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74–863 2002

TRADE PROMOTION AUTHORITY AND TRADE ADJUSTMENT ASSISTANCE: HOW WILL SMALL

BUSINESS EXPORTERS AND FARMERS BENEFIT?

HEARING

BEFORE THE

SUBCOMMITTEE ON TAX, FINANCE, AND EXPORTS

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED SEVENTH CONGRESS 

FIRST SESSION

WASHINGTON, DC, JULY 24, 2001

Serial No. 107–22

Printed for the use of the Committee on Small Business 

(

(II)

COMMITTEE ON SMALL BUSINESS 

DONALD MANZULLO, Illinois, Chairman 

LARRY COMBEST, Texas 

JOEL HEFLEY, Colorado 

ROSCOE G. BARTLETT, Maryland 

FRANK A. LOBIONDO, New Jersey 

SUE W. KELLY, New York 

STEVEN J. CHABOT, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

JOHN THUNE, South Dakota 

MIKE PENCE, Indiana 

MIKE FERGUSON, New Jersey 

DARRELL E. ISSA, California 

SAM GRAVES, Missouri 

EDWARD L. SCHROCK, Virginia 

FELIX J. GRUCCI, JR., New York 

TODD W. AKIN, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

BILL SHUSTER, Pennsylvania 

NYDIA M. VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

DANNY K. DAVIS, Illinois 

WILLIAM PASCRELL, New Jersey 

DONNA M. CHRISTIAN-CHRISTENSEN, 

Virgin Islands 

ROBERT A. BRADY, Pennsylvania 

TOM UDALL, New Mexico 

STEPHANIE TUBBS JONES, Ohio 

CHARLES A. GONZALEZ, Texas 

DAVID D. PHELPS, Illinois 

GRACE F. NAPOLITANO, California 

BRIAN BAIRD, Washington 

MARK UDALL, Colorado 

JAMES R. LANGEVIN, Rhode Island 

MIKE ROSS, Arizona 

BRAD CARSON, Oklahoma 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

PHIL ESKELAND, Deputy Staff Director 

MICHAEL DAY, Minority Staff Director 

SUBCOMMITTEE ON TAX, FINANCE, AND EXPORTS

PAT TOOMEY, Pennsylvania, Chairman 

STEVEN J. CHABOT, Ohio 

DARRELL E. ISSA, California 

EDWARD SCHROCK, Virginia 

TODD AKIN, Missouri 

FRANK LOBIONDO, New Jersey 

JIM DEMINT, South Carolina 

JOHN THUNE, South Dakota 

JAMES LANGEVIN, Rhode Island 

GRACE F. NAPOLITANO, California 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

DANNY K. DAVIS, Illinois 

ROBERT A. BRADY, Pennsylvania 

MIKE ROSS, Arizona 

SEAN M. MCGRAW, Staff Director 

(III)

C O N T E N T S 

Page 

Hearing held on July 24, 2001 ............................................................................... 1

WITNESSES

Aldonas, Hon. Grant, Undersecretary for International Trade, International 

Trade Administration .......................................................................................... 4

Williams, Don Lloyd, President & CEO, Princeton Medical Enterprises ........... 7

Hartman, Paul, Leesport, Pennsylvania ................................................................ 9

Gursahaney, Suresh, MicroAutomation, Inc. ........................................................ 11

Bujalos, William, Mid-Atlantic TAA Center Director ........................................... 22

Froning, Denise, Policy Analyst, The Heritage Foundation ................................. 24

APPENDIX

Opening statements: 

Toomey, Hon. Patrick ....................................................................................... 32

Prepared statements: 

Aldonas, Grant .................................................................................................. 38

Williams, Don Lloyd ......................................................................................... 52

Hartman, Paul .................................................................................................. 55

Gursahaney, Suresh ......................................................................................... 58

Bujalos, William ............................................................................................... 66

Froning, Denise ................................................................................................ 101

(1)

TRADE PROMOTION AUTHORITY AND TRADE 

ADJUSTMENT ASSISTANCE: HOW WILL 

SMALL BUSINESS EXPORTERS AND FARMERS BENEFIT? 

TUESDAY, JULY 24, 2001 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON TAX, FINANCE AND EXPORTS, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2 p.m., in Room 2360, 

Rayburn House Office Building, Hon. Patrick J. Toomey [chairman 

of the subcommittee] presiding. 

Chairman TOOMEY. The hearing will come to order. This afternoon the Small Business Subcommittee on Tax, Finance and Exports convenes to conduct a hearing on Trade Promotion Authority, 

the reauthorization of the Trade Adjustment Assistance Program 

and their respective impacts on small business exporters and farmers. 

One of the major issues of the 107th Congress is approval of 

TPA. The President was granted fast track authority, as it was formerly known, almost continuously from 1974 to 1994. The authority lapsed after the passage of Uruguay Round legislation that established the WTO, and it has not been renewed since. America’s 

competitors have clearly taken advantage of this situation in the 

interim by developing market share in countries with which the 

United States does not yet have favorable trade agreements. 

On May 10, 2001, President Bush outlined his 2001 legislative 

agenda, and TPA was a top priority. The President intends to use 

TPA for a new round of negotiations under the WTO, a Free Trade 

Area of the Americas agreement, and other regional and bilateral 

negotiations. The President said that he wants the authority by the 

end of the year. I hope we can deliver this authority to him before 

we adjourn for the August recess. 

Our training partners need to know the President’s negotiators 

speak for the entire United States. U.S. Trade Promotion Authority 

tells other governments that there will be no more negotiation once 

they reach an agreement with the President. Because Congress has 

the final authority to approve or disapprove, the President will 

work closely in collaboration with Congress during the negotiations. 

In my district in the Lehigh Valley, Pennsylvania, and throughout the United States, international trade is creating new economic 

opportunities in our cities and on our farms. American-made goods 

2

and services are recognized for their high quality, and they are in 

demand all around the world. From large companies like Air Products and Chemicals to small businesses like Olson Technologies in 

downtown Allentown, both employees and employers benefit from 

expanding trade opportunities. 

Export firms employ 42 percent of all workers engaged in manufacturing and wholesaling in my district, and employees working 

for exporters, such as those in my district, earn higher wages and 

better benefits. 

Further, trade has a particularly strong impact on the survival 

of our Nation’s farmers. Export markets are critical to U.S. farmers’ prosperity. According to the U.S. Department of Agriculture, 

agricultural export value is equivalent to about 20 percent of the 

value of farm production and 25 percent of farm income. 

In our second panel today, the Subcommittee will examine the 

reauthorization of the Trade Adjustment Assistance Program. The 

TAA program has two components, trade assistance for workers, 

which is administered through the Department of Labor, and trade 

assistance to farms, which is administered by the Economic Development Administration at the U.S. Department of Commerce. Authorization for the TAA program is set to expire September 30th 

of this year. 

My colleague from Pennsylvania, Phil English, has introduced 

H.R. 85, which would extend the authorization of the TAA program 

through 2006. H.R. 85 would increase the time available for dislocated workers to apply for benefits from 1 year to 2 years. The 

bill also provides authorization for technical assistance to qualifying firms who are seeking relief from lost jobs and sales due to 

foreign imports. In a more open trade environment, some firms and 

industries will grow; others will contract, merge or perhaps fail. 

