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

76–474 2012

U.S. TRADE STRATEGY: WHAT’S NEXT FOR SMALL 

BUSINESS EXPORTERS? 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

HEARING HELD 

MAY 16, 2012 

Small Business Committee Document Number 112–068 

Available via the GPO Website: www.fdsys.gov 


jbell on DSK7SPTVN1PROD with E:\Seals\Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, General Counsel 

MICHAEL DAY, Minority Staff Director 


jbell on DSK7SPTVN1PROD with 
(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Sam Graves ..................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 2 

WITNESSES 

Ambassador Miriam Sapiro, Deputy United States Trade Representative, Office of the United States Trade Representative, Washington, DC ................... 3 

Thomas Crafton, President, Thermcraft, Inc., Winston Salem, NC .................... 19 

Robert B. Sinner, Partner and President, SB&B Foods, Inc., Casselton, ND .... 20 

Joshua Meltzer, Ph.D, Fellow, Global Economy and Development, Brookings 

Institution, Washington DC ................................................................................ 22 

Mark Luden, CEO, The Guitammer Company, Westerville, OH ........................ 24 

APPENDIX 

Prepared Statements: 

Ambassador Miriam Sapiro, Deputy United States Trade Representative, 

Office of the United States Trade Representative, Washington, DC ........ 31 

Thomas Crafton, President, Thermcraft, Inc., Winston Salem, NC ............. 37 

Robert B. Sinner, Partner and President, SB&B Foods, Inc., Casselton, 

ND .................................................................................................................. 42 

Joshua Meltzer, Ph. D, Fellow, Global Economy and Development, Brookings Institution, Washington DC ................................................................. 45 

Mark Luden, CEO, The Guitammer Company, Westerville, OH ................. 51 

Questions for the Record: 

Rep. Ellmers Questions for Ms. Sapiro ........................................................... 57 

Rep. Mulvaney Questions for Ms. Sapiro ....................................................... 58 

Chairman Graves Questions for Ms. Sapiro ................................................... 59 

Answers for the Record: 

Ms. Sapiro Answers for Rep. Ellmers ............................................................. 60 

Ms. Sapiro Answers for Rep. Mulvaney .......................................................... 62 

Ms. Sapiro Answers for Chairman Graves ..................................................... 63 

Additional Materials for the Record: 

National Council of Textile Organizations Statement for the Record .......... 64 

eBay Comments for the Record ....................................................................... 75 

Letter to Ambassador Ron Kirk for the Record ............................................. 79 

Association of Small Business Development Centers Statement for the 

Record ............................................................................................................ 85 

American Frozen Food Institute Statement for the Record .......................... 89 


jbell on DSK7SPTVN1PROD with 

jbell on DSK7SPTVN1PROD with 
(1) 

U.S. TRADE STRATEGY: WHAT’S NEXT FOR 

SMALL BUSINESS EXPORTERS? 

WEDNESDAY, MAY 16, 2012 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Committee met, pursuant to call, at 1:00 p.m., in Room 

2360, Rayburn House Office Building. Hon. Sam Graves (chairman 

of the Committee) presiding. 

Present: Representatives Graves, Chabot, Mulvaney, Tipton, 

West, Ellmers, Hanna, Schilling, Vela ́zquez, Schrader, Chu, 

Cicilline, and Hahn. 

Chairman GRAVES. We will call the hearing to order. Good afternoon to everybody. I want to thank you our witnesses on both panels for being here and I look forward to all the testimony that is 

going to be given today. 

As we celebrate World Trade Month, it is only fitting to have 

Deputy United States Trade Representative before the Committee 

to discuss the administration’s trade strategy. First, I appreciate 

your effort to expedite the implementation of the free trade agreements with Korea and Colombia, which actually just went into effect yesterday. I hope the FTA with Panama is quick to follow. The 

certainty and protections provided by these agreements will help 

thousands of small firms increase their sales, grow their businesses, and ultimately create many more jobs. 

Small businesses rely heavily on negotiated agreements to remove trade barriers and to be competitive in the global marketplace. Unlike large corporations, most small firms do not have the 

personnel and resources to navigate technical trade barriers. As a 

result, many either do not export at all, or only export to just a few 

countries. Given the right circumstances and tools, I know America’s small businesses can do a whole lot better. We must provide 

small businesses with the resources necessary to increase their exports. 

That means we need an aggressive trade strategy to open new 

markets, streamline the trade process, and combat unfair trade 

practices. As we have heard, the president’s goal to double exports 

by 2014 puts small businesses as the number one priority. While 

I applaud this effort, we have yet to see a real strategy. Small 

firms and the U.S. economy cannot wait another five years for the 

next trade agreement. 

This Committee has made increasing exports an absolute priority, and that is why I recently introduced the Export Coordination Act of 2012 to make the export process more efficient while reVerDate Mar 15 2010 01:18 Nov 14, 2012 Jkt 076474 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A474.XXX A474

jbell on DSK7SPTVN1PROD with 
2 

ducing duplication and wasteful spending on federal trade promotion agencies. I look forward to working with the administration 

on identifying ways to improve the system. 

Again, I want to thank you for being here and also thank our 

other witnesses for being here. And I will turn to Ranking Member 

Vela ́zquez for her opening statement. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. Welcome, Ambassador Sapiro. 

We have heard time and again about the need to put small businesses at the forefront of our economic recovery, but perhaps no 

other group is more critical to this effort than small exporters. According to U.S. Treasury Department figures, more than 50 million 

American workers are employed by more than 250,000 small and 

medium-sized companies that export goods overseas. Small businesses that export grow faster, create more jobs, and pay higher 

wages than other businesses. Clearly, in order for the recovery to 

gain steam, our economy will increasingly depend on foreign trade 

to fuel new growth. 

Despite these advantages, it remains difficult for small businesses to take up the mantle and enter foreign markets. By some 

estimates, just 1 percent of the 28 million small firms in this country are doing so. Even though they account for 97 percent of America’s exporting companies, the exports account for only a third of 

all goods shipped overseas. Most sell their goods to only one foreign 

country and to only one customer in that country. Clearly, these 

theorems possess untapped economic potential and today’s hearing 

will help us understand how this may be accomplished in the wake 

of passage of the South Korea, Panama, and Colombia free trade 

agreements last year. 

Balanced free trade agreements have the potential to be a significant driver of prosperity. By eliminating tariffs and other barriers, 

these agreements can help small firms expand sales globally and 

create jobs at home. In order for these benefits to be fully realized, 

we must hold our trading partners accountable for unfair practices 

and ensure that our small businesses receive the level playing field 

they were promised. 

Unfortunately, our history in this area does not inspire much optimism. In 1993, before the North American Free Trade Agreement 

took effect, the U.S. had a 1.6 billion trade surplus with Mexico, 

which supported 29,400 jobs here at home. Since then, imports 

from Mexico have grown much faster than U.S. exports, resulting 

in large trade deficits that have displaced 682,900 jobs nationwide. 

Although many of the workers that were laid off due to NAFTA 

were reallocated to other sectors, the majority were relocated to the 

service industry where average wages are a fraction of what they 

received before. As long as the U.S. persists in trying to play by 

free trade rules while foreign nations are allowed to play the 400- 

year-old game of mercantilism, we can expect to see similar results. 

Still, we must be diligent in our efforts to get it right. 

In regard to the Trans-Pacific Partnership, this sweeping agreement has the potential to remove numerous barriers and give 

American small firms access to new markets on the Pacific Rim. 

However, there are concerns that are reaching beyond areas that 

have traditionally been the purview of trade policy. Reports have 


jbell on DSK7SPTVN1PROD with 
3 

emerged that this agreement may seek to bind the U.S. to new 

standards for everything from foreign investment to pharmaceutical prices and copyright protections. It will be critical that 

these issues be discussed in an open and forthright manner before 

this agreement can be finalized. And it is my hope that the office 

of the USTR will make good on its commitment to do so. 

Now, more than ever, our country needs policies that encourage 

fair trade and promote small business growth. I look forward to 

hearing how our existing and potential future trade agreements 

can achieve these goals, as well as how export assistance programs 

can assist small firms. 

I would like to thank the witnesses in advance for their testimony, and I am pleased they could join us today. I look forward 

to hearing from them. Thank you, Mr. Chairman. 

Chairman GRAVES. Thank you, Nydia. 

Our first witness is Ambassador Miriam Sapiro. She is the deputy U.S. trade representative with the Office of the United States 

Trade Representative. She is responsible for trade negotiations and 

enforcement with Europe, the Middle East, and the Americas. She 

also oversees the Office of Small Business Market Access and Industrial Competitiveness at the USTR. Thank you for being here, 

and I look forward to your testimony. 

STATEMENT OF MIRIAM SAPIRO, DEPUTY UNITED STATES 

TRADE REPRESENTATIVE, OFFICE OF THE U.S. TRADE REPRESENTATIVE 

Ms. SAPIRO. Thank you very much, Chairman Graves, Ranking 

Member Vela ́zquez, and Members of the Committee, especially for 

convening this hearing today and for giving me the opportunity to 

testify about what we are doing to support small business and 

thereby support greater economic growth and jobs throughout the 

country. 

Despite a fragile global economy, the growth of U.S. exports over 

the last year has been a bright spot. Our exports of goods and services have surpassed their pre-crisis peak and we are making good 

progress towards meeting President Obama’s goal of doubling exports by the end of 2014. During the past 12 months, the United 

States exported more than $2 trillion in goods and services, which 

is the highest level of exports in any 12-month period in U.S. history. As our economic recovery continues, we have added private 

sector jobs for 26 straight months, for a total of 4.25 million jobs 

over this period. 

As the President has emphasized, America’s small businesses are 

key engines of our nation’s economic growth and job creation. They 

are a critical source of innovative processes, products, and services. 

I speak as someone who started and ran a small business before 

re-entering government and experienced firsthand the challenges, 

the risks, and the opportunities involved. 

America’s smaller firms are already playing a major role in international trade, accounting for nearly 98 percent of all exporters. Direct and indirect exports by U.S. small businesses support four million jobs and account for an estimated 40 percent of the total value 

of our goods and services exports. 


jbell on DSK7SPTVN1PROD with 
4 

These trends are very positive, but we believe our small companies still have significant room for export growth. Only a small 

fraction, as you both pointed out, currently export, and of those, 

most tend to go only to one market and have one customer. With 

95 percent of the world’s customers living beyond our borders, we 

can, and we must, do better. 

To accomplish this, we are pursuing a robust trade policy that 

supports small business and broader economic growth by tearing 

down barriers to trade and by creating new opportunities for U.S. 

farmers, ranchers, manufacturers, and service providers. We are 

also vigorously enforcing our trade rights, insisting that countries 

fulfill their commitments and act according to the rules to which 

they agreed. 

Our trade agreements now with nearly 20 countries open the 

doors for valuable export opportunities for our small businesses. 

With this Committee’s strong support, Congress approved the 

FTAs with South Korea, Colombia, and Panama, and as you pointed out, just yesterday the Colombia Agreement entered into force. 

