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BUREAUCRATIC OBSTACLES FOR SMALL EXPORTERS: IS OUR NATIONAL EXPORT STRATEGY 

WORKING? 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JULY 27, 2011 

Small Business Committee Document Number 112–028 

Available via the GPO Website: www.fdsys.gov 


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(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 


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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

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

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

WITNESSES 

Mr. Suresh Kumar, Assistant Secretary and Director General, U.S. Department of Commerce, International Trade Administration, U.S. Commercial 

Service, Washington, DC ..................................................................................... 3 

Ms. Marie Johns, Deputy Administrator, Small Business Administration, 

Washington, DC ................................................................................................... 5 

Mr. Christian Foster, Deputy Administrator, U.S. Department of Agriculture, 

Foreign Agriculture Service, Washington, DC ................................................... 7 

Mr. Mark Rice, President, Maritime Applied Physics Corporation, Baltimore, 

MD ......................................................................................................................... 19 

Mr. Mitchell Goetze, President and COO, Goetze’s Candy Company, Inc., 

Baltimore, MD ...................................................................................................... 21 

Mr. Maurice Kogon, Director, Center for International Trade Development, 

El Camino College, Hawthorne, CA ................................................................... 25 

Mr. Wade Merritt, Vice-President, State International Development Organizations (SIDO), Vice-President, Maine International Trade Center, South 

Portland, ME ........................................................................................................ 23 

APPENDIX 

Prepared Statements: 

Mr. Suresh Kumar, Assistant Secretary and Director General, U.S. Department of Commerce, International Trade Administration, U.S. Commercial Service, Washington, DC ................................................................ 35 

Ms. Marie Johns, Deputy Administrator, Small Business Administration, 

Washington, DC ............................................................................................ 39 

Mr. Christian Foster, Deputy Administrator, U.S. Department of Agriculture, Foreign Agriculture Service, Washington, DC ............................. 42 

Mr. Mark Rice, President, Maritime Applied Physics Corporation, Baltimore, MD ....................................................................................................... 50 

Mr. Mitchell Goetze, President and COO, Goetze’s Candy Company, Inc., 

Baltimore, MD ............................................................................................... 52 

Mr. Maurice Kogon, Director, Center for International Trade Development El Camino College, Hawthorne, CA .................................................. 67 

Mr. Wade Merritt, Vice-President, State International Development Organizations (SIDO), Vice-President, Maine International Trade Center, 

South Portland, ME ...................................................................................... 74 

Questions for the Record: 

Questions for Mr. Kumar, Ms. Johns, and Mr. Foster .................................. 77 

Chairman Graves Questions for Mr. Foster ................................................... 79 

Rep. Owens Questions for Mr. Goetze ............................................................ 80 

Rep. Owens Questions for Ms. Johns ............................................................. 81 

Chairman Graves Questions for Ms. Johns .................................................... 82 

Chairman Graves Questions for Mr. Kumar .................................................. 83 

Answers for the Record: 

Mr. Goetze Answers for Rep. Owens .............................................................. 84 

Additional Materials for the Record: 

Aerospace Industries Association of America Statement for the Record ..... 87 

National Council of Textile Organizations Statement for the Record .......... 92 


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(1) 

BUREAUCRATIC OBSTACLES FOR SMALL EXPORTERS: IS OUR NATIONAL EXPORT 

STRATEGY WORKING? 

WEDNESDAY, JULY 27, 2011 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 1 p.m., in Room 2360, 

Rayburn House Office Building. Hon. Sam Graves (chairman of the 

Committee) presiding. 

Present: Representatives Graves, Bartlett, Hanna, Mulvaney, 

Tipton, Ellmers, Vela ́zquez, Clarke, Chu, Cicilline, Richmond, 

Keating. 

Chairman GRAVES. Good afternoon, everyone. I will call this 

meeting to order. 

I want to thank our witnesses on both panels for being here 

today. Today we are going to hear testimony on the National Export Strategy and the administration’s efforts to increase coordination among federal agencies, reduce domestic obstacles to trade, 

and expand exports for small businesses. We will also hear directly 

from some small firms on the barriers that limit their ability to export. 

In March 2010, President Obama announced his National Export 

Initiative aimed at doubling exports by the end of 2014. There is 

strong bipartisan support on the benefits of exporting and it is a 

major contributor to the U.S. GDP totaling $1.8 trillion in 2010. It 

provides new sales opportunities for small businesses and most importantly, exporting creates and supports high paying U.S. jobs. 

However, of the 28 million small businesses in the U.S., only one 

percent currently export. There is a great untapped potential there. 

One important way to get more small businesses to export is by 

passing the three pending free trade agreements with Colombia, 

Panama, and South Korea. The independent U.S. International 

Trade Commission estimates a passing of three trade agreements 

would increase U.S. exports by $13 billion. President Obama stated 

this will create over 250,000 jobs. Unfortunately, until the administration and Congress act on these agreements, American small 

businesses will be at a competitive disadvantage with foreign firms. 

As we seek to open new foreign markets, we also need to reduce 

the domestic bureaucracy to make exporting much easier. The export process can be complicated and overwhelming, and many firms 

do not know where to start. It is just a simple fact. Small firms 


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have a limited amount of time and resources to understand the 

complex federal and foreign regulations that are out there. 

There are over 20 federal agencies that can assist businesses 

with some or all of the export process. Small firms have long voiced 

that navigating the agencies may be as difficult as navigating the 

export market itself and it is our Committee’s job to take a look 

at these programs and ensure that small businesses can access the 

help they need to effectively compete in the global marketplace. 

With the unemployment rate staying above eight percent for 29 

consecutive months, exports can be a catalyst to create new jobs 

and get our economy back on track. 

I look forward to today’s testimony and understand how we can 

work together to make it easier for small businesses to export. And 

now it is my pleasure to yield to Ranking Member Vela ́zquez for 

her opening remarks. 

Ms. VELA ́ ZQUEZ. Thank you, Chairman Graves. 

The resilience of American small businesses is unquestionable. In 

the face of an economic downturn they have adapted and come to 

utilize foreign trade as a tool for growth. Even as domestic sales 

lapsed, U.S. exports grew more than 17 percent and shrunk the 

trade deficit to levels not seen in over a decade. Since 2003, American small business exports have grown by about 80 percent. They 

now account for nearly half a trillion dollars in annual export sales. 

Despite these figures, however, small exporters possess a significant source of untapped potential. While small businesses account 

for nearly 97 percent of all export firms, they are responsible for 

only 30 percent of all export revenues. Additionally, more than half 

of all small business exporters ship goods to just one foreign partner. If we are to achieve the goal set forth in the National Export 

Initiative of governing exports within the next five years and creating two million new jobs, it will be critical to increase both the 

number of small business exporters and the number of countries 

they ship to. 

The 2011 National Export Strategy was promulgated for precisely this purpose. The NES sets forth a strategy to implement the 

NEI. In the context of small exporters this means improving coordination of trade promotion activities. It means increasing access to 

export credit for small firms. It also means updating antiquated 

regulations and reducing redundancies that discourage small firms 

from shipping abroad. While the issuance of the NES undoubtedly 

represents a step in the right direction, much more must be done. 

We often hear from small businesses that red tape and convoluted agency processes prevent them from accessing the very programs that are meant to help them. Duplicative initiatives coupled 

with a lack of coordination between agencies can lead to conflicting 

messages about where to go for assistance. Breaking down these 

barriers should be a priority. 

Additionally, more must be done to provide small businesses with 

improved access to capital. Many small firms have continued to 

find lending conditions extremely unfavorable. This is particularly 

true in the context of export loans where banks are wary of financing products that will be shipped overseas. Despite unprecedented 

efforts taken over the last three years to support and expand the 

SBA’s credit programs, its internal trade loans have actually fallen 


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by more than half over the past five years. They now provide $390 

million less in loans to small exporters. 

At the same time, small businesses have found credit difficult to 

come by on the programs operated by the Export-Import Bank. 

While small businesses receive more than 85 percent of all EX-IM 

bank loans, they receive only slightly more than 20 percent of the 

authorization dollars. With so many small firms continuing to 

struggle to find credit, it simply does not excuse why this agency 

should continue underperforming. Today almost nine out of 10 consumers live outside the United States. In order for small businesses to remain at the center of our recovery, they must be able 

to tap into those markets. If implemented correctly, the NES has 

the potential to advance that goal, making our small businesses 

more dynamic, competitive, and robust, while allowing them to 

focus on what they do best, creating new jobs. 

With that I take this opportunity to thank all the witnesses for 

coming and spending some time with us today. I would like to 

thank the chairman for yielding and I yield back. 

Chairman GRAVES. Thank you, ranking member. 

If any other Committee members have an opening statement prepared, I would ask that they submit it for the record. 

And just to explain the testimony process, each witness has five 

minutes. The light will stay green in front of you until you have 

one minute left. Then it turns yellow and then red after five minutes. I would ask that you please try to keep on the time limit. 

STATEMENTS OF SURESH KUMAR, ASSISTANT SECRETARY 

AND DIRECTOR GENERAL, U.S. COMMERCIAL SERVICE, U.S. 

DEPARTMENT OF COMMERCE; MARIE JOHNS, DEPUTY ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION; CHRISTIAN FOSTER, DEPUTY ADMINISTRATOR, OFFICE OF TRADE 

PROGRAMS, FOREIGN AGRICULTURE SERVICE, U.S. DEPARTMENT OF AGRICULTURE 

Chairman GRAVES. Our first witness is Suresh Kumar. He is the 

assistant—did I get it right? He is assistant secretary and director 

general of the U.S. Commercial Service with the U.S. Department 

of Commerce. He has an Economics degree from Delhi University 

and an MBA from Bombay University. Thank you for being here. 

I appreciate you coming in and you have five minutes. 

STATEMENT OF SURESH KUMAR 

Mr. KUMAR. Chairman Graves, Ranking Member Vela ́zquez, and 

distinguished members of the Committee. Thank you for the opportunity to appear before you today. 

Priority number one of the National Export Strategy is to develop programs designed to enhance export assistance to small and 

medium enterprises. This is consistent with the statutory mandate 

of the U.S. and Foreign Commercial Service to assist SMEs to grow 

exports. It is essential to both the national economic recovery and 

global competitiveness that small businesses participate more effectively in export markets. Our clients consistently tell us what they 

need most is assistance to better understand complex documentation requirements, helping and identifying the right international 

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ents often term as entering a market but ensuring that they get 

paid. 

Our small business clients particularly value in connecting to 

federal and state government programs. This is exactly what the 

Commercial Services does. We serve as a one-stop shop, a single 

point of contact and a clearinghouse for small businesses. We are 

the surrogate export department for small businesses. Background 

Dynamics, a $5 million, 20 percent operation which I visited on 

Monday, is a small business which epitomizes what we do for them 

and the services they need from us. They design and manufacture 

linear actuators, multi-axis automation, and mechanical motion 

systems for multiple industries ranging from defense to entertainment to health care amongst others. 

Our trade specialists help connect them to a support network to 

realize export success. By connecting to the Delaware Valley Industrial Resource Center, a part of the Manufacturing Extension Partnership Program, they received valuable manufacturing-related 

guidance. Contact with the Pennsylvania Department of Trade allowed Macron to access a $3,000 grant that permitted them to participate in a commercial service trade mission to Mexico, where 

through our matchmaking services they identified two potential 

distributors that provided them a beachhead in Latin America. Macron is currently working with the Commercial Service in exploring 

new opportunities in Asia and Latin America. 

The global network of the U.S. and Foreign Commercial Service 

spans approximately 1,450 trade specialists across 108 domestic 

U.S. export assistance centers and 126 offices in 79 countries. Our 

trade specialists are the boots on the ground in local communities 

across the country and in global markets across the world that connect businesses to market opportunities. 

Our programs connect SME exporters to international partners, 

distributors, and buyers. Our counseling and facilitation services 

help businesses across state and federal government resources to 

secure expertise, grants, and even financing. The U.S. Commercial 

Service works closely with state governments, trade associations, 

cities’ local chambers of commerce, and institutions like the State 

International Development Organization to engage small businesses in our programs. Last year, the Commercial Service assisted 

18,000 companies to export, 16,000 of which were SMEs, and we 

facilitated 12,300 export successes and helped 4,630 companies export to new markets. For every one dollar invested in the U.S. 

Commercial Service, we returned $135 to the American taxpayer 

by way of facilitated exports. 

Through the Trade Promotion Coordinating Committee (TPCC), 

the Commercial Service promotes joint collaboration amongst the 

20 federal agencies involved in trade promotion. We helped design 

a single uniform method for referring new clients to the most appropriate service provider. Our enhanced client intake registration 

form on export.gov, the Federal government’s export assistance web 

portal more accurately identifies and directs companies to the most 

appropriate federal agency. 

The National Export Initiative, which President Obama announced in March 2010, is off to a good start. Exports comprised 

12.5 percent of U.S. GDP last year, up from 11.2 percent in 2009. 


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The $1.84 trillion in exports of U.S. goods and services is the second highest annual total on record. We remain on pace in 2011 to 

achieve the NEI goals. 

Besides looking into the rearview mirror it is important to prospectively look forward to the future. This is why the pending trade 

agreements with Korea, Colombia, and Panama are a priority for 

the Obama administration. With the Korea Trade Agreement 

alone, U.S. exports could increase by more than $10 billion and 

could support more than 70,000 American jobs. The agreement 

would eliminate tariff on over 95 percent of industrial and consumer goods within five years, making small and big businesses 

globally competitive. 

A recent study by the U.S. International Trade Commission reported that tariff and non-tariff barriers disproportionately affect a 

small business’s ability to export. FDAs are particularly important 

to small businesses to ensure low tariff, remove complex trade barriers, and secure access through a streamlined trade process. Small 

businesses do not need to navigate global markets alone. They have 

the full support of the U.S. government to connect to profitable opportunities worldwide. The U.S. and FCS of the Commercial Service Trade Specialists stand ready, willing, and able to connect small 

U.S. businesses to the 95 percent of consumers who live outside our 

country. 

I thank you again for the opportunity to appear before you today 

and I look forward to answering your questions. Thank you. 

Chairman GRAVES. Thank you. Our next witness is Marie Johns, 

the Deputy Administrator for the Small Business Administration. 

In her role she oversees the Office of International Trade, including 

the administration of the State Trade Export Promotion grants. 

She earned her Bachelor’s and Master’s degree from Indiana University School of Public and Environmental Affairs. Thank you for 

coming and welcome. 

STATEMENT OF MARIE JOHNS 

Ms. JOHNS. Thank you, Chairman Graves. Thank you, Ranking 

Member Vela ́zquez, and members of the Committee. I am honored 

to be here this afternoon to testify. 

In his first State of the Union Address, President Obama announced the National Export Initiative and his goal of doubling 

U.S. exports in five years. This is an important goal. Increasing exports will strengthen our economy, bolster our global competitiveness, and create good jobs. As the agency that serves America’s 

small businesses, the SBA has an important role to play. Administrator Mills chairs a small business working group of the Trade 

Promotion Coordinating Committee or the TPCC, which is the 

main federal body working to encourage more U.S. businesses to 

export. Meanwhile, the SBA is working with our partners across 

the Federal government to support small businesses. 

Small businesses are well poised for growth through exports. 

Since 2003, revenues from America’s small business exports have 

increased as ranking member said about 80 percent. They now account for nearly $500 billion in annual sales. However, small businesses, as the ranking member also mentioned, only represent 


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about 30 percent of export revenues and more than half of small 

businesses who do export are only shipping to one country. 

The SBA, along with our partners and the TPCC, is working to 

increase both the number of small companies who are exporting 

and the number of countries to which they ship. Our plan, which 

has been incorporated into the 2011 National Export Strategy, has 

four components. First, we identify small businesses that are ready 

to export. Second, we prepare those small businesses with counseling and technical assistance. Third, we connect those small businesses with export opportunities. And fourth, we support those 

small businesses with loans and counseling. 

The SBA and our partner agencies have done extensive outreach 

to identify and motivate small business exporters. For example, the 

Department of Commerce and the SBA have worked closely together to identify and refer new clients to the most appropriate resource. To better prepare small businesses for successful exporting, 

federal agencies have collaborated to train the trainers, offering export training for SBA resource partners such as counselors at our 

Small Business Development Centers, our Women’s Business Centers, and SCORE. Meanwhile, the NEI is working to connect small 

businesses with export opportunities. In September of 2010, we 

launched a series of export matchmaking events, the first of which 

was in New Jersey, and it drew participation from approximately 

150 small businesses, lenders, and others. 

Lastly, the SBA and other agencies, excuse me, continue to support small businesses once they have begun exporting. This includes an increased presence at international trade shows, coordination of marketing materials, and ongoing outreach to lenders to 

encourage their participation in export financing programs. 

Thanks to increased guarantee percentages, increased loan limits, and an improving economy, SBA export loan programs have 

seen a major uptick over last year’s levels. These loans are helping 

small businesses across the country expand their export capabilities. For example, in Missouri, Environmental Dynamics, Inc., took 

advantage of an export working capital loan once the limit was 

raised to $5 million. The increased loan size made the program 

much more appealing to the company, and the firm which has sold 

internationally for 20 years, is using the loan to finance an expansion. Meanwhile, in New York, Turbofil Packaging Machines used 

an export working capital loan to help the company complete a 

large overseas contract. 

The success of the NEI depends on the work of more than a 

dozen agencies across the Federal government. Each agency has 

staff dedicated to working on NEI initiatives who meet and communicate regularly with their colleagues throughout the administration. We have worked to reduce bureaucratic barriers and make 

our efforts as crosscutting as possible. Overall, our goal is to ensure 

that we are connecting federal resources at every point and making 

them work for small businesses. 

Thank you, Mr. Chairman, ranking member, and members, and 

I look forward to answering your questions. 

Chairman GRAVES. Thank you. 

Our final witness on this panel is Christian Foster. He is the 

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eign Agriculture Service within the U.S. Department of Agriculture. He earned a Master’s of Arts from Georgetown University 

in 1982 and a Bachelor of Science in Foreign Service from Georgetown in 1980, I believe. Welcome. And I appreciate you being here. 

STATEMENT OF CHRISTIAN FOSTER 

Mr. FOSTER. Mr. Chairman, members of the Committee, I am 

pleased to be here with you today. 

In his 2010 State of the Union address, President Obama told 

the nation we are launching a National Export Initiative that will 

help farmers and small business increase their exports. USDA has 

taken the President’s charge to heart. The efforts of USDA personnel throughout the country and around the globe, bolstered by 

public-private partnerships, have assisted farmers, ranchers, and 

all agricultural exporters in achieving record export sales. In Fiscal 

Year 2011, we expect U.S. agricultural exports to reach their highest level in history, reaching $137 billion. 

For more than 50 years, the Foreign Agricultural Service has led USDA’s efforts to build overseas markets. We know that every $1 

billion in agricultural exports supports 8,400 jobs and generates an 

additional $1.3 billion in economic activity. At USDA, the commitment to NEI starts at the top. I am pleased to say that next week 

Secretary Vilsack will be hosting the administration’s NEI Small 

Business tour event in Milwaukee, Wisconsin. The event is designed to connect small businesses with the resources they need to 

export. We will be collaborating with the Department of Commerce, 

the Small Business Administration, and the Export-Import Bank. 

I would like to now highlight a few of USDA’s actions in NEI priority areas. Last year, more than 625 new small businesses benefited from the USDA administered Market Access Program to promote their products overseas, resulting in over 975 first-time sales. 

For example, a company, WildRoots, a healthy snack food company 

with production facilities in Illinois and Nebraska, matched MAP 

funds to market their products in Canada. Export sales from this 

company soared from zero in 2008 to $4 million last year. The company buys blueberries from Michigan, corn and soy products from 

Illinois, cranberry from Massachusetts, and almonds from California. 

Another example of our export assistance to small businesses is 

how we link them to foreign buyers at USDA hosted and supported 

trade shows. Last year, USDA supported U.S. pavilions at 27 international trade shows in 19 countries. Nearly 1,000 exhibitors reported $179 million in onsite sales and over $1 billion in estimated 

12-month sales. Participating U.S. companies introduced over 6,000 

new-to-market products. 

USDA-led trade missions link our producers to foreign buyers. A 

trade mission in January to Peru included 16 small businesses. 

Three hundred thirty eight one-on-one meetings were held with 

over 100 Peruvian and 10 Ecuadorian companies. To date, USDA 

has recorded $1.9 million in sales resulting from that mission. In 

addition, USDA supports reverse trade missions that bring foreign 

buyers to the United States to meet with potential suppliers of agricultural products. Such missions are particularly valuable for 

small businesses that may not have the resources to travel abroad. 


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Tariff and non-tariff barriers remain challenges for U.S. agricultural exports. Securing congressional approval of the pending trade 

agreements with South Korea, Colombia, and Panama would significantly reduce tariff barriers to U.S. farm exports. USDA is also 

stepping up efforts to address sanitary and phytosanitary barriers 

to farm exports. 

In 2010, the USDA administered U.S. Technical Assistance to 

Specialty Crops Program assisted U.S. potato exporters in overcoming a Thai phytosanitary protocol that prevented U.S. exports. 

The U.S. Potato Board used program funds for Thai officials to visit 

and review U.S. seed certification procedures and pest mitigation 

measures. Thailand agreed to additional market access that more 

than doubles the number of states that are eligible to export seed 

potatoes to Thailand. 

I am pleased to report that USDA is making progress in the Administration’s goals under the NEI. As our Secretary said, increased exports mean higher incomes for producers, more opportunities for small business owners, and for folks who package, ship, 

and market agricultural products. They mean a thriving rural 

America which is good for our Nation as a whole. 

This concludes my statement. Thank you very much. And I am 

happy to answer any questions. 

Chairman GRAVES. We will move into questions and our first 

questions are going to come from Mr. Mulvaney. 

Mr. MULVANEY. Thank you, Mr. Chairman. 

Very briefly, Ms. Johns, Mr. Kumar, I was listening to your summary of what your agencies do and it sounded to me like there 

might be some overlap between those two things. Ms. Johns, tell 

me what your agency does that Mr. Kumar’s does not. 

Ms. JOHNS. Congressman, we—our agency, as you know, we are 

the voice of small businesses in the administration among federal 

agencies. And so our entire focus is on small companies. 

Mr. MULVANEY. I understand. But in terms of helping them with 

exports, what do you do that is unique from what Mr. Kumar’s organization does? 

Ms. JOHNS. We do a number of things. But I certainly want to 

emphasize that we work closely with the Department of Commerce 

under the Trade Promotion Coordinating Council. Our administrator sits on the president’s Economic Council. So we are involved 

in the crosscutting federal efforts to coordinate federal resources to 

support exporting. 

What we do specifically. We have capital programs. We have 

counseling programs. And those areas of our agency’s programmatic thrusts are the primary ways that we support small 

businesses. 

For example, we are working, as I mentioned in my opening 

statement, on training more international trade counselors so that 

we have a network across the country available to small businesses. Any small business in our country is less than an hour’s 

drive away from an SBA resource where they can get counseling 

for exporting. We have specific loan products that are available for 

them. 

Mr. MULVANEY. Let me stop you there because the loan program 

was one thing I did hear that was different from what Mr. Kumar 


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does. But what you just described is training counselors to help 

folks sort of get through the process of exporting, which is exactly 

what I heard from him. 

So Mr. Kumar, tell me what am I missing here? What is the— 

help me understand how the SBA’s efforts to promote small business exports and the Department of Commerce’s efforts to do the 

same—how they are complementary and not duplicative. 

Mr. KUMAR. Thank you very much for that observation. 

Trade, any trade, until it is consummated, is touched by a number of agencies. And indeed there are several things before you can 

consummate a trade. From identifying a customer to defining the 

access for finance, to getting the right distributor, it is an entire 

chain. And how the two of us or the two agencies get contrasted 

is this. 

First, physical availability of finance is handled by them but connecting customers who invariably, because we work in the communities—I mentioned the 109 offices we have across the United 

States. And we physically work with the businesses to connect 

them to the right resource. 

Second, we ensure this time through the National Export Strategy and National Export Initiative that how do we leverage the 

combined resources for maximum benefit? In fact, it was something 

the president challenged us through the NEI. And what we did as 

a consequence is we realized that dealing with new-to-export companies, people who want to export for the first time, people who 

needed to go through an education, information, and skills training 

program, were perhaps best leveraged through the SBA. On the 

other hand, dealing with the 280,000 current exporters and one of 

the members, representatives mentioned that 58 percent of them 

only go to one market, we chose to concentrate on exporters currently going to some to take them to newer markets. 

So here was a classic example of looking at the entire supply 

chain, concentrating the efforts of one agency towards new exporters and concentrating the efforts and the abilities and the boots on 

the ground as we call it towards current exporters to take them to 

newer markets. 