And while adjusting to freer trade may be a healthy process from 

a macroeconomic perspective, which I believe it is, much like nonmarket—many other factors absent trade, such as changing technology, can have a rather harsh reality for the firms that experience the detrimental effect. So I want to commend Representative 

English, our Ranking Member Bill Pascrell, who is a cosponsor of 

this legislation, for recognizing and addressing the needs of our 

workers and businesses. 

I look forward to the testimony of the witnesses before us today 

and to a spirited discussion concerning these important issues. I 

want particularly to thank those who have traveled a long distance 

to be with us, including Mr. Paul Hartman, a farmer of my own 

home State of Pennsylvania, who clearly understands how TPA will 

benefit farmers throughout the Nation. 

And now I will yield to my friend from New Jersey, the Ranking 

Member Bill Pascrell. 

[Mr. Toomey’s statement may be found in appendix.] 

Mr. PASCRELL. Thank you, Mr. Chairman. I would like to welcome all of our guests who have taken the time to testify before 

this Subcommittee. 

Most of the world, there is an image that large multinational corporations dominate the world of international trade. We know that 

perception certainly does not match reality within the import-export sector. Small firms represent 97 percent of all companies 

3

working with the United States import-export marketplace. In fact, 

88 percent of the U.S. companies in the trade industry are small 

companies with 100 or fewer employees. As the Ranking Member 

of the Subcommittee on Tax, Finance and Exports, ensuring that 

these companies and their employees receive fair and balanced 

treatment in the world marketplace is of critical importance to me. 

I think it is important, Mr. Chairman, that we do stress that this 

is not a debate over trade or not to trade. We all believe in trade. 

This is a question of how far we extend ourselves. This is a question of how far we extend ourselves. And we know that in the past 

7 years, there have been 200 trade agreements without fast track. 

Many of those trade agreements have been a benefit to the Nation. 

Many of those trade agreements are still in effect. 

We are going to discuss two important programs concerning 

trade, as the Chairman outlined today: the trade adjustment assistance and fast track. One of these, I think, is of major benefit 

to small businesses. The latter, I have reservations about. The reality is that the issue of trade is not always industry- or businessspecific. Whether it is large or, in this case, small business, trade 

authority can have varied effects. Many believe that the textile industry in America fell victim to trade agreements that resulted in 

the United States textile companies shifting their U.S. jobs to Central and South America where wages, where labor laws and environmental requirements are weak at best.

I have my reservations about fast track. Of course, I see that the 

President has made it a trade priority to ensure that labor and environmental standards will not be included in our trade agreements. I feel that by ignoring international workers’ rights, we are 

not allowing but assisting in the mistreatment of millions of workers in sweatshops around the globe. Meeting the bottom line is apparently worth the cost of inhumane conditions. 

We are repeating the same mistakes that the U.S. remedied decades ago. If we can place issues such as copyright protection, fair 

trade protection and not allowing unfair subsidies and antidumping 

protections to be among the requirements, why can we not add decent labor and environmental standards? Why can we not also decide to pay out the average working folks? 

Any gain in expanded free trade must be weighed against the serious prospect of the loss of U.S. capital resources and, more importantly, jobs being sent overseas and to cheaper labor cost markets 

in the wake of NAFTA. 

And I might add, Mr. Chairman, that when we look at preNAFTA to the present moment, we have an imbalance—we have 

an imbalance in 1994 of $121 billion, and now it is $435 billion. 

And whether we are talking about goods balance or talking about 

service balance, that imbalance does not speak well for trade. And 

we need to be aware of which jobs are being lost and whether we 

are sacrificing them up on the altar of free trade or, as William 

Jennings Bryant might say, crucified to the cross of gold; in this 

case, crucified to the cross of trade. 

I am vociferously supporting the trade adjustment assistance. 

TAA Program provides assistance to eligible businesses and workers that have been disadvantaged by U.S. trade agreements. 

4

And on conclusion, Mr. Chairman, as I always refer to in any 

trade discussions, article 1, section 8 empowers the Congress to 

regulate commerce and foreign—with foreign nations and to lay 

and collect taxes, duties and impose excises. For 145 years Congress exercised this power through frequent enactment of tariff 

acts setting in detail duty rates for individual imports. I am not in 

the Congress, but he is. I have not been elected to surrender the 

constitutional responsibilities. 

Thank you, Mr. Chairman. 

Chairman TOOMEY. Thank you, Mr. Pascrell. 

Mr. Schrock, do you have an opening you would like to make? 

Mr. SCHROCK. No, sir, I don’t, but thank you, Mr. Chairman. I 

just want to welcome everybody, and it is rather timely we are 

talking about this. I just had folks in my office talking about this 

subject in the last hour, so I have a few questions that I am going 

to ask and am looking forward to your testimony. 

Chairman TOOMEY. Thank you. 

At this time I will recognize the Honorable Grant Aldonas, Under 

Secretary for International Trade, International Trade Administration. Thank you very much for being with us, and I welcome your 

testimony. 

STATEMENT OF GRANT D. ALDONAS, UNDER SECRETARY FOR 

INTERNATIONAL TRADE, INTERNATIONAL TRADE ADMINISTRATION, WASHINGTON, DC 

Mr. ALDONAS. Thank you, Mr. Chairman, Congressman Pascrell, 

and members of the Committee. Thank you for the invitation to 

testify. With your permission, I would like to make a brief opening 

statement and submit the balance of my testimony for the record. 

First of all, I want to say I was talking with Secretary Evans before coming down here, and he wanted me to reiterate his interest 

in working with the Committee and your staffs on trade issues, 

both sides of the aisle, for Trade Promotional Authority, but also 

what we do in terms of trade promotion generally at Commerce on 

behalf of our exporters. Most of our programs are dedicated to 

small and medium-sized exporters. That is where he has asked me 

to focus most of my attention in terms of my job, and we look forward to working with you in terms of that common effort. 

It would be difficult to overstate the importance of small business 

to our economy. Twenty-five million plus small companies create 75 

percent of the new jobs in our country. They generate more than 

half of the Nation’s GDP, which amounts to $5 trillion. And international trade is more critical than ever to the future of American 

small businesses. We now live in a global marketplace. It is here. 

It is not something that is coming in the future. Our small businesses need the ability to engage in that market and find access 

to those markets overseas. 

As Congressman Pascrell noted, 97 percent of all U.S. exporters 

are, in fact, small businesses. Many of the critics of trade have 

pointed to the fact that it is only large multinational corporations 

that benefit from this process. In fact, more often than not, small 

businesses receive benefits from the removal of trade barriers overseas, and there is a simple reason for that. For the big guys, they 

have more than one option. They can export out of the United 

5

States. They can invest overseas behind a tariff wall and manufacture there. They have a number of ways around that problem. For 

the small guys, there is only one option. That is exporting. That 

means the President has to be at the negotiating table trying to 

break down trade barriers on behalf of small business. Ultimately 

things like—very simple things like customs procedures, the red 

tape that goes along with trying to get into a market, the Customs 

official at the overseas border, those are very practical things that 

are real obstacles for small business exporters that larger companies do not confront. That is where a lot of the work has to be done. 

My view is we have to have a primary set of negotiating objectives that serve small businesses’ interest in terms of trade facilitation, in terms of the actual negotiating objectives that we take to 

the table. 

