit U.S. exports of goods produced using biotechnology. 

The U.S. and the EU are major international trading partners in agriculture. U.S. farmers and ranchers exported more than $11.5 

billion worth of agricultural and food products to the EU in 2013, 

while the EU exported more than $17 billion worth of agricultural 

products to the U.S. last year. 

Despite this impressive sum, just 10 years ago, the EU was the 

third-largest destination for U.S. agricultural exports. Today, it has 

fallen to our FIFTH-largest export market. Over the last decade, 

growth of U.S. agricultural exports to the EU has been the slowest 

among our top 10 export destinations. If U.S. farmers and ranchers 

were provided an opportunity to compete, the EU market could be 

a growth market for them. 

Regulatory barriers have become a significant impediment to 

that growth. Unless these trade barriers are properly addressed 

within the TTIP negotiations, they will continue to limit the potential for agricultural trade. It is imperative that TTIP be a highstandard trade agreement that covers all significant barriers in a 

single, comprehensive agreement. Scientific standards are the only 

basis for resolving these issues. Continuing barriers to the export 

of U.S. beef, pork and poultry, along with the slow approval process 

for biotech products, are major areas of interest to the U.S. in the 

TTIP negotiations. Both the U.S. and the EU adhere to the World 

Trade Organization’s Agreement on SPS measures. These measures states that measures taken to protect human, animal or plant 

health should be science-based and applied only to the extent necessary to protect life or health. 

Continuing barriers to the export of U.S. beef, pork and poultry, 

along with the slow approval process for biotech products, are 

major areas of interest to the U.S. in the TTIP negotiations. Both 

the U.S. and the EU adhere to the World Trade Organization’s 

Agreement on Sanitary and Phytosanitary Measures, which states 

that measures taken to protect human, animal or plant heath 

should be science-based and applied only to the extent necessary to 

protect life or health. The U.S. follows a risk-assessment approach 

for food safety. The EU is additionally guided by the ‘‘precautionary 

SBREP-219 with DISTILLER

50 

4http://ec.europa.eu/trade/policy/eu-position-in-world-trade/ 

5http://www.ustr.gov/about-us/press-office/fact-sheets/2013/june/wh-ttip 

principle,’’ which holds that where the possibility of a harmful effect has not been disproven, non-scientific risk management strategies may be adopted. 

The use of the ‘‘precautionary principle’’ is inconsistent with the 

WTO SPS Agreement and is used as a basis for scientifically unjustified barriers to trade. The TTIP negotiations must result in a 

modern, science- and risk-based approach, based on international 

standards that can truly resolve SPS disputes. SPS issues must be 

directly addressed as a part of the negotiations, and these provisions must be enforceable. 

The EU approach for approving products of biotechnology combines a lengthy approval process with the ability of EU member 

states to ban approvals. The result in restrictive import policies 

and substantial reductions in U.S. exports of corn and soybeans to 

the EU. 

Furthermore, is it not just SPS issues that present non-tariff 

trade barriers to agricultural trade. An example of one of these 

issues is the EU system of geographic indications for foods and beverages designates products from specific regions as legally protected for original producers. The use of these markers will prevent 

forward looking U.S. farmers and ranchers from developing products for a marketing program which would allow then to capture 

the value added through processing. The U.S. has opposed recognizing geographical names for foods when it would inhibit the marketability or competitiveness of U.S. products. The TTIP must not 

become an avenue to erect a new barrier to U.S. agricultural exports through the use of geographic indications...pretty sure salami 

is salami no matter where it is made. 

Negotiations on bilateral concerns move in both directions. There 

must be positive outcomes for all sides. The European Union has 

concerns about U.S. rules on EU beef and dairy products. An emphasis on finding trade-opening solutions to sanitary barriers will 

assist in resolving our many trade issues. 

In addition to resolving non-tariff barriers to trade, the TTIP negotiation proposal also calls for the elimination of tariffs. The average U.S. tariff on imported agricultural products is 5 percent, with 

75 percent of our tariff lines at between zero and 5 percent. For 

the EU, the average tariff is 14 percent, with 42 percent of tariff 

of lines at zero to 5 percent. In order to expand market opportunities for U.S. agricultural products in the EU, tariff reductions will 

be necessary. 