Mr. MULVANEY. Mr. Kumar, let me cut you off there, Mr. Kumar. 

I am sorry. I only have a few minutes. Because I am going to follow 

up on that point and ask Mr. Foster a question aside from congratulating him on where he went to school. 

If I am a farmer who is new to exporting, I want to get in the 

export business, do I go see you, Ms. Johns, or Mr. Kumar? 

Mr. FOSTER. Indeed, in the U.S. government there are vast resources available across all agencies. If you are a farmer you have 

a number of options to get support. You can go to the U.S. government portal, export.gov, which will direct you to the U.S. Department of Agriculture. You can go to your Department of Agriculture 

for the state, which will link you to our regional service provider 

that will help any small business in that region. You can come to 

FAS directly, again, via the internet. And then I should say we are 

working now with our local farm service agency offices and rural 

development offices across the country so that they know if any 

farmer were to walk in, any small business from a rural area were 


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to walk in, they would know where to go in the Department of Agriculture. 

Mr. MULVANEY. Thank you. I yield back my time. Thank you, 

folks. 

Chairman GRAVES. Ranking Member Vela ́zquez. 

Ms. VELA ́ ZQUEZ. Thank you. 

Ms. Johns, you do business planning, right, for small business 

exporters? 

Ms. JOHNS. Yes, we assist them with business plans. 

Ms. VELA ́ ZQUEZ. And access to capital? 

Ms. JOHNS. Yes. 

Ms. VELA ́ ZQUEZ. And Commerce does not. Right? 

Ms. JOHNS. We provide—I think that my colleague said it well. 

When we talk about exporting and small businesses, the clear issue 

that we, I think, all agree on is that there is tremendous upside 

potential to involve more small businesses in exporting in order to 

grow and create jobs in the country. So what the SBA does is to 

use its network and its longstanding experience in preparing more 

small businesses to be able to do just that. 

Ms. VELA ́ ZQUEZ. Okay. It has been almost a year since the state 

Trade Export Promotion Program was enacted under the Jobs Act. 

And the agency has yet to award a single dollar under the program. With three out of every five states’ Export Promotion 

Projects being caught, this money, as you know, has netted more 

than ever before. So what can you tell us and the states that they 

can expect—when will they be able to expect these funds? 

Ms. JOHNS. Yes, ranking member. We have gone through a process, a very rigorous process, for managing this new grant program. 

First of all—— 

Ms. VELA ́ ZQUEZ. Thirty million, right? 

Ms. JOHNS. Thirty million per year. 

Ms. VELA ́ ZQUEZ. Per year. 

Ms. JOHNS. And it is a—we were authorized for three years but 

we have money appropriated for two. Every state that applied for 

the funds will receive funding. That is the first thing. 

Ms. VELA ́ ZQUEZ. Just answer my question. When do we expect for 

these funds to get into disbursed? 

Ms. JOHNS. My best estimate of that is early to mid-September. 

Ms. VELA ́ ZQUEZ. Okay. And under the STEP Program, grant recipients will have one calendar year to fulfill the requirements of 

the program. Will this year begin on the date states are notified 

of successful applications or from the date they actually receive the 

grant? 

Ms. JOHNS. That is a detail that I do not know. I will certainly 

get back to you on that. 

Ms. VELA ́ ZQUEZ. I would like to know that. 

Ms. JOHNS. I will let you know. 

Ms. VELA ́ ZQUEZ. While USDA and the Department of Commerce 

know the number of new-to-export firms they are providing assistance and which new markets the programs are helping to open, 

SBA has yet to begin tracking those numbers. And as you know, 

as part of the national strategy for small business exports, tracking 

numbers are going to be very important to measure success. So 


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when are you going to start putting together the framework to collect those numbers? 

Ms. JOHNS. We have a requirement to report on the state activity 

with exporting and we are in the process of pulling that framework 

together now. I wrote to the committee saying that we needed additional time from the timeframe that was specified in the Small 

Business Jobs Act, so we appreciate your flexibility there and we 

are working hard to get that document to you. 

Ms. VELA ́ ZQUEZ. Mr. Kumar, of all the services provided by the 

Department of Commerce, the Gold Key Matchmaking Services is 

perhaps the best in terms of linking small businesses here in the 

U.S. with foreign buyers abroad. But what we continue to hear 

from small business exporters is that the cost is prohibitive. What 

can you tell us your agency will do to make this program more affordable so that small business orders can benefit? 

Mr. KUMAR. Thank you, Ranking Member Vela ́zquez. 

The Gold Key indeed is one of our more popular services. And 

what it does is physically matches—— 

Ms. VELA ́ ZQUEZ. Answer my question, please. I know what it 

does. What I am asking you is what will you do, the agency, to 

make this program accessible for small business exporters? 

Mr. KUMAR. It is currently accessible to any business which 

wants to do it. The cost for that program is $700. The value 

through research that we find is perhaps more than 10 times what 

we charge for it. And it is already discounted for small and medium 

enterprises. We happen to believe it is a fair charge. And in discussions with several small and medium enterprises who not only use 

our services and those who counsel, the cost of a Gold Key has 

never come as a challenge to SMEs. 

Ms. VELA ́ ZQUEZ. Well, that is not what we hear from small businesses. We are going to have a second panel here and I will invite 

you to stay so that you can listen to what they have to say. 

Mr. KUMAR. Thank you. 

Ms. VELA ́ ZQUEZ. That cost will go up. Do you foresee? 

Mr. KUMAR. We have an obligation to Congress to assess the 

value of the services we provide. And measure the costing and adjust the pricing once every two years. That is the reason why I 

could give you the 10 time multiple. We are just in the process of 

going through the findings of that. I cannot comment whether it 

will go up or stay where it is but it appears that the value provided 

by the service and what is likely to be provided by any external 

vendor is about 10 times more than what we can get. 

Ms. VELA ́ ZQUEZ. Mr. Foster, a significant portion of the National 

Export Strategy seems primus on the passage of not just the Korea, 

Panama, Colombia Free Trade Agreements but also the ratification 

of a Trans-Pacific Partnership and completion of the Doha agreement. Can the Export Strategy succeed if these agreements are not 

completed? 

Mr. FOSTER. We continue to work as part of the Administration 

and remain committed to securing Congress’s approval of the pending trade agreements that you mentioned. We are committed to 

seeing those through. The Trans-Pacific Partnership is another 

agreement we continue to work on. We at USDA, with USTR that 


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has the lead on this, we remain committed and will continue to 

work on that. 

Ms. VELA ́ ZQUEZ. But do you think that if we do not get those 

agreements passed and ratified that the Export Strategy will be in 

jeopardy in terms of the success? 

Mr. FOSTER. As the Administration says, the agreements, we believe, have tremendous benefits for American exporters and jobs 

and producers’ incomes. So we believe they will have tremendous 

benefits. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Chairman GRAVES. Ms. Ellmers. 

Ms. ELLMERS. Thank you, Mr. Chairman. My question is basically for each one of you, and thank you for being here today to 

give your testimony. 

As we know right now, small businesses are facing many obstacles domestically, including higher gas prices, increased government regulations, and always the looming possibility of tax increases. Can you explain how this impacts small businesses and 

their supply chain and your ability to help them export? And I will 

start, Mr. Foster, with you. And then if we could just move down 

the panel. Thank you. 

Mr. FOSTER. Our goal at FAS for the last 50 years is promoting 

agricultural exports. We believe we do that well and investment 

there is a wise decision. We are trying in every manner possible 

across government and within the multiple agencies in the Department of Agriculture to make sure small businesses get the support 

they need. We certainly understand that transportation infrastructure at ports and the like are incredibly important to moving exports, agricultural exports out of the country. We work through the 

NEI, on that topic. That is one of the primary recommendations of 

NEI looking at infrastructure. I believe we would all agree we will 

continue to focus on that. For agriculture that is vital. As we know 

for Louisiana, Congressman Richmond here, the Port of Louisiana 

is one extremely important example of getting agricultural exports 

out of the United States. Forty-seven percent of grain transports 

out of that region, a tremendously large amount. 

Ms. JOHNS. Thank you for your question, Congresswoman. 

At the SBA we are—our mission is to support our small businesses. And we are coming out of the worst economic downturn 

since the Great Depression. Small businesses were hit inordinately 

hard but they are bouncing back faster actually than some other 

sectors of the economy. The reason that this National Export Initiative and the work that we are doing at the agency in conjunction 

with our federal partners at the TPCC is that as has been stated 

earlier, 95 percent of market demand exists outside of our country. 

The USA—Made in the USA brand is still a very, very strong, very 

valued brand. And so the extent—to the extent that we can get 

more of our small businesses ready for exporting, that is a huge 

win for the economy overall. 

As I mentioned in my testimony, we have a four-prong approach 

that first we identify those companies that have not yet exported 

but are right there and with some support can move into that category. Once we identify those companies, then we prepare them 

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ners and the counseling that we provide through our 68 field offices. We have a robust and a very integrated network to provide 

the counseling for them. We have more international trade counselors available thanks to the Jobs Act, et cetera. Then we connect 

those small companies, excuse me, with opportunities working 

closely with the Department of Commerce and other federal partners in that role and then once the business opportunity happens 

we support those small businesses with what they need in order to 

be successful. So this effort is incredibly important to small businesses and to our economy as a whole because small businesses are 

the creators of jobs in our country. They really are our economic 

engine. 

Ms. ELLMERS. Amen. I believe that, too. 

Mr. Kumar. 

Mr. KUMAR. Thank you very much, Congresswoman. 

In the face of increased costs which everyone is going through 

the question really was how can we most effectively help small and 

medium enterprises engage in global markets. That is what we do 

through our business counseling sessions. And also through helping 

people develop business plans and marketing plans. But it does not 

stop there. Ours is a turnkey plan which we work with. And what 

we do is then connect the players to the most cost effective logistics 

provider. Logistics is a major part of the exercise. Then look at the 

best distributors through matchmaking services in external countries where they export to. 

In addition to that, we engage people through trade missions, 

which is an easier better way by scale to come to meet buyers. Additionally, we have increased the concentration we place and focus 

we place on international buying programs where we get buyers 

from foreign countries coming to shows here. So that also reduces 

the cost burden on an SME. 

And finally, even using technology. We now have, even wine tasting or export of wines from California. We have had virtual wine 

tasting missions put together where simultaneously when you are 

here on your Internet or website or through web access you are 

dealing with buyers in China or wherever they are who are tasting 

the same wine, educated on what the wine is about, and have all 

the product benefits and features which they can base it on. 

So we are interceded by looking at the elements of cost and trying to provide the value to small and medium enterprises in the 

most cost effective manner because we believe the price is right 

only when those who must buy, buy, and those who sell make a 

profit. 

Ms. ELLMERS. Thank you so much. And I yield back. Actually, I 

think I went over a little bit. Thank you. 

Chairman GRAVES. Ms. Clarke. 

Ms. CLARKE. Thank you very much, Mr. Chairman. And thank 

you, Ranking Member Vela ́zquez. I would like to thank our panelists for their expertise and their testimony today. 

While I am a bit skeptical about the pending FDAs, I recognize 

that we are in a global economy where trade plays an important 

crucial role towards our domestic economic success. So to that end 

I would like to ask each of you if you could elaborate a bit more 

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ing programs or initiatives that you have unveiled or plan to unveil 

in support of the NEI. 

Ms. JOHNS. I will begin, if I may. 

Ms. CLARKE. Yes, please. 

Ms. JOHNS. You are asking about actual programs that we have 

launched in support of the NEI. Yes, thank you, Congresswoman 

Clarke. 

We have done a number of things. First of all, by our very—the 

very role that the agency plays as part of the president’s Export 

Council where Karen Mills is a member, I work with the Trade 

Promotion Coordinating Council where Karen chairs the Small 

Business Working Group. That is the institutional way through the 

TPCC and the PEC where the SBA is involved. And the benefit of 

the TPCC is that it has allowed us to work in a much more collaborative fashion with our federal partners. 

And we have talked a bit in this hearing about the different 

pieces and different players who are involved in this process. It is 

complicated. It is certainly doable but it is complicated to ensure 

that we are providing all the resources that businesses need across 

the board to be able to export. And so what we are doing with the 

Small Business Working Group under the TPCC is that various 

working groups have been created. A working group focused on 

preparing—identifying small businesses. A working group focused 

on preparing, connecting, and supporting. Each of the four elements of the plan have a working group assigned to them and we 

have specific programs under each of those working groups that we 

have launched. 

For example, the Connecting Working Group is focused on 

matchmaking events. I mentioned in my testimony the first one in 

New Jersey. We intend to have more of those around the country 

because we found them to be very successful in bringing the players, the right players together to make business happen. Under the 

Preparing Work Group we have launched our Train the Trainers 

Initiative where we are working with the Association of Small 

Business Development Centers and training individuals who work 

in the SBDCs as well as our Women’s Business Centers and our 

other resource partners. And we have created within each of our 

district offices, each of our 68 district offices, a district international trade officer so that any small business in the country will 

be in a very short distance able to reach someone who can provide 

expertise in those areas. Those are some of the initiatives. 

Ms. CLARKE. Let me ask. Do you have sort of a, I guess, a formula for what you think participation of—given the number of 

businesses that exist in the small business, medium-size business 

sphere of our economy, what percentage of those businesses should 

be eligible to participate in these programs? And based on that, are 

you I guess targeting resources because when you think about it, 

you know, it—I think part of the pushback is not understanding 

how these businesses actually plug into a system of global economic—with global economic implications. And so no one quite understands what it means for the average small business in terms 

of its growth and its development. 

And for those who do venture into that area it is so very complicated for them to break through that they kind of discourage 


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others because it is such a daunting endeavor. Do you get where 

I am? 

Ms. JOHNS. If I may respond, yes, Congresswoman. That is exactly why I have been—to your point, that is exactly why I have 

been focusing on the counseling and the nationwide network of 

counselors that the SBA is putting in place. Because that can address—it can take away the mystique. It can take away the complexity for that small business who needs that support. You are 

talking a large business. They have their own in-house resources 

for how to navigate this global marketplace but we are that—we 

stand in that gap for small businesses. 

And I will give you an example. I was in Indianapolis, Indiana 

not long ago at one of our Women’s Business Centers, talking to 

a group of women, one of whom I will highlight. She is a jewelry 

maker. Because of the resources that she found at the Women’s 

Business Center and was exposed to the idea of exporting, she is 

now able to take her jewelry making business and she, through the 

web, has launched in two countries. She is in Great Britain and 

she is in France. And she intends to grow from there. 

And I just use that as an example to say that with the benefits 

of technology that we have at our disposal now and I believe a 

strong role that we must play at the SBA is to build awareness to 

again demystify the notion of exporting, connect small businesses 

with the expert advice that they need and the other support, and 

we will see a breakthrough. It is our responsibility to develop 

metrics to track that. We are in the process of thinking through 

how we need to do that but the main point is getting these tools 

from the Small Business Jobs Act into the hands of small businesses, doing our part to develop the network of support that the 

small businesses need, and then building awareness. Because that 

is a big problem. Too many of our small businesses just have not 

thought about exporting. And when the issue is raised and when 

we talk about the tools that are there at the SBA and across the 

Federal government, a very strong positive reaction always results. 

Ms. CLARKE. Thank you very much, Mr. Chairman. I yield back. 

Chairman GRAVES. Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. Panel, I would like to 

thank you for taking the time to be here. 

I am a small business guy myself and certainly I recognize your 

appreciation that small business is the number one job creator in 

this country and probably one of the keys to being able to lead us 

out of this recession. 

If I could, Ms. Johns, you stated in your opening statement and 

I heard this, that the administration wanted to be able to double 

exports in the last five years—over the next five years. How is that 

going? 

Ms. JOHNS. Well, we are certainly working as hard as we can 

to—— 

Mr. TIPTON. Where do we sit now? 

Ms. JOHNS [continuing]. To do our part but I would defer to my 

colleague on the actual data there. 

Mr. KUMAR. Last year exports grew at 17 percent over a year 

ago. A doubling of export is a 15 percent compounded annual 

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ports are tracking at 17 percent. Given the fact that over 19 

months we are tracking at 17 percent, that is about our goal but 

that is why we always like to call it a beginning. Whether you look 

at macro level or micro level, the trend is quite heartening. Besides 

the 17 percent, exports were at 1.83 trillion last year, the second 

highest. And exports as a percent of GDP went up from 11.2 to 

12.5. That is at the macro level. 

At the micro level we physically were able to touch 18,000 SMEs. 

No, 18,000 companies, of them 16,000 SMEs. And we were able to 

post significant increases in export success. Again, our approach 

was to divide and conquer to leverage our combined resources. The 

USFCS focused on taking newer companies—existing exporters to 

newer markets. We succeeded in 4,700 such cases; 12,300 export 

successes. 

So whichever form we look at it, whether we look at it in physically facilitated exports and what it had been over a year ago or 

at the macro level, we are tracking well onto our goal. 

Mr. TIPTON. Good. You know, I guess I am curious because part 

of the problem is when we are dealing with small businesses, as 

you note, you do not have some of the sophistication in the marketplace. Are all of the forms, all of the applications, are those available and deliverable online? 

Mr. KUMAR. Export.gov is the single web portal which we would 

like every business to be directed to. And what we have done on 

that portal and continue to improve the portal is have the Trade 

Information Center intercede so that any inquiry from any one of 

your constituent companies is directed to the right agency. 

Mr. TIPTON. I understand the direction but I mean in terms of 

filling out forms, are those available online? 

Mr. KUMAR. Yes, it is. 

Mr. TIPTON. All forms are available? 

Mr. KUMAR. Not all. Most forms, through the Client Intake System. The right forms—— 

Mr. TIPTON. Are you working to get them all online? 

Mr. KUMAR. Yes, sir. 

Mr. TIPTON. You are. What is your time of completion on that? 

Mr. KUMAR. Export.gov is an interagency staff. Most of the forms 

which small business entities require are already online. And I cannot give you a finite time but it should not be more than six 

months or so when every form would be there. 

Mr. TIPTON. Okay. Great. And I may be following up a little bit 

on Congresswoman Vela ́zquez’s question there. If I was interpreting it correct. But the return on investment that we were having for the cost of what you do versus the yield from a benchmark, 

do you have any idea what that is? 

Mr. KUMAR. I do not have the benchmark idea but what we do 

is track the value of exports. Export successes. 

Mr. TIPTON. On a year over year basis what would you say given 

some of the statistics that you just gave me earlier? 

Mr. KUMAR. It is tracking upwards. I did mention in my testimony that the return on investment to date states that every dollar 

invested in the service is coming out at 1.35. And I do know it is 

significantly higher than what it was in the previous year. 


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Mr. TIPTON. Okay. I think there will be probably something because, you know, as Congressman Mulvaney was pointing out, it 

sounds like we do have some duplication going on. And I think it 

is probably in all of our interests right now to see where we can 

merge those components to be able to work the most efficiently, to 

be able to achieve that common goal of being able to export more 

at the most efficient cost that we can certainly have. 

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

Chairman GRAVES. Thank you. Our next questions come from 

Mr. Richmond. I might remind Mr. Richmond that that last pitch 

was not a strike; it was a ball. And I should limit your time and 

I am too nice a guy. 

Mr. RICHMOND. Mr. Chairman, I certainly appreciate that. And, 

you know, sometimes you get lucky and you just have to accept 

luck. So I just accept the luck from the baseball game and hope 

that I can repeat it next year. But you never know. 

Chairman GRAVES. Well, just remember when the chairman is 

up to bat and you are pitching. 

Mr. RICHMOND. I will tell you I was surprised and disappointed 

that the umpire called that a strike. I just did not want to overrule 

the umpire but certainly he was wrong for calling it a strike. I 

thought it was a ball all the way. 

First I will start with Mr. Kumar. First let me thank you because I had the opportunity to see and participate in a New Markets, New Jobs NEI Small Business National Tour, one of which 

was in New Orleans at Tulane University. And the feedback that 

I received from many constituents and small businesses in New Orleans was incredible in terms of the education and the information 

that was provided there. My question to start off with is for Mr. 

Foster and Mr. Kumar. How much do you all talk to other agencies? Because Mr. Foster, you correctly pointed out Louisiana and 

the Port of New Orleans, Port of South Louisiana, our role in exporting in the country. However, I do not know if the Corps of Engineers understands that if they are not dredging the Mississippi 

River, which is our superhighway for trade, you have now put road 

bumps in the middle of our highway. So the more you can talk to 

other agencies to let them know the importance of that it would 

certainly be helpful. 

Now my question to you, you talked a little bit about hosting a 

reverse trade mission. And I guess I wanted to hear a little bit 

more about how you do it and how you identified businesses outside of the country to come to it. And do you have that in such a 

model that cities can duplicate it if they have the resources to do 

it? We are a port city and we export a lot of things and we have 

the ability to do more. That would be something I am interested 

in if you all could give us a roadmap on how to do it. 

Mr. FOSTER. Thank you. I will answer that first. Thank you very 

much, Congressman. 

And again, yes, we at USDA are very familiar with your district 

and your state. I was mentioning earlier corn, wheat, and soybeans 

are going out through your ports at about $49 billion a year, so 

that means a lot to us. 

We at USDA have four regional trade associations, non-profits 

that help small businesses exclusively in those regions. In fact, our 


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Southern United States Trade Association, which covers the whole 

south, is based in New Orleans. They work every day with new 

small and medium-size companies to help enter world markets. I 

have a note here that a company called Magic Seasonings, not far 

from New Orleans, is involved in our program and is now exporting 

to several countries after attending a number of trade shows that 

we helped fund them to go to. Another company, Crown Products, 

that produces sunflower seeds and popcorn and so forth in Louisiana, are working with us and going to trade shows. They are 

now selling to the Dominican Republic at the tune of $200,000. 

The Southern United States Trade Association (SUSTA) that we 

fund brings reverse trade missions regularly to Louisiana. We want 

to make sure they do this through all our partners there. We can 

do even more to make sure that they are reaching out to every 

small business in your state and any of the states—to make sure 

that they are meeting the buyers that our posts are bringing to the 

United States. We have 100 offices around the world covering 150 

countries. They regularly bring buyer missions to the United 

States. Again, that is because small businesses cannot afford to get 

all over the world to meet the buyers. But I will say the SUSTA 

trade organization I mention has funds to supplement any company in your district, for instance, that wants to attend an international trade show to enter world markets. They get funding up 

to 50 percent of the cost to travel. And I must say USDA does not 

charge any services, any fees. I am sorry, charge any fees for our 

services. 

Mr. RICHMOND. Okay. Ms. Johns, I have a two-part question. 

When we talk about the STEP Program I guess the question becomes was there large participation from the states? And do you 

all anticipate allocating or leveraging all of the funds allocated for 

the program? 

Ms. JOHNS. Thank you, Congressman. Yes, there was a very good 

response to the STEP grant program. Fifty-three states and territories responded and as I mentioned earlier, each one of the entities who sent in an application will receive funding. We are in the 

process now of working with the states to ask them to—it is a comparative process. We are asking them to resize their application because we were oversubscribed. The applications that we received 

were over $42 million for a $30 million program. But that process 

is underway and as I said to the ranking member, we will have 

those dollars out the door within the next few weeks. 

And I am sorry. The second part of your question was regarding—— 

Mr. RICHMOND. Just would you leverage it all. 

Ms. JOHNS. Oh, I am sorry. Yes. There is a matching requirement. And the good thing about the STEP Program is that it really 

gives—it gives an incentive. A bit of a jump start and another opportunity for states to build their own capacity for supporting exporting small businesses because as discussed earlier, some of 

those resources have gone away at the state level but this is a way 

to help replenish that opportunity. 

Mr. RICHMOND. Thank you. Mr. Chairman, thank you. I exceeded 

my time but next year I will make that up to you. 

Chairman GRAVES. Does anyone else have any other questions? 


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With that, I appreciate you coming. And I would encourage you 

if you have got to leave if one of your staff could stay to listen to 

the next panel. And I will go ahead and seat our second panel. 

STATEMENTS OF MARK RICE, PRESIDENT, MARITIME APPLIED PHYSICS CORPORATION; MITCHELL GOETZE, PRESIDENT AND COO, GOETZE CANDY COMPANY, INC., ON BEHALF 

OF THE NATIONAL CONFECTIONERS ASSOCIATION; WADE 

MERRITT, VICE PRESIDENT, STATE INTERNATIONAL DEVELOPMENT ORGANIZATIONS; MAURICE KOGON, DIRECTOR, 

INTERNATIONAL TRADE DEVELOPMENT, EL CAMINO COLLEGE 

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

Our first witness is Mr. Mark Rice, who is the president and 

founder of Maritime Applied Physics Corporation. His company designs and builds high-tech Maritime vessels, including hydrofoils 

and unmanned vehicles for the U.S. Navy. They started with one 

person and grew into 80 full-time employees with the help of a 

Small Business Innovative Research Program. Mr. Rice received 

his Bachelor’s degree in physics from the University of Maine and 

is a licensed professional engineer. Welcome. I appreciate you coming in and traveling all this distance. 