Last week I had the chance firsthand to see some of the ingenuity and innovation that is going on among America’s small businesses. I was in Los Angeles to speak at a conference put on by 

the Commerce Department’s Minority Business Development Agency. Part of my goal and my mission, along with Ron Langston, who 

is the Director of MBDA, is to try and create opportunities for 

small businesses. What was most remarkable about that experience was the energy in the room, the interest in exporting, the 

questions that we had, and the interest in having the Commerce 

Department’s help in terms of accessing new markets, mostly in 

terms of information. It was more of a question of ‘‘how to’’ than 

it was necessarily about trade barriers. 

But when they did talk about the troubles they have getting into 

markets, it came back to the same sort of practical thing: Higher 

tariffs on auto parts going into Europe than they face coming into 

the United States; agricultural subsidies in Europe; the same sorts 

of barriers that are part of the American trade agenda that they 

need broken down. To do that, of course, the President has to be 

at the negotiating table. What that boils down to is some very practical considerations. 

For example, I met with Joe and Jack Nalgian, who produce auto 

vehicle safety, and security systems in Congressman Berman’s district. They started out with a real good idea. What they found was 

there were, in fact, intellectual property problems. They needed the 

support of the U.S. Government trying to break into a variety of 

markets. Now they export as close as Mexico and as far away as 

Mongolia, oftentimes with the support of the United States Government being at their shoulder not only in opening the markets, but 

also in terms of providing assistance and financing along the way. 

Same thing with Maria Sorveno, who produces high-quality gelatin desserts in East Los Angeles. There you have somebody who 

started out in her kitchen. Through NAFTA she has gained access 

to the Mexican market. It has created a business not only regional, 

national, but also international, exporting as far away as New Zealand. Again, it just underscored for me the importance of external 

markets to the future of our small businesses. 

That leads me to my two final points, the answer, really, to the 

question of how best our Government can help small businesses. 

First and foremost is the topic of the hearing, Mr. Chairman, which 

is Trade Promotion Authority. My own view, although its oftenVerDate Aug 23 2002 17:41 Aug 30, 2002 Jkt 081127 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HR\OC\A863.XXX A863
6

times said you don’t need TPA until the end, frankly, I view TPA 

as a way Congress and the President get on the same page in 

terms of trade. I agree with Congressman Pascrell about where the 

power resides in the Constitution with respect to the regulation of 

our foreign commerce, and ultimately, the President has to be the 

sole voice of the Nation at the negotiating table. What this is about 

is trying to find a way to accommodate those two interests, to make 

sure that Congress is in the driver’s seat in terms of setting the 

objectives and has an opportunity fully throughout the process to 

be involved as a part of it; and also at the end to have the up or 

down vote as to whether or not the United States is actually going 

to enter into an agreement and implement it. 

In my view, it is essential to have Congress and the President 

on the same page. You can imagine if you are in negotiations, and 

you don’t feel like you have the full power of the U.S. Government 

behind you, it is difficult to make choices. It is difficult to know 

where to draw the lines. It is difficult to know whether you have 

a deal that will pass muster. One of the most important things 

about Congress setting the negotiating objectives is defining the 

parameters within which American negotiators can pursue an 

American trade agenda. It is also the united U.S. Government telling our trading partners what we have to have at the negotiating 

table. 

The second of my two points is what we do after an agreement 

is in place. One thing we have not done with our trade promotion 

budget is think strategically about it. We negotiate trade agreements. We do not necessarily coordinate. What we do in terms of 

trade promotion activities is to fill in behind those trade agreements and secure the markets that we have bargained for in negotiations. 

So one of the things that Secretary Evans has asked me to focus 

on is what we do in terms of our trade promotion activities once 

agreements are in place. Now, a good share of that is compliance. 

We have seen a significant increase in the Commerce Department’s 

compliance budget. We have hired 28 new people to contribute to 

that effort. But more fundamentally, we have launched the Trade 

Promotion Coordinating Committee, which is a statutory body that 

the Secretary chairs, to find efficiencies in how we go about trade 

promotion; to try and encourage a more strategic vision about how 

we approach trade agreements and fill in behind the market initiatives that we secure. 

As a part of that, we have had significant help on both Trade 

Promotion Authority and trade promotion policies from small businesses. We have a very active Industry Sector Advisory Committee 

that has contributed a great deal to our understanding of the barriers that small businesses face. They have done a great job of advising us, along with our district export councils, in terms of where 

we should be going with our trade promotion activities. 

Let me close there, and I welcome your questions. 

Chairman TOOMEY. Thank you very much, Mr. Aldonas. 

[Mr. Aldonas’ statement may be found in appendix.] 

Chairman TOOMEY. At this time, I would welcome Mr. Don Lloyd 

Williams from Marietta, Georgia. Thank you for being with us 

today. 

7

STATEMENT OF DON LLOYD WILLIAMS, PRESIDENT AND CEO, 

PRINCETON MEDICAL ENTERPRISES, MARIETTA, GA 

Mr. WILLIAMS. Good afternoon, Mr. Patrick Toomey, Honorable 

Chairman, Congressmen, Congresswomen, Representatives and 

staff, distinguished guests and fellow international exporters and 

businesses. My name is Don Lloyd Williams, and I am president 

of Princeton Healthcare, an international healthcare consulting and 

integration company doing business in both Latin America and Africa. We provide USA-manufactured medical and information technology products and support services to hospitals and clinics worldwide. Our mission is to improve the quality of healthcare in emerging markets in undeveloped countries through the use of new technology. 

Princeton Healthcare is classified as both a small business and 

minority-owned business and operating company, or SME, if you 

will. And again, as you mentioned, my firm is located and based 

in the metropolitan area of Atlanta, Georgia. 

I have come today to Washington, D.C., to speak to you in support of both the Trade Promotion Authority and Trade Adjustment 

Assistance Program. And I speak to you from a perspective of not 

only many years of international experience, but from a perspective 

unique to small firms that have to work in the trenches against 

fierce international competition in a global community. This is how 

we create business opportunities, revenues for our companies and 

jobs for U.S. citizens. 

You see, I was blessed with the opportunity to start my business 

career working with several U.S. major companies, and which later 

afforded me an opportunity to work for several major international 

companies. The experiences and the perspectives that I gained 

from these firms were beneficial because it helped me to gain the 

expertise and knowledge to create business opportunities in these 

foreign markets and to transact business successfully. However, my 

firm, similar to most small businesses, have all the challenges that 

the larger firms have, but typically have to operate without the 

support systems and resources that the larger firms can invest in 

to support their internationally-based business development programs. 

U.S. small businesses in general have a wide array of challenges 

to overcome in developing market-entry strategies in foreign markets. My firm has had to work effectively to overcome the barriers 

associated with the commercial risk of doing business in Latin 

America and Africa. This includes currency and exchange rate dynamics and payment and performance issues with customers. We 

have had to manage risks associated with logistics, freight forwarding, cargo insurance and completing the appropriate documentation to clear Customs. To date, and to our credit, we have 

been able to manage these issues rather successfully. 

Two major areas, however, continue to present problems for my 

firm: One, getting our projects financed for the foreign buyer or 

customer; and two, dealing with the trade policies which may further disadvantage our exports to that region. 