This makes it easier and less expensive for small businesses, like 

the meat packers and the dairy farmers in your district, Mr. Chairman, to export their products to this important Latin American 

country. 

And this week we are concluding the 12th round of the TransPacific Partnership negotiations in Dallas, Texas. Relevant to this 

Committee is our focus on developing specific provisions to help 

small businesses participate more actively in regional trade, including through information sharing. Our commitment builds upon the 

joint APEC Trade-SME Ministers’ meeting that Ambassador Kirk 

held last year in Big Sky. 

We are also helping small business by opening Russia’s market 

of 145 million customers. Russia’s WTO membership will create 

new export opportunities and bind Moscow to a clear set of rules 

for trade and transparency. However, for U.S. companies to enjoy 

these benefits, Russia’s WTO membership this summer, Congress 

will have to act quickly to terminate application of the 1974 Jackson-Vanik amendment to Russia. We hope this Committee will 

strongly support Chairman Camp’s efforts to do just that. 

In the Western Hemisphere, we are collaborating with other 

agencies to connect more of our small businesses to regional partners and entrepreneurs there as President Obama announced last 

month on his way to the Summit of the Americas. 

As we continue to strengthen the international rules-based trading system and hold our trading partners accountable, we are also 

enhancing our trade enforcement capabilities. The Interagency 

Trade Enforcement Center, known as the ITEC, recently established by the President will increase our capacity to prioritize and 

to aggressively challenge unfair trade practices brought to our attention by smaller companies. 

Ambassador Kirk and the entire USTR team continue to reach 

out to small businesses across the country to highlight not only export opportunities that we have created but to hear more about the 

existing trade challenges. As a result, last year we were proud to 

launch the FTA Tariff Tool, a free online way for small firms to do 

market research and look up specific tariffs. 


jbell on DSK7SPTVN1PROD with 
5 

In conclusion, we are very proud of our small businesses that 

offer high-quality, ‘‘Made in America’’ products and services to customers around the world. We are determined to see that they have 

the trade policy tools they need to compete and to succeed in the 

global economy. We look forward to working with you to accomplish 

that goal. Thank you. 

Chairman GRAVES. Thank you very much. 

I will turn to Mr. West. 

Mr. WEST. Thank you, Mr. Chairman, and also Ranking Member. 

And thank you, Ambassador, for being here. 

We had an Ag roundtable down in our district area, Martin 

County, and one of the major complaints came from a gentleman 

who has Yee Farms down there about the flooding of tomatoes coming in and how it is affecting our market out of Mexico. So the big 

question I am sure that the farmers down in South Florida would 

like to know, what are the specific things that we are putting in 

place to help them as far as, you know, the tariffs and the non-tariffs and the NAFTA and also the CAFTA, how we can open up 

China and other Asian markets for our agricultural products so 

that they are not penalized. 

Ms. SAPIRO. Thank you for that important question. We had a 

terrific year in 2011 in terms of our Ag exports. We are fully committed to doing everything that we can to help farmers across the 

country compete in every single global market. With our free trade 

partners we do that by lowering tariffs and also reducing the nontariff barriers behind the border that you cannot always see at 

first. But as you may well know, our ability to fight what we call 

SPS, sanitary and phytosanitary restrictions that are not justified 

by science or by risk assessments, is really an important part of 

what we do every single day at USTR. 

Mr. WEST. Thank you, Mr. Chairman. I yield back. 

Ms. VELA ́ ZQUEZ. Ambassador, Ambassador Kirk has expressed a 

commitment to maintaining transparency in the negotiations for 

the Trans-Pacific Partnership and in all the talks that have been 

conducted this week in Dallas I just would like to ask you why did 

he make the decision to further restriction public involvement in 

the negotiations by eliminating the full day stakeholder forums? 

Ms. SAPIRO. The talks that are going on in Dallas right now had 

a very robust set of stakeholder consultations. The negotiators 

broke for several hours to sit down with all of our stakeholders who 

have a very important role in terms of giving us feedback on what 

they would like to see in the TPP agreement. So we have spent 

considerable amounts of time working with our stakeholders both 

before the round in Dallas and also in Dallas. 

Ms. VELA ́ ZQUEZ. Why the decision to eliminate the full-day stakeholder forum? 

Ms. SAPIRO. I think what we did was break up the consultations 

into different periods of time so that we could accommodate the 

schedules of different stakeholders as well as the negotiators. I 

know, Ranking Member, that we have had a very robust set of consultations with our stakeholders at this round in Dallas, just as we 

have at previous rounds and just as we will continue to do so. 

Ms. VELA ́ ZQUEZ. Yeah, in other rounds that have been conducted, 

in other places you have not eliminated the full day stakeholder 


jbell on DSK7SPTVN1PROD with 
6 

forum. So I am just wondering why. How do you reconcile the fact 

that he said we are going to maintain transparency and engagement and then yet you cancel this event? 

But I would like to ask you who is representing or how are small 

businesses represented in the stakeholder forums? 

Ms. SAPIRO. We have a number of small businesses that are part 

of the stakeholder groups. For example, we have our advisory committees that are the more formal way in which we receive input, 

and we have small and minority business advisory group that is 

very robust and provides terrific input. And we also have informal 

ways of reaching out across the country. I do not think there is a 

trip that Ambassador Kirk or Ambassador Marantis or I take 

where we do not reach out to small business, as well as Ambassador Siddiqui, who is our agricultural negotiator and who meets 

with farmers across the country. 

So outreach and transparency are a critical, critical part of our 

job that we take very seriously, both in Dallas at this round and 

in our broader work. 

Ms. VELA ́ ZQUEZ. Well, I am glad to hear that. Moving forward I 

hope that you will not cancel again the full day stakeholder forum 

so that we can have more engagement. 

But talking about small businesses, we hear that small businesses make up 9 of every 10 businesses that export goods from the 

U.S. But when it comes to the negotiation process for trade agreements, the interests of the small business community often take a 

backseat to that of large multinational corporations. My question 

is what is your agency doing to integrate safeguards in the TPP to 

ensure that the interests of big corporations are not disproportionately favored and expend small businesses. And if you hear a level 

of pessimism coming from my line of questioning, we have seen 

this rerun before where we come here, we discuss trade agreements, and we always raise the issue that even though 97 percent 

of all exporters are small businesses, they are always at a disadvantage. 

Ms. SAPIRO. I understand your concern and I would like to reassure you. If I cannot do it in my limited time today then to come 

back and visit with you. We are working very hard to make a difference and I think we are starting to see the results. 

So just to give you a few examples. For the first time we have 

one person designated to handle SME issues within our TPP negotiating team. So they are looking out just for SMEs. And that role 

is two-fold. One, it is crosscutting to make sure that SME interests 

are represented in general chapters on, for example, trade facilitation or business competitiveness. And then also for the chance in 

this negotiation to have a separate chapter on small and medium 

enterprises focused on giving them the tools they need to succeed 

in the TPP region. And I am very pleased that that chapter is 

going exceedingly well right now and we think we may have agreement with our other TPP partners in terms of the robust approach 

that the United States is taking towards helping SMEs. 

Ms. VELA ́ ZQUEZ. Okay. I have other questions so in the second 

line I will come back. Thank you, Mr. Chairman. 

Chairman GRAVES. Mr. Mulvaney. 


jbell on DSK7SPTVN1PROD with 
7 

Mr. MULVANEY. Ambassador, I would like to talk about textiles 

for a few minutes if we can. One of the members of the TPP assuming it goes through will be Vietnam, one of our major textile trading partners. As most folks know, it is not an open economy. It 

would be different than some of the other members—New Zealand, 

Australia, Singapore—in that fashion. It is a government that still 

has a lot of state-owned enterprises. It is a government that still 

manipulates its currency. What is the USTR going to be doing as 

part of the TPP to protect our businesses domestically generally 

but also the textile industry specifically against market manipulation by the Vietnamese government? 

Ms. SAPIRO. We are working very closely with all of our TPP 

partners to develop a truly 21st century trade agreement. And the 

obligations obviously run two ways. So we intend to hold each and 

every one of our partners, including Vietnam, to the highest standards that we succeed in negotiating. And that goes for the range 

of issues, whether we are talking about goods or non-tariff barriers 

or state-owned enterprises, which is a very important topic I think 

related to your question in terms of agreeing on some basic rules 

of the road. 

So with respect, for example, to state-owned enterprises, it is not 

that countries cannot have them but that we have a common understanding of how they operate when it comes to international 

trade so that they do not disadvantage businesses. This is a really 

key piece of the TPP effort that we are undertaking. But our goals 

for TPP as you know are very ambitious. We have been consulting 

closely with members of Congress. I believe we have had several 

hundred consultations at least, and we intend to have many more 

because this is an issue, including particularly on textiles, where 

our stakeholders have clear interests and we want to do our very 

best to be responsive to those interests as we all work together to 

forge what we hope will be a very ambitious 21st century agreement. 

Mr. MULVANEY. Specifically, because Vietnam is a nonmarket 

economy, are you all looking at extended phase out or phase down 

provisions for textile tariffs? 

Ms. SAPIRO. It is hard to speak publicly about specific negotiating 

objectives but, we would be very happy to brief you and your staff 

in more detail. 

Mr. MULVANEY. Let me ask a question that hopefully you can answer publicly, which we have heard back home that the Vietnamese negotiators have taken a fairly hard line on this and said 

that they do not want any restrictions on textile exports in the 

United States and that if there are any it will be a nonstarter for 

them for the rest of the negotiations. Can you comment on that? 

Ms. SAPIRO. Well, I can say that there is often a lot of posturing 

in public about trade negotiations, not just with respect to TPP but 

across the board. What I will say and promise you is that Ambassador Kirk and I, and the whole team are committed to vigorously 

defending U.S. interests, both with respect to the negotiation of 

trade agreements and then, of course, with respect to their enforcement so that everybody lives by the rules as I mentioned earlier 

to which they have agreed. That is a critical, critical piece of what 

we believe is a robust trade agenda. 


jbell on DSK7SPTVN1PROD with 
8 

Mr. MULVANEY. And as part of our previous robust trade agendas 

that we have with various countries and various other regions, we 

have a fairly traditional and fairly standard yarn-forward rule. Are 

you familiar with what that is? 

Ms. SAPIRO. Yes. 

Mr. MULVANEY. Is it currently the USTR’s position that they will 

be pushing that same rule as part of the TPP or have you decided 

to change your position on that? 

Ms. SAPIRO. Well, I am not going to speak for our chief textile 

negotiator who has been down in Dallas working this issue but I 

do believe that that is an important component of what our general 

policy is. So I would be happy, if you like, to take a question for 

the record and get back to you with a specific answer if that is useful. 

Mr. MULVANEY. That would be great. Anything you can do. And 

I recognize you cannot do everything publicly here. I know how negotiating works. 