We call for an ambitious agreement that addresses the real barriers to the growth of agricultural trade between the United States 

and the EU, both in the form of tariff and non-tariff barriers. The 

European Union’s 28 members account for 19% of world imports 

and exports 4 and in 2012 consumed $458 billion in goods and private services from the U.S.5

While the EU presents U.S. farmers and ranchers with very real 

potential for a major new market, TTIP is not the only trade deal 

SBREP-219 with DISTILLER

51 

that has the potential to help farmers and ranchers through reductions in tariff and non-tariff trade barriers to trade. 

The Trans Pacific Partnership (TPP) is the other major regional 

trade negotiation for the U.S. TPP consists of Australia, Brunei, 

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

Singapore, Vietnam in addition to the United States. The addition 

of Japan to full participation in the TPP talks enhances the significance of the negotiations and makes the agreement much more encompassing of North American goals for agricultural trade. It will 

also fuel interest among other Asia-Pacific nations for similar opportunities to improve trade relations with the U.S. and other participating countries. Japan is the fourth-largest agricultural export 

destination for the U.S. with more than 12.4 billion dollars in sales 

in 2013. 

Again despite our trade success in Japan, the country maintains 

several restrictive policies that inhibit U.S. exports, such as high 

tariffs on dairy, horticulture, rice and other products, along with 

various SPS barriers. By joining the TPP negotiations under the 

same conditions as other participants, Japan must negotiate to resolve long-standing trade barriers for all agricultural products thus 

benefitting U.S. farmers and ranchers. 

The TPP will only fulfill its promise of improved and increased 

trade in the Pacific region by including the elimination of tariffs on 

agricultural products. 

While TTIP and TPP offer ways for the U.S. to deal with SPS 

and other non-tariff trade barriers through the framework of trade 

deals, they are not the only option for the U.S. As a member of the 

World Trade Organization (WTO) U.S. agriculture must continue to 

seek a commercially meaningful outcome through expanded market 

access from WTO negotiations. We must remain committed to advancing the goal of trade liberalization and increased opportunities 

for real trade growth. The U.S. wants an outcome to trade negotiations in the WTO that will open new markets around the world, 

produce new trade flows and grow the global economy. We can 

achieve this outcome by negotiating on the basis of a new agenda, 

not be reliving the failures of the past. Lastly, Farm Bureau has 

long supported trade promotion authority (TPA) in order to complete and pass into law trade agreements. For our important TPP 

and TTIP negotiations to move forward, to maintain the focus on 

improving and expanding trade between our negotiating partners, 

we need to have TPA in place. 

Agricultural market access measures are usually finalized at the 

end of negotiations when the certainty of TPA is crucial to a successful negotiation. We urge the House to pass the Bipartisan Congressional Trade Priorities Act of 2014, HR. 3830, as a necessary 

and critical component for a successful trade policy agenda. While 

we understand that the Small Business committee is not the primary committee of jurisdiction for H.R. 3830, the committee can 

sever as an excellent conduit for support of H.R. 3830. They can 

do this by sharing the challenges faced by small business and small 

agribusiness with the House Ways and Means committee as they 

move this legislation. 

SBREP-219 with DISTILLER

52 

6http://www.ustr.gov/sites/default/files/FINAL-2014-SPS-Report-Compiled.pdf 

While many challenges continue to present themselves, 2013 was 

not without some successes. 2013 saw expanding U.S. beef exports 

by 12 percent to reach over $6 billion by expanding access for U.S. 

beef to Japan, the European Union, Indonesia, Mexico, Panama, 

and the Dominican Republic. In 2013, the European Union also 

opened its market to live swine. Peaches, nectarines, and cherries 

may now be exported to Australia and Japan. These increases were 

the result of the removal their unwarranted SPS measures.6

I thank you Chairman Tipton for the opportunity to testify today 

on this important issue. American agriculture drastically needs 

more market access that is free of SPS and non-tariff trade barriers. American farmers and ranchers are the most productive in 

the world. With market access, we can continue to provide high 

quality products to markets throughout the world. I look forward 

to answering any questions you may have. 

SBREP-219 with DISTILLER

53 

House Committee on Small Business 

Subcommittee on Agriculture, Energy, and Trade 

‘‘Unfair Trade Practices: Addressing Barriers Facing Small Business 

Exporters’’ 

Testimony of Timothy C. Brightbill 

Partner, Wiley Rein LLP, Washington DC 

Adjunct Professor, Georgetown University Law Center 

May 22, 2014 

Chairman Tipton, Ranking Member Murphy, and Members of 

the Subcommittee. I am Tim Brightbill, a partner at Wiley Rein 

LLP and adjunct professor at Georgetown University Law Center. 