Let us take a look at the financing scenario. My firm, similar to 

most small businesses, is in a better position to secure a contract 

with a foreign buyer if we can provide low-interest financing. FiVerDate Aug 23 2002 17:41 Aug 30, 2002 Jkt 081127 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HR\OC\A863.XXX A863
8

nancing provided by Ex-Im Bank’s Medium Term Foreign Buyer 

Programs has helped to level the playing field for small exporters. 

For example, my firm was recently approved by Ex-Im Bank to provide $400,000 in medical and laboratory equipment to a diagnostic 

testing laboratory in Ghana. This testing laboratory supports the 

clinical testing of patients that are treated at surrounding hospitals 

in the region. 

Last year we were also able to secure financing for a hospital in 

the Ivory Coast through Ex-Im Bank financing. And this region has 

been a stronghold for Francophone-based European companies, yet 

we were able to secure the contract and gain export revenues. In 

both instances, by providing both competitive financing and financing for these customers, we were able to beat out several major European and Asian companies that were clearly in a better position 

in the market. Without Ex-Im Bank’s support, these transactions 

would have been impossible. So from our perspective, it is important to increase the funding for Ex-Im Bank so that smaller firms 

have a shot to secure business in these emerging markets. 

Aside from financing, Princeton Healthcare’s most significant 

challenge lies within the constraints of the U.S. trade policy and 

number of free trade agreements. Clearly the U.S. seems to be behind in the number of bilateral trade agreements established in 

these emerging markets. My firm is at a significant disadvantage 

in markets where host countries of European and Asian competitors have established free trade agreements. You see, in many instances, being competitive on a transaction can make the difference 

in deciding if you will win a contract or lose a contract. Therefore, 

any cost differential that may be artificially created can put us at 

a disadvantage. 

An example of this is in the Brazil marketplace. My firm is currently developing programs to establish business in this region. 

However, the U.S. does not have a free trade agreement for this 

market. This could put us at a major disadvantage to our European 

competitors if the European Union establishes a free trade agreement in this market before the U.S. And as you are aware, the U.S. 

is currently negotiating an FTA with the Mercosur Customs Union 

to cover the Latin American countries of Argentina, Brazil, Paraguay and Uruguay. We also are aware that many other countries 

in Asia are establishing bilateral FTAs to expand their economies 

and increase their number of trading partners. 

Therefore, from my perspective, the U.S. represents the largest 

economy and most competitive Nation in the free world. We must 

take a leadership position towards the development of international 

trade programs. We must be proactive rather than reactive. We 

must be innovative on multiple fronts when dealing with trade 

matters and find effective solutions that can impact the trade deficit. 

Small businesses will continue to play an important role in the 

growth of international trade by opening up new markets. However, we need your support to help create the tools that can minimize the trade barriers to allow us to be successful in these markets. We feel that through proactive legislation, for example, reestablishing the TPA and developing and expanding the TTA proVerDate Aug 23 2002 17:41 Aug 30, 2002 Jkt 081127 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\HR\OC\A863.XXX A863
9

grams are positive steps which will help level the playing field for 

U.S. small businesses pursuing opportunities in these markets. 

We encourage you and challenge you as Congress to continue to 

take giant steps towards legislation that promotes international 

trade development. I thank you for your time and consideration. 

Chairman TOOMEY. Thank you for your testimony. 

[Mr. Williams’ statement may be found in appendix.] 

Chairman TOOMEY. At this time, I would like to introduce Paul 

Hartman from Pennsylvania. 

Thank you for being with us today. 

STATEMENT OF PAUL HARTMAN, LEESPORT, PA 

Mr. HARTMAN. Good afternoon. My name is Paul Hartman. I am 

an eighth-generation farmer from Reading, Pennsylvania. 

I want to thank Congressman Toomey and the entire Committee 

for this opportunity to testify before you on behalf of the Pennsylvania Farm Bureau and the American Farm Bureau Federation regarding our strong support for H.R. 2149, the Trade Promotion Authority Act of 2001. 

My family owns and operates an 800-head dairy farm. We grow 

crops on approximately 500 acres, which is used entirely to feed the 

cows and replacement young stock. Our dairy produces about 9 million pounds of milk per year. 

U.S. agriculture continues to be increasingly reliant on access to 

export markets. The agricultural industry in this country can only 

continue to grow and prosper by reaching the 96 percent of consumers who live outside this country. Our ability to export continues to be hampered by significant barriers to trade. Given continued low commodity prices, access to world markets is now more 

important than ever. U.S. leadership in international trade has 

languished since negotiating authority for the President lapsed. 

Other countries have struck new trade deals that place our producers at a disadvantage relative to their competitors. We need to 

arm President Bush and his team of negotiators with the tools that 

are necessary to open new markets for our commodities. Granting 

this authority without trade restrictions or sanctions governing environment and labor is essential. Employing trade-restraining 

measures to address these important societal goals will serve only 

to hamper, not promote, trade without achieving the desired policy 

result. 

The lack of Trade Promotion Authority is hindering the United 

States’ ability to be taken seriously as a trade negotiating partner. 

Meanwhile, other countries are moving forward without us. The 

European Union, Canada, Mexico and Latin American countries 

are negotiating new free trade agreements and preferential arrangements that do not include the United States. Over 130 preferential trade agreements exist today. Only two of them include 

the United States. The preferential access given to European Union 

producers on a number of commodities, including dairy, has enabled them to better compete with U.S. Exports. On subsidies, the 

European Union outspends the United States nearly 4 to 1 on domestic supports and uses over 90 percent of the world’s agricultural 

export subsidies. World agricultural tariffs today average about 62 

percent, while U.S. agricultural tariffs average 12 percent. These 

10

farm barriers to U.S. agricultural exports can only be eliminated 

by trade agreements, and without Trade Promotion Authority, we 

are unlikely to achieve these goals. 

Economic studies show that the most significant growth in demand for agricultural products, and, in particular, for value-added 

foods, is in societies with emerging middle classes. As families and 

households move into the economic middle classes, they spend an 

increasing portion of their discretionary income on food. It is estimated that in the next decade, nearly 250 million Indians and 

more than 200 million Chinese will attain middle class status. 

Growth of demand for food will be strongest in these emerging 

markets. To maximize our opportunities to supply these markets, 

we must get tariff and nontariff barriers down. 

A wider range of U.S. agricultural products now depend on export markets. Corn, wheat, soybeans and other bulk commodities 

used to dominate the trade picture, accounting for two-thirds or 

more of total U.S. agricultural exports. No more. Since the 1980s, 

the most rapid and consistent growth has been in consumer-oriented products, everything from meats to snacks and fruits and 

vegetables to pet foods. This category ranked third in 1985 after 

bulk and intermediate products. By 1989, for the first time ever, 

consumer-oriented exports captured the lead. This means that a 

wider range of jobs and economic activity in the agricultural sector 

depends on trade than ever before. An estimated 750,000 full-time 

U.S. jobs in 1999 were related to the production, assembly, processing and distribution of U.S. agricultural exports. Of this total, 

the majority, 470,000 jobs, were off the farm. 

World market prices for many agricultural products are depressed in part because of high levels of trade-distorting subsidies 

and protected home markets. Strengthening of world prices which 

helps incomes of U.S. producers and exporters can only happen 

with effective international disciplines on unfair trading practices 

and trade barriers. Other countries are unlikely to agree to such 

disciplines except through a comprehensive round at the World 

Trade Organization negotiations that Trade Promotion Authority 

would authorize. 