Let me ask one question though that I do get from folks back 

home, which is what is the schedule? It seems so often that textiles, for example, sort of go to the very end of the line and are negotiated in the last couple of days and weeks before there is a 

deadline approaching. What is the schedule for the overall negotiation and where do textiles fit in that timeline? 

Ms. SAPIRO. Well, the schedule is that President Obama and 

other TPP Leaders have asked the negotiators to wrap up their 

work by the end of this year. They asked that last November, and 

so we have been on an accelerated schedule ever since. 

Mr. MULVANEY. End of this calendar year? 

Ms. SAPIRO. This calendar year. Correct, 2012. And so as I mentioned, Dallas is the 12th round. We have also had some informal 

intercessional rounds so we can get our work done. We are scheduling several additional rounds this year with the goal of trying to 

wrap this up. As you know, sometimes the most difficult issues are 

those that end up being worked at the end but at the same time 

each round we are making progress, in our view, on the textile 

issue as well as all the other issues. It is a 25-chapter roughly 

agreement and so textiles are a critical piece and other stakeholders have interest in other chapters. So we are really trying to 

push everything as much as we can in favor of our interests. 

Mr. MULVANEY. Thank you, Ambassador. And I will just close by 

saying that I recognize it is 25 chapters. Mr. Chairman, it always 

struck me that free trade agreements could be written on one page 

which is you lower your tariffs, we will lower ours and we will just 

go and compete. It is a shame that we get into these documents 

that would make the health care bill look simple, for example. But 

I appreciate you coming today and I yield back the balance of my 

time. 

Chairman GRAVES. Ms. Hahn. 

Ms. HAHN. Thank you, Chairman and Ranking Member 

Vela ́zquez. Ambassador Sapiro, it is great to have you here. 

I am the founder and co-chair of the Bipartisan Port Caucus back 

here in Congress and I have made it a priority of mine to raise the 

profile of ports in Congress and the importance for our nation’s 

economy which obviously includes exports. And everyone knows 


jbell on DSK7SPTVN1PROD with 
9 

that our trade policies affect all businesses, whether they directly 

export a project, import a component or a part or sell foreign merchandise. And all these goods need to get to and from our ports of 

entry in a timely and efficient manner. It was recently reported 

that goods imported through the Port of L.A. took 48 hours to travel to Chicago and an additional 30 hours to get across Chicago. And 

it is safe to assume that exports will also be facing transportation 

bottlenecks. 

Last week, I sent a letter to the transportation companies highlighting the critical need for our country to have a national freight 

policy, to have a national plan on how to best move imports and 

exports throughout our country. So specifically with this goal to 

double our exports in a few years, could you discuss if you think 

it is important for us to have a national policy on moving goods 

throughout this country, investing in our infrastructure, grade separations, whatever. I am worried that businesses are poised to benefit from exports but we may get bogged down in our infrastructure 

in this country so that will slow things down. 

Ms. SAPIRO. Well, thank you for that question. We are very supportive of efforts to make sure that the United States has modern 

infrastructure, whether we are talking about ports or airports or 

highways or railroads. As you know, President Obama is very dedicated to doing everything that the Administration possibly can to 

create and build an economy that will last. So I think the point 

that you are making is a very important one and an effort that we 

are very supportive of from the trade perspective. 

Ms. HAHN. You know, with just a few minutes left, one of the 

things I hear from my small businesses as well is there are particularly women-owned, minority-owned businesses. They would love to 

get involved in the international trade industry. They would love 

to get somehow involved in exporting their goods. There is a big 

disconnect between small businesses and this incredible opportunity. What are you doing? What can we do a better job of in 

terms of educating our small businesses in how they can access 

capital and how they can get the experience and how they can get 

the training to actually be involved. 

I have businesses that can literally see the Port of Los Angeles 

but yet have no idea on how they might benefit from this huge 

growth opportunity in exports. 

Ms. SAPIRO. Well, at USTR, working with SBA and the Commerce Department and others, we are very focused on doing everything possible to publicize our export opportunities to ensure that 

small businesses have the finance tools and the other tools they 

need to access these opportunities. 

I think one step that they can hopefully take if they are interested in exporting is to contact the local SBDC, the local Small 

Business Development Center. We have about 2,000 throughout— 

actually, we have about 1,000 throughout this country and nearly 

2,000 in the hemisphere and we are looking to expand more because these SBDCs—and I know the ranking member has at least 

one in her district—they are great tools to be able to sit down oneon-one and consult with our entrepreneurs and companies that are 

smaller, to find out what is their product. Are they interested in 

a market where we have a free trade agreement? If so, the public 


jbell on DSK7SPTVN1PROD with 
10 

online tariff tool that I mentioned is a great way to help them look 

up their product code. They can right away see what is the tariff 

treatment with respect to Colombia, since the Agreement entered 

into force just this week, as we noted. We hope Panama will be in 

force within the next few months. Korea entered into force on 

March 15th and we have 17 other agreements where we have either zero tariffs or relatively low tariffs. 

So I think contacting in the first instance the SBDC that is local 

could be a very important step to get them started. We are ready 

to help as well and ready to work with you on other ideas. But publicizing I think what we are already doing as much as possible and 

the tools we have. While at the same time, within the government, 

we are looking at ways to be more efficient and make sure as much 

as possible we have one stop shopping, whether it is our Business 

USA initiative or going to www.export.gov, or using the tariff tool. 

We are going to try as much as we can to continue to make this 

easier for people because we know at first it can seem quite complex. So we would like to work with you to simplify things. 

Ms. HAHN. Thank you. Thank you, Mr. Chairman. 

Chairman GRAVES. Mr. Schilling. 

Mr. SCHILLING. Thank you, Chairman, and Ranking Member. 

And thank you, Ambassador, for being here today. We appreciate 

your time. 

My home state of Illinois ranks second in the country for ag exports to nations and China is a major market, of course, as you are 

well aware to U.S. ag products. But International Trade Commissions stated China’s tariff and non-tariff barriers inhibited between 

1.3 billion and 2.1 billion in annual sales. What is the USTR doing 

with regard to the issue with China? 

Ms. SAPIRO. We are very much focused on ensuring that China 

lives up to the obligations that it took on when it joined the WTO 

10 years ago. And so with respect especially to the SPS restrictions 

we really want to make sure that they are science-based and consistent with valid risk assessments. 

We have been very active in using international remedies 

through the WTO when we feel that China is not living up to its 

obligations. I am thinking, for example, of broiler parts. We filed 

an action against China that is proceeding because of the way they 

were treating our poultry. Because we are so competitive in ag exports. I mentioned how we have had a banner year and we want 

to have another one this year thanks in part to Illinois. We are also 

very focused on Russia. We negotiated with Russia for many, many 

years, and finally wrapped those up last fall successfully so that we 

could provide greater access to the Russian market for our pork, for 

our poultry, for our beef, and for a number of U.S. products where 

we are highly competitive and we want to see more access. 

Mr. SCHILLING. Thank you for that. 

We often hear about the negative implications of free trade 

agreements. Do you think the United States economy and small 

business exporters are better off with them in place or worse? 

Ms. SAPIRO. With trade agreements? 

Mr. SCHILLING. Yes, ma’am. 

Ms. SAPIRO. I think they benefit clearly small business, which 

simply do not have the tools and the resources that larger compaVerDate Mar 15 2010 01:18 Nov 14, 2012 Jkt 076474 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HR\OC\A474.XXX A474

jbell on DSK7SPTVN1PROD with 
11 

nies have to try and figure out what is the trade regime of another 

country. And unfortunately, the trade agreements cannot be one 

page. They are sometimes many, many, many pages. But the reason we do that is to try to provide clarity on what the rules of the 

road are. And that benefits our small business. 

So I am very supportive of the efforts I mentioned in TPP, trying 

to involve more small businesses in this effort and doing it with 

transparency as I mentioned earlier. I indicated that it was not so 

much that we canceled an event; rather, we reallocated the time 

and we had an intensive round of consultations with all of our 

stakeholders. We simply broke it up, as I understand it, differently 

than we did in other rounds. But transparency—so small businesses understand what we are negotiating, and when we are done 

explaining to them clearly how they can benefit—is a critical part 

of our work and our agenda. 

Mr. SCHILLING. Very good. So that leads me to the next question. 

That is a good lead-in. 

Considering only 1 percent of small businesses in the United 

States export, what do we need to do to get them to participate a 

little bit more, I guess? 

Ms. SAPIRO. I think part of it is continuing to speak forcefully, 

and I commend the Chairman and all of the members of this Committee for speaking across the country, about the importance of 

trade and why what we are doing is so critical to help small businesses thrive and help our economy succeed as a whole. So a large 

part of this is outreach and making clear what the tools are. That 

we are negotiating TPP. That we have negotiated in APEC, which 

is a broader group. The Asia-Pacific Economic Cooperation forum 

is a broader group than TPP. 

What we are doing with the European Union, one of our closest 

trading partners. We, like they, are very committed to making our 

SMEs a higher priority. They think we are doing something right. 

We think they are doing something right. So it is a wonderful opportunity for the sharing of best practices. 

I mentioned in the Western Hemisphere this effort to connect our 

SBDCs with those hopefully to the north in Canada, and also down 

through Mexico and Central America and into South America, particularly in Colombia, our newest trade partner. 

So as you look around the world, we are very committed to making things as easy as we can so that our small businesses can 

thrive. And I would add also we are giving them the confidence to 

try another customer in an existing market or try a new market. 

So again, I think it is a collaborative effort working with all of you 

to try to figure out where the gaps still are, and what we can do 

together, as partners, to try to fill them because we have the same 

interest here, which is letting our small businesses thrive and export more. 

Mr. SCHILLING. Very good. Thank you, ma’am. With that I yield 

back. 

Chairman GRAVES. Ms. Chu. 

Ms. CHU. Well, I also sit on the Judiciary Committee, where I 

have been working hard to address business concerns about intellectual property rights. And this is a major priority for my constituents in the San Gabriel Valley of California. 


jbell on DSK7SPTVN1PROD with 
12 

Your testimony mentions that you are pursuing a robust trade 

policy that supports small business and vigorously enforcing our 

trade rights. How is USTR making sure that the small businesses 

are protected from overseas intellectual property rights violations? 

What recourse does USTR provide for small businesses to ensure 

that they can report violations and seek redress given their limited 

resources and what can you do to strengthen relationships between 

these small businesses and regulatory agencies such as the Department of Justice so that these small businesses can have more confidence in exporting overseas? 

Ms. SAPIRO. Thank you for that very important question. 

The importance of intellectual property rights and enforcement is 

another reason why I believe that small business can benefit greatly from our trade agreements. In our trade agreements we always 

seek to have a very robust intellectual property chapter so that we 

lay out the rules of the road and make clear that if other countries 

want to partner with us, and have more access to our market 

through reduced tariffs, they in turn have to provide the kinds of 

protections that we want to see for all U.S. companies but that particularly benefit the smaller companies that do not have the resources to engage legions of lawyers to bring litigation in foreign 

countries. So I think that is another reason why small businesses 

might want to look first and foremost to trade with our partners 

under an FTA because of the additional comfort that that provides. 