STATEMENT OF MARK RICE 

Mr. RICE. Thank you very much. Thank you, Chairman Graves 

and Ranking Member Vela ́zquez and members of the House Committee. I appreciate the opportunity to testify. 

Our company is a 75-person, 80-person employee-owned company. I founded it in 1986. The company builds five defense products. We are a manufacturer of defense products and these range 

from unmanned boats to very automated cranes. We also have 

about 10 R&D contracts mainly with DOD. 

We have exported to South Korea, Germany, Scotland, France, 

and hopefully to Brazil. Our company has offices in three states 

and through the recession we have grown at an annual rate of 

about 20 percent due in large part to exports. 

Our journey has not been easy to become an exporter and I 

would like to share a particular story with you about our experiences in South Korea. It began in the year 2000. We received an 

email from a business agent in South Korea. The agent had researched our involvement in a U.S. Navy project for supplying ship 

rudders through the Internet. And he indicated there was a similar 

program in South Korea. He invited us to visit the world’s largest 

shipbuilder, Hyundai Heavy Industries in South Korea, and at this 

point we were a 25-person company with no exporting experience. 

We did not understand the laws, the customs, or the cultural aspects of doing business overseas. We had no idea who the Department of Commerce was or where to get financing. We were totally 

ill-prepared. We did not understand the laws, either in this country 

or overseas, and at the time it was really unclear to us whether 

we needed an export license, and once we understood that we 

might it was not clear whether this was from the Department of 

State or the Department of Commerce. We learned through trial 

and error until we found the U.S. Export Assistance Center in BalVerDate Mar 15 2010 01:45 Dec 01, 2012 Jkt 076495 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HR\OC\A495.XXX A495

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timore and they really bailed us out of the export license problems 

that we got ourselves into. 

So with that scare behind us we continued three more times to 

Korea and we got, in one case, the State of Maryland Export Assistance Grant. On each trip we were sort of gradually drawn a little further into this. We had never built these products ourselves. 

We had largely done the engineering for the products that we were 

talking to the Koreans about. We ended up in a head-to-head bidding competition against a British firm that was a multi-billion dollar firm. They brought in representatives of the British government. They had a retired Korean admiral on their staff. And we 

went head-to-head with them over a period of about six months. 

And at the end of that process we won the competition on both a 

technical basis and our cost was about half a million dollars below 

the British cost. We received a contract for 100 tons of machinery, 

hydraulics, and electronics. We came home to celebrate and to find 

20 new workers to do the work. We then went to our bank, shared 

the news with our bank, and they promptly canceled our credit 

lines and said the deal was too big for us. And it was a large U.S. 

bank. 

So we were in a very disparate business situation at that point 

and I approached a local bank and I found a very brave banker 

who understood the SBA Export Assistance Program, went to the 

SBA and basically stitched the deal back together. He saved our 

company. And after three years we basically got through the export 

process, delivered 100 tons of equipment, and broke even on the 

deal. 

So without the Export Assistance Center, the SBA and Sandy 

Spring Bank, we would not have survived as a company. It was 

very difficult and it required a lot of commitment and time and resources, both from our company and from those people who helped 

us through this process. It was overwhelming and I can attest to 

that. 

So the USEACs, the SBA, the local offices, the people we really 

go out and interact with on a one-to-one basis, are the people who 

saved our company, put this deal together, and turned us into an 

exporting company. 

So there are four recommendations I would like to make at the 

end of this. 

The interagency coordination of export licensing has gotten a 

whole lot better since we did this. The Department of State and 

Commerce are pretty well coordinated but we need to get to a onestop shop here. Having two parallel processes is just confusing and 

it makes it twice as hard. We got caught between the two agencies. 

The second one is the same recommendation on export financing, 

whether it is SBA, EX–IM, there are a myriad of opportunities out 

there. Not only do the small companies not understand these options but their bankers do not understand. So in many cases the 

banks that have to act as the go-between between the small business and EX–IM or SBA are not well informed in these programs 

and things like letters of credit and the complexities of international business are just tough. 

The third one, as a country we need to increase our awareness 

of the need to export and the national priority given to exporting. 


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21 

When I went to a shipyard in South Korea and I talked to the average worker, every worker in that shipyard knew the importance of 

exporting. When I go hire someone from a U.S. university or a U.S. 

high school, they have no idea. It is a cultural thing that we teach 

and we need to learn how to teach it. 

The fourth one is the Department of Commerce recently reduced 

its staff in Washington by sending people out to the field offices. 

That is great. The real work in this business is done in the field 

offices. In our case the SBA representative was with the USEAC 

sitting in that office and had the Department of Agriculture been 

there and everybody else this whole thing would have gone more 

smoothly. So get people to the field and get the decision-making in 

the field. There is far too much bureaucratic time spent in these 

programs discussing the administration in the offices as opposed to 

the execution of their missions. 

So I would like to thank the members of your Committee, Chairman, ranking member, and I look forward to your questions. 

Chairman GRAVES. Our next witness is Mr. Michael—Mitchell. 

Mr. Mitchell Goetze, president and COO of Goetze Candy Company, Inc. Goetze Candy is a fifth generation family business that 

manufactures the trademark candy Caramel Creams and Cow 

Tales. Mr. Goetze grew up in the family business, attending his 

first trade show when he was 12, and he is testifying on behalf of 

the National Confectioners Association. Welcome and I appreciate 

you being here. 

STATEMENT OF MITCHELL GOETZE 

Mr. GOETZE. Thank you, Chairman Graves, Ranking Member 

Vela ́zquez, and other members of the Small Business Committee 

for inviting me to testify on behalf of our company, as well as our 

trade association, and highlight some of the issues facing our industry and small business today. 

The Goetze Candy Company is located in Baltimore, Maryland, 

and I am certainly honored to be here. The Goetze Candy Company 

was founded in 1895 by my great-great-grandfather and it has been 

in my family for five generations. We have 100 employees and 

manufacture, as you said, confections under the brand names Caramel Creams and Cow Tales. I am also the chairman of the National Confectioners Association. 

The association is representing the United States Gum, Candy, 

and Chocolate industries of which 85 percent are small businesses 

like mine. U.S. confectionary is a $30 billion industry with international sales of well over a billion dollars. Industry sales grew by 

about three percent a year and international sales grew by about 

seven percent. Industry employs over 70,000 in manufacturing and 

over 200,000 when we include our suppliers and distributors that 

support the sale of our products. The confectionary industry is a 

critical component to manufacturing in the United States overall. 

We welcome the opportunity to grow our exports but two key obstacles stand clearly in our way of export growth. First, the input 

costs of American products that are higher than our foreign competitors; and second, several bureaucratic obstacles and larger public policy issues that add complexity and impede trade. As a small 

company it is hard to find the resources to adequately research 


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global markets and execute sales orders. Input costs drive a small 

company’s ability to export our goods and present an extreme challenge. Sugar is the most widely used ingredient in the confectionary industry but the current U.S. sugar policy is woefully outdated. The current law allows only about 15 percent of sugar to be 

imported and what we are forced to buy domestically from a handful of sugar suppliers is priced at twice the world price. Actually, 

we had a price increase yesterday from the top three U.S. suppliers 

of sugar and it has officially doubled over the last three years, the 

price per pound. 

The artificially high price of sugar directly drives the price of all 

other agricultural materials we buy. To be able to compete, companies today are moving operations to Canada and Mexico to avoid 

the U.S. sugar restrictions and take advantage of lower business 

operating costs. We need reform to the outdated sugar program 

now. 

Health care expense has dramatically increased over the past 10 

years. Goetze’s cost to provide health care to our employees has 

risen two and a half times, pushing our rate from $182 to $465 per 

employee per month. We need to address the uncertainty of health 

care and the abuse of the system or companies like mine will be 

forced to raise employee contributions or worse, drop health insurance altogether. 

All goods need to be transported to our ports on our coasts to be 

exported. Transportation costs are roughly 10 percent of operating 

costs for our industry and the freight cost per pound shipped has 

risen by 15 percent in two years. That increase along with a rise 

in diesel fuel price surcharges have led to a 34 percent increase in 

overall shipping costs for us. We advocate for increase in the truck 

weight limit to offset enormous transportation costs associated with 

the diesel fuel index. 

The U.S. Government provides some great services to business 

but the promotion of these services offered must be increased. The 

Foreign Agricultural Service has been particularly instrumental 

through their Market Access Program known as MAP. We certainly 

support continuing MAP funding. 

I would like to point to the U.S. Department of Commerce Gold 

Key Program, which was mentioned earlier, that could be a good 

model for use in the agricultural sector which it does not apply to 

us. A similar program would help us with basic steps of how export—how to export would be very helpful and make entering new 

markets less intimidating. On a broader policy scale, 95 percent of 

the world’s population lives outside the United States and what an 

enormous opportunity for exporting small goods manufactured 

here. If tariffs were reduced by 10 percent to our top 17 export 

markets, NCA estimates that we could see more than a $14 million 

increase in U.S. export sales of confectionary goods. 

We support the president’s National Export Initiative to double 

U.S. exports and the most efficient way to do this is through congressional approval and a timely implementation of the pending 

Free Trade Agreements with Korea, Colombia, and Panama. With 

Free Trade Agreements in place, we would help lower our input 

costs, make our products more competitive, which will increase exports and grow jobs. 


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When a product is labeled Made in America that message resonates around the world. I believe that we can grow U.S. manufacturing but only if we consider a careful balance of reduced domestic 

regulatory burdens, smarter, more competitive supply management, increase marketing of government resources, and have the 

policies in place to not only allow our products to enter new markets but to be able to enter those markets at a competitive price. 

In conclusion, owning or running a small company today, small 

confectionary company today, is far more challenging than even my 

grandfather could imagine. It has become so complicated and challenging at times that I forget that I am just manufacturing candy. 

There are many bureaucratic obstacles to overcome in order to even 

ready one’s product to be able to break into an international marketplace and grow exports. I would like to say that our National 

Export Strategy is working but with the ever-growing obstacles and 

challenges I cannot. 

Again, thank you for inviting me to share my perspective and I 

look forward to working together to find solutions to resolve these 

issues. And I am happy to answer any questions. 

Ms. VELA ́ ZQUEZ. Now it is my pleasure to welcome Mr. Wade 

Merritt. He is currently vice president of State International Development Organizations, the leading U.S. organization dedicated to 

supporting state international trade agencies. He also serves as 

vice president for the Maine International Trade Center where he 

works directly with small and medium-size businesses, as well as 

federal agencies to coordinate trade missions, technical assistance, 

and export credit assistance programs. Welcome, and thank you for 

being here. 

STATEMENT OF WADE MERRITT 

Mr. MERRITT. Thank you, ranking member, Chairman Graves, 

Ranking Member Vela ́zquez, members of the Committee. Thank 

you for inviting me to testify today. 

My name is Wade Merritt. I am the vice president of the Maine 

International Trade Center and currently serve as vice president of 

SIDO, which is the National Association of State Trade and Export 

Promotion Agencies. And an allied but separate group of boots on 

the ground providing export development services in the United 

States. 

Nationally, SIDO states currently boast a domestic staff of 300 

with a total budget of over $83 million for international development. I know that is not a lot when compared to the overall budget 

for the commercial service. Our overhead is lower and we have become experts in doing much more with much less. 

The president’s goal of doubling exports is ambitious and requires robust export development programs at both the state and 

federal level. The president also suggested that this growth be led 

not by the Boeings and Caterpillars of the world but by small and 

medium-size businesses like my friend here from the University of 

Maine, Maritime Applied Physics, or the 80 percent of my clients 

in Maine who have fewer than 100 employees. These small and medium-size businesses hold the largest potential but also require the 

greatest level of overseas support. 


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A 2006 World Bank study demonstrated that on average every dollar spent by countries on export promotion yielded $40 in new 

exports. And you heard from Director General Kumar that Commerce is showing a much higher number than that. And I would 

point out that our number was from 2006. Presently, our country’s 

export promotion spending by percentage of what we export—and 

this is state and federal combined—is much closer to that of a developing country than to our peer nations. There is a lot of room 

to grow and the time to take advantage of that opportunity is now. 

The states working collaboratively with the Federal government 

are ready to do our part. However, as states are being called upon 

to provide even higher levels of service, the current fiscal crisis has 

prompted state governments to make difficult choices. In just two 

years, state support for trade development and investment attractions dropped by 20 percent. States are having to choose short-term 

budget fixes over long-term solutions. And as I mentioned earlier, 

foregoing an investment with a proven 40, 90 or 135 to one return 

is not—just is not a choice that states should have to be making. 

The STEP Program to the U.S. Small Business Administration is 

now poised to provide much needed support to our state trade offices and exporters. While the roll out of the program has been delayed as metrics have been revisited, proposals have unexpectedly 

had to be reformatted and resubmitted. And I can attest that I 

have personally been wrestling with this while simultaneously preparing this testimony. The program has the potential to truly revitalize American exports. Once STEP Program funds are awarded, 

states will quickly be in a position to enhance the services and assistance available to small and medium-size exporters in our 

states. I think that is a key point because we are much closer to 

the ground. 

There are several export promotion priorities that should be addressed and implemented in order to maximize the chances of success for the NEI. First, the commercial service will be essential to 

deliver—a revitalized commercial service will be essential to deliver 

on the NEI’s commitment. Even the best funded state trade program cannot provide global market coverage and all states depend 

on the worldwide network of commercial service posts to provide 

their businesses with market access in countries where the state 

has little or in my case no independent resources. State programs 

are well positioned to complement federal promotion efforts domestically through our on-the-ground practical assistance programs but 

reductions in CS budget and overseas personnel deployment adversely affects our programs and has a chilling effect on the ability 

of U.S. producers to export their products. 

Secondly, access to traditional markets is essential. While accessing emerging markets is a worthwhile objective, most new-to-export 

companies will find the best opportunities where our exporters 

have enjoyed a comparative advantage in the past. Case posts such 

as Hamburg, Barcelona, Amsterdam have been closed and Canada, 

our largest trading partner and often the first export market, has 

just one American officer responsible for the entire country. These 

offices should be reopened and staffed as soon as possible. 

Third, pricing for CS services. We heard that earlier, such as 

Gold Key and International Partner Search should be maintained 


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at the current rate which we believe is affordable for small business. These programs represent some of the tools most frequently 

used to enter new markets and increasing the costs would be counterproductive to the growth of the NEI. 

Fourth, support for the SBA’s Office of International Trade is essential to the success of the STEP Program. Through STEP, the 

Federal government has provided much needed assistance to boost 

non-agricultural exports. Now it is necessary to fulfill that commitment by affording the SBA the resources it needs to name a fulltime associate administrator for international trade and to supplement its staff with the numbers necessary to roll out this pilot program successfully and efficiently. 

And finally, an enhanced partnership between the federal and 

state trade agencies to seamlessly deliver customer focused services 

is critical to expanding the pool of successful U.S. exporters and 

promoting market diversification among existing exporters. In 

order to better coordinate efforts and avoid duplicative services, 

there needs to be a mechanism for sharing metrics, tracking successes, and identifying the areas for improvement where currently 

there is no incentive for collaboration. American exports create and 

sustain millions of jobs in the U.S. and current prospects for expansion are excellent, but a collaborative partnership that combines resources and finds efficiencies at the federal and state levels in a 

systematic manner is the best way to assist companies in finding 

export success. 

Thank you, members of the Committee, for allowing me the opportunity to speak. And I will also welcome your questions. 

Chairman GRAVES. Our final witness is Mr. Maurice Kogon, director for International Trade Development, El Camino College in 

Hawthorne, California. Mr. Kogon has over 50 years of international business experience as a U.S. government official, business executive, educator, and consultant. His experience includes 

over 30 years with the U.S. Department of Commerce, which he 

held management positions in trade promotion and strategic planning. Mr. Kogon has a Bachelor’s and Master’s degree in Foreign 

Affairs with George Washington University here in D.C. and we 

welcome you. 

STATEMENT OF MAURICE KOGON 

Mr. KOGON. Thank you, Chairman Graves, Ranking Member 

Vela ́zquez, and Committee members. Thank you for the opportunity to provide this testimony. 

As you said, my name is Maurice Kogon and I have spent a lot 

of time in this field, at the federal and state level, with a multinational, as a small business owner and as an educator, including 

33 years in the Commerce department. My testimony today raises 

a basic question about the National Export Initiative, specifically 

does it adequately meet needs of the thousands of small businesses 

that are or could be exporting? In my view, it is not yet as relevant 

or as helpful as it could be to meet needs of this vital constituency. 

I have three main points. First, the NEI has an ambitious goal 

to double exports in five years but not a strategy that will get us 

there. The strategy relies too much on global economic factors we 

cannot control, while the programs we can control are not focused 


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enough on the small businesses that most need export help, and 

also not enough on the services they most need at critical early 

stages. The NEI’s export promotion programs are basically only 

what the government can afford; not on what can best help small 

businesses at each stage of their export development. Far too many 

small businesses with export potential are left to fend for themselves. Claims that the NEI is on pace based on recent large export 

gains belie the reality that most of these gains came from recovery 

and world import demand and would have happened anyway. 

My second point is that the NEI does not adequately address 

what I see as our national export paradox. That while we are a 

very large exporting nation, we are not a nation of exporters. 

Roughly 85 percent of U.S. manufacturers do not export at all and 

over half of the 15 percent that do export sell only to Canada or 

Mexico. The NEI addresses the half of the 15 percent, the low 

hanging fruit, but essentially writes off the far larger group of potential new exporters in the 85 percent. U.S. exports would increase significantly if we could get more of the 85 percent into the 

export base. For that, in my view, we need to go beyond a low 

hanging fruit strategy. We need what I call a fertilize the tree 

strategy to optimize exports—that is, to increase exports to our full 

potential and capacity as a nation. An optimization strategy would 

focus not just on getting existing exporters into new markets, but 

would also cultivate the far larger group of potential new exporters 

that could most contribute to long-term export expansion. 

It would have two interrelated goals. First, we need to increase 

U.S. exports as a percent of GDP. Although we are the world’s 

third largest exporter, our exports to GDP ratio lags well below our 

major world competitors. For example, Germany is at 45 percent; 

we are at 12 or 13 percent. Our competitors, with comparable 

economies and competing in the same global marketplace, are more 

fully exporting to their capacity. We have the potential to close this 

gap. We are, after all, the manufacturing powerhouse of the world 

and the world leader in innovation and technology. And, most of 

our manufacturers are not even exporting yet. 

Second, we need to increase the number of new exporters. We 

could come much closer to our national export potential if more 

non-exporters were to start exporting. We now have roughly 

280,000 actual exporters in the U.S. As noted, they account for only 

15 percent of all manufacturers. Many of the 85 percent non-exporting manufacturers may well have export potential. Why? For 

one reason they have succeeded in the world’s toughest market— 

our own—against the same competition they would face in foreign 

markets. If they can sell competitively here, they have the potential to export to at least one or perhaps even many of the roughly 

200 world markets. 

If my suggested priority on new exporters makes sense, why is 

the NEI so narrowly wedded to the low hanging fruit? The reason 

is, and Mr. Kumar mentioned that and I agree, they cannot afford 

to do both. Limited resources should be reserved for the export 

ready firms able to make the best use of the trade promotion and 

matchmaking services. But that misses the larger point. The newto-export sector is too important to ignore or write off. The solution 


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is obvious. It is not to stretch federal resources further, but to collaborate with non-federal partners well equipped to fill the gap. 

This gets to my third and final point, the need for systematic collaboration with non-federal partners. The vast network of state and 

local export assistance organizations could be part of an overarching export optimization strategy to both fertilize the tree and 

pick the low hanging fruit. Centers like mine and others are at the 

grassroots of potential new exporters. We have the expertise and 

resources and are ready and willing to engage in a meaningful collaboration. Unfortunately, I do not see a federal mindset, a plan, 

or a mechanism to collaborate. The NEI is more concerned with internal collaboration within the TPCC. It gives abundant lip service 

to collaboration with others, but not much else. 

Here is what real collaboration would look like in my view. Nonfederal partners would have a seat at the TPCC table. They would 

help plan and develop a holistic export optimization strategy that 

shares data with potential and existing exporters, jointly recruits 

prospects, reconciles programs to reduce wasteful duplication and 

overlap, and coordinates the seamless delivery of complementary 

services to both new and existing exporters. 

Before concluding, let me emphasize that my concern is with the 

strategy, not with the programs. They do increase exports and do 

have a high ROI to justify their costs. The only problem is that 

they do not go far enough and do not meet enough small business 

needs. 

Thank you again for the opportunity to share my thoughts. My 

written submission elaborates on all my points today, including 

specific needs of small businesses through all stages of the export 

process from start-up to getting paid. Thank you and I welcome 

your questions. 

Chairman GRAVES. Ms. Vela ́zquez, I will start with you. 

Ms. VELA ́ ZQUEZ. Sorry. I was not ready. 

Chairman GRAVES. That is okay. 

Ms. VELA ́ ZQUEZ. Mr. Kogon and all of you, it has been incredibly 

helpful to us, your testimony, and specifically your experience in 

the exporting business. 

Mr. Kogon, you said you do not have any issue with the program 

but the strategy. In putting together the formulation of the strategy did the administration reach out to any of you or do you know 

of any input that was requested from businesses that are in the export business—in the exporting business? 

Mr. KOGON. When the NEI was first issued there was an opportunity to submit comments to the TPCC. I submitted a very detailed white paper saying basically what I said today in much more 

detail and laying out a complete strategy that I thought would be 

more effective. I do not believe anybody paid any attention to that 

frankly and I thank the Committee for recognizing that that paper 

exists. 

Ms. VELA ́ ZQUEZ. Any other? Yes, Mr. Rice. 

Mr. RICE. Yes. Yes, ma’am. There was an outreach effort and 

there were several visits through the District Export Council. 

There were road shows that traveled through the country but I 

agree that I think it as more show than substance. I did not feel 

that I had an opportunity to significantly influence it. 


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Ms. VELA ́ ZQUEZ. Mr. Rice, you spoke that when you first were 

contacted by the overseas industry or business you went to the 

State Department, the Department of Commerce, and the SBA to 

complete your first overseas sale. Of all those agencies, which of 

them was the easiest one to work with? And this is not to be critical of the agencies; it is just to learn how to better improve what 

they do. 

Mr. RICE. There were two key people. There was in the USEAC 

in Baltimore a gentleman named Bill Burwell and in the SBA 

there was a woman named Debora Conrad. I mention the names 

because they were individually extremely helpful as opposed to organizationally. They understood our problem, they took us under 

their wing, and they really helped us through these things. And 

that interagency interaction worked extremely well. 

And to your earlier question, there was a great division between 

the financing role and the overseas Gold Key sort of reach out role. 

And I understood that very clearly from the first interaction with 

the two groups. 

Ms. VELA ́ ZQUEZ. Mr. Kogon, I asked the representative, the witness from the USDA the question that the strategy was predicated 

into the success of trade agreements—Korea, Panama, and Colombia. What will happen to the strategy if we do not get those trade 

agreements ratified? 

Mr. KOGON. The strategy is multifaceted. It includes the reduction of trade barriers and it also—— 

Ms. VELA ́ ZQUEZ. Oh, the success of the strategy. 

Mr. KOGON. Yeah. I do not, you know, they were already claiming success of the strategy based on export increases of the past 

two years. I do not think it had anything to do with the strategy. 

For the same reason, a couple of years ago exports went down and 

I do not think they would blame bad strategy on that. So I think 

strategy is not really the driving force here. It is what we can do 

to help companies get into exporting. 

Ms. VELA ́ ZQUEZ. Okay. Mr. Goetze. Yes, sorry. 

Mr. GOETZE. That is okay. 

Ms. VELA ́ ZQUEZ. You wanted to add something? 

Mr. GOETZE. Yes. I would just add to that. You know, from our 

perspective with the Free Trade Agreements, I mean, what they 

allow certainly is the first step of opening those new potential export markets. But along with Free Trade Agreements, they also include the protection of intellectual property. There are agreements 

on that which is a big concern of U.S. brands like ourselves. Mr. 

Rice manufactures a product that is very successful because of its 

technology, whereas a piece of candy, you know, is not all that complicated to go into another foreign land. It is easily duplicated. So 

the protection of intellectual properties is important. 