We can no longer afford to stand idly by while other nations’ governments improve trading opportunities for their citizens and industries. Securing Trade Promotional Authority for the President 

will make launching a round in the World Trade Organization 

where the greatest gains will made in agricultural trade more likely. Leadership and action by Congress must no longer be delayed. 

The time to act is now. Congressional passage of Trade Promotional Authority is essential this year. Thank you. 

Chairman TOOMEY. Thank you very much, Mr. Hartman. 

[Mr. Hartman’s statement may be found in appendix.] 

Chairman TOOMEY. At this time, I would like to recognize Mr. 

Suresh Gursahaney from MicroAutomation in Chantilly, Virginia. 

Thank you for being with us. 

11

STATEMENT OF SURESH K. GURSAHANEY, 

MICROAUTOMATION, INC., CHANTILLY, VA 

Mr. GURSAHANEY. Thank you for giving me an opportunity to testify today before the House Small Business Committee, Subcommittee on Tax, Finance and Exports. 

My name is Suresh Gursahaney, and I am the president and 

CEO of MicroAutomation, Incorporated, located in Chantilly, Virginia. We are a small, disadvantaged business, certified minority 

business enterprise. We currently have a work force of 20 employees. 

MicroAutomation designs and implements product sets for call 

center environments. We consider ourselves to be one of the industry’s pioneers and are quite pleased that our products and applications are used in organizations renowned for their customer service, such as Hilton Reservations Worldwide, Maytag and Baltimore 

County 911. 

In the last several years, we have brought a variety of ways for 

consumers to reach customer contact centers. Advances in technologies have allowed customers access to service via the fax, Web, 

e-mail, chat sessions and telephone. MicroAutomation helps businesses and organizations develop one integrated point of customer 

service contact that is accessible from these diverse media. 

Based on the statistics available from the U.S. Government, and 

based upon my own experience, the opportunities for small firms 

to participate in the global marketplace are quite exciting. Small 

businesses with less than 20 employees made up two-thirds of all 

U.S. exporting firms in 1998, which has been a significant increase 

from 1992 when these small business exporters stood at 59 percent. 

In 2000, the U.S. information technology sector alone exported 

$134 billion in products. This sector contributed one-third to real 

U.S. GDP growth from 1997 to the year 2000, according to the Department of Commerce. Small businesses dominate the IT sector 

and many of them, like MicroAutomation, work in these technologies and markets. The growth of the innovative IT sector can 

only be sustained through expanding markets, and much of these 

opportunities will occur abroad. MicroAutomation is so pleased by 

our expanding opportunities, and we are hopeful that more U.S.-

based small businesses will have an opportunity to pursue markets 

abroad as well. 

MicroAutomation’s successful work in implementing solutions for 

Hilton Reservations Worldwide in five U.S. reservation centers has 

led to an expansion of our work overseas. We most recently completed a call center project in Glasgow, Scotland Reservation center, and there are plans for four additional international call centers. Our international portfolio also includes work via prime contractor for South Korea Telecom, Samsung Life Insurance, Citibank 

using IBM, and Hong Kong Telephone via Mosaix. Indeed, there 

are many opportunities for MicroAutomation to conduct business 

abroad for a variety of clients, and we are thrilled by these opportunities for growth. However, as we have also learned from our 

overseas work, there are risks for small businesses also. 

While MicroAutomation’s experience participating in overseas 

markets has been largely positive, our experience in South Korea 

served as a wake-up call to the prospective perils faced by small 

12

firms in the world marketplace. Through a local South Korean subcontractor, MicroAutomation implemented our call center solution 

for SK Telecom and Samsung just prior to the fall of the Korean 

economy. Unfortunately, we fell victim to an economic slump, and 

invoices totaling $100,000 are still outstanding, which is a significant amount of revenue for a small company. 

While larger companies have the resources to dispatch legal 

teams when such circumstances arise, the recourse small firms 

have, such as MicroAutomation, are really rather limited. It would 

require enormous sums of money for our firm to pursue collection 

of those outstanding bills, and, quite frankly, we are less powerful 

and politically connected than larger firms. Our experience in 

Korea did not dampen our pursuit of overseas work, but it has altered our international strategy for pursuing such opportunities. 

MicroAutomation’s current plans are to work with companies 

that are headquartered in the United States with contracting and 

invoicing performed domestically. The current prerequisites that 

we have established for ourselves in conducting work abroad only 

underscores the importance of expanding trading opportunities for 

all American business abroad. Clearly there are many small businesses that successfully export their products and services on their 

own, and expanding favorable trade agreements with a variety of 

countries will give small businesses a broader market to sell those 

products and services. 

In the case of MicroAutomation, it is also clear that when all 

businesses have increased access to overseas markets, small, medium and large businesses alike, all sizes of business and their 

work force, will benefit from increased global opportunities. 

As mentioned, it is quite risky and difficult to transact overseas 

as a smaller business entity. Competing with businesses around 

the globe in unfamiliar environments is a big step for a small firm. 

Any steps that our Government can take to lay the groundwork for 

better trading relationships with countries abroad, including favorable trade agreements that create more certainty and lower tariffs, 

I believe, is beneficial for all small businesses. 

Trade Promotion Authority is a positive tool that will not only 

expand our market opportunities for small firms, but help establish 

favorable parameters for doing business in foreign countries. 

Thank you very much. 

Chairman TOOMEY. Thank you very much for your testimony. 

[Mr. Gursahaney’s statement may be found in appendix.] 

Chairman TOOMEY. Thank you all. 

Let me explain something briefly about how our light system 

works, and we are going to try to follow that system here. We have 

got three lights in front of you. The green light is set for 5 minutes. 

As the clock ticks down, with 1 minute remaining, the light switches to yellow to warn us there is only a minute left. And when the 

5 minutes expire, the light goes red. I explain this not so much for 

your benefit, but for the benefit of myself and my colleagues. And 

I would like to stick to the clock because we have a number of folks 

here who have a number of questions, and we have another panel 

coming afterward. So with that having been said, if people could 

try to address questions as succinctly as they can, it would be very 

helpful. 

13

And I have a couple of questions for Under Secretary Aldonas. 

Thanks again for being here. 

My first question is that some would suggest that certain past 

trade agreements—NAFTA is one that comes up periodically—have 

been a failure because we have a trade deficit with the countries 

in question. Of course, United States has a large trade deficit in 

general, but certainly we have experienced the greatest economic 

expansion in American history during a period of time in which we 

have had increasing trade deficits. Could you address the question 

of whether we ought to be measuring the success of trade by the 

extent to which we have either a surplus or deficit? 

Mr. ALDONAS. Trade deficits in and of themselves generally reflect differences in growth rates between economies rather than 

necessarily barriers to trade. 

For example, right now, if you take a look, the trade deficit is 

narrowing. It is not because there has been any recent market 

opening initiative or any change in the barriers we face. It is because the economy started to slow relative to other economies. Interestingly enough, the last time that we really closed the trade 

deficit that we had with Japan was the 1991 recession, and again, 

nobody would argue that Japan was opening its market in 1991 to 

us. That was well in advance of the conclusion of the Uruguay 

Round agreement. So generally, that is what drives the deficits. 