For trading partners that are not FTA partners we, of course, 

have the WTO agreements. I am thinking in particular of the 

TRIPS agreement with respect to intellectual property rights. We 

have, for example, prosecuted successfully a case against China in 

the WTO with regard to audiovisual. And in fact, just a few months 

ago we reached an important agreement with them on implementing some of their commitments in the film and audiovisual 

area. So it is an ongoing process where we are very committed to 

doing what we can to enforce these rights because of the innovation 

that they foster, and because of the entrepreneurship that depends 

on them. 

I would add also that the new ITEC, the Interagency Trade Enforcement Center is going to be looking at a range of areas to make 

sure that we are keeping our trading partners focused on our 

rights and if they are not implementing them, that we have the capacity to launch investigations and do what we can to enforce our 

rights. And again, small businesses I think, which can be disproportionately affected by barriers can also, we hope, gain by the 

new ITEC; our additional resources mean that when smaller companies come to us with a problem we will be able to look into it 

ourselves. The larger companies, again, have the resources to look 

into these questions on their own and then come to us. The smaller 

companies do not. By having a robust enforcement capability as a 

new tool in our arsenal, we believe we will be able to benefit small 

businesses again in this manner. 

Ms. CHU. Thank you for that. 

I went on a delegation to China recently and I was very startled 

to find that half of the wine that the Chinese consume comes from 

France, while only 5 percent comes from the U.S. And yet we have 

some of the best wines in the world, particularly from my home 


jbell on DSK7SPTVN1PROD with 
13 

state of California. So what programs are available in the national 

export strategy to help particular industries like the wine industry 

enter these new markets abroad? 

Ms. SAPIRO. Well, I am also a fan of California wines. I hope I 

do not insult anyone from another state, but they are excellent. 

I wonder if we have had a trade mission to China focused on the 

wine industry or what the great potential is for the export of California wines. I think this is an important industry for California 

and also for other states, a growing industry certainly in Virginia 

as well. I think it is something that we can certainly look into in 

conjunction with the Commerce Department and its ability to lead 

trade missions. 

Ms. CHU. Okay, finally, let me ask, there are many small businesses in my district but nearly two-thirds of my district does not 

speak English at home. And they have trouble accessing the services that they need in order to export. What do you do to offer assistance to business owners who are not native English speakers? 

Ms. SAPIRO. I would certainly hope that an SBDC located in an 

area where there are business owners who speak other languages 

could have someone on staff to help. I would have to look into 

whether that is indeed the case but I am guessing that probably 

the Commerce Department has done something to address this concern. 

Ms. CHU. Okay. Thank you. 

Chairman GRAVES. Mr. Hanna. 

Mr. HANNA. I heard a couple people mention currency manipulation. Tell me everything you know about it and with Vietnam, with 

China, it is alleged—I think personally I think maybe some of it 

is blown out of proportion but what do you know about it? 

Ms. SAPIRO. Well, I know it is in the papers a lot. Certainly, it 

is a hot topic for discussion in Congress and I will say this is something that the Administration is very focused on. Secretary 

Geithner has been very involved in this question and I would probably best refer that question to him and his team because they 

really have done the most work on this. 

Mr. HANNA. But is that not an integral part of what makes you 

successful or not successful? I mean, the value of the dollar right 

now has a lot to do with our changing export picture. So conversely, is it not the same when it is coming in the opposite direction? 

Ms. SAPIRO. The value of the dollar can certainly have bearing 

on the export question. But as I mentioned, Secretary Geithner and 

his team are focused on the currency fluctuations and discussing 

that issue with other countries. So I have to defer to him on this 

question. 

What I can say is that we are very focused on, no matter what, 

is the international climate in terms of monetary policy. We make 

sure that our companies have the tools that they need to succeed 

in the marketplace in terms of the free trade agreements and in 

terms of the other tools, such as enforcement capabilities that we 

are very committed to pursuing. 

Mr. HANNA. But how can you do one without understanding or 

at least having a handle on a lever, if you will, on the other? 


jbell on DSK7SPTVN1PROD with 
14 

Ms. SAPIRO. As a government, we are very involved across the 

board in these kinds of questions. But USTR’s role is to formulate 

trade policy and make sure that we can negotiate trade benefits for 

our companies of all sizes and then, of course, that we have the 

ability to follow up on the enforcement side. Our jurisdiction does 

not get into currency questions, and those we defer to the Secretary 

of the Treasury because that is his expertise. 

Mr. HANNA. In terms of dairy policy, in Russia for years we have 

been shut out. Assuming that the Jackson-Vanik goes away and 

they join the WTO, do you have an idea—I come from a place that 

is a lot of dairy farms—how you can encourage our products to go 

over there and that particular product? 

Ms. SAPIRO. If Congress is able to terminate the Jackson-Vanik 

amendment, then our companies, including our dairy farmers, will 

be able to enjoy the benefits that we negotiated in terms of, for example, the SPS rules. And if Russia does not abide by the rules to 

which they have agreed, we would then have the option of dispute 

settlement. So strict adherence to the SPS rules that can benefit 

dairy farmers and enforcement tools, should we need them, would 

be very important benefits I think for the farmers of New York 

State. But it all depends on whether or not Congress will act quickly this summer to terminate this provision, which dates from 1974, 

before Russia becomes a Member. Otherwise, our exporters will not 

be able to enjoy the additional benefits that we negotiated. 

Mr. HANNA. Thank you, ma’am. I appreciate it. I yield back. 

Chairman GRAVES. Ms. Ellmers. 

Ms. ELLMERS. Thank you, Mr. Chairman. 

Ambassador Sapiro, I am from North Carolina. I represent the 

2nd District. Textiles and tobacco are very important in my district. My first question to you is in regard to tobacco. A moment 

ago you were mentioning the amount of transparency and trying to 

increase the amount of transparency. I was recently told as a member of Congress that I am allowed to request the language on tobacco within TPP; however, I am not allowed to share any of this 

language with my staff or any of my constituents that have concerns. My question to you is why have we not seen this language 

and why is the USTR attempting to halt the discussion of the tobacco exemption in Dallas as we speak? And why are they unwilling to share the language on this issue in the agreement? 

Ms. SAPIRO. The tobacco question is obviously an important one 

that is being worked first interagency and with Congress and with 

stakeholders. I know I am not personally involved in that discussion because I am not handling the TPP negotiations on a day-today basis, but I know it has been the subject of a lot of discussion 

and consultation in terms of finding the right proposal to move forward with. 

So I just want to reassure you that this is a very important 

issue, one that the Administration and USTR is taking very, very 

seriously. And we are doing our utmost to work with everyone to 

find the right path ahead. 

Ms. ELLMERS. But the question being why is, you know, again, 

on the issue of transparency, why would the language not be readily available for, of course, myself, but I would need to go over that 

information with my staff and possibly some of my constituents 


jbell on DSK7SPTVN1PROD with 
15 

who are tobacco farmers and have these concerns. Why would that 

be not forthwith? Why are we holding back on that? 

Ms. SAPIRO. Well, I cannot speak to the exact details but what 

I can say is we do a significant amount of outreach with Congress, 

and at the staff level as well. So I am not sure exactly what happened but I do think in general we try to be very transparent with 

Congress because it is such an important part of what we do, making sure that we are being responsive to you and your concerns and 

the concerns of your staff. 

Ms. ELLMERS. Great. Well, then I will make sure that my staff 

is reaching out to you on those issues. 

My next question, and I understand that my colleague, Mr. 

Mulvaney has already touched on this issue, and of course, that is 

the yarn-forward rule. And my understanding is now we are looking at possibly changing that and going forward with the flexible 

rule of origin. And of course, you know, again, in some of the discussion that I listened to with my colleague, Mr. Schilling, you 

were talking about the concerns that we have with China, and yet 

this will actually benefit China. 

So I am wondering why on earth would we consider this rule and 

once again throw the textile industry under the bus as was done 

in the South Korean Free Trade Agreement forcing textiles to work 

against another free trade agreement, as well as, for instance, myself. I ended up, I am a big proponent of free trade, fair trade, but 

I had to vote no on that agreement because of my textile industry. 

Do not do that to us again. And I am going to do everything that 

I can to make sure that that does not happen. But if you could 

maybe just touch on that again I would truly appreciate it. 

Ms. SAPIRO. I would be happy to, Congresswoman. I cannot 

stress enough how important the textile industry is to our ability 

to trade. And we take their interests and their concerns very, very 

seriously. So I just want to reassure you that we are doing that in 

TPP as well. This is an important issue, an important constituency, 

and we want to see them succeed. 

Ms. ELLMERS. So why would there be some favorable thinking 

here on the flexible rule of origin rather than the traditional way 

that we have looked at this issue when it comes to the textile industry? I mean, where is the change and why have we made that? 

Ms. SAPIRO. I have not been involved in the specifics. Our chief 

textile negotiator has been very involved and is working this issue 

in Dallas. But I can say as a general matter that we are very committed to making sure that all of our exporters, including the textile industry, remain competitive, and that they remain a vibrant 

part of our own economy. 

Ms. ELLMERS. Thank you. I am sure that that will be reassuring 

to the textile industry. Thank you. And I yield back the remainder 

of my time. 

Chairman GRAVES. Do you have any more questions? 

Ms. VELA ́ ZQUEZ. Ms. Sapiro, Ambassador, despite the fact that 

for the last two decades there has been an emphasis on free trade 

agreement as a primary tool to increase trade and the facts that 

we have before us in respect to small businesses is that only 1 percent out of 28 million are exporting a product to a country and then 

when you come before our committee and there are trade negotiaVerDate Mar 15 2010 01:18 Nov 14, 2012 Jkt 076474 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\A474.XXX A474

jbell on DSK7SPTVN1PROD with 
16 

tions you are telling us that trade agreements are going to benefit 

small businesses. So it seems to me that after two decades, and I 

have been here now for two decades and I have been hearing the 

same rhetoric, if you will, that those trade agreements are not living up to the promises that were made to small businesses. They 

are doing great for big corporations but not for small businesses. 

And to tell me that SBDCs, small business development centers, 

they are not experts on trade promotions, they provide technical assistance for startups, microbusinesses, small businesses domestically, but they do not have the expertise. So there has to be a better job, interagency jobs when it comes to trade promotion and we 

are not seeing that. 

Ms. SAPIRO. I want to assure you that one of the key priorities 

of the National Export Initiative, launched by the President, is focused on SMEs. All of the agencies involved in trade are working 

together to have the most robust set of tools we possibly can to 

help our SMEs succeed. 

I cannot speak to what happened earlier but I can tell you in the 

last two years I have seen an unprecedented level of coordination 

interagency and coordination with our trading partners. In probably every meeting I have had with a foreign counterpart I have 

raised SMEs. How can we work together to help? And, just like 

they are the backbone of our economy, they are the backbone of 

most economies around the world. So there is great interest in 

working together more closely to establish these regional links between our SBDCs, which link at the micro level, to partners in different countries around the world so that they have a virtual network and they have real resources, too, including access to financing tools and export promotion opportunities to succeed. 