Thank you for the opportunity to testify before you today on the 

issue of unfair trade practices and barriers facing small business 

exporters. (These views are my own, not those of my firm or my 

clients.) 

I have practiced international trade law for almost 20 years, and 

my practice has always focused on helping American companies, 

American industries, and American workers. I have worked with a 

variety of industries—including manufacturers of everything from 

steel to solar panels to school notebooks to heavy forged hand tools. 

I also work with many companies that provide services both here 

and abroad. My job is to help these companies grow, to prevent unfair trade practices from harming these companies, and to help 

eliminate trade barriers overseas. 

Small businesses face enormous challenges in the area of international trade. While all U.S. companies face trade barriers and 

unfair trade practices, these problems can be even greater for 

small- and medium-sized businesses. Trade laws and regulations 

are complicated, trade remedy cases are expensive, and trade barriers are becoming more pervasive and more challenging all the 

time. 

As a result, it is probably not surprising how few small businesses are able to become substantial exporters of goods and services. Let me list several of the challenges facing U.S. small business exporters, as well as all U.S. companies: 

1) dumping and subsidies - are two of the most pervasive 

unfair trade practices. Foreign manufacturers often sell below 

cost to enter the U.S. market and to take market share away 

from domestic competitors. Subsidies and government ownership of foreign companies facilitate this type of unfair pricing. 

Small businesses are forced to choose between cutting prices to 

match foreign competition, or giving up sales and market 

share. Notably, the antidumping (AD) and countervailing duty 

(CVD) laws that address these unfair practices are complex 

and the requirements for filing trade remedy cases are difficult 

SBREP-219 with DISTILLER

54 

for even large, sophisticated companies. There are many steps 

that Congress and the Commerce Department could take to 

make the trade laws simpler and easier to use for small businesses. I would be happy to discuss these specific ideas with 

the subcommittee later this morning. 

2) currency manipulation - is a serious problem that 

harms all U.S. exporting businesses, large and small. The Petersen Institute for International Economics, one of the most 

respected think tanks in Washington, has called currency manipulation ‘‘the biggest subsidy of them all,’’ and estimates that 

currency actions by China and more than 20 countries have increased the U.S. trade deficit by $200 billion to $500 billion per 

year, and that the United States has lost 1 million to 5 million 

jobs as a result of foreign currency manipulation. If Congress 

wanted to take one trade-related action that would create the 

most new American jobs, it would be to pass legislation directing the Commerce Department to investigate currency undervaluation as an illegal subsidy. 

3) intellectual property theft - is a pervasive problem that 

demands a serious response from U.S. government and law enforcement. The United States took an important step this week 

by filing criminal charges against five members of the Chinese 

military for cyber hacking. The U.S. companies named as victims in this week’s indictments are at the heart of American 

manufacturing of steel, aluminum, solar, and others. I applaud 

the Administration for taking this step. But the reality is that 

the Chinese Government sees no difference between military 

espionage and corporate IP and trade secret theft. And there 

are thousands of U.S. companies that are victims of these activities. As one expert has stated, there are two kinds of U.S. 

companies—those that know they’ve been hacked, and those 

that just haven’t figured it out yet. 

4) the rise of state-owned and state-controlled enterprises is another factor that is harmful to small business exporters. U.S. companies are forced to compete not with private 

companies, but with foreign governments. And while China is 

also a notable example of this problem, SOEs play substantial 

roles in the economies of many countries—Russia, Brazil, Indonesia, India, Malaysia, and many others. 

We need to include strong, enforceable disciplines on state-owned 

enterprises in all new free trade agreements, starting with the 

Trans-Pacific Partnership and the T-TIP agreement with the European Union. I would be happy to discuss what specific terms and 

conditions we need to include in these trade agreements in order 

to help U.S. small businesses compete. And, if we are serious about 

addressing SOEs, we should include such provisions in any bilateral investment treaty with China as well. 

5) Finally, we need to address the growing use of non-tariff 

barriers to shut down trade. This can involve obvious measures like export taxes, but also more subtle barriers like Customs regulations, import licenses, burdensome standards and 

certification requirements that can become technical barriers 

SBREP-219 with DISTILLER

55 

to trade. The United States has been very successful in reducing tariffs worldwide, but those that want to protect their markets are continually looking for new ways to shut out foreign 

competition. 

Thank you for addressing this important issue today, and I 

would be happy to answer any questions. 

-ENDÆ 

SBREP-219 with DISTILLER