Another way to look at it is that we benefit in a way from a capital surplus and that gives us the ability to buy more abroad or investing in our country. There was a period in the 1980s where that 

surplus was going to current consumption. Now generally that 

comes to us in the form of foreign direct investment. We have been 

running a capital surplus in this country since 1975. In fact, people 

are investing their money in the U.S. to make it productive. The 

return on that exceeds the cost of the capital, so that foreign direct 

investment here in the United States is the net benefit. 

Chairman TOOMEY. Thank you, yes. I would just—further to that 

point, I would suggest it is not a coincidence that we have the 

freest trading environment in the United States, and we are the 

most attractive place in the world for people to invest capital as 

manifested by huge capital inflows that we have had that have 

kept the dollar strong despite large trade deficits. 

One of the objections that people frequently raise or will want to 

address with TPA is whether or not and to what extent labor and 

environmental considerations should be part of those agreements. 

It is my understanding that the position of the administration is 

that those should be addressed separately, not as part of the trade 

agreement per se. Could you address that issue, and how do we—

I should say not as part of the Trade Promotion Authority per se—

how do we address labor issues and environmental issues in a constructive way? 

Mr. ALDONAS. Well, there is a trade component to this debate. 

For example, on the environmental front, there are plainly things 

we can be doing that would be helpful to the environment. First 

of all, trade in and of itself helps conserve resources. What you are 

doing is making our economy more efficient, economies more efficient. That puts less weight on the environment generally. 

14

Second, if you think about the most serious problem in terms of 

overproduction, things that are damaging to the environment, the 

common agricultural policy in Europe would have to rank number 

one. Going after the CAP, frankly, at the negotiating table at WTO 

is one of the most helpful things we can do for the environment at 

this stage. In addition, opening up new markets for our environmental goods and services would also be a great benefit. 

Now, is the WTO the best place to try and negotiate labor standards or environmental standards? I would argue it is a difficult 

place just to negotiate trade standards much less to actually enforce those standards. There are other places where we can go. I 

agree, however, we need an active agenda on that front. Certainly 

there is a consensus that we need to be more aggressive on the 

international labor front which was reflected in the United States 

agreement to the 1998 ILO declaration, and there is a venue to do 

that. The real question is whether you might undercut the real 

benefit of trade for labor and the environment, which is raising living standards abroad, if you include things that result in sanctions 

that would block trade, and that is the hard nut to crack. 

I think we say in order to use trade as a powerful tool to raise 

living standards and raise labor and environmental standards overall, there needs to be component pieces that work those issues separately. But at the end of the day, you don’t want to undercut the 

real value of trade. 

Chairman TOOMEY. Mr. Hartman, I had a question for you. 

Many parts of Pennsylvania, my district included, there is significant crops in corn and soybeans, but not a large amount of that is 

exported today. Nevertheless, I think one could argue that greater 

exports of American agricultural products will help Pennsylvania 

farmers. Do you share that view? And if so, how is it that expanding trade can help all the farmers in America and especially in 

Pennsylvania? 

Mr. HARTMAN. Corn and soybeans are commodities that are 

priced based on the marketplace, and if you open up trade in other 

marketplaces around the world—if you open up trade around the 

world, you are going to have more markets, and hopefully your 

commodity prices would rise because there would be more demand 

for your product. 

Chairman TOOMEY. Well, in the interest of observing my own 

rule, I will at this time yield to the gentleman from New Jersey 

Mr. Pascrell. 

Mr. PASCRELL. Thank you, Mr. Chairman. 

Agreeing with the agenda, the objective to broaden market opportunities, wouldn’t you agree that one of the major problems we 

have is—Mr. Under Secretary, is making these broadened opportunities reciprocal? Isn’t that a major problem that we are facing in 

terms—and which brings about imbalance in trade? 

Mr. ALDONAS. Yes. We face trade imbalance and as well as opportunities. The United States has been a leader in world trade, 

really, since the end of the Second World War, and my view is 

there have been times when we have ‘‘paid more at the office’’ than 

others. So this time around I think what we have to do is say, look, 

on tariffs, for example, we are not going to tolerate the fact that 

Europe continues to impose a 10 percent tariff on our automobiles 

15

when we only impose 21⁄2 percent on imports. We can’t let that 

stand. 

Mr. PASCRELL. But the problem is if we have fast track, and the 

Congress is not able to modify the agreement that the President 

comes to, thereby surrendering our constitutional obligations and 

responsibilities, that is what I am concerned about, not with the 

fact that we do not want to trade with other countries. We do. We 

live in a global economy. When you see six or seven countries in 

the worst fiscal condition, whether we are talking about Turkey, 

Argentina, Indonesia, Brazil, when you look at those countries, we 

have had trade agreements with those countries, and other European countries have trade agreements. That isn’t what is the cohesive force in whether the economy moves forward or backwards. It 

is important. I am not downplaying it. But the more reciprocal the 

trade agreement is, the better off both nations are. That is what 

I am saying. 

Mr. ALDONAS. I agree with that completely. Part of it, what we 

need to do with our trade policy—I mean, these remarkable stories 

that you hear about small business people—that ought to be the 

focus of where we go in terms of our trade negotiating objectives. 

In some respects you have to look back at the past and say, who 

paid the last time around? That means you have to be aggressive 

on that front. At the end of the day, we have to have our best salesperson at the table. 

Mr. PASCRELL. When you look at the commitments and promises 

that were made concerning NAFTA—I mean, we have Mexican 

farmers going south. We have Mexicans that are involved in the 

factories that we built losing their jobs. And so one has to wonder 

not only what NAFTA did to our economy, but what did it do to 

the Mexican economy. 

Now there is a report coming out next week that is going to state 

in stark terms just before we debate, I guess, some issues—in stark 

terms what really the fallout was of NAFTA. 

You know, China-U.S. Business and Industry Council claims that 

a 1996 report by the National Association of Manufacturers show 

that a mere eight United States companies generated more than 

one-third of all the U.S. goods exported to China. Opponents of 

China’s participation in the WTO argue that open trade with China 

will therefore only benefit a few large companies and expand the 

gap between the large companies and the small business exporters, 

which we do not want. What we are here to do is help primarily 

the small business company in the United States of America, and 

I think if we can agree on that and look at the facts and see what 

mistakes we made in the past, I think we can move forward on a 

lot of trade agreements. Wouldn’t you say that? 

Mr. ALDONAS. I think the essence of it, like with China, goes 

back to the point I was making in my oral remarks, which is, you 

know, the big guys have more options in terms of how they get into 

that market. When you look at what our auto industry faced in the 

way of tariffs in China—still faces until the WTO agreement goes 

forward—it is a surprise that there is one American vehicle in 

China. Now you see a number of them, and you wonder how they 

got there. 

16

But the bottom line is the agreement. Reducing those initial barriers at the negotiating table helps small and medium-sized enterprises by reducing tariff levels. It is also helpful, I think, in China 

in particular to introduce disciplines on Customs procedures and 

transparency because that is a lot of what the obstacles are for 

small business. So the WTO is a good vehicle to go after that. It 

is also going to require us to follow up very, very hard on compliance with the Chinese. 

Mr. PASCRELL. Well, you bring up the issue. Who is going to force 

anyone to comply? There is no compliance with NAFTA. There is 

no follow-up. Who is supposed to be there to enforce the rules? The 

rules are not being enforced. And this is what I fear about fast 

track. And we all would like to have reciprocal trade agreements, 

and we don’t have. 