This is a challenge, and I am not suggesting that we have answers, but I am suggesting that we have a firm commitment and 

a real dedication and priority placed on this issue that I do not 

think has been a hallmark of previous administrations. We are determined to work with you to figure out exactly how to make a difference. 

For example, under a number of our FTAs we are starting small 

and medium enterprise committees so that we can, again together, 

focus on how do we help. How do we connect our SMEs together 

so that they have export opportunities in both trading partners, or 

in additional partners? So it is a challenge but we have done a lot. 

I think there is a lot more to do and that is part of the reason I 

wanted to come today and see how we can work more closely together in the future. 

Chairman GRAVES. Mr. West. 

Mr. WEST. Ambassador, you just mentioned the National Export 

Initiative. One of the countries that the Administration is pushing 

hard to get into that is Brazil. And this Committee was contacted 

by a small business owner, this health care equipment manufacturer, and he faced on average 65 percent import tariffs as opposed 

to on this side only 3 percent. So how can, if we want Brazil to be 

a part of this National Export Initiative, how can we level that 

playing field so the small businesses can participate in that? I 

mean, 65 percent versus 3 percent? I mean, that is exorbitant. I 

mean, what can the USTR do to get Brazil to level that playing 


jbell on DSK7SPTVN1PROD with 
17 

field out so that, you know, free trade is fine but it has to be fair 

trade. And again, I have to echo the comments of the Ranking 

Member. We talk about small businesses but they are put at a severe disadvantage. 

Ms. SAPIRO. Brazil is a challenge. We do not have a trade agreement with Brazil. We do not have an investment agreement with 

Brazil. We did have the first meeting under the new Trade Partnership Agreement that Ambassador Kirk signed last year. We 

held that meeting in March. So we are very focused on developing 

a much closer partnership with Brazil. There are many issues we 

do see eye-to-eye on. Others we are still working towards. 

SMEs are an issue where they do want to work with us. Investment is also an issue, not in terms of an agreement but in terms 

of a dialogue. So we are looking for areas of common ground where 

we can work together. High tariffs are a concern; so are some of 

the non-tariff barriers. We have been forthright with them in trying to address these concerns and we will continue to push with 

Brazil to do that. 

Mr. WEST. Well, I guess is there some numerical threshold? You 

know, part of being a member of this export initiative, we are going 

to say that this is nonnegotiable with them. I mean, I do not want 

us to, you know, roll over and allow our bellies to be scratched and 

our small businesses end up losing out. So is there a threshold? Is 

there some point of no return where we are going to push the 

table? Push the envelope? 

Ms. SAPIRO. Well, we are pushing the envelope, Congressman, as 

far as we can with Brazil, through looking for areas where we can 

work together. So, for example, they are hosting the World Cup, 

and other events as well, so they have infrastructure needs. In 

some cases, initially that benefits the larger companies but then 

they subcontract with the smaller companies. So it is not an ideal 

solution, but it is something that we are working towards at this 

point. And as I said, they have focused domestically on SMEs. And 

so one opportunity might be to link our SMEs through this ‘‘Connect the Americas Initiative.’’ Then they can have more access to 

each other through virtual networks and other forms of assistance. 

Mr. WEST. Well, that is an important thing for us because, like 

Ms. Hahn said, you know, we have got Port of Miami, Port Everglades, and Port of Palm Beach down in our neck of the woods and 

that is very beneficial. So thank you, Mr. Chairman and Ranking 

Member. I yield back. 

Chairman GRAVES. Mr. Hanna. 

Mr. HANNA. Some of the bills, for example, the highway bill has 

a ‘‘Buy America’’ provision in it. Do you have an opinion about 

those? And do you have an idea of how the net effect—what the 

net effect might be on American businesses? 

Ms. SAPIRO. Well, we do hear a lot from our trading partners, regarding concerns about ‘‘Buy America’’ provisions. We try to gain 

as much access as we possibly can to trading partners’ procurement 

markets. We do have to obviously offer access here as well, or they 

will not allow us to access their markets. 

In general, if a country is a trading partner and they are a party 

to the WTO’s Government Procurement Agreement, then they have 

broad access. But there are, of course, some exceptions. So it is a 


jbell on DSK7SPTVN1PROD with 
18 

continuing source of friction with our international trading partners. On the other hand, domestically we know that this is important especially for our small and medium enterprises, so they can 

compete effectively through those procurement processes here. 

Mr. HANNA. Do you think it works? 

Ms. SAPIRO. In terms of helping SMEs or in terms of giving us 

more access overseas? 

Mr. HANNA. Both. 

Ms. SAPIRO. I think it does help in terms of SMEs. I have seen 

the statistics and they are certainly getting more and more federal 

procurement contracts. Overseas, as long as we have exceptions, it 

is a tougher push for us to make. So I have not seen stats on how 

that balances out yet. It is a very good question. 

Mr. HANNA. Well, thank you, ma’am. I yield back. Thank you, 

Chairman. 

Chairman GRAVES. Any other questions? 

Seeing none, I want to thank you, Ambassador, for being here 

today. It is obviously clear that we have a lot of opportunity, I 

think, to remove some trade barriers and open new markets for our 

small businesses. And we need to stay aggressive and continue to 

make small business a priority. But we very much appreciate you 

coming in today and I look forward to working with your office. So 

thank you very much. 

Ms. SAPIRO. Thank you. Thank you, Mr. Chairman. Thank you, 

Ranking Member. Thank you, everyone. 

Chairman GRAVES. We will seat the next panel. 

[Recess.] 

Chairman GRAVES. We are going to go ahead and start. We have 

a series of votes coming up between 2:25 and 2:30, so that will create a little bit of a problem. We will probably have to recess for 

those votes and then we will come back, but we will try to get 

through as much testimony as we can. 

STATEMENTS OF THOMAS CRAFTON, PRESIDENT, 

THERMCRAFT, INC., TESTIFYING ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS; ROBERT B. SINNER, PRESIDENT, SB&B FOODS, INC., TESTIFYING ON BEHALF OF THE AMERICAN SOYBEAN ASSOCIATION; JOSHUA 

MELTZER, PH.D., FELLOW, GLOBAL ECONOMY AND DEVELOPMENT, BROOKINGS INSTITUTION; MARK A. LUDEN, CEO, 

THE GUITAMMER COMPANY, TESTIFYING ON BEHALF OF 

THE CONSUMER ELECTRONICS ASSOCIATION 

Chairman GRAVES. I will go ahead and introduce our first witness, which is Mr. Thomas Crafton. He is the president of 

Thermcraft, Inc., in Winston-Salem, North Carolina. Thermcraft is 

a leading manufacturer of high quality thermal processing equipment, including industrial furnaces that can reach over 3,000 Fahrenheit. They currently export to 12 countries. He is testifying on 

behalf of the National Association of Manufacturers. And welcome 

to the Committee. 

I might point out each of you have five minutes and the lights 

will be green up to the last minute it will turn yellow and then red 

at the end of five minutes. But Mr. Crafton, thank you for being 

here. 


jbell on DSK7SPTVN1PROD with 
19 

STATEMENT OF THOMAS CRAFTON 

Mr. CRAFTON. Thank you for the invitation. Chairman Graves, 

Ranking Member Vela ́zquez, and members of the House Committee. You know, we appreciate the opportunity to present our experiences regarding international trade as a small business. 

Again, my name is Tom Crafton with Thermcraft, Inc., and we 

are located in Winston-Salem, North Carolina. Founded in 1971 

and we just celebrated our company’s 41st birthday and now employ more than 70 people. We manufacture high temperature 

equipment, supplying to many different types of industries like 

solar cell industry, aircraft, glass, nuclear components, OEMs, fiber 

optics, just to name a few industries. We are also a member of 

NAM, National Association of Manufacturers, which is one of the 

largest national trade organizations. 

Thermcraft started out 41 years ago in a small 5,000 square foot 

building in a very poor section of Winston-Salem, and we have now 

grown to having our own building and about 70,000 square feet 

with about 70 employees. But we grew rapidly from making small 

laboratory equipment, small systems to much larger systems for 

high volume manufacturing. Customers currently include most of 

the Fortune 500 companies, like the General Electrics, Boeings, 

DuPonts, Corning Glasses, Rockwell, again, just to name a few. 

Our customers with international presence actually is what got 

us started in exports from the standpoint our specialty is designing 

custom systems for manufacturing. A U.S. customer here would 

purchase equipment, a custom furnace for a particular manufacturing process. They would be in discussions with sister companies 

that were overseas. The sister companies would need to duplicate 

that process so they came to us. And that is how actually we 

began. Our start in exporting was a result of our dealings with 

U.S. companies. 

But the bulk of our exports have been primarily the semiconductor industry worldwide, mainly Asia and Western Europe. In 

the early 1990s, we began dealing with an MRO, maintenance repair and overhaul organization in Europe, and they began distributing our heaters to the semiconductor industry there. In the late 

1990s, we began to see much of that business move to Asia, so as 

a result we began relationships with Asian representatives in several Asian countries, including Japan, Taiwan, Singapore, China, 

and they helped us support that business there. 

The business in Asia continued to increase, which again gave us 

more experience, more exposure to exporting. And again, in a variety of different countries. Each country kind of presents its own different sets of challenges based upon the product that you are shipping into and in Asia, Europe, and even within any of those communities. 

By 2008, our export business had actually reached about 35 percent of our total sales which was probably in excess of $4 million 

a year. And during the same time period, in order to help generate 

additional export sales, we developed a standard line of equipment 

that was more of a catalogue distributor-type item versus custom 

equipment. And we participated in the Commerce Department’s 

new export initiative, Gold Key distribution program in Singapore, 


jbell on DSK7SPTVN1PROD with 
20 

which we were very successful in finding a good qualified distributor there. 

We also worked with the U.S. commercial service representatives 

locating distributors in China, Korea, again, Singapore, and many 

of the other Asian countries. And we are currently working on distributor networks in Europe and the Middle East, but in order to 

get that Middle East business developed further, there are trade 

shows we participate in. Most recently, in the Arab Lab Expo, 

which is a laboratory equipment trade show that was in Dubai. 

And as a result of doing that show, we have located a number of 

possible strong prospects that have potential of enhancing our export items through distributors throughout the Middle East. 

And that has been the positive side. We have had a lot of help 

with the U.S. commercial service. We had a lot of export issues 

arise on a daily basis that continue to be a problem and mainly it 

is a matter of finding one source for information to be able to help 

us get the information we need to be able to adequately export to 

a particular country. 

Commercial officers seem to, by our experience, have more or less 

the big picture and when we start trying to get into the small picture they are just not in a position to help. They do not have that 

information or expertise to be able to help. You know, regulatory 

changes are constant and trying to find one source, again, one 

source in one place, to locate that information is a challenge. It 

takes hours and hours and people that we simply, we do not have 

the manpower to be able to support those types of things. 