And then certainly some of the issues that have floated around 

about child labor certainly dealing with countries with Free Trade 

Agreements. There are also stable economies. The governments 

usually have collaborative efforts. 

Ms. VELA ́ ZQUEZ. Are those the reasons why in your testimony 

you said that the North American Free Trade Agreement created 

a disincentive for you as companies to remain here but you also 

said that you support Free Trade Agreements with Korea, Panama, 


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and Colombia. Why will these trade agreements produce different 

results than the ones from North America? 

Mr. GOETZE. Well, first of all I think I am here representing certainly the U.S. company with extreme input costs and, you know, 

when we originally spoke I thought my contribution could be that 

before a product is even ready to be exported, input costs are important. I think when you take a look at Free Trade Agreements, 

you know, if you talk about the north or the south of us they are 

very similar to what we did. That is the way we see the world. 

When we try and take this product and go to the Middle East 

which we were recently over in Dubai looking at a show or Germany through the NCA, through the MAP Program, it is more complicated. But with an agreement in place I think as a small company you feel more secure conducting business with a country like 

that or a country that falls under a Free Trade Agreement for all 

the reasons I mentioned—the intellectual properties, the stability 

of the economy, things of that nature. 

Ms. VELA ́ ZQUEZ. Thank you. 

I have another question. I will come back. 

Chairman GRAVES. Okay. I have got a question concerning—and 

it was brought up in the earlier panel. And it comes to marketing 

plans. How much, you know, we have so few firms obviously or 

small businesses in particular, you know, exporting stuff. How 

much of that is related to—and I welcome input from all of you— 

how much of it is related to market? I mean, that is obviously— 

it can be extraordinarily expensive. And if you are concentrated on 

domestic here in the United States obviously and I suppose it could 

be very, very tough to go into another country and try to even let 

them know you have got a product out there available, I mean it 

is very curious to me and, you know, is it just too expensive to try 

to do that? And you know, where do you go, you know, what country do you pick to try to make a dent at least? Let us start with 

Mr. Rice. 

Mr. RICE. A couple of thoughts. Number one, the expense of 

going overseas is in the $5,000 to $10,000 range for a reasonable 

thing. And that is a lot for a small company, a very small company. 

So the more you can do virtually—so the Department of Commerce 

has some virtual methods to get you overseas to get your feet wet. 

The second thing I would say is when I came back we put together a program that is called Export Tech, which is a three-day 

program where a CEO from a small company comes in. The first 

day it is really infusing them with knowledge. The second day is 

addressing specific problems they may have in the markets they 

think they want to go to. And the third day, which is two months 

later, they have to provide a business plan to a council of their 

peers and experts on where they want to go, what it is going to 

take, and what the realities of the business plan might or might 

not be. I think that is the sort of training we need to get out to 

people, whether it is through Mr. Kogon’s organization or these 

public-private partnerships. People just do not understand what 

the markets are. The business plans are daunting. They do not understand the cultural aspects and they need help. And they have 

to have help coaching themselves through the process. They have 

to do it. As a farmer, if you were going to export, you know, to 


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Dubai and you needed to understand what crops you were going to 

raise and what might there be a demand for, that is where the foreign—where the foreign presence and the commercial service really 

helps. It lets you reach into the country, understand through their 

culture what their market is, and then feed that information back 

through the USI Act to the local business to reach their educational level up to where it needs to be. 

Mr. KOGON. I would like to comment on that. Mr. Chairman, I 

think you started to say how important is marketing and market 

planning. For new-to-export companies, which is my focus today, 

none of which is being provided by either SBA because they do not 

have the competence to do it and US&FCS because they are not 

interested in helping new-to-exports; they are focused on the other. 

It is not one thing or two things you can do. That is why we developed a seven-step export enabler program. And we start with assessing whether that company has the potential and readiness to 

export. Then we train them on how to export. Then we provide the 

research to identify which markets are most promising and what 

is the best strategy to get into those target markets. Then we help 

them develop an export market plan. And the market plan would 

address the distribution pricing, promotion, and adaptation strategy in each target market. Then we move to the marketing, the 

promotion, to implement those aspects of the market plan. So we 

take them to trade shows or we recommend that they improve their 

website or they do all the marketing things. 

And the seventh step is the matchmaking. Matchmaking through 

Gold Keys is very important. What you should know is the U.S. 

and Foreign Commercial Service is no longer able to provide the 

level of Gold Key support that is needed. And when the STEP Program comes along with more demand for Gold Keys it is going to 

be a mess—there are going to be some problems. 

Mr. GOETZE. I would say when talking about marketing a product overseas, we spend approximately $12,000 to send two people 

to let us call it Germany. Germany every year. That is two people. 

That is time away from the office. We participated in that show for 

10 years. So in essence we have spent about $120,000 just in participating in travel and the show. Right now we roughly do maybe 

a half a million dollars in export sales. The real challenge is when 

you show up there, is actually selling the product and having the 

person that you are trying to sell it to understand, you know, your 

product just in general. 

Again, I go back to the input costs. Usually sugar and other agricultural products that are in our Caramel Creams, you throw the 

cost out to them and they shake their head and say, well, no, that 

is not what it should cost. So once you get over that and you come 

home it is usually a nine-month to a 12-month sale cycle for confectionary. By the time you finish your communication and negotiation you might have to come up with some type of special packaging or labeling to comply with that country. 

In our case, those sales, unlike the United States, you go and you 

sell a retailer here in the United States, it is sold and it usually 

stays on the shelf if you perform. International business constantly 

needs this feeding that you hear. There are not the retail—other 

than Europe there are not the retail placements that there are here 


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31 

in the United States. It is mainly an ad hoc sale. So every year it 

seems we are duplicating the sale thing. We know you get residual 

sales if the product sells well or they find a different market. But 

the challenge is it is not placed on a retail shelf in most cases. 

Chairman GRAVES. Mr. Merritt. 

Mr. MERRITT. Thank you, Mr. Chairman. I completely agree with 

my colleague form California that the ability that it will sell in the 

United States pretty well, you know, you are battle hardened by 

the time you reach the world market. I think that is a good thing. 

What we find is that it is incredibly difficult to shake some of 

these small business owners from their complacency, that they 

have been able to survive on the U.S. market for so long that the 

thought of even getting out of the office is, you know, it is not 

there. 

It is very expensive to market. We run trade missions in Maine 

on a complete total cost recovery basis. Those are, again, they 

match up very nicely with Mr. Rice and Mr. Goetze. About $7,000 

for a participant to go overseas with us for a week. The USDA has 

fantastic programs for agricultural exporters and then we have 

been able to stretch those into fishers and into forest products, 

which for a state like mine that is a large portion of our base but 

that is not the case necessarily for other states. It is why we got 

really excited about the SBA STEP Program, honestly, which is 

that there is lots of money out there for agriculture and for forestry 

and for fisheries, but there has never really been anything for manufacturers which is one thing that we have kind of thrown out 

there for a long time of our competitor nations are, you know, providing whatever. I mean, it does not have to be much. In our case, 

small—we were able to find from another pot of money small 

grants. A thousand dollars to put towards companies participating 

with us on trade missions to offset costs of travel or matchmaking 

services or whatever. And just that tiny little bit of money was 

enough to be an incentive to get them out of the office and actually 

looking at that international market. 

So, you know, we had not pushed. We, the states, had pushed 

Commerce to do something like this, to do a market access program 

like grant program for manufacturers. SBA kind of came out with 

this more flexible program that said the states could apply for it 

and do whatever you would like to do for export development. Most 

of us have decided to go that route. That is what we are doing with 

our application is to provide offsetting costs for Gold Keys. Mr. 

Kogon mentioned, however, there may be an issue with capacity at 

the commerce level as to whether or not the posts are going to be 

able to handle this influx of Gold Keys which is going to come out 

of many of our STEP proposals. 

And then finally, just to kind of put a point on the difference between USDA and the ag programs and everything else. We heard 

a couple of years ago that there was actually more money that was 

given to the California Raisin Board for marketing of California’s 

raisins than there was in the entire one grant program that the 

Commerce Department offered for manufacturers. Just one industry was receiving more money than all the rest of the manufacturers could even have the potential to get their hands on which was 

not much honestly. 


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32 

So I guess that would be my key. It is just difficult to get people 

out of the office and if you are able to provide them even a small 

incentive, you know, they are willing to do it and willing to think 

about it. 

Chairman GRAVES. Mr. Goetze, do you guys use beet sugar or 

cane sugar? 

Mr. GOETZE. Cane. 

Chairman GRAVES. Cane. 

Ms. VELA ́ ZQUEZ. Mr. Merritt also answered my question. 

Chairman GRAVES. Okay. 

Ms. VELA ́ ZQUEZ. Thank you. 

Chairman GRAVES. Mr. Bartlett. 

Mr. BARTLETT. I am sorry that I could not have been here for the 

testimony and the questions but I wanted to get back because two 

of our witnesses are from Maryland. Thank you very much. 

When I ran for Congress 20 years ago there was an article in 

Money Magazine that said that Maryland was the least attractive 

state in the union for retirees and business. And just the other day, 

I forget which entity it was, said that once again Maryland is the 

least attractive state in the union for business. So I wanted to come 

to see two really triumphant warriors. You are still making it in 

Maryland. Thank you very much. 

You know, every six hours, in fact, just a little less than that, 

we have another billion dollar increase to our debt. And about 

every 12 hours we have another billion dollar increase in our trade 

deficit. I know people who have been—who feel that because that 

dirty smokestack industry is moving overseas and we have that 

nice, clean service-based economy in our country now. And sometimes if you push something to an absurdity you can say, gee, that 

is not going to work. Is it? 

And no matter how much you charge for cutting each other’s hair 

and doing each other’s laundry, that is not going to be a viable 

economy. Is it? And so what this hearing is about today is enormously important. And we have got to do something to reduce that 

trade deficit. I do not know which one of those two deficits will 

bring us to our knees first; whether the budget deficit and the increasing debt or the trade deficit. When every 12 hours another billion dollars of wealth leaves our country—it comes back. A lot of 

it comes back but it comes back to buy us. Seventy percent of all 

of our cement, about the same number—70 percent of our track is 

owned by foreign countries now. So I really appreciate what you all 

are trying to do increasing trade because that will help to lower 

that trade deficit. 

We have—one of the first things that we can do, you know, what 

you have to do to compete with those people over there, unless you 

are competing with somebody in Japan, every one of those companies pays less corporate tax than you do. You have the second highest corporate income tax in the world. That is a little tough for you 

to compete in a global marketplace when you start out with that 

deficit, is it not? 

And then we have probably more regulations here than most 

places. There was an article that really gave me some pause. It 

must be a year or more ago now and it was in a strange place. It 

was a National Demographic. I do not know if you read it or not. 


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It was the story of two Chinese businessmen, a local contractor, 

and a reporter. And they went to a shell of a building in a small 

Chinese town. And they were going to build a factory. And the reporter says that the senior businessman took a scrap of paper out 

of his backpack and wrote an outline of the building on it and said 

I would like to put, you know, restrooms here and manufacturing 

here and so forth and so forth. And he timed them and it took him 

an hour and eight minutes. And he had engineered the conversion 

of all three floors of this building for a factory. And then he turned 

to the—the businessman turned to the local contractor and said if 

you do not use cheap materials and do a good job, I will get you 

to do my next factory conversion. And he said and I would like you 

to start immediately. And the local contractor looked at his watch 

and he said it is 2:30. Is it okay if I start tomorrow morning? 

Wow. How many years would it take us before we could get to 

that point after our environmental impact study and so forth? And 

I wondered, you know, just how long—just how long can we continue this fight with all of the problems that we have with the second highest corporate income tax in the world with all of the regulations, and with the impediments starting a new business. Can 

you start—I would like you to start immediately. It is 2:30. I said, 

okay if I start tomorrow? 

So I want to thank you very much for what you do for our country and, you know, help us fight the battle to get the taxes down, 

to get regulations down so that you have a truly level playing field. 

The fact you are able to export at all means that you are super 

performers because all the impediments that we have laid in your 

way you do very well to be able to compete. We would like to help 

you compete better. Thank you very much for what you do for our 

country and thank you, Mr. Chairman. 

Chairman GRAVES. Thank you. 

I want to thank you all for participating today. We are going to 

closely follow the bureaucratic obstacles that small business exporters are facing right now. And I plan to let you know—I plan to 

send a letter to the U.S. Government Accountability Office. The 

GAO requesting a report on the efficiency of trade promotion, the 

efficiency of the Trade Commission, coordinating committee, and 

the barriers faced by small business exporters. 

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 this hearing 

is adjourned. 

[Whereupon, at 4:00 p.m., the Committee hearing was adjourned.] 


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CERTIFICATE OF NOTARY PUBLIC

DISTRICT OF COLUMBIA

I, Stephen K. Garland, notary public in and for the District of 

Columbia, do hereby certify that the forgoing PROCEEDING was 

duly recorded and thereafter reduced to print under my direction; 

that the witnesses were sworn to tell the truth under penalty of 

perjury; that said transcript is a true record of the testimony given 

by witnesses; that I am neither counsel for, related to, nor employed by any of the parties to the action in which this proceeding 

was called; and, furthermore, that I am not a relative or employee 

of any attorney or counsel employed by the parties hereto, nor financially or otherwise interested in the outcome of this action. 

Notary Public, in and for the District of Columbia 

My Commission Expires: May 31, 2014 


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Testimony of 

Assistant Secretary for Trade Promotion and 

Director General of the U.S. and Foreign Commercial Service Suresh Kumar 

before the House Small Business Committee on 

Bureaucratic Obstacles/or Small Exporters: Is our National Export Strategy Working? 

July 27, 2011 

Chairman Graves. Ranking Member Velazquez, and distinguished Members of the Committee. Thank you for 

the opportunity to appear today to discuss how the Obama Administration has helped small exporters and the 

National Export Strategy. 

The National Export Initiative (NEI) is at the forefront of the Obama Administration's short and long term 

efforts for winning the economic future. The President's goal of doubling U.S. exports by 2015 challenges us 

to enhance our competitiveness, create sustainable jobs and build a stronger America. What sets the NEI apart 

is that it is the first Presidential export promotion strategy, one that leverages ail the resources of all the export 

promotion agencies of the Federal Government. The President created the Export Promotion Cabinet, which 

includes the Secretary of Commerce and the heads of all the other trade-related government agencies. and 

charged it with developing and implementing the NEt 

By collaborating with local and state government, trade associations, organizations such as the State 

International Development Organization (SmO), local chambers of commerce and others throughout the 

private sector, the Federal Government is enhancing its reach into business communities to identify 

opportunities and to help U.S. companies export to new markets. 

The 2011 National Export Strategy provides a framework for how to continue implementation of the NEI. As 

reported in the Strategy, priority number one of the NEI is to develop programs designed to enhance export 

assistance to smail- and medium-sized enterprises (SMEs). The United States and Foreign Commercial Service 

(US&FCS) has a statutory mandate to assist SMEs to grow exports. It is essential both to national economic 

recovery and U.S. global competitiveness that U.S. small businesses participate more actively and effectively in 

export markets. 

Our clients have told us that they want assistance in understanding the basics of exporting, gaining knowledge 

of our products and services. and securing access to finance. That is why the Obama Administration has 

encouraged and facilitated SME exports by raising public awareness of export opportunities and available 

assistance and by directing U.S. export promotion and financing agencies to revamp their services to address the 

changing needs of exporters. Starting this year, members of the Export Promotion Cabinet have travelled to 

local communities to engage small businesses make them aware ofthe benefits of exporting, and inform them 

of the various Federal Government programs to help them connect to overseas markets. Through the New 

Markets New Jobs NEI Small Business National Tour, the members of the Export Promotion Cabinet will 

educate 3,500 small- and medium-sized companies about export opportunities and directly connect them to 

federal and state export resources. The first five conferences, held in Minneapolis, Minnesota; Los Angeles. 

California; New Orleans, Louisiana; Wilmington. Delaware; and Charlotte, North Carolina, have reached over 

1,000 companies. 

The service that I am privileged to lead. the US&FCS, is a one-stop shop for SMEs that operates as a 

clearinghouse to link U.S. exporters to services throughout the Federal Government. We have a global network 

of trade specialists that allows us to provide a broad array of export services and programs to assist U.S. 

businesses. Approximately 1,450 trade specialists across our 108 domestic U.S. Export Assistance Centers and 

126 offices in our embassies and consulates across 79 countries provide soup to nuts programs that include: 
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market research; 

market entry plan development; 

information and help on securing access to finance and working capital; 

assistance on navigating foreign customs and regulations; 

classic matchmaking such as prescreening potential distributors and joint venture partners; 

advocacy to ensure our businesses have a level playing field in foreign public procurement projects; and 

commercial diplomacy that provides solutions to programs such as nontariffbarriers. 

Our trade specialists are the boots on the ground in local communities across the country that connect U.S. 

businesses to opportunities and the various programs that the [nternational Trade Administration (ITA) and 

USFCS has to offer such as: 

trade missions to different markets; 

International Buyer Programs at various U.S. trade shows; and 

regional trade fairs. 

The US&FCS also houses the Secretariat for the Trade Promotion Coordinating Committee (TPCC) that 

promotes joint collaboration among the 20 federal agencies involved in trade promotion, including the Small 

Business Administration (SBA), the Export-Import Bank (EXIM Bank), and the U.S. Trade and Development 

Agency (USTDA). We work closely with each agency to focus the Federal Government's resources so that 

America's SMEs are provided with the highest quality services. For example, the International Trade 

Administration and SBA worked closely to design a single, uniform method for identifYing and referring new 

clients to the most appropriate local resource or TPCC export promotion service provider. This year, we 

developed an enhanced client intake registration form on www.exporl.gov, the Federal Government's export 

assistance Web portal, which allows the TPCC agencies to track how current exporters or potential exporters 

heard about the Web portal. More importantly, the registration form enables agencies to more accurately 

identifY new-to-export and new-to-market companies and refer them to the most appropriate federal resources 

for personalized service. Once registered, companies also receive a free three-month subscription to the U.S. 

Census Bureau's USA Trade Online and are positioned to receive valuable customized marketing knowledge in 

the future. 

Through the NEI, President Obama called on us to leverage the combined export promotion resources oflhe 

Federal Government to the maximum benefit of U.S. businesses. And this is what we are doing by bringing 

even greater focus that allows us to use our limited resources more effective[y. We are focusing on four ways 

to help increase U.S. exports: 

I. Get more companies than the current 280,000 exporters to export through the New to Export initiative. 

[n collaboration with [T A, SBA focuses on this area. 

2. Get the 58% of U.S. exporters who currently export to one country only, to expand into more markets. 

This New to Market approach is the principal focus of the US&FCS. 

3. Get current exporters to increase exports to current markets. The Increase to Markets initiative is the 

focus of EXIM Bank and USTDA, with assistance from US&FCS. 

4. Protect U.S. businesses in all markets. This is the responsibility of all agencies that work on trade. For 

example, the Department of Commerce's www.stopfakes.gov is the online resource for U.S. firms, 

particularly SMEs, to access tools and services to help protect intellectual property rights. In addition, 

ITA's Import Administration works to level the playing field for companies harmed by unfair trading 

practices of foreign entities. 

The NEI is off to a good start and is delivering the results that we set out to achieve. Exports comprised 12.5% 

of U.S. GDP in 2010, up from the 11.2% recorded in 2009. Exports contributed nearly half of the 2.9 
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percentage point growth in real GDP in 2010. The $1.84 trillion in exports of U.S. goods and services represents 

the second-highest annual total on record. For example, Chairman Graves, in your state of Missouri, exports of 

merchandise grew 36% in 20 I 0, much faster than the national growth rate of21 %. Thus far for 2011, we 

remain on pace to achieve the President's goal. In May 2011, U.S. exports of goods and services totaled $174.9 

billion, with record exports of services at $49.7 billion. The monthly export value for U.S. capital goods ($41.4 

billion) was also the highest on record in May 2011. Overall for the first five months of20 11, exports of goods and 

services are up 16.4 percent, which is higher than the 14.8% Compound Annual Growth Rate (CAGR) needed 

to double exports by 2015. 

Last year, US&FCS helped 18,000 companies to export, of which 16,000 were SMEs. As a result nearly 5,600 

companies exported for the first time or increased their exports overseas, 85 percent of which were SMEs. In 

total, we helped U.S. companies post over 12,000 export successes in 2010. And these are not the only metrics 

that we're proud to report. For the first-time, the TPCC has developed metrics for measuring the Federal 

Government's impact as a whole, rather than highlighting individual agencies' successes. The metrics are 

broadly organized in three areas: Trade Advocacy and Export Promotion, Trade Financing, and Reducing 

Barriers to Trade and Enforcement. 

It is one thing to look in the rear view mirror and another to look prospectively on how to drive the future. To 

"win the future" this Administration continues to focus on innovation and to strengthen programs that work, and 

push for initiatives that help U.S. businesses. This is why the pending trade agreements with Korea, Colombia 

and Panama are a priority for the Obama Administration. With the Korea trade agreement alone. the U.S. 

International Trade Commission estimateS that U.S. exports might increase by more than $10 billion and could 

support more than 70,000 American jobs. The agreement would eliminate tariffs on over 95 percent of 

industrial and consumer goods within five years. 

The US-Colombia Trade Promotion Agreement would increase U.S. GDP by an estimated nearly $2.5 billion 

including through expanding U.S. merchandise exports by $1.1 billion, and would eliminate tariffs for over 87 

percent of U.S. exports of consumer and industrial products within five years. And with the Panama Trade 

Promotion Agreement, 87 percent of U.S. goods would enter Panama duty-free immediately; remaining tariffs 

would be eliminated within 10 years. To compare, in 2010, 98 percent of Panama's exports to the United States 

received duty-free treatment, yet fewer than 40 percent of U.S. exports entered Panama duty-free. 

SMEs will benefit from passage of the pending FTAs, including from reductions in tariffrates and non-tariff 

barriers, as well as improvements in business transparency. Improved services facilitating access to information 

about FT A trading partners will deepen SME-to-SME engagement in these markets. ITA developed over the 

past year a new online capability to help U.S. small businesses, stakeholders, and the public take better 

advantage of new export opportunities with the 17 existing and three pending U.S. PTA partners. In April 

20 II, we launched the "PTA Tariff Tool" on export.gov as a powerful new means for SMEs to take greater 

advantage of PTA markets. This free PTA Tariff Tool empowers the user to perform, instantly and at a glance, 

industrial product searches for tari ff treatment under U.S. FTAs. 

Knowing that although trade better positions American products in the competitive global marketplace, it also 

means adjustments for the American worker, the Administration is committed to a strong and robust renewal of 

Trade Adjustment Assistance (TAA) that supports Americans who need training and other services when their 

jobs are affected by trade. TAA is a key component of our comprehensive legislative agenda for trade policy. 

Preparing American workers for the transition into a new era of global trade policy is essential to maintaining 

America's economic preeminence. 

Engagement with our trading partners overseas to ensure a level playing field is critical to the success of the 

NEI. The Obama Administration is committed to free and rair trade, and the enforcement of our trade laws and 

agreements is imperative to the success of our companies. ITA has continued its vigilance in its review of trade 

compliance cases (219) and resolving market access barriers (82) in 2010. Moving forward, the Administration 
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has identified several areas of focus which are among the most critical to the success of the National Export 

Initiative including: (I) increasing coordination with state export promotion programs and nonprofit 

associations; (2) identifying and encouraging exports by U.S. companies selling technologies in high-growth 

sectors; (3) ensuring better data and measurements of the U.S. services economy; and (4) approval and 

implementation of the pending trade agreements, along with a robust renewal of Trade Adjustment Assistance. 

In conclusion, let me emphasize that American businesses, particularly small- and medium-sized enterprises, 

have the full support of the U.S. government in connecting potential exporters to global partners and markets. 

Thank you again for the opportunity to appear before you today. I look forward to answering your questions. 
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U.S SMALL BUSINESS ADMINISTRATION 

WASHINGTON, D.C. 20416 

TESTIMONY OF MARIE JOHNS 

DEPUTY ADMINISTRATOR 

U.S. SMALL BUSINESS ADMINISTRATION 

BEFORE THE 

U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON SMALL BUSINESS 

Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy Working? 

JULY 27,2011 

Thank you Chainnan Graves, Ranking Member Velazquez, and members of this committee. It is 

an honor to be here to testifY today. 

In his first State of the Union address, President Obama announced the National Export 

Initiative, and his goal of doubling US exports in five years. This is an important goal. 

Increasing exports will strengthen our economy, bolster our global competitiveness, and create 

good jobs. 

As the agency that serves America's small businesses, the SBA has an important role to play. 