I am not going to ask any more questions, Mr. Chairman. Mr. 

Williams, I listened very closely to your testimony, and I read it. 

I can’t find where fast track would assist you. I don’t understand 

the barriers that exist with our trade agreements that you were citing and how that would be assisted directly by fast track. 

And, Mr. Hartman, interestingly enough, a lot of folks that we 

trade with in terms of—in different trading agreements that we 

have had, farmers are getting hurt most of all in very different, 

very specific commodity products, and we have got to look at this 

very carefully. Small farmers in this country are being hurt. 

Chairman TOOMEY. Thank you. 

Mr. Schrock. 

Mr. SCHROCK. Thank you, Mr. Chairman. 

Let me follow up on what Mr. Pascrell said, and I address my 

question first to Mr. Hartman. If we do not get this act—the Trade 

Promotion Authority, if it doesn’t pass, how will it impact your 

ability to enter foreign markets? 

Mr. HARTMAN. I believe now to get into these markets, we need 

to have a force at the negotiating table. And right now I feel without fast track and having a strong voice at the negotiating table, 

we are limiting our opportunities. And there is some trade going 

on, which Mr. Pascrell mentioned, that perhaps with better negotiating procedures and regulations that could be set up at the table, 

then maybe some of this distortion in certain products could be 

avoided. 

Mr. SCHROCK. Mr. Secretary, the Chairman of the Federal Reserve seems to indicate that the economy is slowing down. I hope 

that is not the case, but that is what he is indicating. What impact 

do you believe Trade Promotion Authority will have in jump-starting the economy not only here in America, but throughout the 

world? 

Mr. ALDONAS. Well, passage of TPA is something that is basically 

procedural, isn’t going to do anything economically. What you do, 

though, is send a strong signal when our negotiators are going off 

to Doha, for example, in the fall, to launch a new trade round of 

trade negotiations that were back at the table. 

Last time we saw this was 75 years ago when you had the major 

economies of the world slowing down. Traditionally what you do in 

those circumstances, you try to move the trading system along. Liberalization then starts to move the forces forward, so you affect the 

17

psychology and eventually the market. But you need that first step 

so that people understand that the President is back at the table, 

and the United States is going to assert its leadership on trade. 

Mr. SCHROCK. Mr. Williams and Mr. Gursahaney, how do you expect your businesses will expand if this authority passes, and what 

will happen if it does not? 

Mr. WILLIAMS. I would like to say I think it is—we need the leadership, first of all, when we are fighting against competition in 

these particular markets. It is very clear to us that in many instances, they have, one, the support and a little more incentive to 

get into these markets because they are—the trade arrangements 

that they have actually promote certain products that are now coming into these markets. 

We are, in fact, hampered by, as I was alluding to, some differentials with tariffs and the Customs issues if it becomes, in certain 

markets that we compete against, a pricing issue. And so any differential, any barrier that we deal with in that regard can prevent 

us from being as competitive as we need to be. And if we do not 

have all of our ducks lined up, it makes it very difficult for us to 

win, and many of these companies that we are competing against 

are lining up all of their—positioning themselves and lining up all 

of their strategies to make sure that the financing and trade barriers and everything is working in sync for them to win these contracts and opportunities in the markets. And we do not have that 

sync. That it is going to be very difficult, and I have encountered 

that in certain markets, and I think this fast track program can

really help us. 

Mr. GURSAHANEY. From my perspective—I suspect I represent 

the IT the portion of the industry—as we go and attempt to secure 

opportunities in international countries, we are always faced with 

the laws of the local country. 

Our experience in South Korea is a prime example of that. We 

went in and implemented a solution, and we were never paid because of the fall in the economy. There was no trade agreement 

with South Korea that the government had established that we 

could leverage. From our perspective, if there were trade agreements that were authorized by the United States Government, we 

could leverage those as a small company and essentially be able to 

go out and trade to these companies with some sort of security that 

they would abide by the laws and such that we see in the United 

States. 

Mr. SCHROCK. But you heard one of the Members ask how do you 

make sure the laws are being adhered to—I guess my time is up. 

Chairman TOOMEY. Thank you. 

Mrs. Napolitano. 

Mrs. NAPOLITANO. Thank you, Mr. Chair. There are a number of 

questions, and I am afraid 5 minutes is not going to get to everybody. 

I have been involved in international trade for a number of 

years, and small business specifically, particularly. I have been to 

China or to Thailand where I found that the government had set 

up a panel of judges to be able to help American businesses resolve 

differences, but it had no enforcement, no teeth. 

18

So while it looks good, it is really not helpful to American businesses. How do you see the working in the enforcement, even 

though there is already trade agreements, there is already in place 

the ability to be able to do it and yet it is not being done? Somehow 

it just escapes me. 

Mr. ALDONAS. Part of the explanation is the fact that two sovereign states are using one enforcement tool. That is always going 

to be difficult, but one thing I have found in my own experience, 

both working with clients when I was in the private sector and 

when I was in government before, is that a lot of these things can 

be resolved on a practical basis if you have the U.S. Government 

on the ground. That means that—and it is my responsibility to do 

that—is to ensure that our foreign commercial services really try 

and rectify the problems there so that the problem stops with the 

customs officer in Shanghai rather than becoming a political issue. 

Mrs. NAPOLITANO. Then the question becomes is the agency that 

should be involved doing the outreach to the MCHMS because they 

are the ones who are telling us this is not happening and I have 

had MCHMS come to me and try to get workshops in our area, 

anywhere in the United States for that matter, with American 

business to help them do outreach, to help them set up in those different countries, but I am kind of leery because I don’t know what 

is happening in those areas. I don’t know how well they will be protected. I don’t know how much their product is going to be able to 

get reimbursed, and as he says, whether that country is going to 

be able to help our American business get paid back. That is of concern to me because if I am putting something out in my area and 

it turns sour, I am the one that is going to get blamed, not the government, me. 

The other is the SBA, since I sit not only on SBA but I also sit 

on International relations is—and I find sometimes that agencies 

don’t talk to each other. How well does ITA work with SBA and 

any of the other agencies that have to do with small business? Because I find that sometimes when you are questioned there is a 

very small segment that works on small business and the rest is 

general. 

Mr. ALDONAS. The answer is not as well as I would like. One of 

the reasons—— Mrs. NAPOLITANO. What are you going to do to make it better? 

Mr. ALDONAS. Secretary Evans and I have launched, through the 

Trade Promotion Coordinating Committee which he chairs and 

oversees all of the committees involved in export promotion, a 

benchmarking exercise, where what we are going to look at is our 

own performance, first of all, relative to our own customers’ expectations. We have gone out to our District Export Councils to muster 

the small businesses involved currently through ISAC–14, as well 

as the other ISACs, the Industry Sector Advisory Committees, and 

we are going to be asking them for their input, A, on what their 

expectations are and, B, where we are now relative to those expectations. 

Second, we are going to be looking at our foreign competition— what a foreign government is doing. If they are doing it better, I 

am going to be an absolute thief about the ideas and we will use 

those. 