And we have also gone to private export consultants that have 

helped us and many have experienced the same problem. You 

know, we always thought it was our problem as a small business 

but we find out it is more of a small business issue versus just our 

small business. But, you know, we can all benefit from improved 

access to markets abroad. And we are looking to see recent implementation, new trade agreements, which we think can be beneficial 

to us. But we hope the Small Business Administration will redouble efforts to help pursue more FTAs and be able to help find a 

local single source to be able to help small businesses, like us, get 

the information we need. 

And again, I appreciate the opportunity to be able to testify 

about my experiences and I am happy to answer any additional 

questions. 

Chairman GRAVES. Thank you, Mr. Crafton. 

Next, I would like to introduce Mr. Robert Sinner. Bobby is the 

president and partner of SB&B Foods in Casselton, North Dakota. 

He is a family farmer of over 30 years and has extensive experience in international trade. SB&B is a two-time winner of the Export of the Year award from the State of North Dakota and he is 

testifying on behalf of the American Soy Bean Association. Thanks 

for being here. 

STATEMENT OF ROBERT B. SINNER 

Mr. SINNER. Good afternoon, Mr. Chairman, members of the 

Committee. My name is Bob Sinner. I am a fourth-generation partner in a family farming business and president of SB&B Foods, 

Inc. Thank you for the opportunity to appear before you today to 


jbell on DSK7SPTVN1PROD with 
21 

provide my views concerning trade policy and its effect on small 

business exporters. 

Our company, SB&B, employs approximately 30 people who 

produce, package, and export an extensive line of Identity Preserved soybean products to customers worldwide. With annual export sales between $20 and $25 million for the past three years, 

our largest exports are in Asia. 

When our business first expanded to the international marketplace, we received funding for promotional activities in Japan from 

Food Export, USA, a non-profit funded by USDA’s Market Access 

Program (MAP). I cannot overstate the success and value of 

USDA’s export promotion programs in expanding farm exports 

globally. 

One of the challenges we have encountered over the years is we 

have expanded to other markets is the lack of consistency in international standards, specifically the patchwork landscape of countries that require a phytosanitary certificate, and the inconsistency 

of our government to provide them. In this regard, the U.S. government must work towards achieving international harmonization of 

standards in order to facilitate trade between small businesses and 

global markets. 

Under the Korea Free Trade Agreement, food-grade soybean producers now have access to a zero tariff-rate quota (TRQ) for the 

first time outside of that country’s state trading enterprise. But access to the quotas will be a challenge for small exporters because 

the TRQ is managed by local processor associations and competing 

member companies. On this point, I strongly urge our government 

to ensure a certain level of transparency on the implementation 

and administration of the TRQ so that U.S. exporters can reap the 

full benefits of the FTA. 

I would also like to share some thoughts about our infrastructure 

and transportation system, which challenges a small exporter’s 

ability to compete effectively. We have a transportation system in 

the United States that prices equipment into and out of large metropolitan locations in favor of bridging many of the rural supplier 

states en route to departure ports. This approach ignores the importance and necessity of timely food shipments, and we are concerned that as the world continues to demand more grains and soybeans from the U.S., small exporters may not be able to compete 

unless we have available container equipment at competitive pricing. 

Finally, it is also my hope that the Food Safety Modernization 

Act does not impose an additional set of burdensome and costly requirements on small businesses in addition to food quality standards already required by our customers and safety requirements already established by foreign governments. 

As I have stated, small exporters face enormous competition and 

a web of international regulatory constraints. Our export promotion 

programs are among the few tools that help American agricultural 

exporters stay competitive abroad. And while rapidly growing markets in the Asia-Pacific region are key drivers of the food-grade soybean demand, we must break down remaining barriers to meet increased demand for our products in the region. We hope that a TPP 

FTA is successful in easing foreign regulatory burdens so that U.S. 


jbell on DSK7SPTVN1PROD with 
22 

companies can operate more seamlessly abroad and help small 

businesses participate more effectively in international trade. 

Thank you, Mr. Chairman, for the opportunity to present our 

views. I am happy to respond to any questions. 

Ms. VELA ́ ZQUEZ. Mr. Chairman, it is my pleasure to introduce Dr. 

Joshua Meltzer. He is a fellow at the Brookings Institution specializing in global trade and development. His work focuses on issues 

related to international trade, as well as U.S. trade with key economies such as China, India, Japan, and the European Union. He 

currently serves as an adjunct professor at the John Hopkins University School for Advanced International Studies in Washington, 

D.C., as well as an adjunct professor of law at Georgetown University Law School in Washington, D.C. Thank you and welcome. 

STATEMENT OF JOSHUA MELTZER 

Mr. MELTZER. Chairman Graves, Ranking Member Vela ́zquez, 

honorable members of the Committee, thank you for this opportunity today to share my views with you on U.S. trade strategy and 

what is next for small business exporters. 

In 2011, it became clear that concluding the WTO Doha Round 

in its current form is not possible. Efforts are therefore underway 

to make progress on elements of the Doha agenda and the United 

States is taking the lead in such areas as services liberalization. 

The Trans-Pacific Partnership (TPP) negotiations are really the 

only other trade negotiation to which the United States is currently 

a party. The nine countries involved in these negotiations including 

the United States are Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. The TPP also has the potential to be the building block for a wider free trade agreement of the 

Asia-Pacific region, a goal endorsed by APEC leaders and recently 

reiterated by United States trade representative Ron Kirk at the 

TPP negotiations in Dallas this week. 

Given the focus of the current administration on completing the 

TPP negotiations this year, I will focus the rest of my testimony 

on the implications of the TPP for the United States and small 

businesses. In particular, I will focus on the economic implications 

of the TPP, the role of the TPP in achieving free trade in the AsiaPacific region, and finally, we will discuss some of the implications 

for small businesses. 

The Asia-Pacific region is crucial for the United States. It is the 

fastest growing region in the world and a key driver of economic 

growth. Indeed, the region already accounts for 60 percent of global 

GDP and 50 percent of international trade, and is expected to grow 

by around 8 percent this year. 

In 2011, the United States’ exports to TPP economies were worth 

approximately $105 billion and imports were valued at $91 billion, 

giving the United States a trade surplus in the range of $14 billion. 

However, the economic benefits to the United States of the TPP 

will be greatly expanded as more countries join. In this regard already Canada, Mexico, and Japan have expressed interest in joining. And should these countries join, the agreement will end up 

covering over $800 billion worth of exports and $875 billion worth 

of imports of goods and services. 


jbell on DSK7SPTVN1PROD with 
23 

The potential economic gains to the United States from the TPP 

highlights its significance as a template for free trade in the AsiaPacific region. The recently created free trade agreement which 

came into effect on March 15th of this year will likely serve as a 

baseline in the negotiations. USTR is also seeking agreement on a 

range of new rules such as on regulatory coherence to reduce trade 

barriers arising from unnecessary regulatory diversity among TPP 

countries and rules of state-owned enterprises that will discipline 

the trade-distorting impact that they have when they are not operating according to competitive market-based principles. 

The TPP should also address the realities for businesses which 

rely on supply chains located in different countries, often in the 

Asia-Pacific region. Developing coherent rules of origin is one way 

of ensuring that the TPP reflects these business realities. Progress 

on trade facilitation, which reduce the cost of moving goods 

through customs is another one. 

The TPP can also provide an important framework to develop 

new rules that protect the free flow of data across borders. The 

Internet is now a key driver of trade and actually, especially for 

small and medium-sized enterprises as these companies are now 

able to use the Internet to access customers overseas and at scale. 

The TPP will also address the trend in the Asia-Pacific region toward regional economic integration that excludes the United 

States. For instance, ASEAN, the Association of South East Asia 

Nations, has free trade agreements with China, Japan, South 

Korea, Australia, and New Zealand. These agreements divert trade 

from the United States, and in the absence of U.S. participation in 

developing these trade rules undermines the United States’ leadership in the region. 

In this light, the TPP will also be an important vehicle for pursuing economic integration that is both Asia-Pacific in scope and 

involves the United States. 

Small and medium-sized businesses will stand to gain significantly from trade liberalization under the TPP. In fact, almost 98 

percent of all exporters and 97 percent of importers are small and 

medium-sized enterprises, though representing only 40 percent of 

goods and 31.5 percent of imports, so there is clearly room for 

growth. 

In addition to this, 94 percent of small and medium-sized enterprises both import and export. Therefore, trade agreements which 

as the TPP which both liberalize barriers in the United States and 

abroad should benefit small businesses. Small businesses will also 

benefit the most from government efforts to reduce trade barriers 

as the capacity to overcome these barriers, for instance, by establishing subsidiaries overseas, is certainly limited. The TPP has the 

potential to be a 21st century trade agreement, and if it fulfills 

these ambitions, small businesses should stand to gain. 

Thank you again for the opportunity to testify here today. 

Chairman GRAVES. Thank you very much. Our final witness is 

Dr. Mark Luden. He is the chief executive officer of Guitammer 

Company in Westerville, Ohio. They manufacture the speaker and 

sound systems that are used in major theaters around the world, 

including IMAX. He is testifying on behalf of the Consumer Electronics Association. Welcome. I appreciate your testimony. 


jbell on DSK7SPTVN1PROD with 
24 

STATEMENT OF MARK A. LUDEN 

Mr. LUDEN. Thank you very much. Chairman Graves, Ranking 

Member Vela ́zquez, members of the Committee, thank you very 

much for having me here today and for your efforts on this important matter. I also very much appreciated the depths of the questions the Committee asked to the ambassador previously. 

As Chairman Graves said, my name is Mark Luden. I am the 

president and CEO of The Guitammer Company. We are based in 

Westerville, Ohio, a suburb of Columbus, and we make the 

ButtKicker-brand of consumer electronics products. And what they 

do is let you feel bass like a silent subwoofer so that you are able 

to have the full experience without the volume. And our products 

are used by the world’s best musician in home theaters by video 

gamers and in movie theaters around the world and in Kansas 

City. I am also a member of the Board of Industry Leaders and of 

the Consumer Electronic Association (CEA) and past chairman of 

CEA’s small business committee. The CEA represents over 2,100 

diverse technology companies, and my company, The Guitammer 

Company, is proud to be among them. And we are also very proud 

to be a small exporter. 

I would like to briefly talk about two things. First, that wellcrafted free trade and free trade agreements can and do help small 

businesses. And secondly, to recommend three actions Congress can 

take to continue to help our small businesses grow and thereby 

allow us to hire more Americans. 

So why is free trade important to our small business? Historically, 35 percent of our sales are outside the U.S. In fact, in Q1 of 

this year, 45 percent of our sales were outside the U.S.—10 percent 

in Canada and 35 percent outside of North America. In the past 

six months alone, we have shipped ButtKicker-brand products 

around the world—Spain, Belgium, France, South Korea, Brazil, 

the Netherlands, Germany, the U.K., Singapore, Japan, Denmark, 

Switzerland, Portugal, Kuwait, and more, including product to a 

Chinese movie theater chain. So we are proud to let you know that 

we are shaking Chinese movie theaters’ ‘‘you know whats’’ with 

Kentucky-made ButtKickers. 