We are working with our partners across the federal government to leverage federal resources in 

support of small businesses. Meanwhile, Administrator Mills chairs the Small Business Working 

Group of the Trade Promotion Coordinating Committee (TPCC), which is the main federal body 

working to encourage more U.S. businesses to export. 

Small businesses are well poised for growth through exports. With growth in global networks 

and communications, new markets are continually opening for small business. Since 2003, 

America's small business exports have grown about 80%. They now account for nearly $500 

billion in annual sales. However, small business only represent about 30% of export revenues, 

and more than half of small business exporters only ship to one country. 

The SBA, along with our partners in the TPCC, is working to increase both the number ofsmall 

business exporters and the number of countries to which they ship. 

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Our plan, which has been incorporated into in the 2011 National Export Strategy, has four 

components: 

• First: Identify small businesses that are ready to export. 

• Second: Prepare these small businesses with counseling and technical assistance. 

• Third: Connect small businesses with export opportunities. 

• Fourth: Support these small business exporters with loans and counseling. 

SBA and our partner agencies have done extensive outreach to identify and motivate small 

business exporters. For example, the administration launched a video series in partnership with 

Inc.com and A TT. SBA and Visa are also working together on a video contest, which will be 

out in August, to promote exporting. 

In addition, the Department of Commerce and SBA have worked closely together to identifY and 

refer new clients to the most appropriate resource. An improved client registration on 

www.export.gov is identifYing new-to-market and new-to export companies. New-to-market 

leads are being distributed to USEACs for follow-up. SBA is designing a results-driven process 

to direct new-to-export companies to the appropriate local resource partner, to help them take the 

next step in the export process. 

To better prepare small businesses for successful exporting, federal agencies have 

collaborated to "train the trainers"--offering export training for SBA resource partners, such as 

counselors at the Small Business Development Centers, Women's Business Centers, and 

SCORE. The Small Business Jobs Act contained additional funding for this training. SBA is 

tapping into that funding to train District International Trade Officers on the variety of federal 

resources available to small business exporters. SBA's Office of International Trade and the 

TPCC have also created a training program for SBOC counselors that will serve as preparation 

for SBJA required international trade certification. 

At the same time, we have launched online trainings such as the "Six Steps to Begin Exporting" 

tool on export.gov, and the Export Business Planner on sba.gov. 

Meanwhile, the NEI is working to connect small businesses with export opportunities. [n 

September of 2010, we launched a series of export matchmaking events. The first of these 

events in New Jersey drew participation from approximately 150 small businesses, lenders, and 

others. The results of a participant evaluation were overwhelmingly positive, and many 

attendees indicated an interest in future events. There will be two more of these events in 20 II. 

and the program will be expanded throughout the rest of the country in 2012. 

USTR, DOC, and SBA also worked together to launch a web tool that helps small businesses 

navigate tariffs and free trade agreements, available at export.gov. 

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Lastly, SBA and other agencies continue to support small businesses once they have begun 

exporting. This includes an increased presence at international trade shows, coordination of 

marketing materials, and ongoing outreach to lenders to encourage their participation in export 

financing programs. 

The SBA received support from the Small Business Jobs Act, which contained many new tools 

and enhancements to existing programs that support small business exporting. 

For example, the SBA's international trade loans were enhanced by the Jobs Act. The act raised 

the size of these loans to $5 million, and made the quick turnaround Export Express pilot 

permanent. Thanks to increased guarantee percentages, increased loan limits and an improving 

economy, SBA export loan programs have seen a major uptick over last year's levels. 

In Missouri, Environmental Dynamics, Inc took advantage of an Export Working Capital Loan 

once the limit was raised to $5 million. The increased loan size made the program much more 

appealing to the company. The firm, which has sold internationally for twenty years, is using the 

loan to finance an expansion. 

Meanwhile in New York, TurboFiI Packaging Machines used an Export Working Capital loan to 

help the company complete a large overseas contract that came to them through a web search. 

The agency is also reviewing applications for the State Trade and Export Promotion grants 

program, created by the Jobs Act. The STEP grants will provide $30 million to states for export 

assistance. We expect to advise states of their awards in September. 

These and other new initiatives will provide more resources to small businesses as they begin to 

grow and create jobs through exporting. 

The success of the NEI depends on the work of more than a dozen agencies across the federal 

government. Each agency has staff dedicated to working on NEI initiatives, who meet and 

communicate regularly with their colleagues throughout the administration. We have worked to 

reduce bureaucratic barriers and make our efforts as cross cutting as possible. For example, 

every agency involved has committed to using export.gov as the main point of entry for 

exporting online. We know that interagency collaboration, and cutting down on bureaucracy, is 

essential to our efforts. Overall, our goal is to link, leverage, and align federal resources and 

make them work for small businesses. 

Thank you, and I look forward to answering your questions. 

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Statement by Christian Foster 

Deputy Administrator of the Foreign Agricultural Service 

U.S. Department of Agriculture 

Before the U.S. House Committee on Small Business 

Washington, DC 

Wednesday, July 27, 2011 

Mr. Chairman, members ofthe Committee, I am pleased to appear before you today. 

In his 2010 State of the Union address, President Obama told the nation, "we're launching a 

National Export Initiative that will help farmers and small businesses increase their exports." 

The U.S. Department of Agriculture (USDA) has taken the President's charge to heart and 

ratcheted up our export assistance efforts. The efforts of USDA personnel throughout the 

country and around the globe, bolstered by public-private partnerships, have assisted U.S. 

farmers, ranchers, and all agricultural exporters in achieving record export sales. In fiscal year 

2011, we expect U.S. agricultural exports to reach a new record of$137 billion. 

LINKING U.S. AGRICULTURE TO THE WORLD 

For more than 50 years, the Foreign Agricultural Service (FAS) has led USDA's efforts 

to open and build overseas markets. The National Export Initiative (NEI) goal of doubling U.S. 

exports has energized FAS's global network of agricultural economists, market development 

experts and trade specialists both in Washington, DC and throughout our network of key 

international offices. This is because we know that the more agricultural products we sell to 

other countries, the more jobs we support right here in America. In fact, USDA analysis has 

shown that every $1 billion in agricultural exports supports 8,400 American jobs and generates 

an additional $1.31 billion in economic activity. 

COMMITMENT 

President Obama's National Export Initiative calls for a Government-wide approach, and 

our commitment to this Initiative starts at the top. Next Wednesday, August 3, Secretary Vilsack 
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will host the Administration's NEI Small Business Tour event in Milwaukee, Wisconsin. The 

event titled "New Markets, New Jobs," is one in a series of Administration events specifically 

designed to help connect small- and medium-sized businesses with the resources they need to 

sell more of what they make in markets overseas. Collaborating with USDA at the event will be 

representatives from the Office of the U.S. Trade Representative (USTR), the U. S. Department 

of Commerce (DOC), the U.S. Small Business Administration (SBA), and the Export-Import 

Bank (EXIM). 

COORDINATION 

USDA has stepped up its export program coordination with other Federal agencies through 

the Trade Promotion Coordinating Committee (TPCC), which is comprised of21 agencies and is 

chaired by the Department of Commerce. The Committee's efforts have focused on developing 

and implementing interagency communication and outreach plans primarily with the SBA, 

EX 1M, and DOC. This inter-agency collaboration extends to U.S. embassies overseas where 

FAS Foreign Service officers work with DOC and the U.S. Department of State to assist the 

export efforts of small companies. 

In addition to working with our Federal partners, F AS has forged important relationships 

with export assistance and small business centers, state agencies, and U.S. trade associations in 

an effort to raise awareness of the benefits of exports and the range of U.S. Government 

assistance available to small businesses. 

USDA is broadening its outreach throughout the country at the local level to alert small and 

medium-sized enterprises (SMEs), especially in rural areas, about the tools available to start or 

expand exporting. To that end, F AS is enhancing collaboration with its USDA sister agencies, 

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the Farm Service Agency (FSA) and Rural Development (RD), through their field offices to get 

the word out on the scope of USDA and other Federal assistance programs and services. 

This afternoon, I would like to highlight a few of USDA's specific actions in a number of 

NEI priority areas of activity. 

NEI PRIORITY: EXPORTS BY SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs) 

In 2010, more than 625 new SMEs benefited from USDA's Market Access Program 

(MAP) to promote their products overseas, which resulted in over 975 first-time sales. A costshare program, MAP provides partial matching funds to U.S. organizations to conduct a range of 

activities, including market research, consumer promotion, maintaining and expanding relations 

with foreign buyers, market development, and market access support. The economic impact of 

MAP and the Foreign Market Development (Cooperator) Program (FMD), our second largest 

market development program, is striking. A recent cost-benefit analysis concluded that U.S. 

food and agricultural exports increased by $35 for every $1 invested by government and industry 

on market development under these programs. 

For example, WildRoots, a small healthy snack food company, with two production 

facilities in Illinois and one in Nebraska, matched MAP branded funds to market their products 

in Canada. Export sales soared from zero in 2008 to over $4 million in 20 I O. The company 

buys blueberries from Michigan, corn and soy products from Illinois, oats from Nebraska, 

cranberries from Massachusetts, and almonds from California. According to a WildRoots' cofounder, "Without the branded program, we simply would never have been able to compete with 

Canadian producers. It has moved our business to a new level and has promoted U.S.-based 

agricultural products, creating jobs in an economy that desperately needs them." 

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Export-related outreach to SMEs is conducted by F AS in coordination with the four state 

regional trade groups (SRTGs I). F AS and the SRTGs have a near 40-year history of promoting 

U.S. agricultural exports. The SRTGs invest USDA market development program funds 

worldwide to conduct generic promotions for U.S. food products and brand activities specifically 

targeted to SMEs. USDA funds support SRTG webinars, Export Helplines, seminars, email 

bulletins, newsletters, trade publication advertising, and one-on-one contact with companies at 

U.S. food shows that reach SMEs with pertinent trade information. 

Milo's Whole World Gourmet, an Ohio company, needed help with export documentation 

and obtaining market research for their products. After calling an SRTG Export Helpline, Milo's 

was paired with an export counselor to assist them in getting ready to export. In regard to his 

experience, Jonathan Leal, Milo's founder and owner stated, "It has been an invaluable resource. 

Without the Food Export Helpline I'd be lost in a sea of export language and conditions." 

NEI PRIORITY: FEDERAL EXPORT ASSISTANCE 

Another prime example of our export assistance to SMEs is how we link them to foreign 

buyers at USDA-supported trade shows. U.S. pavilions at international trade shows create 

national identity and visibility for U.S. exhibitors. In 2010, USDA supported U.S. Pavilions at 

27 international trade shows in 19 countries. At those events, nearly 1,000 exhibitors, most 

SMEs, reported $179 million in total on-site sales, and over $1 billion in estimated total 12-

month sales. Further, participating U.S. companies introduced over 6,000 new-to-market 

products, and made close to 16,000 serious business contacts. On average, 70 percent of the 

companies exhibiting in these U.S. pavilions were small companies. 

I The SRTGs are: Food Export USA - Northeast, headquartered in Philadelphia, PA; Food Export 

Association of the Midwest, headquartered in Chicago, Il; Southern United States Trade Association, 

headquartered in New Orleans, LA; and Western U.S. Agricultural Trade Association, headquartered in 

Vancouver, WA. 

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For example, in 2011, another of the SRTGs, the Western u.s. Agricultural Trade 

Association (WUSATA), assisted Linden Nut Company, a small California company, in 

attending the Food Ingredient China Trade Show in Shanghai. Linden Nut exhibited at the show 

and connected with dozens of Chinese buyers and distributors. As a result of their participation 

in the show, the company generated $130,000 in first-time sales. 

NEI PRIORITY: TRADE MISSIONS 

Agribusiness trade missions (ATMs) to foreign markets led by high-level USDA officials 

are another example of how we link our producers to foreign buyers. On these missions, 

participants meet with local entrepreneurs in one-on-one business meetings, host country and 

U.S. officials, and public/private sector experts as well as participate in onsite visits. In 2010,29 

companies participated in two high level, USDA sponsored A TMs with a resulting export value 

of$14.8 million. 

For example, Acting Under Secretary for Farm and Foreign Agricultural Services 

Michael Scuse led an ATM in January 2011 to Peru accompanied by 20 representatives from 

U.S. agribusinesses and business associations; 16 were from small businesses. This was the first 

USDA-led A TM of its kind to the South American region. With 101 Peruvian and 10 

Ecuadorian companies attending the business activities, a total of338 one-on-one business 

meetings were held. To date, USDA has recorded $1.9 million in sales of U.S. products to Peru 

and Ecuador as a result ofthis mission. Looking at SMEs successes from the A TM, a dairy and 

vegetable processing company from Illinois recorded over $350,000 in first-time sales to Peru 

and a meat and poultry company from Georgia recorded over $800,000 in first-time sales and is 

considering opening a sales office in Peru to be closer to the market. Total sales generated by 

the Peru ATM are expected to reach $5 million by 2013. 

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In addition, USDA supports reverse trade missions that bring foreign buyers to the United 

States. to meet with potential suppliers of agricultural products. These reverse trade missions are 

particularly valuable for SMEs that may not have the resources to travel to a large number of 

countries in search of new markets. In 20 I 0, USDA increased the number and scope of reverse 

trade missions. Our efforts brought 2,734 foreign buyers together with U.S. SMEs as part of 

more than 270 such reverse tmde missions. 

NEI PRIORITY: REDUCING BARRIERS TO TRADE 

The biggest challenge to agricultuml exports continues to be market access, both opening 

new markets and maintaining existing markets. Together with other Federal agencies, USDA is 

stepping up efforts to address unjustified sanitary and phytosanitary barriers and technical 

barriers, as well as tariff barriers to trade. 

For example, in 20 I 0, the F AS-administered Technical Assistance for Specialty Crops 

(T ASC) program was instrumental in assisting U.S. potato exporters in overcoming a Thai 

phytosanitary protocol that prevented U.S. exports from certain states. T ASC was authorized 

and funded by Congress specifically for projects that address sanitary and phytosanitary barriers 

that prohibit or threaten the export of U.S. specialty crops. Following several months of 

negotiations between the Thailand Department of Agriculture and USDA, the U.S. Potato Board 

(USPB) used TASC funding to arrange for Thai officials to visit the United States to review U.S. 

seed certification procedures, cultivation practices and phytosanitary risk-mitigation measures. 

Following this activity, Thailand agreed to additional market access that more than doubles - to 

14 - the number of states eligible to export seed potatoes to Thailand. Seed potatoes from 

Colorado, Maine, Michigan, Minnesota, Montana, Nebraska, New York, North Dakota, 

Wisconsin and Wyoming may now be exported to Thailand. FAS estimates sales of $250,000 to 

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$500,000 during the first year of the expanded Thai market access, while the USPB estimates 

that the broader market access could boost exports to Thailand to $1 million in three to five 

years. 

The Administration remains committed to securing Congressional approval of the 

pending trade agreements with South Korea, Colombia, and Panama, which would significantly 

reduce tariff and other trade barriers to U.S. exports. The Korea agreement (KORUS), will 

provide America's farmers, ranchers, food processors, and the businesses they support with 

improved access to the Republic of Korea's $1 trillion economy and 49 million consumers. 

Almost two-thirds of the agricultural products that we currently export to Korea would receive 

duty-free treatment immediately, including com, soybeans for crush, cotton, cherries, orange 

juice, grape juice, and wine. South Korea's average current tariff on processed agricultural 

products is 8 percent, but these products have been subject to arbitrary annual adjustment tariffs 

as high as 45 percent. Under the agreement, tariffs on nearly all processed products would be 

eliminated within 5 to 10 years. Nearly all other agricultural commodities would have their 

tariffs and duties eliminated over a period of time, creating tremendous opportunity to increase 

our exports to Korea. USDA's Economic Research Service (ERS) projects that on full 

implementation, U.S. agricultural export gains under KORUS would be over $1.9 billion 

annually - a 33 percent increase from the 2010 level of U.S. agricultural, fish, and forestry 

exports to that market ($5.8 billion). 

The Colombia Trade Promotion Agreement also contains good news for U.S. agriculture. 

Currently, no U.S. agricultural exports enjoy duty-free access to Colombia, with most applied 

tariffs ranging from 5 to 20 percent. But on day one of implementation, U.S. exporters would 

receive duty-free treatment on products accounting for almost 70 percent of cum:nt trade. When 

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implementation is complete, we expect it to increase our agricultural exports by 44 percent - an 

additional $370 million per year. 

U.S. agricultural exports to Panama have been on the rise, growing to over $450 million 

in 2010. According to ERS, the U.S.-Panama Trade Promotion Agreement would continue this 

progress with an additional $46 million in annual sales upon full implementation. More than half 

of current agricultural trade (by value) will receive immediate duty-free treatment, with most of 

the remaining tariffs on agricultural products to be eliminated within 15 years. Tariffs on 68 

percent of Panama's agricultural tariff lines, accounting for more than half of current U.S. trade 

by value, would be eliminated immediately upon entry into force of the agreement. 

CONCLUSION 

As Deputy Administrator of USDA's Foreign Agricultural Service, I have witnessed the 

success of our efforts to improve foreign market access for U.S. products, build new markets, 

and improve the competitive position of U.S. agriculture in the global marketplace. I am also 

pleased to report that USDA is making progress in the Administration's goals under NEI. As 

Secretary Vilsack said, "increased exports mean higher incomes for producers, more 

opportunities for small business owners, and for folks who package, ship and market agricultural 

products. They mean a thriving rural America which is good for our Nation as a whole." 

This concludes my statement. I look forward to answering any questions you may have. 

Thank you. 

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STATEMENT BY: 

Mark Rice 

President 

Maritime Applied Physics Corporation 

I thank Chairman Graves, Ranking Member Valezquez, and the members of the House Committee on Small 

Business for this opportunity to testify on the subject of small business exporting. 

Maritime Applied Physics Corporation is a 75-person employee-owned company that I founded in 1986. The 

company manufacturers 5 defense products that range from unmanned boats to automated marine cranes. We 

also perform Research and Development contracts for both commercial and government sponsors. We have 

exported to South Korea, Italy, Scotland, and Germany. Our company has offices in three states and through the 

recession, we have grown at an annual rate above 20% due in part to exports. 

Our company's growth and our ability to hire employees has been significantly helped by the Small Business 

Innovation Research (SBIR) program, the Small Business Administration Export Loan Guarantees, and the SBA 504 

program that is guaranteeing the real estate loans for the expansion of our facility in which we intend to add 30 

employees over the next 2 years. The SBIR awards that we have received over the past 25 years have resulted in 

new products, technology advances, teaming opportunities, and substantial growth. 

Our journey to become a successful exporter was not easy. I would like to share one particular story that illustrates 

a number of the benefits and challenges associated with small businesses that are new to exporting. Our story 

began in 2000 when we received an email from a business agent in South Korea. The agent had researched our 

involvement with a particular type of ship rudder under a U.S. Navy program. He indicated that there was a similar 

application upcoming in South Korea and asked that we arrange for a marketing visit to the world's largest 

shipbuilder. At this point, our 25 person company had no export experience and we did not understand the laws, 

customs, or cultural aspects of doing business overseas. We were totally ill prepared to deal with international 

business. We did not understand the U.S, Government assistance that was available to us nor the government 

regulations that we were subject to. At the time, it was unclear to us whether we needed an export license and 

whether this fell under the Department of Commerce or Department of State. We learned through trial and error 

that this product fell under the Department of State. After several missteps we discovered the US Export 

Assistance Center in Baltimore and they helped us navigate the export compliance regulations to finally acquire an 

export license. 

With that scare behind us, we travelled three times to Korea, once with the assistance of a State of Maryland 

program, to discuss the opportunity. On each trip, we were gradually and naively drawn into the next step of the 

program including head-to-head bidding against a large British firm that was very well supported in the meetings 

by their embassy. At the end of the third arduous meeting, we were informed that we had won the bidding 

process on both a technical and cost basis. We were awarded a contract to construct 100-tons of hardware 

including rudders, hydraulics, and electronics. We came home to celebrate the large win, to find 20 new workers, 

and to share the news with our bank. Our very large U.S. Bank promptly told us that this deal was too large for us 

and withdrew the credit lines that were essential to our continued operation. 

In this desperate business situation, I approached a friendly local bank and found a very brave banker who took on 

our company and its new project by pooling his bank's resources with the SBA Export Financing program. 14 

months after Signing the contract, and nearly 3 years after our first visit to South Korea, we successfully completed 

the installation of the 100 tons of equipment in the South Korean shipyard under a fixed price contract. While this 

was a break even contract from a financial perspective, it taught us a great deal. Perhaps the greatest and most 

lasting benefit of this experience was the international experience and personal growth that it brought to our 
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employees. Were it not for the dedicated people of the Small Business Administration, the US Export Assistance 

Center in Baltimore, and the Sandy Spring bank, our business would not have survived this experience. The 

interagency coordination that saved our company did not occur at high levels but rather through the personal 

connections between Federal officials located in local field offices 

As you can see, my first experience exporting required a tremendous commitment of time and resources. The 

export process can be overwhelming for many small businesses, but with increased coordination and education, 

we can avoid these issues and increase our exports. 

I'm currently a member of the local District Export Council (DEC) and work on a volunteer basis with the Baltimore 

US Export Assistance Center (USEAC) to help companies new to exporting. Together with the local USEAC and the 

Manufacturing Extension Partnership, we developed a 3 day course for senior managers of companies who are 

new to exporting. This course, which has now spread to 25 states, results in an international business plan that 

each company writes with the substantial technical assistance of local government and private experts. The 

company can then be worked into the Department of Commerce Tradewinds or Gold Key programs as they are 

helped to execute their export plan. The participant reviews of this program are extraordinary with a very wide 

range of companies that are growing their exports around the world. 

The local USEACs and the international offices are critical to the growth of small business exporting, and they have 

helped our company to export to Asia and Europe. Overall, I believe the federal trade agencies do a tremendous 

service to our nation, but there is plenty of room to improve agency coordination to more efficiently help small 

businesses. 

I would like to conclude with four recommendations: 

1. While the interagency coordination in export licensing has improved markedly, the concurrent involvement of 

Departments of State and Commerce creates confusion and duplication for a business that is new to exporting. I 

believe that the licensing process should lie in a single agency and that the process of selecting technologies for 

export control should be streamlined. 

2. Export financing, be it through the SBA or EXIM bank, is not well understood by small businesses that are new to 

exporting. The process often depends upon the actions and recommendations of bankers who also may not be 

experienced in exporting. The process can be awkward, costly, and daunting. More needs to be done to locally 

coordinate and promote the federal programs so that small businesses understand the remarkable guarantees 

that the U.S. Government offers for exporting. 

3. As a country, we need to increase the national priority and visibility given to exporting. When working with our 

peers in South Korea, the entire shipyard workforce understood the importance of exporting. Such is not the case 

in the U5. where the new graduates that we hire often have no recognition or interest in markets outside of our 

borders. While the National Export Initiative has raised awareness at some levels, there is much more to be done 

with both existing and emerging business leaders. 

4. The Department of Commerce has recently reduced its staff in Washington by reassigning staff to field offices. I 

believe that this trend needs to continue. While field offices have some local authority to tailor programs, the local 

responsibility and authority needs to increase. The real work that reaches the small businesses is done in the field 

and the budget priorities and senior personnel assignments should reflect this priority. 

I thank the members of the Small Business Committee for their invitation to testify and for their important work in 

lowering the barriers to business exporting be they regulatory, bureaucratic, educational, or financial. I look 

forward to your questions. 
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Statement before the 

Committee on Small Business 

U.S. House of Representatives 

Hearing on "Bureaucratic Obstacles for Small Exporters: Is our National Export 

Strategy Working?" 

Wednesday, July 27, 2011 

1:00 p.m. 

2360 Rayburn House Office Building 

Testimony by: 

Mitchell Goetze 

President/COO Goetze's Candy Company 

Baltimore, MD 

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Thank you Chairman Graves, Ranking Member Velazquez and other members of the Small 

Business Committee for inviting me to testify on behalf of our company and highlight some of 

the issues facing our industry and small businesses today. My name is Mitchell Goetze and I am 

the President and Chief Operating Officer of Goetze's Candy Company located in Baltimore, 

Maryland. It is an honor to be here and I look forward to working closely with the committee to 

ensure that the U.S. government continues to create policies and programs that help small 

businesses like mine stay competitive and grow our exports. 

The Goetze Candy Company was founded in 1895 by my great, great grandfather August 

Goetze, and has been in my family for 5 generations. We have 100 employees including multigenerations of my family members within our ranks. We manufacture Caramel Creams and 

Cow Tales in a variety of flavors. These candies are a soft, chewy caramel wrapped around a 

sweet fondant center, and are confectionary brands enjoyed by many generations. I am also 

the current chairman of the National Confectioners Association (NCA). NCA has represented the 

U.S. candy, gum and chocolate industry since 1884, and while NCA includes large multi-national 

confectionery companies, eighty-five percent of our members are small to medium-sized 

companies like mine. The majority of our members represent privately owned family 

businesses and many have been operated within the same family for multiple generations. 