So as you can see, exports are a vital part of our business. For 

example, the Korea Free Trade Agreement dropped an 8 percent 

tariff on our products that we sell to a Chinese movie theater 

chain. It made us much more competitive. The New Colombia Free 

Trade Agreement should reduce the price of our products exported 

there about by 11 percent, and we were just recently contacted by 

their leading cinema company asking about our products. So that 

will make us, I think, more competitive and have a better chance 

to win that business. These lower costs help us sell more products 

and our international customers to buy more of our products. 

Trade barriers act as a tax on transactions and create a zero sum 

gain where no one wins. Trade barriers and trade policies can unfairly and disproportionately affect small businesses who are not 

able to absorb these extra costs and it can make it harder for us 

to compete against large multinational companies. But well-crafted 

free trade agreements do not cause small businesses to lose jobs. 

Instead, they can be the reason small businesses create jobs. 


jbell on DSK7SPTVN1PROD with 
25 

So what can Congress do to help? I would like to make three recommendations. First of all, I ask you to support the Trans-Pacific 

Partnership. This agreement is of key importance to CEA members 

and the tech industry as a whole. Successfully negotiated it will include tariff elimination and removes technical barriers to trade. 

Secondly, support the expansion of the Information Technology 

Agreement (ITA). Guitammer and CEA strongly support the efforts 

to expand the product coverage within this agreement. Since its 

passage, which I think was about 15 years ago, ITA has helped 

drive innovation, create jobs, open new markets, and lower consumer prices across the globe. Yet, since its passage, the product 

scope of this agreement has never been expanded, leaving products 

that we all use now, such as tablets and Smartphones outside of 

the scope of the current agreement. 

And finally, pass the TRADE (Transparent Rules Allow Direct 

Exporting and Jobs) Act as sponsored by Representative Tipton. 

This act, the TRADE Act, creates an easy-to-use tool for companies 

to access country-specific information regarding export regulations 

and trade requirements, and there is something to be said for simple-to-use points tools. And you are right, I do agree the SBDCs, 

they are not experts in it so the TRADE Act really will help. This 

tool will make it more cost-effective for a small business to easily 

access information about foreign regulations, labor requirements, 

custom declaration information , and more. 

So thank you very much for giving me the opportunity to testify. 

I welcome any questions you may have. 

Chairman GRAVES. We are into this vote series. There are three 

votes, so it may take us—hopefully we will be back within 30 minutes and then we will ask questions if that is all right with you 

all. So we will recess for a short period of time and we will be right 

back. 

[Recess.] 

Chairman GRAVES. We will bring the hearing back to order. Ms. 

Vela ́zquez. 

Ms. VELA ́ ZQUEZ. Mr. Meltzer, critics of the USTR have complained that negotiations for the Trans-Pacific Partnership have 

been conducted behind closed doors, and in fact, one of the congress 

ladies was questioning about the tobacco issue. And nobody will 

know what the proposal will look like until it has been signed off 

by all the parties involved. Does this secretive approach to the negotiating process pose risks that the agreement may not be able to 

garner public support once it sees the light of the day? 

Mr. MELTZER. Thank you for our question. And I am a very big 

supporter personally of transparency throughout government, certainly as far as possible in the trade negotiating process. My sense 

is that generally speaking USTR has done a very good job of trying 

to be transparent in its trade negotiating processes with the TPP 

as well as with its other free trade agreements. I do understand 

that often these issues involve somewhat of a tradeoff between providing as much information as possible to stakeholders and keeping 

them informed of the developments in the negotiations while at the 

same time providing a certain level of confidentiality for negotiators from the United States and other countries to also express 


jbell on DSK7SPTVN1PROD with 
26 

their views freely and frankly. And I think that is always an ongoing balance. 

Ms. VELA ́ ZQUEZ. Thank you. 

I think, Mr. Sinner, you spoke about the lack of coordination in 

terms of trade promotion assistance. What in your opinion would 

be the quickest and most cost-effective means of improving coordination between the different agencies and harmonizing their support when it comes to putting together strategies that will help 

small businesses and medium-sized businesses reap the benefits of 

trade agreements? 

Mr. SINNER. Well, in agriculture you have regional divisions of 

Food Export USA, which is a division of MAP. And those are funds 

that are available for export promotion, export promotional materials, and those are actually, you know, quite helpful to help a 

small business get started. Many of the trade offices in the states 

in cooperation with the Department of Agriculture which have a 

conduit link to Food Export USA or the regional offices of MAP are 

also very helpful to small exporters to looking at the regulatory 

regulations and some of the things, the first steps to get started. 

So, I mean, there is a process and I think at the ground level those 

have been helpful. 

Ms. VELA ́ ZQUEZ. Okay. Mr. Crafton. Thank you, sir. 

While the recently passed trade agreements and Trans-Pacific 

Partnership improve access to foreign markets, they will not translate into improved market share for small businesses if problems 

accessing credit go unresolved. How might the ongoing lack of 

trade financing impact your industry’s capacity to export abroad? 

Mr. CRAFTON. We have been fortunate that it has not made a 

major impact simply because we have forged partnerships with distributors. We utilize them to handle the financial transactions. At 

the same time, we also were dealing with some larger potential 

projects at this point and having the association with EX-IM Bank 

has been a tremendous boon to allowing us to actually get orders 

that we otherwise probably would not be able to handle. 

Ms. VELA ́ ZQUEZ. So when you say ‘‘we,’’ are you referring to your 

company? 

Mr. CRAFTON. Yes, to the company. Yes. 

Ms. VELA ́ ZQUEZ. And do you have any kind of anecdotal stories 

coming out of the manufacturing sector? 

Mr. CRAFTON. Not specifically. I mean, again, it has just been a 

lot of cases. We deal with markets that are maybe Middle East and 

someone’s maybe marginal credit so that we have to deal with financing that, you know, EX-IM allows us to do that where otherwise we just do not have the resources to do otherwise. 

Ms. VELA ́ ZQUEZ. Okay. Thank you. 

Mr. CRAFTON. You are welcome. 

Chairman GRAVES. Mr. West, questions? 

Mr. WEST. Thanks to the panel and thanks you Chairman and 

Ranking Member. You all were here when the ambassador was 

here. If you could trade places with the ambassador or the actual 

USTR ambassador and there were two things that you would implement which would help our small businesses and the arena of 

free trade, fair trade, what would be the two policy initiatives that 

you would enact? 


jbell on DSK7SPTVN1PROD with 
27 

Mr. SINNER. Congressman West, I will respond to that first. And 

it was addressed by Ranking Member Vela ́zquez a couple times 

earlier today. 

Those of us that are involved in international trade would like 

to be involved and would like to be somehow in the discussion of 

some of the negotiation. 

Mr. WEST. At the table? 

Mr. SINNER. At the table so that we understand what is on the 

table. I hear all the time from customers in Asia their fear of what 

this is going to be. They are asking me questions about what is involved in this TPP. To be honest with you, I do not know the nuts 

and bolts of the TPP. But I would like to be more involved in that. 

So, that is one thing. 

Mr. WEST. And that concerns me because, Mr. Luden, you asked 

us to make sure we support the TPP, but Mr. Sinner just said he 

does not exactly know what is in it. And that is one of the problems 

we have up here on Capitol Hill sometimes. We pass things that 

we do not know what is in it. But next? 

Mr. MELTZER. Congressman, if I might, the two things that I 

would think would help small businesses the most in the United 

States on the trade liberalizing front generally speaking, reducing 

tariffs and tariff barriers both overseas but also importantly here 

in the United States I think would be significantly beneficial. You 

know, it always needs to be remembered that when we talk about 

improving the opportunities for small businesses and businesses 

generally to be competitive internationally, imports are an important part of that equation. And in fact, the statistics do demonstrate that approximately 55 percent of imports into the United 

States are actually used as imports into production processes into 

making other goods which are then sold. So actually reducing those 

types of barriers can also be particularly helpful. 

The other thing which is probably not particularly necessarily in 

the purview of the USTR but I think would go a long way towards 

improving the competitiveness generally of small businesses are 

some of the more longer term but really crucial policies which 

evolve around things like education, innovation, infrastructure, and 

creating really the environment here in the United States which allows these businesses to be highly productive and competitive. 

Mr. LUDEN. And if I may answer, Representative West, I would 

agree with Mr. Sinner that the inputs from the SMEs to the USTR 

to these processes, although I am sure they are getting them, 

maybe a wider ask to the SMEs so that they knew it was available 

to speak on those topics, a way of soliciting comments, of soliciting 

input maybe in a more aggressive manner I think would be very 

helpful. 

The other point I would go back to is Brazil that one of the representatives brought up. It is a booming market. It is a burgeoning 

market for our type of product. The disparity, I think you brought 

that up. 

Mr. WEST. Yes, 65 percent. 

Mr. LUDEN. Yes, the disparity is something that although the 

USTR is working on it, that is something that if that is equalized 

out could certainly open new markets for us. 


jbell on DSK7SPTVN1PROD with 
28 

And to your point about the TPP, I do urge you to support it but 

only as all the members have said, if it is well crafted and if it 

makes sense. So in the old review standpoint of being able to reduce tariffs and to break down trade barriers, that makes sense 

and I am totally in favor of that. But done poorly, no. A bad bill 

is not a good bill. 

Mr. WEST. Absolutely. 

Mr. CRAFTON. I agree with Mr. Sinner and Mr. Luden for the 

most part. From our standpoint, the free trade agreements do not 

directly impact us quite as greatly only from the standpoint of we 

have such a diversity of industries that we cater to. We are not focused through electronics, through textiles, through one other one 

necessarily. But the bottom-line is it is important that the organizations that are supposed to be helped have some input into what 

has been crafted in the bill. 

Mr. WEST. And if I may, Mr. Chairman, last question. Will there 

ever come a time when we do not need the Export-Import Bank? 

Mr. CRAFTON. I think not. When you are dealing with smaller 

companies, smaller, you know, our sales are 10 to 15 million range 

and we simply do not have the resources and any other way—it is 

also a safety net. If a customer defaults on a bill or defaults on payments, the Ex-Im Bank is able to—acts as an insurance policy in 

addition to it, so it allows us to go after things which otherwise 

might be too risky. 

Mr. SINNER. My comment is we do not use Ex-Im Bank. We use 

an International Credit Insurance Company. It works fine. We did 

use some Ex-Im Bank a few years ago but the level of protection 

was a little bit lower than going with an International Credit Insurance Company. 

Mr. WEST. Okay. 

Mr. LUDEN. We do not take advantage of the Ex-Im Bank either 

at this point. 

Mr. WEST. Thank you, Mr. Chairman and Ranking Member. I 

yield back. 