The confectionery industry in the US is a $30 billion industry, with international sales last year 

at $1.25 billion. On average the domestic industry is growing at a rate of 2.8 percent per year, 

which pales in comparison to international confectionary sales which grew by 6.9 percent last 

year. Nearly 3000 new products are introduced into the US market each year and many of 

these innovative and creative products have great export potential. Confectionery businesses 

employ over 70,000 people in the manufacturing sector, and the job figure reaches 200,000 

workers when supplier and distributor jobs are included. There are candy operations in more 

than 40 states and probably every state in the country when you consider very small 

independent retail chocolate and candy makers. 

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While many Americans may regard international trade as the domain of large multinationals, 

nearly 270,000 small and medium-sized companies export. Within the candy industry, nearly 40 

percent of companies export and similar to Goetze, the majority of those are small, with less 

than 250 employees. In a series of studies released last year, the U.S. International Trade 

Commission found that small to medium-sized exporting companies outperformed those that 

did not export. Goetze sells approximately 30 million pounds of product each year, but right 

now only a little over 1 percent of that product is sold internationally. 

We welcome the opportunity to grow our exports, but there are several bureaucratic obstacles 

to export growth for small confectioners like Goetze. First and foremost, it is very difficult to 

compete on a price basis with foreign competitors due to the input costs of American 

manufacturing. Secondly, being a small company, it is hard to find the resources in time, 

money, and personnel to adequately research global markets and execute sales orders. Finally, 

there are larger policy issues impacting the confectionery industry that serve as immediate and 

potential impediments to trade. 

I. It is difficult to compete on a price basis with foreign competitors 

The Goetze Candy Company manufactures all of its candy in the United States and has been 

doing so since 1895. We cook and processes candy daily for shipments all over the globe, but 

current domestic policies hinder our ability to compete globally. In addition to raw material cost 

increases, energy cost increases, and general volatility and uncertainty in the commodity 

market, some of our most critical issues are outlined below: 

Sugar: Sugar is the most widely used ingredient in the confectionery industry, and the current 

U.S. sugar policy is woefully outdated. Due to the federal sugar program as mandated in the 

2008 farm bill, domestic sugar supplies are restricted by "market allotments" that can never be 

lower than eighty-five percent of domestic demand. Marketing allotments are legally binding 

sales limits on sugar processors. As a result of this "domestic content" requirement on the U.s. 

sugar market, and other provisions of the 2008 farm bill, u.s. companies are forced to pay 

nearly twice the world price for sugar. 

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This artificial market situation, combined with the fact that most imported candy enters the 

U.S. marketplace duty free, creates a major economic incentive for manufacturers to seek comanufacturing partners abroad to make their candies or re-Iocate plants and factories outside 

of the United States. Total U.s. imports grew 43.8 percent from 1998 to 2010, while imports 

from our NAFTA partners increased an astounding 208 percent. Companies today are moving 

operations to Canada and Mexico to take advantage of lower business operating costs and 

avoiding the U.S. sugar restrictions. Given these market dynamics, at Goetze I am fighting to not 

only maintain my U.S. market share, but to keep manufacturing jobs here in Baltimore. 

According to the U.S. Department of Commerce, the sugar program is directly responsible for 

the loss of thousands of U.S. food manufacturing jobs. Between 1997 and 2009, 112,000 jobs 

were lost in sugar-using industries alone, and for every sugar growing job in the U.s. saved 

through artificially high domestic U.S. sugar prices, approximately three American 

manufacturing jobs are lost. 

American sugar producers benefit from the current federal policy, at the expense of U.S. sugarusing companies and consumers. There are only 4,700 sugar farms in the U.S. that benefit from 

the federal sugar program, but they are supported at the expense of thousands of lost food 

manufacturing jobs in the U.S. In contrast, there are more than 600,000 U.s. jobs in food 

industries that use sugar. If the failed sugar policy is not changed, domestic sugar prices will 

remain at current record highs at the expense of American consumers and workers. By overly 

protecting sugar growers and processors, we are also jeopardizing the export opportunities for 

other U.S. agricultural producers, who must face market access barriers in other countries that 

result from our current sugar policy (e.g. the U.S. denied Australia additional access to the U.S. 

sugar market in the U.S.-Australia FTA, so South Korea was able to exclude additional U.S. rice 

market access from the U.S.-Korea FTA). 

From our machines to our hairnets, at Goetze we buy everything we possibly can from America. 

This includes all of our raw ingredients, but the astronomically high price of domestic sugar is 

making it harder and harder for us to compete. The current 2011 published price for refined 

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sugar is 57 cents per pound, whereas the price for refined sugar available on the world market 

is 33 cents per pound. Sugar is grown in countries all over the world, but there is a cap on how 

much can be imported and on how much can be grown in the U.S. It is a remnant from the 

past-a market totally controlled by the federal government. 

One way that USDA has attempted to compromise on this issue it through the sugar re-export 

program. In this program the U.S. government offers a refund on the difference between the 

world price of sugar and the domestic price of sugar to manufacturers that export U.S. sugarcontaining products. While this program is helpful, it is still cumbersome and adds uncertainty 

to the price equation. The price uncertainty arises because the reimbursement rate is 

determined when the claim is submitted rather than when the sugar is purchases. For pricing 

purposes then, we do not take that discount into account. We may purchase sugar months or 

even a year out and it's not possible to know and calculate the refund for sugar in exported 

products. At Goetze, we have not taken full advantage of the sugar re-export program, largely 

because the inherent uncertainty in the market makes participation a challenge to determine 

what the return on investment for additional staff time would be. There is a significant amount 

of paperwork and time involved in achieving the refund. It is a business decision that many 

other small confectioners find themselves making as well. 

Lastly, trade experts believe that current sugar program provisions, such as the 85 percent 

domestic market content requirement that has been designed to further protect the sugar 

growing and processing industry, may violate u.s. obligations under the WTO. 

In order to be both domestically and internationally competitive, this arcane program needs to 

be eliminated and allow U.S manufactures access to world sugar. We need U.S. Sugar reform 

now. 

Health Care: The United States spends $2.5 trillion a year on health care with more than 170 

million Americans receiving health care through their employer. For small businesses in 

particular, this expense can often discourage a company from making a new hire. Between the 

years 2000 and 2010 Goetze's costs to provide healthcare to our employees rose over two and 

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half times the rate we were paying ten years ago; going from $182.20 to $465.47 per 

employee/per month. We pay80 percent of the total cost, which is expensive for an employer, 

but in some cases my employees have opted out of our health care plan because they cannot 

afford the other 20 percent. In many cases, it is the difference between paying that premium, 

or putting dinner on the table. Adding insult to injury, my employees have also told me that 

they are opting out because they can "go to the hospital for free". 

Unless we address rising health care costs, including abuse of the system, more small and 

medium sized companies and families will be forced to drop coverage, adding to the millions of 

Americans without health insurance. The new health care law expands coverage but allows 

costs to continue spiraling out of control. Allowing businesses to freely pool together and 

negotiate with health insurers, allowing companies to purchase plans across state lines and 

competitiveness, and incorporating health information technology (such as electronic 

prescriptions and medical records) will lower costs for government and businesses while 

improving choice and competition. 

Infrastructure: On average freight costs are roughly 10 percent of operational costs for our 

industry, and can be a means to create competitive advantages in the marketplace. A vast 

majority of our product travels via truck across America and often times with refrigerated 

systems. In the past two years the cost of freight per pound increased 15.5 percent. The NCA is 

a member ofThe Coalition for Transportation Productivity (CTP), a group of more than 180 

shippers and allied associations dedicated to increasing the federal vehicle weight limit to 

97,000 pounds for vehicles equipped with an additional (sixth) axle. Between 2009 and 2011, 

diesel fuel prices lead to a 34.5 percent increase in our shipping costs. We advocate for 

heavier, not bigger trucks and believe that by filling the trucks up our freight costs will 

decrease. 

Taxes: As a business owner, taxes never cease to amaze me. The most recent tax that I have 

become acquainted with is the federal estate tax, also known as the death tax. This tax is 

applied to the transfer of property upon death, and under current law is set at the rate of 35 

percent. On January 1, 2013 the estate tax is set to return to a top marginal rate of 55 percent. 

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Assets that are eligible for the tax include business property, machinery, investments and 

personal property such as homes, cars, and furniture. The recipients of the inheritance are 

liable to pay back the tax, and if they do not have sufficient cash, they are forced to sell what 

they have just inherited. In the case of family business owners, the tax often exceeds the ability 

of the family to pay. These heirs are consequently forced to sell off part, if not all, of their 

enterprise in order to pay the tax. 

While the taxation debate is eternal, this tax in particular punishes small family businesses like 

mine. As a family owned fifth generation company, my grandfather recently passed away. If it 

were not for my family savings, the structure of our company would have drastically changed, 

or worse, possibly lost our business. I believe that a full repeal of the estate tax is necessary to 

keep family-owned businesses in business. 

II. Small companies often do not have the resources in-house to manage the practical 

and strategic aspects of exploring and entering foreign markets. 

Promoting federal government services available to small businesses must be increased. The 

services, expertise, knowledge and dedication from representatives of the Foreign Commercial 

Service, Foreign Agricultural Service, Small Business Administration and many others are first 

class, but I can attest that most small businesses don't know about them, nor do they have the 

first clue as to how to take advantage of these programs. 

The Foreign Agricultural Service has been particularly instrumental to the confectionary 

industry through their many resources including the Market Access Program (MAP). The MAP 

program is a grant system that provides funds to companies and associations in the agriculture 

sector in order to increase international sales. The MAP program can fund registration and 

travel costs for trade shows, various market research, trade servicing, and technical information 

activities in order to help companies navigate the international marketplace. This public/private 

partnership is vital to the development of new markets and has been responsible for increased 

global sales of U.S. confectionery. Costs such as a $10,000 package/labeling change is a 

nuisance for a big firm; but it can be a show stopper for a smaller company. With MAP 

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assistance companies have more flexibility to pay such costs if they are not using their own 

funds for issues mentioned above. 

MAP funding is currently available to small businesses for five years per market. However, MAP 

makes no distinction between the export markets of Panama versus China. Panama is a small 

country and a five year investment in Panama may be all that is needed. We believe the future 

global marketplace resides in China, India and Russia, and these countries represent several 

markets rather than just one. If a company invests in one of the four distinct areas of China, 

they will exhaust the MAP funding program before being able to expand and establish sales in 

other areas. The MAP program should be amended to split large markets, into submarkets. 

Additional help is stili needed. Part of doing diligence before entering a new market consists of 

performing feasibility studies and understanding the market potential for new products. For a 

small company however, this can be a daunting, time-intensive, and expensive task. Without 

insights into the market size, competition, distribution channels, and trade structure, a 

company could be entering uncharted waters and often times end up making bad business 

decisions because they didn't have adequate information up front. The Foreign Agricultural 

Service's Global Agricultural Information Network provides excellent information about global 

markets - sizes, competitors, and regulations and is a good starting place for small companies 

like mine. This is a fantastic and free service but many companies in my industry are not aware 

it exists. 

The FAS reports are a great launching pad to learn about foreign markets, but then on-theground intelligence and assistance is needed to take the process further. The US Department of 

Commerce has a "Gold Key" program for the manufacturing and service sector that combines 

both market research and personal assistance that I believe could be a good model for the 

agriculture sector. This program helps businesses from start to finish, and takes them from 

market exploration to in-person business meetings that they arrange. 

Exporting to a new market requires a commitment and investment that is difficult to make for a 

small company. At Goetze, I don't have one individual who is solely responsible for growing our 

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export opportunities separate from our domestic sales opportunities. Frankly speaking, I 

believe to adequately engage in a particular export market, I would need to hire several fulltime employees - without a guarantee of success. I would need a dedicated team just to help 

with the basic steps of obtaining proper permits, registering products, filling out bills of lading, 

understanding labeling requirements and adhering to ingredient restrictions. Additionally I 

would need other personnel to understand the market dynamics in terms of retailers, 

distribution, brokers, etc. At Goetze, I would love to hire more people, but with rising costs and 

regulatory burdens, these are investment risks that I struggle with. 

Acquiring small business loans and credit guarantees continues to be an issue as well. Often 

times companies require cash in advance or a guarantee or letter of credit. Programs like the 

Export-Import Banks Global Access are a good start, but need additional marketing in order for 

businesses in the real world to be aware of them and know who are the partnering banks and 

financial institutions that can provide those loans. 

Finally, it would also be worth considering a flexible approach to the definition of small 

business for industries like mine who are consolidating and merging. Often times two small 

candy companies who are not proficient in exporting will merge, and then no longer meet the 

threshold of a small business. These companies often still operate as two different businesses 

and product brands but have no expertise in exporting. Once this happens, they are no longer 

able to take advantage of various resources and programs (like MAP) that can assist in exports. 

III. Larger policy issues impact the ability of confectionery companies to export. 

Trade Agreements: The U.S. confectionery and chocolate industries have made free trade and 

maintaining an open US market a key operating principle for over 25 years. America cannot 

have a growing economy or lift wages and incomes of our citizens unless we continue to reach 

beyond our borders and sell our products to the 9S percent of the world's population that live 

outside the United States. The National Confectioners Association estimates that our industry 

could see more than $14.5 million in increased U.S. export sales, if tariffs were reduced to 10 

percent or less to our top 17 export markets. 

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The industry has maintained this free trade stance in spite of excessive raw material costs for 

sugar and dairy, which result from u.s. domestic price support programs and tariff and nontariff barriers that block U.S. access to these commodities at world prices. Our industry pays 2-

3 times the world price for these key inputs, incurring hundreds of millions of dollars in 

additional costs each year. The risk of competing with both sugar prices and severe restrictions 

on imports needed for an under-supplied domestic market certainly doesn't provide incentives 

for companies to operate in America. 

The National Confectioners Association strongly supports the President's National Export 

Initiative (NEI) to double US exports, and the most efficient way to do this is through 

Congressional approval and the timely implementation of the pending free trade agreements 

with Korea, Colombia and Panama. These high-standard and commercially meaningful trade 

agreements will help level the playing field, create new market access opportunities, and 

stimulate job growth. We also see opportunities for candy exports within the Trans Pacific 

Partnership free trade agreement. 

Korea remains the third largest export market for U.S. confectionery products. U.S. exports of 

most sugar confectionery and chocolate confectionery to South Korea will be duty free in S 

years after implementation of the proposed FTA with Korea. Equally important, U.S. 

confectioners will be able to maintain U.S. market share over EU confectioners that now benefit 

from preferential access into Korea as a result of the recently implemented EU-Korea FTA 

(implemented July 1, 2011). Every day that we wait to pass the FTA with Korea, the U.s. 

confectionery industry is losing market share to our European competitors. 

The U.s.-Colombia FTA will provide some relief to a U.s. sugar-using industry that continues to 

face an especially tight domestic sugar supply environment after implementation of the new 

restrictions on sugar imports that were added in the 2008 farm bill. The Colombia FTA provides 

a minimal amount of additional U.s. sugar market access, but it is nevertheless important to 

have sugar included in the agreement to further the principle of comprehensive agreements for 

future bilateral and multilateral trade negotiations. Since the U.S. is a net-deficit producer of 

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sugar, U.S. users of sugar welcome opportunities for access to additional sugar imports. 

Pursuant to the Colombia FTA, the U.S. will be able to import an additional 50,000 metric tons 

of sugar above the existing tariff-rate quota (TRQ) in the first year of the agreement, and this 

amount increases by 1.5 percent for years following. 

Panama is the sixth biggest export market for confectionary exports, selling close to $27 million 

to that country last year. Even though the U.S.-Panama FTA provides for only a small amount of 

additional sugar imports from Panama, this agreement is important because of the export 

growth potential. Between 2009 and 2010, confectionary exports to Panama increased 71 

percent. Additionally, this FTA will allow Panama to send another 6,000 metric tons of raw 

sugar to the U.S. and this sugar TRQ increases by 60 metric tons annually for 10 years. 

The Trans-Pacific Partnership (TPP) Agreement also offers an opportunity for our sector to 

reduce direct input costs and remove tariff barriers on our finished products. We hope the TPP 

can correct the omissions ofthe U.S.-Australia FTA when it excluded sugar. This regional FTA 

presents a renewed opportunity to ensure all products are on the table and increased access 

for all commodities, including sugar and dairy, if achieved. The TPP could eliminate tariffs as 

high as 30 percent (in the case of Vietnam) on finished confectionery products in some markets 

to be eliminated in no more than 5 years. In order to compete with the Asia Pacific region, it is 

imperative that U.S. confectioners gain preferential access via FTAs in the region. 

The high cost of inputs in the U.S. along with the added barrier of high tariffs on finished 

chocolate confectionery and sugar-confectionery in some key markets create even more 

challenges to the u.s. confectionery sector. As examples, tariffs continue to be high (Le.20 

percent or higher) in key export markets including Brazil, Argentina, India, Egypt, EU (complex 

tariffs), Thailand, South Africa, Japan, Russia. See NCA's Tariff Comparative Chart for specific 

examples: http://www.candyusa.com/Sales/TradeRegulations.cfm ?navltemNumber-2783. I 

point this out to show the "double whammy" that U.S. confectioner's face -- high cost of inputs 

when manufacturing in the U.s. and high tariffs upon export from the US. 

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Mexico is our second largest export market and $40 million dollars' worth of chocolate and 

chewing gum were included on Mexico's retaliatory duty list as part of the U.S.-Mexico trucking 

dispute. We applaud the recent MOU signed between the U.S. and Mexico earlier this month, 

and look forward to resuming normal trade conditions with Mexico. It is incongruent with the 

President's NEI to lose the benefits of NAFTA with one of our largest and most important 

trading partners. After signing the MOU, duties on chocolate and chewing gum into Mexico 

were immediately reduced from 20% to 10%; however, we're still paying 10% duty to a market 

where we have benefitted and made business decisions based on duty free access for 20 years. 

We urge Congress to finish resolving the trucking dispute and do not allow politics to interrupt 

and damage our important trade relationship with Mexico. 

Non-Tariff Barriers (NTB's): NTBs are especially harmful to smaller companies because they can 

intimidate companies from competing in the international market place, and they add to fixed 

costs. 

Sulfuryl Flouride (SF): is currently the only known fumigant used on imported cocoa beans. The 

EPA is proposing to phase out SF due to health concerns about excess fluoride exposure in 

some populations. Removing SF use as a fumigant on cocoa beans will not address the health 

risks posed by exposure to fluoride, as the major contributors of fluoride exposure are drinking 

water and toothpaste. U.S. chocolate manufacturing facilities rely on imported cocoa beans 

that require SF fumigation. This is a critical issue for the cocoa processing industry, which is also 

a part of NCA's membership, and losing SF may mean moving jobs off shore and importing 

semi-finished chocolate into the U.S. It will also create higher input costs for our domestic 

chocolate manufacturers and confectioners like Goetze that use cocoa ingredients. The NCA 

has submitted comments to the EPA urging the agency to consider alternative administrative 

procedures. Nonsensical decisions like this by government agencies have real consequences 

that will ultimately affect the price of our products and again, make it more difficult for us to 

compete globally. 

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Importance of science-based food policy and U.S. leadership: Our industry is also concerned 

with a number of export markets that have proposed standards for cocoa, chocolate and 

confectionery that are not in line with the Codex Alimentarius (standard system). When 

international standards are proposed or revised, they should be in line with Codex standards 

which protect the health of consumers and ensure fair trade practices in the global food trade. 

The U.S. must continue to playa strong leadership role within Codex to assure a rational, 

science-based approach is maintained with international standards. 

One market that has largely virtually been eliminated for U.S. confectionery exports is the 

European Union and this is due primarily to non-tariff trade barriers. The EU requires unique 

labeling of products containing certain artificial colors and other labels if ingredients are 

derived from genetically modified plants. Considering that U.S. corn and sugar beets are grown 

using modified seeds and that corn sweeteners and sugar are basic ingredients of candy, most 

U.s. produced candy would require special labeling in the EU. These requirements are clearly 

inhibiting US exports, and other countries in Asia and the Middle East have threatened to follow 

EU's lead. 

We appreciate the role FAS and FDA has played in helping to establish science and risk based 

policy approaches to global regulation and urge their continued engagement on these 

important issues. 

IWG: The Inner Agency Working Group (iWG) is comprised of USDA, FDA, FTC, and CDC and has 

proposed a set of voluntary marketing guidelines aimed at children and adolescents that could 

dramatically impact how we do business domestically and lead to the development of 

detrimental international standards. The goal of the guidelines is to limit the type of products 

that children and adolescents are exposed to in order to combat childhood obesity. 

Goetze and NCA's other member companies support responsible advertising and marketing, 

especially when it comes to children. The industry has demonstrated this commitment over the 

last five years. The largest confectionery companies in the u.s. have stopped advertising candy 

to children under the age of twelve. 

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The IWG Proposed Guidelines are over reaching. The nutrition criteria along with the age 

groups and scope of marketing activities they cover do not acknowledge candy's unique role in 

the diet. As virtually no candy could meet the proposed nutrition criteria and reformulation is 

not a reasonable option for the candy sector, the entire confectionery category would be 

subject to the full scope of marketing restrictions -thereby causing significant and damaging 

changes to the industry without any evidence of change. 

We know that recent studies have shown that 60 percent of today's children don't meet 

average fitness standards. Goetze's is concerned about this trend. Only two to three percent of 

calories in the average American's diet come from candy. Eaten in moderation, Caramel 

Creams® and Cow Tales® can fit perfectly with a healthy diet and lifestyle. Michelle Obama's 

"Let's Move" campaign is a good example of responsible consumer practices and a balanced 

diet, which we support. With activity, candy and treats can be consumed in moderation. 

Given the uncertainty of the effectiveness of these guidelines and their ability to harm the 

business practices and traditions of the candy industry, NCA has requested the IWG conduct a 

study to test the impact of the proposed guideline prior to requesting industry participation. 

Conclusion: Owning and running a small confectionery company in this day and age is as 

challenging as ever. As you have heard from my colleagues on this panel, there are many 

bureaucratic obstacles to overcome in order to break into the international marketplace and 

grow exports. I would like to say that our National Export Strategy is working, but with the ever· 

growing obstacles and challenges to businesses, I am not sure that I can. I believe that we can 

grow U.S. manufacturing and find customers all over the world, but only if we consider a careful 

balance of reduced domestic regulatory burdens, smarter supply management, increased 

marketing of government resources, and have the policies in place that allow our products to 

enter new markets. 

When a product is labeled "Made in America", that message resonates around the world. Our 

industry has a long tradition of making fun, delicious candy for everyone to enjoy. We are also 

more productive than we have ever been, and continue to make the highest quality products in 

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the world. Candy is a critical piece of Americana, and with more than 65 percent of American 

candy brands loved by consumers for over 50 years, our reputation precedes us. With these 

traditional brand recognitions and the most innovative new candies coming to market, the 

confectionery industry is primed for exploding into the international marketplace. 

Despite the many challenges I have outlined above, The Goetze's Candy Company and the U.S. 

confectionery industry have the will to compete internationally. Investing in the export 

potential of America's small and medium-sized businesses could bring dramatic gains and 

stimulate the economy. Like my fellow small and medium size confectioners, Goetze is a true 

American success story. I would love to share this story and Goetze caramels with the rest of 

the world. 

Thank you for your time, I look forward to answering any questions you may have. 

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Statement by Maurice Kogon 

Before the 

U.S. House of Representatives Committee on Small Business 

Impact of U.S. National Export Strategy on Small Business 

July 27, 2011 
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Chainnan Graves, Ranking Member Velasquez, and Committee members. Thank you for the opportunity 

to testi fy here today. 

My name is Maurice Kogon. 1 have worked in the international trade field for over 50 years - at the 

federal and state level, with a U.S. multinational, as a small business owner, and as an educator. 

My testimony today makes three basic points about the National Export Initiative (NEI) - specifically, 

does it adequately meet needs of the thousands of small businesses that are or could be exporting. In my 

view, it is not yet as relevant or as helpful as it could be to meet needs of this vital constituency. 

My first point. The NEI has an ambitious goal to double exports in five years, but not a strategy that will 

get us there. The strategy relies too much on global economic factors we cannot control, while the 

programs we can control are not focused enough on the small businesses that most need export help, and 

not enough on the services they most need at critical early stages. The NEI's export promotion programs 

are basically only what the government can afford, not on what can best help small businesses at each 

stage of their export development. Far too many small businesses with export potential are left to fend for 

themselves. Claims that the NEI is "on pace," based on the 17% export increase in 20 I 0, belie the reality 

that most of that gain came from recovery in world import demand and would have occurred anyway. 

My second point is that the NEI does not adequately address what I see as our national export "paradox," 

- that while we are a very large exporting nation, we are not a nation of exporters. Roughly 85% of U.S. 

manufacturers do not export at all, and over half of the 15% that do export sell only to Canada or Mexico. 

The NEI addresses the half of the 15%, the "low-hanging fruit," but essentially writes off the far larger 

group of potential new exporters in the 85%. U.S. exports would increase significantly if we could get 

more of the 85% into the export base. For that, in my view, we need to go beyond a low-hanging fruit 

strategy. We need what I call a "fertilize the tree" strategy to "optimize" exports; that is, to increase 

exports to our full national potential and capacity as a nation, at whatever level that might be. An 

optimization strategy would focus not just on getting existing exporters into new markets, but would also 

cultivate the far larger group of potential new exporters that could most contribute to long tenn export 

expansion. It would have two interrelated goals: 

First, we need to increase U.S. exports as a percent of GDP. Although we are the world's third largest 

exporter, our exports-to-GDP ratio lags well below our major world competitors. For example, Germany 

is at 45%, we are at just 13%. Our competitors, with comparable economies and competing in the same 

global marketplace, are more fully exporting to their capacity. We have the potential to close this gap. We 

are after all the manufacturing powerhouse of the world and the world leader in innovation and 

technology. And, most of our manufacturers are not even exporting yet. 

Second, we need to increase the number of new exporters. We could come much closer to our national 

export potential if more non-exporters were to start exporting. We now have roughly 280,000 actual 

exporters in the U.S. As noted, they account for only 15% of all manufacturers. Many of the 85% nonexporting manufacturers may well have export potential. Why? For one reason, they have succeeded in 

the world's toughest market, our own, against the same competition they would face in foreign markets. If 

they can sell competitively here, they have the potential to export to at least one, or perhaps even many, of 

the roughly 200 markets outside the U.S. 
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If my suggested priority on new exporters makes sense, why is the NEI so narrowly wedded to the lowhanging fruit? The reason is, and I agree, they can't afford to do both. Limited resources should be 

reserved for the export-ready firms able to make the best use of their trade promotion and matchmaking 

services. But that misses the larger point. The new-to-export sector is too important to ignore or write off. 

The solution is obvious. It is not to stretch federal resources further, but to collaborate with non-federal 

partners well equipped to fill the gap. 

This gets to my third and final point -- the need for systematic collaboration with non-federal partners. 

The vast network of state and local export assistance organizations could be part of an overarching export 

optimization strategy to both fertilize the tree and pick the low hanging fruit. Centers like mine and others 

are at the grass roots of potential new exporters. We have the expertise and resources and are ready and 

willing to engage in a meaningful collaboration. 

Unfortunately, I don't see a federal mindset, plan or mechanism to collaborate. The NEI is more 

concerned with internal collaboration within the TPCe. [t gives abundant lip-service to collaboration with 

others, but not much else. Here's what real collaboration would look like in my view. Non-federal 

partners would have a seat at the TPCC table. They would help plan and develop a holistic export 

optimization strategy that shares data on potential and existing exporters, jointly recruits prospects, 

reconciles programs to reduce wasteful duplication and overlap, and coordinates the seamless delivery of 

complementary services to both new and existing exporters. 

Before concluding, let me emphasize that my concern is with federal strategy, not with the actual 

programs. They do increase exports, and do have a high ROI to justify their cost. The only problem is that 

they don't go far enough and don't meet enough small business needs. 

Thank you again for the opportunity to share my thoughts. My written submission elaborates on all my 

points today, including specific needs of small business through all export stages, from start-up to getting 

paid. 

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Matrix 1 

Export Need Purpose/Nature of Assistance Assistance Tools/Resources Team P

Build Export Capacity 

ImDfove Comuetitiveness 

Situation analysis/SWOT Assess client production processes, management Needs/competitiveness assessments SIDO, ITAC

systems/controls, and business practices, Identity SBDCs, SC

structural strengths and weaknesses. Recommend 

improvements to increase global competitiveness. 

Solidify Fundamentals 

Production processes Provide advice//training/technical assistance to increase Advice/training in continuous MEP, SCOR

productivity. improvement (lean manufacturing, 

Six Sigma, TQM, etc.) 

Business practices Provide entrepreneurial advice/training to improve/adapt Advice/training in SWOT analysis, DECs, SBD

business practices for export. business planning, best SCORE 

entrepreneurial practices 

Operating capital Provide or guarantee loans to commercialize high-tech Export development loans, pre-export YCs/Angels

prototypes for export and for pre-export working capital. loans/guarantees. Exim, FAS 

DevetoD EXDort Readiness 

Assess export potential & readiness Assess export market potential for client products and ECC/CITD Export Readiness SlDO, !TAC

adequacy of company's commitment, resources) Assessment, CORE, Others? USEACs, F

how, and marketing methods. Identity strengths and 

weaknesses and recommend improvements to increase 

export potential and readiness. 

Enhance export potential & readiness Provide advice/training to increase product How-to-export counseling; export SlDO, USE

competitiveness/receptivity abroad (pricing, quality, guides, seminars and courses IT ACs, DE

branding, adaptability, etc.). Provide advice/training to colleges, tra

increase company's export motivation, confidence, and 

compelency (knowledge, skills and abilities. 

organization

Get/Use Help Trade assistance network Provide client service through collaborative Partner/collaboration agreements USEACs, F

export assistance network at all levels (governmental, defining roles, available services, and SBA, SlDO

academic, NGO, private, etc.). Refer clients to partner client entry and handoff points. WTCs 

services as needed. 

Trade assistance resources Provide seamless acceSs to needed sources of trade Compatible client databases & USEACs, F

funding, information, contacts, etc. Refer clients to directories; shared access to partner SBA, SlDO

sources as needed. Web sites. WTCs 

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Matrix 1 

Export Need PurposelNature of Assistance Assistance ToolslResourees Team P

Develop Export Markets 

Identify Best Markets 

Market research/analysis Conduct research to identify!assess best markets, market ClTD/BMRs. Flexible Market USEACs, S

segments, and market dynamics (business Research. Partner Web sites and other ITACs 

customs/practices, competition, market access, etc.). sources of market targeting data 

(trade statistics, market surveys). 

Develop Entrv Stratellies 

Market Strategy Planning Assist clients to develop export market plans (EMPs) EMP templates. Partner Web sites USEACs, S

that include recommended strategies. actions and and other sources of market ITACs 

budgets for distribution. pricing, promotion, and product entry/marketing mix data (CCGs, 

adaPtation in each target market. market surveys). 

Implement Entry Strateeies 

Find Partners (Buyers/Distributors) Disseminate trade leads; refer clients to on-line trade TOP, FAS & other trade-lead sources. USEACs, F

lead systems. Help clients find interested and qualified IPS, Gold Key, SIDO, & other ITACs, WT

overseas agents/distributors/other paItners. Help clients repfind services. ICP & commercial 

screen buyers and agent/distributor prospects and credit reporting services. 

protect themselves in partner agreements. Qualifications checklists & sample 

partner agreements. 

Promote Export Sales Assist clients to increase global and/or target market CNUSA, Export Yellow Pages & USEACs, P

exposure for their company and products by helping . other exporter databases/directories. ITACs. 

them develop/globalize their Web sites; list in export Overseas & IBP trade shows. 

directories/databases, and take part in trade events that Outbound & inbound trade missions, 

reach foreign buyers/distributors. catalog shows, FUSE, single 

companv promotions, etc. 

Market Promotion Financing Provide access to financing for market development, FAS programs (MAP); SBA Export PAS, SBA. 

promotion, business travel, trade shows, etc. Express,()thers? __ ---- ----

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Matrix I 

Export Need Purpose/Nature of Assistance Assistance Tools/Resources Team Par

Make Sales/Get Paid 

Close the Deal 

Respond to inquiries Assist clients to develop materials for Export counseling/seminars & USEACs, SlOO

timely/professional response to export inquiries workshops. Sample response 

letters. 

Quote prices (INCOTERMS) Advise clients on techniques and proper use of Export counseling/seminars & USEACs, SIDO

INCOTERMS to quote prices. workshops. Sample price 

calculation/quote sheets. Sample 

Proforma invoices. 

Negotiate sales terms Advise clients on options & pros/cons of possible price, Export counseling/seminars & USEACs, SIDO

credit, payment & delivery terms to meet the workshops. 

competition. Advise clients on techniques for 

negotiating terms and closing deals. 

Finance Sales/Get Paid 

Payment methods/services Advise clients on the range and pros & cons of export Export counseling/seminars & USEACs, SlOO

payment options, from cash in advance to open account. workshops. Export finance guides. SBA, SBDCs, 

Advise clients on range of export financing options, commercial ba

including pre-export, transaction and post-transaction 

financing. Advise clients on risk mitigation options and 

services, including export credit insurance and factoring. 

Payment sources/aids Refer clients to sources of export finance and risk Export Working Capital Guaranty Exim, SBA, OP

mitigation services. Assist clients to prepare applications Programs, Medium-and long-term Commercial ba

for export financing. Work to simplify procedures and export financing. SME and export credit in

expedite processing of export financing applications. environmental export financing, brokers, factors

Export credit insurance. Foreign 

buyer financing. Countertrade. 

Factoring & forfaiting 

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Matrix 2 

Illustrative Seamless Service Flow 

1 2 3 

Export Assistance Activity Coordination Facilitators Start Point Hand-Offs/Referrals To 

Initial client intake Common or compatible intake forms Any partner Other appropriate parlner(s) 

Create client files/databases Common or compatible databases Any partner Other appropriate partner(s) 

Assess needs for assistance Compatible/shared surveys Any partner Other appropriate partne!is) 

Competitiveness assessments Standard outline Client's choice or as partners may agree MEP -type organizations 

Export readiness assessments Standard diagnostic tool Client's choice or as partners may a 1ree CITD/ERA 

Export counseling/consulting Complementary topics covered Client's choice or as partners may agree CITDs, USEACs, smos, ITACs, ISB

Export training Complementary training Client's choice or as partners may agree USEACs smos ITACs ISBDCs 

Market research Access to partner databases Client's choice or as partners may agree USEACs smos, IT ACs, ISBDCs Market planning Standard template Client's choice or as partners may agree USEACs, SIDOs, ITACs, ISBDCs 

Marketing & promotion Joint planning/marketing Client's choice or as partners may agree USEACs, FAS, smos, ITACs 

Trade leads Shared access to leads Client's choice or as partners may agree USEACs, FAS, SlDOs,WTCs 

Matchmaking/partnering Based on markets covered & costs Client's choice or as partners may agree USEACs, smos, ITACs, WTCs 

Business travel facilitation Based on markets covered & costs Client's choice or as partners may agree USEACs smos, !TACs, WTCs 

Regulatory compliance Enforcement agencies, Infllawyers 

Documentary compliance Freight forwarders 

Cargo delivery Freight forwarders, carriers 

Marketing financing SBA/SBDCs, USEACs, FAS, 

Financial assistance SBA/SBDCs. Others? 

Pre-export working capital Exim, SBA, commercial banks 

Transaction financing Exim, 

Export credit insurance Exim Credit insurance agencies 
74 


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Testimony of Wade Merritt, 

Secretariat: 

444 North Capitol, NW, Suite 401 

Washington, DC 20001 

Tel: (202) 624·5460 

Fax: (202) 624·5452 

Web: www,sidoarnerica,org 

Vice-President, Maine International Trade Center 

Vice-President, State International Development Organizations 

Committee on Small Business, U.S. House of Representatives 

"Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy Working?" 

July 27, 2011 

Chairman Graves, Ranking Member Velazquez, members of the Committee - thank you for inviting me to testify today. 

My name is Wade Merritt and I am the Vice-President of the Maine International Trade Center and I currently serve as 

Vice-President of 5100, the State International Development Organizations. SIDO is the premier association of state 

trade and export promotion agencies in the United States and it represents the interests of state international economic 

development programs. We have worked with many federal partners in attempts to increase awareness of small 

business needs and pave the way for the successful attainment of the President's National Export Initiative (NEI). I am 

very pleased to be able to share this message with the members of the committee. 

What I would like to do this afternoon is just take a few minutes to give you a little more background on what states do 

to promote exports, our view of the support needed from the federal government for small business' success, and our 

recommendations for improvements needed to successfully fulfill the goals of the National Export Initiative. 

Nationally, SIDO states currently boast a domestic staff of 300 with a total budget of over $83 million for international 

development. That's not a lot when compared to the overall budget for the U.S. Commercial Service, but our overhead is 

lower and we've become experts in doing much more with much less. 

Studies have shown that investing in export promotion is a reliable way to ensure a stable economic recovery, and is one 

of the best, most impactful ways governments can assist companies in making sales and growing their employment 

base. It is well-documented that companies which export their products grow faster, are more profitable, and pay 

higher wages to their employees. By doubling American exports, hundreds of thousands of new, higher wage jobs will 

be created for the citizens of our country. Following that logic, in his 2010 State of the Union address President Obama 

set as a goal that the nation's businesses should double their exports by 2015 - and that small and medium sized 

enterprises (SMEs) should lead the way. It is an ambitious goal that requires robust export development programs at 

both the state and federalleve!. 

In 2010, nearly half of all U.S. business profits came from exports. A 2006 World Bank study demonstrated that, on 

average, every $1 spent by countries on export promotion yields $40 in new exports. The study also found that 

countries with low levels of export promotion spending generated higher rates of return ($60 or more) when they 

increased their export promotion spending, but at a certain paint, nations will experience diminishing levels of return 

(such as most OECD countries). This is an important point as our country's export promotion spending is much closer to 

that of developing country levels las a percentage of our total exports) than to OECD levels - simply said, there is a lot of 

room to grow and the time to take advantage of this opportunity is now. 

SIDO's numbers show that this study has merit - the state of Pennsylvania, which boasts a healthy trade promotion 

program and has resources to regularly measure its own successes, reported 2010 returns at nearly 90:1 on the dollar. 

With numbers like these, investing in State and federal programs to promote should be an obvious priority and yet 

program budgets and resources are being cut at a time when we need them the most. 
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The numbers are sobering - in just two years, state support for trade development and investment attraction has 

dropped by 20"" - from $103 million in 2008 to just $83 million in 2010 (up from $70 million in 2009). In 2009, 84% of 

states suffered drastic cuts to their budgets and 69% of states saw additional cuts in 2010. Cuts have ranged in size from 

5% to 66%, and have directly affected the services offered to SME exporters because of the resultant staff reductions, 

foreign office closures, and other service eliminations. 

While states rely on the federal government for market research information, there are many services that states 

provide to small businesses that the federal government does not offer. Some states even offer grants to cover the cost 

of company participation at trade shows and other market promotion events, and although there is massive aid for 

agricultural exports, there is no program in place to assist manufacturers. Many states have partnered with federal 

government agencies in their domestic operations, offering subsidized office space and in-kind program assistance to 

local U.S. Export Assistance Center staff to provide an integrated set of services to small businesses. The most basic of 

services, business to business matchmaking, is offered by the US Department of Commerce as well as some state 

contractors. However, Commerce's "Gold Key" matchmaking program is constantly under threat of massive fee 

increases that would put its cost out of the reach of most SMEs. 

The states, working collaboratively with the federal government, are ready to assist in achieving the objective of 

doubling U.s. exports. However, as state trade offices are being called upon to provide ever higher levels of service, the 

current fiscal crisis has prompted governors and legislatures to make difficult budget choices. State governments are 

having to choose short-term budget fixes over proven long-term solutions - and, as I mentioned earlier, forgoing an 

investment with proven 40:1 returns for every dollar spent on trade promotion just isn't a choice that states should have 

to make. 

As part of the 2010 Small Business Jobs Act, Congress authorized funding for a 3-year State Trade and Export Promotion 

program through the US Small Business Administration that is now pOised to provide much-needed support for state 

trade offices and exporters. While the roll-out of the program has seen several delays as metrics have been revisited 

and the unexpected task of re-formatting and re-submitting proposals has been burdensome to limited state resourcesand I can attest that I have personally been wrestling that burden while Simultaneously preparing this testimony - the 

program has the potential to truly revitalize American exports. Simply stated, once STEP program funds are awarded, 

states will quickly be in a pOSition to enhance the services and assistance available to small and medium-sized exporters. 

SIDO strongly believes that there are several export promotion priorities that should be addressed and implemented in 

order to maximize the chances of success for the NEI: 

A revitalized US Commercial Service (USCS) will be essential to deliver on the NEI's commitment. Even the best 

funded state trade program can't provide global market coverage and all states depend on the worldwide network 

of Foreign Commercial Service posts to provide their businesses with market access in countries where the state 

has little or no independent resources. In the case of small states like Maine that have no overseas representation, 

Commerce's presence in foreign markets is absolutely key to our SME's successful market entry. Adequate funding 

must be provided to uses international operations to assure that timely support is available to assist U.S. 

companies. Small and medium sized firms hold the largest potential for export expansion, but also require the 

highest level of overseas support to enter new markets and diversify their exports. 

Over the last decade numerous overseas USCS positions and commercial offices abroad have been eliminated. 

5100 believes that adequately staffing foreign commercial posts and providing them with the tools to effectively 

perform their mission should be among the highest priorities of u.s. Department of Commerce. Especially critical, 

in our opinion, will be filling and retaining the locally engaged staff (LES) positions that have been eliminated or 

allowed to remain vacant for budgetary reasons. These specialists are people from the local area who are engaged 

in their local business communities, speak the local language, and are invaluable to inexperienced exporters trying 

to reach an international market. 
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State programs are well-positioned to compliment federal promotion efforts overseas by providing on-the-ground, 

practical assistance to US exporters. Further reductions in the USCS budget and overseas uses personnel 

deployment would adversely affect state trade programs and have a devastating effect on the ability of U.S. small 

and medium producers to export their products. 

Traditional markets will be essential in doubling exports. Exporters will need to access those markets that 

historically and currently are providing the best opportunities for success for U.S. exporters. While accessing 

emerging markets for U.S. products is a worthwhile objective, most SME exporters will find the best opportunities 

in traditional markets in such as the European Union and the Western Hemisphere. In recent years, key 

commercial posts in markets where our exporters have enjoyed a comparative advantage (such like Hamburg, 

Barcelona, and Amsterdam) have been closed. Canada, our largest trading partner and often the first export 

market for SMEs, has been gutted and has just one US commercial officer responsible for the entire country. Our 

support in these markets should be expanded, not reduced, and these offices should be reopened and staffed as 

soon as possible. 

Pricing for uses services, such as the Gold Key and International Partner Search Program, should be maintained at 

the current rate which is affordable for SME exporters. States pay for the services we receive and some states use 

up to a third of their trade budget each year to subsidize federal trade promotion services for their companies. In 

fact, the state of Florida is the single largest consumer of "Gold Key" trade promotion services in the country. 

These programs represent some of the tools most frequently used by SME exporters to enter new markets, 

Increasing the cost would be counterproductive to the NEI. In addition, implementation of a program offering 

financial support in the form of export grants for U.S. manufacturers, with equivalent resources to U.S. Department 

of Agriculture's Market Access Program, should be introduced to assist American manufacturers to enter the export 

business and/or diversify their exports. 

Increased support for the Small Business Administration's Office of International Trade is essential to the success 

of the STEP grant program. The federal government has provided the monetary resources necessary for SMEs to 

achieve the NEl's goal of doubling exports - now it's necessary to fulfill that commitment by affording the SSA the 

resources it needs to name a full-time associate administrator for international trade and supplement its staff with 

the numbers necessary to roll out this pilot program successfully and efficiently. 

An enhanced partnership between the USCS and state trade agencies to seamlessly deliver customer-focused 

services is critical to expanding the pool of successful U.S. exporters and promoting market diversification among 

existing exporters. Currently, there is no incentive for uses officers in the field to share information or successes 

stemming from collaboration with state trade officers. In order to better coordinate efforts and avoid duplicative 

services, there needs to be a mechanism for sharing metrics, tracking successes and identifying areas for 

improvement The uses and SIDO members, working together, can make a powerful team for providing better 

service delivery to mutual customers, the American SME, and potential exporters of products and services. 

American exports create and sustain millions of jobs in the U.s. and current prospects for expansion are excellent, but a 

collaborative approach that combines resources at the federal and state levels in a systematic and efficient manner is 

the only way the NEI will be successful. As our states are required to balance budgets annually, we are all too aware 

that federal budget reductions will require some painful decisions, but at a time when the Administration has rightly 

shone a spotlight on exporting products and services as a key to future prosperity, we would prefer that our federal 

partners look to us to find efficiencies and use those savings to expand services where possible, rather than make cuts in 

what may seem like a vacuum, but is actually a vital piece of a larger system. 

Thank you, members of the committee, for allowing me the opportunity to speak -I welcome your questions. 
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Hearing: "Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy 

Working?" 

July 27, 2011 

Follow-up Questions for Administration Officials 

Mr. Suresh Kumar 

Assistant Secretary 

U.S. Department of Commerce, Commercial Service 

Ms. Marie Johns 

Deputy Administrator 

U.S. Small Business Administration 

Mr. Christian Foster 

Deputy Administrator 

U.S. Department of Agriculture, Foreign Agriculture Service 

1. The National Export Strategy stated the Trade Promotion Coordinating Committee has 

developed a standard set of metrics to track the performance of the federal agencies. What 

is your primary assistance measure within your agency? And how do we know for sure 

your three agencies are not double counting and taking credit for the same service? 

2. One ofthe top trade obstacles voiced by small businesses is understanding the variety of 

foreign and domestic regulations. I noticed none of the 17 policy initiatives in the 

National Export Initiative focuses on this issue. How is your agency working to help 

small businesses navigate the regulatory challenges? And which agency is best positioned 

to have this responsibility? 

3. When measuring performance, do you have protocols in place that measure the return time 

for certain services for small businesses? And if so, how have you worked to improve the 

rate of return? 

4. Your agencies spend a lot of taxpayer dollars on technology and IT systems. How are you 

using technology such as videoconferencing and webinars, to increase efficiency reach 

and assist more small businesses? And do you coordinate your IT systems and share 

electronic resources among agencies? 
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Mr. Foster and Mr. Kumar 

5. Your agencies along with the State Department have offices overseas to provide direct and 

local assistance to U.S. exporters. How do you work together, and with the State 

Department, to divide and conquer your resources, in an effort to reach as many markets 

as possible? 
79 


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Chairman Graves 

Committee on Small Business 

Questions for the Record 

Mr. Christian Foster 

Deputy Administrator 

U.S. Department of Agriculture, Foreign Agriculture Service 

Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy Working? 

July 27, 2011 

I. The National Export Strategy stated the Trade Promotion Coordinating Committee has 

developed a standard set of metrics to track the performance of the federal agencies. What 

is your primary assistance measure within your agency? And how do we know for sure 

your three agencies are not double counting and taking credit for the same service? 

2. One of the top trade obstacles voiced by small businesses is understanding the variety of 

foreign and domestic regulations. I noticed none of the 17 policy initiatives in the 

National Export Initiative focuses on this issue. How is your agency working to help 

small businesses navigate the regulatory challenges? And which agency is best positioned 

to have this responsibility? 

3. When measuring performance, do you have protocols in place that measure the return time 

for certain services for small businesses? And if so, how have you worked to improve the 

rate ofretum? 

4. Your agencies spend a lot of taxpayer dollars on technology and IT systems. How are you 

using technology such as videoconferencing and webinars, to increase efficiency reach 

and assist more small businesses? And do you coordinate your IT systems and share 

electronic resources among agencies? 

5. Your agencies along with the State Department have offices overseas to provide direct and 

local assistance to U.S. exporters. How do you work together, and with the State 

Department, to divide and conquer your resources, in an effort to reach as many markets 

as possible? 
80 


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Rep. Bill Owens (NY-23) 

Committee on Small Business 

Questions for the Record 

Mr. Mitchell Goetze 

Goetze's Candy Company 

Bureaucratic Obstaclesfor Small Exporters: Is our National Export Strategy Working? 

July 27, 2011 

I. In my district we have a fairly successful small business candy maker, which I have had 

the opportunity to tour, that has two locations in Croghan and Carthage, New York. As a candy 

store owner yourself, can you tell me what percentage of your operating costs are devoted to 

purchasing basic commodities such as sugar and milk? Have you seen much price fluctuation 

for these goods since the economic crisis began in 20077 
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Rep. Bill Owens (NY-23) 

Committee on Small Business 

Questions for the Record 

Ms. Marie Johns 

Deputy Administrator 

U.S. Small Business Administration 

Bureaucratic Obstaclesjor Small Exporters: Is our National Export Strategy Working? 