Chairman GRAVES. You all have been successful in or experienced some success at least with exporting and creating jobs. Do 

you have any recommendations you would give to businesses who 

are struggling with starting that process or not wanting to start 

that process just because they are afraid of it or whatever the case 

may be? Any advice? What would that advice be? 

Mr. CRAFTON. Our main benefit is there are a lot of U.S. government and state resources that are available to help companies like 

us export. You know, North Carolina, for example, has six offices 

scattered throughout the world and those offices have a dedicated 

employee that their sole job is to help companies like me be able 

to develop export markets within that country or that region. So 

again, just through a little research, finding those resources, government resources that are available because most of the time they 

are of no expense to the company. 

Chairman GRAVES. Mr. Sinner. 

Mr. SINNER. That is a good question. And I am quite involved on 

the state level, involved in the North Dakota trade office and we 

are very proactive with companies, encouraging them and put together resources on the state level through export assistance with 


jbell on DSK7SPTVN1PROD with 
29 

companies that have experience in helping smaller companies get 

started. We have done okay with that, and a lot of companies at 

first, you are right, they are scared. I do not really need this. And 

once they get started and involved they do very well. 

You know, people are people and doing business with someone is 

no different than how you want to be treated. If you can develop 

an honest relationship, Americans are notorious for wanting to 

make a quick buck, but when you get outside the borders of this 

country it is all about relationships and building integrity with a 

relationship. Of course, quality is always important but it can be 

done. 

Mr. MELTZER. I will just say briefly, Chairman, that the preamble to the World Trade Organization in fact says something 

along the lines of I am ensuring the predictability of the instability 

of the world trading system and I think that from a business perspective, even though these are long and certainly at times complex 

rules, the key underlying goal here is really to create a certain degree of certainty and reduce the risk for businesses when they do 

want to engage in trade overseas. So despite the what can appear 

at times daunting length of some of these trade agreements, taking 

time to understand the extent at which they provide them with actually more certainty and predictability than without them might 

actually be some help. 

Mr. LUDEN. I would like to answer that may be a little differently. And I think what we need to do is to help convince people 

that you can do it. That you must need to take the jump. And with 

no disrespect, you know, the saying is, one of the worst things you 

hear is we are the government. We are here to help. And I guess 

in this case that that is really—the government from state, local, 

and federal level on the export, you guys have done a masterful job 

on this. And I do not know that that message is quite getting out 

of how much on a bipartisan effort that you are really trying to 

make it something that is accessible. And so I think what happens 

to an SME, especially a very small one, is the amount of regulations and the ensuing possible risk can be very daunting. And then 

the question is where do you find the help? How do you get the 

help? And will anybody help me? And again, as a small 

businessperson, it is all about the level of risk you are comfortable 

with. Right? You do not want to take more risk not to get the reward. 

In this instance, just look at what you are doing here with this 

hearing by bringing the USTR ambassador in. You were kind 

enough, Ranking Member, to meet with us when I was with the 

SBC Small Business. I mean, it has been something that you folks 

have really lived and have put your hearts into. And there are 

some real resources out there that make it possible. We were not 

born with this knowledge. Our lady who does our export and does 

the harmonizing codes and learns that, we have gotten help. And 

candidly, we have gotten help from the government. 

So I think one of the things—I would answer this just to summarize in two ways, Chairman. One is the message I think would be 

jump in, the water is fine. And secondly, that your government— 

state, local, and federal—is really trying to pave the way and has 

the sense of focus to make it a level playing field because when 


jbell on DSK7SPTVN1PROD with 
30 

given that chance American small businesses really do compete 

and they compete well. So I thank you for the question and I thank 

you for your efforts on this. 

Ms. VELA ́ ZQUEZ. Are you sure you were not my witness? 

Mr. LUDEN. I was born in Queens as you remember. 

Chairman GRAVES. Well, with that the Committee is going to obviously continue to closely follow the impact of trade policy on 

small businesses. And I appreciate all of you coming in today. Some 

of you came a long way and that is very much appreciated. And 

your testimony was very helpful. And with that I would ask unanimous consent that members have five legislative days to submit 

statements and supporting materials for the record. Without objection, so ordered. And with that the hearing is adjourned. Thank 

you. 

[Whereupon, at 3:39 p.m., the Committee was adjourned.] 


jbell on DSK7SPTVN1PROD with 
31 


jbell on DSK7SPTVN1PROD with Insert graphic folio 83 here 76474A.001
32 


jbell on DSK7SPTVN1PROD with Insert graphic folio 84 here 76474A.002
33 


jbell on DSK7SPTVN1PROD with Insert graphic folio 85 here 76474A.003
34 


jbell on DSK7SPTVN1PROD with Insert graphic folio 86 here 76474A.004
35 


jbell on DSK7SPTVN1PROD with Insert graphic folio 87 here 76474A.005
36 


jbell on DSK7SPTVN1PROD with Insert graphic folio 88 here 76474A.006
37 


jbell on DSK7SPTVN1PROD with Insert graphic folio 89 here 76474A.007
38 


jbell on DSK7SPTVN1PROD with Insert graphic folio 90 here 76474A.008
39 


jbell on DSK7SPTVN1PROD with Insert graphic folio 91 here 76474A.009
40 


jbell on DSK7SPTVN1PROD with Insert graphic folio 92 here 76474A.010
41 


jbell on DSK7SPTVN1PROD with Insert graphic folio 93 here 76474A.011
42 


jbell on DSK7SPTVN1PROD with Insert graphic folio 94 here 76474A.012
43 


jbell on DSK7SPTVN1PROD with Insert graphic folio 95 here 76474A.013
44 


jbell on DSK7SPTVN1PROD with Insert graphic folio 96 here 76474A.014
45 


jbell on DSK7SPTVN1PROD with Insert graphic folio 97 here 76474A.015
46 


jbell on DSK7SPTVN1PROD with Insert graphic folio 98 here 76474A.016
47 


jbell on DSK7SPTVN1PROD with Insert graphic folio 99 here 76474A.017
48 


jbell on DSK7SPTVN1PROD with Insert graphic folio 100 here 76474A.018
49 


jbell on DSK7SPTVN1PROD with Insert graphic folio 101 here 76474A.019
50 


jbell on DSK7SPTVN1PROD with Insert graphic folio 102 here 76474A.020
51 


jbell on DSK7SPTVN1PROD with Insert graphic folio 103 here 76474A.021
52 


jbell on DSK7SPTVN1PROD with Insert graphic folio 104 here 76474A.022
53 


jbell on DSK7SPTVN1PROD with Insert graphic folio 105 here 76474A.023
54 


jbell on DSK7SPTVN1PROD with Insert graphic folio 106 here 76474A.024
55 


jbell on DSK7SPTVN1PROD with Insert graphic folio 107 here 76474A.025
56 


jbell on DSK7SPTVN1PROD with Insert graphic folio 108 here 76474A.026
57 


jbell on DSK7SPTVN1PROD with Insert graphic folio 109 here 76474A.027
58 


jbell on DSK7SPTVN1PROD with Insert graphic folio 110 here 76474A.028
59 


jbell on DSK7SPTVN1PROD with Insert graphic folio 111 here 76474A.029
60 


jbell on DSK7SPTVN1PROD with Insert graphic folio 112 here 76474A.030
61 


jbell on DSK7SPTVN1PROD with Insert graphic folio 113 here 76474A.031
62 


jbell on DSK7SPTVN1PROD with Insert graphic folio 114 here 76474A.032
63 


jbell on DSK7SPTVN1PROD with Insert graphic folio 115 here 76474A.033
64 


jbell on DSK7SPTVN1PROD with Insert graphic folio 116 here 76474A.034
65 


jbell on DSK7SPTVN1PROD with Insert graphic folio 117 here 76474A.035
66 


jbell on DSK7SPTVN1PROD with Insert graphic folio 118 here 76474A.036
67 


jbell on DSK7SPTVN1PROD with Insert graphic folio 119 here 76474A.037
68 


jbell on DSK7SPTVN1PROD with Insert graphic folio 120 here 76474A.038
69 


jbell on DSK7SPTVN1PROD with Insert graphic folio 121 here 76474A.039
70 


jbell on DSK7SPTVN1PROD with Insert graphic folio 122 here 76474A.040
71 


jbell on DSK7SPTVN1PROD with Insert graphic folio 123 here 76474A.041
72 


jbell on DSK7SPTVN1PROD with Insert graphic folio 124 here 76474A.042
73 


jbell on DSK7SPTVN1PROD with Insert graphic folio 125 here 76474A.043
74 


jbell on DSK7SPTVN1PROD with Insert graphic folio 126 here 76474A.044
75 


jbell on DSK7SPTVN1PROD with Insert graphic folio 127 here 76474A.045
76 


jbell on DSK7SPTVN1PROD with Insert graphic folio 128 here 76474A.046
77 


jbell on DSK7SPTVN1PROD with Insert graphic folio 129 here 76474A.047
78 


jbell on DSK7SPTVN1PROD with Insert graphic folio 130 here 76474A.048
79 


jbell on DSK7SPTVN1PROD with Insert graphic folio 131 here 76474A.049
80 


jbell on DSK7SPTVN1PROD with Insert graphic folio 132 here 76474A.050
81 


jbell on DSK7SPTVN1PROD with Insert graphic folio 133 here 76474A.051
82 


jbell on DSK7SPTVN1PROD with Insert graphic folio 134 here 76474A.052
83 


jbell on DSK7SPTVN1PROD with Insert graphic folio 135 here 76474A.053
84 


jbell on DSK7SPTVN1PROD with Insert graphic folio 136 here 76474A.054
85 


jbell on DSK7SPTVN1PROD with Insert graphic folio 137 here 76474A.055
86 


jbell on DSK7SPTVN1PROD with Insert graphic folio 138 here 76474A.056
87 


jbell on DSK7SPTVN1PROD with Insert graphic folio 139 here 76474A.057
88 


jbell on DSK7SPTVN1PROD with Insert graphic folio 140 here 76474A.058
89 


jbell on DSK7SPTVN1PROD with Insert graphic folio 141 here 76474A.059
90 


jbell on DSK7SPTVN1PROD with Insert graphic folio 142 here 76474A.060
91 


jbell on DSK7SPTVN1PROD with Insert graphic folio 143 here 76474A.061
92 


jbell on DSK7SPTVN1PROD with Insert graphic folio 144 here 76474A.062
93 


jbell on DSK7SPTVN1PROD with Insert graphic folio 145 here 76474A.063
94 


jbell on DSK7SPTVN1PROD with Insert graphic folio 146 here 76474A.064
95 


jbell on DSK7SPTVN1PROD with Insert graphic folio 147 here 76474A.065
96 


jbell on DSK7SPTVN1PROD with Insert graphic folio 148 here 76474A.066
97 


jbell on DSK7SPTVN1PROD with Insert graphic folio 149 here 76474A.067
98 


jbell on DSK7SPTVN1PROD with Insert graphic folio 150 here 76474A.068
99 


jbell on DSK7SPTVN1PROD with Insert graphic folio 151 here 76474A.069