July 27, 2011 

I. How many separate programs are there within SBA to assist small businesses in 

exporting and how much funding did each of these programs receive in the previous 

fiscal year, including the Office ofIntemational Trade? 

2. What is the amount of exports generated by small business that have received SBA 

assistance? 
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Chainnan Graves 

Committee on Small Business 

Questions for the Record 

Ms. Marie Johns 

Deputy Administrator 

U.S. Small Business Administration 

Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy Working? 

July 27, 2011 

1. The National Export Strategy stated the Trade Promotion Coordinating Committee has 

developed a standard set of metrics to track the perfonnance of the federal agencies. What 

is your primary assistance measure within your agency? And how do we know for sure 

your three agencies are not double counting and taking credit for the same service? 

2. One of the top trade obstacles voiced by small businesses is understanding the variety of 

foreign and domestic regulations. I noticed none of the 17 policy initiatives in the 

National Export Initiative focuses on this issue. How is your agency working to help 

small businesses navigate the regulatory challenges? And which agency is best positioned 

to have this responsibility? 

3. When measuring perfonnance, do you have protocols in place that measure the return time 

for certain services for small businesses? And if so, how have you worked to improve the 

rate of return? 

4. Your agencies spend a lot of taxpayer dollars on technology and IT systems. How are you 

using technology such as videoconferencing and webinars, to increase efficiency reach 

and assist more small businesses? And do you coordinate your IT systems and share 

electronic resources among agencies? 
83 


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Chairman Graves 

Committee on Small Business 

Questions for the Record 

Mr. Suresh Kumar 

Assistant Secretary 

U.S. Department of Commerce, Commercial Service 

Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy Working? 

July 27, 2011 

1. The National Export Strategy stated the Trade Promotion Coordinating Committee has 

developed a standard set ofmetrics to track the performance of the federal agencies. What 

is your primary assistance measure within your agency? And how do we know for sure 

your three agencies are not double counting and taking credit for the same service? 

2. One of the top trade obstacles voiced by small businesses is understanding the variety of 

foreign and domestic regulations. I noticed none of the 17 policy initiatives in the 

National Export Initiative focuses on this issue. How is your agency working to help 

small businesses navigate the regulatory challenges? And which agency is best positioned 

to have this responsibility? 

3. When measuring performance, do you have protocols in place that measure the return time 

for certain services for small businesses? And if so, how have you worked to improve the 

rate of return? 

4. Your agencies spend a lot of taxpayer dollars on technology and IT systems. How are you 

using technology such as videoconferencing and webinars, to increase efficiency reach 

and assist more small businesses? And do you coordinate your IT systems and share 

electronic resources among agencies? 

5. Your agencies along with the State Department have offices overseas to provide direct and 

local assistance to U.S. exporters. How do you work together, and with the State 

Department, to divide and conquer your resources, in an effort to reach as many markets 

as possible? 
84 


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Rep. Bill Owens (NY-23) 

Committee on Small Business 

Washington, DC 

Care Of: Caroline Rabbitt 

Monday. August 22, 2011 

House Committee on Small Business 

Caroline.Rabbitt@mail.house.gov 

I want to thank the Committee on Small Business for the opportunity to testify on July 27, 2011. 

I am in receipt of your question for the record and my response to such is as follows. 

Our commodity costs can range between 22%-35% of our product cost So roughly 1/3 of our 

product costs are directly driven by the input costs associated with raw materials like sugar and 

milk. Our commodity input costs are a critical component to company profitability, which drives 

our ability to be able to offset other manufacturing and employee costs. It is also important to 

note that not only have costs risen by an alarming rate over the last few years, the extreme 

market VOLITILITY has added an additional component to the purchasing of raw materials. 

VOLITllITY, based on crazy market conditions, plays a significant role in our ability as a 

manufacturer to be able to purchase our materials based on sound market information. We are 

often being forced to make purchasing decisions as a result of fear, anticipation, and gut 

reaction in order to book forward "coverage", and hopefully avoid even further run-up in these 

costs. We believe that a significant amount of this VOLITILITY is driven by speculators that 

NEVER TAKE TITLE TO THE PHYSICAL PRODUCT. These often uncapped and loosely 

regulated investment positions in our food supply have no positive impact on the cost of food, 

and inhibit US manufacturers' ability to compete in the marketplace against imported foods. 

This inability for US manufacturers to compete hurts job producing operations here in the U.S. 

and creates an environment that is just not competitive. The other result of these uncontrollable 

input costs is a sharp increase in the cost of food to U.S. consumers. We manufacturer 

100% of our candy exclusively in Baltimore, MD and do not have the luxury of cost averaging 

our input costs down by producing components or purchasing materials overseas. Small 

businesses like mine maintain and create Jobs here at home. 

To be specific here are some major raw material input costs and their percent of increase over 

the last several years. The seventh year used is 2012, as we have already booked some 

commodity purchases in this period, and are fairly confident where our costs will be. 

Gaetif! i ('Iildy (om!h1IlY, III( 3900 ftul Ml1numelll Slrllel Bcillmilre MD 21205 2YlW PnCIiI: 4lD 3422010 Fllx 410 522 7b81 / www91.1elwD!1dy(om 
85 


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Sugar 39"20% 

Dextrose 43"00% 

Soybean Oil 11750% 

Fructose 6540% 

Corn Syrup 6550% 

Milk 67,50% 

Whey 5050% 

how are 

be compete not only with the 

foods are manufactured overseas without the 

wonder why U"S" manufacturing Jobs have 

disappeared" " 

I am available for further questions and again appreciate the opportunity to share our story" 

Best Regards, 

,<~;\c,""'lQ 

Goetze 

Generation COinfectic,nel'v Manufacturer 

President Chief Operating 
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JOHN BODE LLC 

100 4th Street, NE 

Washington, D.C. 20002 

BY ELECTRONIC MAIL 

Honorable Sam Graves 

Chairman 

Committee on Small Business 

House of Representatives 

Washington, D.C. 20515 

Dear Chairman Graves: 

August 8, 2011 

My client, the American Fruit and Vegetable Processors and Growers Coalition, 

thanks you and your colleagues on the House Committee on Small Business for your 

focus on the importance of building job opportunities for American small businesses. 

Please find enclosed testimony of Ben Puehler, President of McDonnall Harvester 

and Parts, Inc. submitted for the record of the Committee's July 27, 2011 hearing on 

"Bureaucratic Obstacles for Small Exporters: [s our National Export Strategy Working?" 

The testimony expresses small business support for H.R. 2675, the Farming Flexibility 

Act of 2011, legislation recently introduced by Representatives Ribble, Walz, Pence, 

Baldwin, and others to allow farmers to opt out of the farm programs on an acre-for-acre 

basis to grow fruit or vegetables for processing. 

This bi-partisan legislation would reduce federal spending, increase American 

jobs and competitiveness, while allowing environmentally desirable crop rotations. 

Thank you for your consideration. 

Enclosure 

JWB:mhh 

Sincerely, 

~~ John W. Bode 
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STATEMENT FOR THE RECORD 

MS. MARION C. BLAKEY 

PRESIDENT AND CHIEF EXECUTIVE OFFICER 

AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA 

Introduction 

Bureaucratic Obstacles for Small Exporters: Is our 

National Export Strategy Working? 

House Small Business Committee 

.July 27, 2011 

Chairman Graves and Ranking Member Velazquez, thank you tor holding this important 

hearing. 

The Aerospace Industries Association of America (AlA) appreciates the opportunity to 

provide this statement for today's hearing evaluating how the administration and 

Congress support a critical national security and economic asset: the export 

competitiveness of the U.S. aerospace industry. AlA represents more than 350 member 

companies-the industry as a whole has a high-skilled, high-technology workforce of 

624,000. We operate as the largest trade organization in the United States that represents 

space systems, national defense, and civil aviation. Our industry consistently generates 

America's largest manufacturing trade surplus ($51.2 billion in 2010), but continuing this 

track record of success cannot be taken for granted. 

Why Do Aerospace Exports Matter? 

More than a third of the $214.5 billion in U.S. aerospace sales of civil, space, and defense 

products last year went to overseas customers. In these challenging economic times, it is 

necessary but not sufficient to highlight that these exports create and sustain high-skill, 

high-wage jobs. It is equally, if not more critical to recognize that these exports are 

necessary to sustain and increase the capacity for cutting-edge innovation in the U.S. 

industrial base. The parts and components used to develop, produce and sustain these 

systems sold overseas are sourced from thousands of small- and medium-sized 

companies who use this revenue to invest in their future global competitiveness. We 

must therefore continue to compete effectively in the international marketplace to 

expedite our economic recovery and set a future trajectory for even greater economic 

growth. 

Exports help AlA members provide the Americans defending our country and guarding 

our homeland with the best technology at the best price for the U.S. taxpayer. Exports 

support technology exchange, allowing our industry to leverage foreign innovation to 

make our own world-class products even better. Exports also lower unit costs for 

systems and components. In challenging economic times, overseas sales keep critical 
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2 

production lines open and available to meet the threats we face now and will face in the 

future. 

Aerospace exports also serve as a foundation for building key relationships and a shared 

future with important international allies and partners. American aviation products and 

services are at the forefront of providing to the world safe, reliable and environmentaIly 

responsible air travel. Our space industry connects the globe, helping us communicate, 

navigate and explore with other nations. As the United States asks its allies to take on 

greater responsibility in a shared effort to protect international security and stability, it is 

imperative that these key partners be equipped with and trained on the appropriate 

systems and technologies to ensure engagement and interoperability with U.s. and other 

coalition forces. 

Government and Congressional Activity Affecting Aerospace Exports 

The value of aerospace exports is certainly not lost on the members of this committee, or 

on other leaders on Capitol Hill and in the administration. Across all segments of our 

industry, the biggest asset we have in international competition is the advocacy and 

support provided by our government on behalf of our companies, large and smaIl. The 

consistent and sustained efforts of senior leadership in Congress, State, Commerce, 

Defense, Transportation (including FAA and NASA), Treasury, the Office of the U.S. 

Trade Representative, the U.S. Export-Import Bank-the list goes on and on-is crucial 

to ensure a level playing Held, opening up markets for U.S. products and winning those 

sales opportunities-particularly in the face of strong and determined advocacy from 

foreign governments on behalf of our international competitors. 

The Ex-1m Bank in particular plays a critical role in our economy. First, it supports the 

efforts of American small businesses to export their products worldwide. In 2010 the 

Bank supported $5 billion dollars in small business exports, a number which the Bank 

projects to grow in the coming years. Second, they support the manufacturers of hightechnology products including aircraft and other high-technology aviation products. The 

combination of the small number of companies capable of manufacturing these products, 

along with the current global economic crisis, means that it is essential that our 

companies are able to compete on a global scale. Foreign companies enjoy Ex-1m Banktype support from their governments when competing internationally, and it is imperative 

U.s. manufacturers receive comparable support. In addition, the Bank has generated over 

$4.5 billion dollars in profit over the last ten years, all of which has been repaid to the 

Treasury. 

All U.S. government agencies should consider the return on investment to our nation's 

economy when evaluating budget decisions that affect these important functions. The 

same care must be taken when considering the potentially adverse impacts of "Buy 

American" policies, visa review policies that create unique barriers for our industry, 

sanctions, cuts in Foreign Military Financing and other missed opportunities for 

international cooperation. "Selling American" (in particular the value of our products 
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3 

and partnership) to other countries is worth it, and there is no such thing as too much 

support or advocacy. 

Passage of the pending Free Trade Agreements (FTAs) between our close allies South 

Korea, Columbia, and Panama will also remove obstacles to trade. South Korea currently 

stands as the ninth largest market for U.S. aerospace exports-but that may not remain 

true for long. While the U.S. delays implementation of the FTAs, the European Union 

and Canada have moved forward with their Korean and Colombian free trade 

agreements. Reducing barriers to trade ensures that U.S. industry remains globally 

competitive. 

Export Control Modernization 

Presuming our industry is able, with the help of the U.S. government, to compete 

successfully in the international marketplace to win a contract, one of the last hurdles to 

cross is the U.S. export control system. It is this last hurdle that discourages many of 

AlA's small- and medium-sized businesses from pursuing export opportunities. 

Small- and medium-sized companies typically lack the resources and the confidence to 

navigate the complexity of the U.S. export control system or pay a high price for the 

expertise to do so. Failing to operate in compliance with the export control system 

carries both criminal and contractual liability. As a result, some companies avoid seeking 

export opportunities. Others routinely lose sales to foreign competitors because, as noted 

in the 2010 QDR, "our overly complicated system results in significant interagency 

delays that hinder U.S. industrial competitiveness." I Ultimately, the loss of export 

opportunities weakens the U.S. defense industrial base, a significant national security 

asset. 

The U.S. commercial satellite industry is a prime example of the negative effects of 

inappropriate export controls on a business. In 1999 Congress mandated that commercial 

satellites and their parts and components should be moved from the Commerce Control 

List (CCL) to thc U.S. Munitions List (USML) which is under the umbrella of the 

International Traffic in Arms Regulation (lTAR). The U.S. determined commercial 

satellites were a military grade technology even though the rest of the world treated their 

commercial satellites as commercial items. This determination led to increased 

bureaucracy and delays in getting U.S. products to market. As a result our international 

competitors took advantage of the inappropriate controls on U.S. technology and began to 

market their satellites as "IT AR-free." American companies saw their global market 

share go from more than 70 percent in 1995 to 25 percent in 2005 though we have 

recently seen some upswing in U.S. global market share. 

For far too long, the conventional wisdom about Congress was that it did not favor export 

control modernization because that supposedly meant relaxing controls. On the contrary, 

reforms that allow for the "right size walls around everything" will strengthen our 

national security interests by preventing our adversaries from accessing our technology 

I 20 I 0 Quadrennial Defense Review, page 83 
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and facilitating technology trade with our closest allies and trading partners. Our defense 

industrial base will also benefit from the economic opportunity. 

Short-Term Congressional Actions to Modernize U.S. Export Controls 

• Oversight of Reforms to the U.S. Munitions List. There is a growing consensus in 

Congress that the overly restrictive, "one-size-fits-all" control system applied to all 

levels of technology "designed or modified" for use by the military no longer serves 

our national security interests. The export of low- or no-risk technologies to our key 

allies and partners is hampered, creating avoidable costs and delay. Congress should 

carefully consider the new administration proposal to tailor controls on the more 

flexible CCL to accommodate low- or no-risk technologies from the USML, as well 

as impending recommendations from the Defense Department-led review of the 

USML that will detail the technologies that could be moved over safely and securely. 

• Returning authority to the Executive branch to determine licensing jurisdiction 

for commercial satellites. A healthy domestic space industrial base is vital to U.S. 

national security and foreign policy interests. Restrictive controls on all Commercial 

Satellite (COMSAT) technology have disadvantaged U.S. spacecraft and component 

manufacturers in the global marketplace-without necessarily having achieved their 

intended objectives. Taking action will safeguard access to critical space technology 

for the U.S. defense and intelligence community, strengthen America's ability to 

compete in the $144 billion global satellite market and reinforce our nation's global 

technological leadership. Industry is not seeking any change to current restrictions on 

exports of satellites to or launch from China, and supports Congressional review of 

adjustment to controls through the Section 38(f) notification process. The release by 

the administration of the Congressionally-mandated 1248 report outlining the 

appropriate control regime for COMSATs should serve as a guide for this discussion. 

• Amending current law so the State Department's Directorate of Defense Trade 

Controls can use fees it collects from industry to implement improvements in its 

licensing and compliance activities. In 2008, the Directorate of Defense Trade 

Controls (DDTC) substantially increased registration fees levied on all US 

manufacturers of IT AR-controlled items. At the time, DDTC said higher fees were 

needed to implement procedural reforms mandated by National Security Presidential 

Directive 56, issued in January 2008. While DDTC has adequate funds to move 

forward on modernization, current law restricts the uses to which DDTC can direct 

these funds, with surplus funds diverted to other purposes. Industry opposed the fee 

increase, and we continue to believe adequate funding should be provided through 

normal appropriations channels. For as long as these fees continue to be collected, 

they should be dedicated to modernizing DDTe operations. 

• Updating Congressional Notification Thresholds and Processes. Thresholds used 

to determine which export licenses must be notified to Congress have not been 

adjusted for inflation for more than thirty years. As a result, less-sensitive 

transactions are needlessly delayed. Industry also encourages dialogue between the 
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State Department and the committees of jurisdiction to develop procedures for more 

efficient and predictable review of licenses requiring Congressional Notification, 

including a documented procedure for out-of-session notifications. 

Conclusion 

The U.S. aerospace industry is second to none. The trade surplus our industry has earned 

and the hundreds of thousands of jobs it supports will playa critical role in our nation's 

economic recovery. Aerospace exports fuel the health of our companies and the 

competitiveness of the most innovative industrial base in the world. Our nation reaps the 

benefits of aerospace exports in the form of enhanced national security and economic 

growth. The government-industry partnership supporting aerospace exports is crucial, 

and cannot be taken for granted. In the absence of the type of dialogue and collaboration 

practiced by this committee and its leadership, it is easy to miss opportunities or even 

damage international cooperation with our friends and allies overseas. 

AlA commends the committee's interest in this topic. We stand ready to work with you 

and the Obama Administration to ensure that we continue to make meaningful progress 

toward removing unnecessary bureaucratic hurdles to the export competitiveness of the 

U.S. aerospace and defense industry. 
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blational Gotton_1 r:'W \'-oune. ~,; Of AMERICA 

Joint Statement Submitted by 

American Apparel & Footwear Association (AAF A) 

National Cotton Council (NCC) 

National Council of Textile Organizations (NCTO) 

Before the 

House Small Business Committee 

On 

The Reauthorization of the Export-Import Bank of the United StatesStakeholder Perspectives 

July 27,2011 

Thank you for providing the above organizations the opportunity to submit comments 

regarding "Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy 

Working?" We would like to focus our testimony on the Export - Import Bank of the 

United States and the pending reauthorization of the Bank. Our organizations strongly 

believe that today's hearing will help the Committee better understand how the ExportImport Bank (Ex-1m Bank) can better address the needs small exporters, particularly in 

the apparel and textile industry. 

The Ex-1m Bank could and should playa critical role in supporting and expanding U.S. 

jobs in the U.S. textile industry and in turn anchoring a strong Western Hemisphere textile 

and apparel supply chain. Regrettably, the Ex-1m Bank has failed to fulfill this role 

because the structure of Ex-1m Bank loans and guarantees do not reflect either the realities 

of the apparel and textile supply chain, U.S. trade policy, or today's global supply chains in 

general. 

At the direction of U.S. trade policy, the textile and apparel supply chain has developed 

across the Western Hemisphere and has evolved into a mutually beneficial relationship for 

both U.S. cotton growers and U.S. textile manufacturers as well as U.S. apparel importers. 
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The Free Trade Agreements and preference program areas in this Hemisphere for the most 

part grant duty-free access to the U.S. market for apparel assembled in the region as long 

as the apparel is made, either entirely or in part, from U.S.-grown cotton and U.S.-made 

yarn and fabric. As a result, all parties in the supply chain benefit - from U.S. cotton 

growers, U.S. yarn and fabric manufacturers, to apparel manufacturers in the region and 

ultimately the U.S. apparel brands and retailers. All parties are positioned to reap the 

benefits of U.S. trade policy. However, the supply chain is missing the necessary ingredient 

to truly make this supply a success - reliable supply chain financing for small exporters. 

Prior to this reauthorization, the Ex-1m Bank did very little to support supply chain 

financing, particularly for small textile exporters. This lack of financing has had the 

practical effect of suffocating domestic capital investment and job creation. Traditionally, 

the Bank has only considered the creditworthiness of the producer receiving U.S. textile 

industry exports and has failed to acknowledge that these components, once exported to 

Central and South America, return to the United States - to major U.S. brands and 

retailers - as finished goods. This policy has limited the financing opportunities at the 

Bank for the small exporters that comprise the bulk of the U.S. textile industry. 

Ex-1m Bank financing would facilitate and grow the Western Hemisphere apparel and 

textile supply chain by increasing the incentives for U.S. apparel brands and retailers to 

increase their sourcing from the region because such financing would make access to the 

U.S. cotton and textiles necessary to obtain the benefits under the various free trade 

agreements and preference programs easier, faster and more reliable. As a result, Ex-1m 

Bank financing would lead to increased exports of U.S. cotton, yarn, and fabric to the 

region. Those increased exports would support and grow U.S. jobs. 

U.S. Government - ''Yon Should Export to the Region. but We Won't Help 

You" 

The Ex-1m Bank bases much of its financing decisions on country risk. In the case of the 

Western Hemisphere apparel and textile supply chain, this "Country Limitation" policy 

outright eliminates the possibility of financing for some countries and severely restricts 

financing and/or significantly increases the interest rates for many others that are integral 

to this supply chain. 

As a result, the U.S. government strongly encourages U.S. textile manufacturers to export 

their products to Central America and the Dominican Republic through the incentives it 

negotiated through CAFTA-DR while at the same time saying that financing U.S. exports to 

half of the CAFTA-DR countries is too high of a risk to provide anything but the most 

limited loans and loan guarantees, at high interest rates to boot. For Haiti, a country that 

the U.S. Congress has deemed a priority through passage of the HOPE and HELP trade 

preference programs, the Ex-1m Bank basically says the country is off limits. 

Improving Products to Better Provide "Supply Chain Financing" 

While the amount. of paperwork and the timeline for approval remain major barriers 

preventing any small business from utilizing Export-Import Bank programs, for the 

Western Hemisphere apparel and textile supply chain we believe that the Export-Import 

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Bank must adapt to today's global supply chain. As in textiles and apparel, the United 

States doesn't just export final manufactured products anymore. Exports of U.S.-made 

goods today are just one part of a global supply chain. And these exports are, for the most 

part, generated by small businesses. In our industry, U.S. exports of cotton, yarn, or fabric, 

return to the United States as finished apparel or home goods. The programs offered by the 

Export-Import Bank should reflect these realities. 

House Bill Includes Textile Amendment to Help Address Industry Financing 

Concerns 

The House Financial Services Committee recognized the evolution of the textile and 

apparel industry global supply chain. Essentiallegislative text was included in the version 

of H.R. 2072 approved by the Committee on June 22, 2011 that would address three 

important issues: Bank Advisory Committee representation, reviewing the industry's use of 

Bank products and why or why not they are being used, and promoting Bank financing of 

transactions for the textile and apparel industry. 

The legislative text is explained in more detail below: 

1.) Representation on Bank AdvisoIY Committee: The textile industry will be included in 

the list of those to be represented by Advisory Committee members. The charter will 

read: "Sec. 3(d)(1)(B). Such members shall be broadly representative of environment, 

production, commerce, finance agriculture, labor, services, State government, and the 

textile industry." 

2.) Textile IndustIY Use of Bank Product~ - Analysis: The Bank will conduct an analysis of 

textile and apparel industry use of the Bank products, examining the impediments to 

the industry's use of the Bank as well as then number of U.S. jobs supported by the 

industry, and make proposals for how the Bank could provide financing to meet the 

needs of the industry, including proposals for new products. Within 180 days, the Bank 

will be required to submit a report to Congress that contains the results of the study. 

3.) Promotion of IndustIY Financing by the AdvisoIY Committee: The Advisory Committee 

will be required to consider ways to promote Bank financing of transactions for the 

textile industry, consistent with the requirement that the Bank obtain a reasonable 

assurance of repayment, and determine ways to increase Bank support for exports of 

textile components or inputs; and increase Bank support for the maintenance, 

promotion and expansion of jobs in the United States that are critical to the 

manufacture of textile components and inputs. 

4.) Annual Report: The determinations made by the Advisory Committee would be 

included in the Bank's annual report. In addition, the Bank would be required to report 

on the success of the Bank in providing effective and reasonable priced financing to 

U.S. textile and apparel industry for exports of goods manufactured in the United States 

and steps the bank has taken to increase the use of Bank products. 

It is our belief that the legislative text as included by the Financial Services Committee 

would be a great first step towards bringing much needed liquidity to the Western 

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Hemisphere supply chain at a time when major brands and retailers are considering 

shifting sourcing back to this region of the world. 

Conclusion 

Thank you again for holding a hearing on this important issue. We believe that a 

combination of changes in both Export-Import Bank policies and programs will position 

the Export-Import Bank to truly assist U.S. companies, particularly small businesses, and 

the hundreds of thousands of U.S. workers they employ, that playa critical role in today's 

global supply chains. We would be happy to discuss any of the above points in more detail 

with the Committee. 

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