19

Finally, we are going to be looking at where our business processes, for example, like Eximbank lending, mirrors things that go 

on in the private sector and try and benchmark against those practices to determine how we can gain efficiencies. We live in a time 

of tight budgets. We need to find ways to do more with what we 

have, in effect, but the principal thing is getting everybody communicating so that my foreign commercial service officer in country, 

when they have a customer in front of them, is capable not only 

of explaining the ‘‘how to’’ of how to get a letter of credit, who to 

talk to here to get your goods in, how do you deal with the Customs 

officers; but they can also tell them here is where Eximbank can 

help, here is where the Overseas Private Investment Corporation 

can help, here is where SBA can help. 

Mrs. NAPOLITANO. But the unfortunate part is that sometimes 

your budget does not allow for that outreach. Now, how do you 

handle your Web site, do you hit on the SBA and on the other 

agencies so that a business can go in and actually know where to 

go? 

Mr. ALDONAS. The answer is there is—export.gov, which is essentially a one-stop shop that then links you to other Web sites. 

Mrs. NAPOLITANO. But who knows about it? That is my point. 

Mr. ALDONAS. I understand. 

Mrs. NAPOLITANO. And for me to go tell my businesses I can only 

reach a certain segment of them, but what are the agencies doing 

to educate the business that might not be doing export but may be 

in the process of developing something that is exportable, if they 

have no way of knowing and, beyond that, if they have no way of 

getting the capital to be able to expand it other than maybe some 

State help and no Federal because they are too small and our 

agents are too busy dealing with the big guys and forget the little 

guys? 

Mr. ALDONAS. What we try to do, and again, I would love to be 

able to do this much, much better, but what we try to do is leverage our resources by relying on District Export Councils. Those are 

businesses who have been exporting in communities. So our local 

officials in the U.S. commercial service work closely with the DECs 

as a way of trying to communicate to other people in the business 

about export opportunities. Also, those DECs serve as mentors for 

new companies that are in the business of exporting so they can 

say, look, if you are going into the Mexican market here was my 

experience, here is how I did a letter of credit, here is the banking 

relationship I established. Not all stuff we can provide but certainly ways we can do outreach through other folks who have succeeded with the help of our services. 

Mrs. NAPOLITANO. Thank you for your answers, and I am hoping 

somehow we will be able to get more of that for a bigger audience.

Mr. ALDONAS. I would love your advice about how to do more on 

that because we really need to. There is no doubt about it. 

Mrs. NAPOLITANO. Thank you, Mr. Chairman. 

Chairman TOOMEY. Thank you. Mr. Chabot. 

Mr. CHABOT. Thank you, Mr. Chairman. Mr. Under Secretary, 

last time this came up of course it was called fast track back then 

and trade promotion authority now, and it didn’t have the votes to 

pass then and of course that was during the Clinton administraVerDate Aug 23 2002 17:41 Aug 30, 2002 Jkt 081127 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HR\OC\A863.XXX A863
20

tion, and a lot of my Democratic colleagues, not all but a lot of 

them, were against it principally because the unions were against 

it, and it was the chicken and egg thing, but the bottom line is that 

is where the opposition came from. 

On the Republican side there were various reasons, but one of 

the reasons some of my colleagues—they oftentimes didn’t say this 

on the record but their opposition was because they didn’t trust 

Clinton or they didn’t like Clinton or whatever. I supported it because I thought it was the right thing to do regardless of what my 

feelings might have been relative to our President, but I really felt 

it was the right thing to do, and the union opposition I think there 

is a number of reasons, but principally is because they felt jobs 

would leave this country and go offshore where wages could be 

lower and all the rest. 

And you have addressed it to some extent already, but could you 

address again the numbers of jobs that go offshore versus the jobs 

that are created here because we are trading more and businesses 

are created in this country and that sort of thing? 

Mr. ALDONAS. One of the things that was striking about the last 

decade, of course, is you had the significant market openings with 

both NAFTA and the WTO, and during that time the U.S. economy 

created 20 million new jobs since the early 1990s. Jobs don’t literally leave the United States. Some jobs are lost. In certain sectors, new jobs are created. Overall 20 million new jobs during that 

period of time were created in the United States after a very significant opening in both NAFTA and in terms of the WTO. Real 

wages are up, private sector productivity increased by 3 percent annually and our exports supported approximately 12 million jobs. 

Wages in export jobs are higher, between 13 and 18 percent higher. 

So the value of trade for workers in the United States is extremely high, not only in terms of real wages, because we are moving in the direction where we are more efficient and more productive so you would expect to see wages be higher, but also as consumers in terms of the range of goods that are available to them. 

So it reduces their costs while their wages are rising. 

Mr. CHABOT. Thank you. Secondly, another argument for free 

trade or for trade promotion authority is that the consumer, the 

folks in this country who are actually going to the store, going to 

the markets, going to the department store, wherever they might 

shop, are able to purchase more goods, more variety of goods at a 

price that they can afford which they might not otherwise be able 

to afford if we just threw up walls around this country and just 

traded amongst ourselves or made it more difficult for other products to come in. 

Could you address that issue relative to goods that are available 

to folks here, the actual consumer, how the consumer benefits? 

Mr. ALDONAS. Yes. Certainly there is a wider range of consumer 

goods available and there is a heck of a lot of competition in those 

products, whether it is automobiles on whether it is electronics. I 

also want to make the point that in addition to consumers, when 

we think about the individual, the people at the table here are consumers as well, and when they have to remain competitive globally, what they have to be able to do is manage their costs, and 

what they need in front of them are the lowest cost inputs possible. 

21

So you want the competition that international trade brings because what it means, inputs for these products that we then export, 

are kept at a manageable level and they can remain cost competitive globally. 

So it is not just for the individual consumer that faces a wider 

range of higher quality goods at lower prices, but from the point 

of view of small businesses, it helps to manage their costs also, and 

that is the bottom line. 

Mr. CHABOT. Okay. And finally, my time is wrapping up here, so 

I will make it real quick. The G–8 just met recently. It seems 

whenever our leaders get together now we are seeing turmoil in the 

streets and you know it might be the death penalty or it might be 

the environment, a whole range of issues, anarchists I guess as 

well, too. But it seems that globalization and trade seems to be one 

of their pet peeves and something that they are against, and I 

would certainly argue that people all around the world, if you are 

trying to help folks that are poor or disadvantaged, they are going 

to be helped by trade. 

Can you make an argument, you know, for that particular point 

of view? 

Mr. ALDONAS. Well, there is no doubt based on the evidence that 

economies that open their markets increase their rate of economic 

growth and raise their living standards. That is the strongest and 

most powerful tool that we have in fact in terms of economic development, but I would say one other thing, which is that those countries with closed markets are often those countries with the worst 

labor practices that literally shackle their people in poverty. Some 

of that is because the markets are closed and at the end of the day 

that is why you will hear the President and you will hear Secretary 

Evans and you will certainly hear me say that we view this as a 

moral issue on those grounds. We really believe that freedom is indivisible and ultimately that is our strongest export, and that goes 

with American business when it goes overseas. That is the real 

value at the end of the day. 

Mr. CHABOT. Thank you very much. 

Chairman TOOMEY. I will yield a couple of minutes to the ranking member here. 

Mr. PASCRELL. Since we are talking about morality, I can’t miss 

the point here. Do you want me to believe—let’s take an example, 

about trade, final questions that the gentleman asked are really I 

think on point. I might not have agreed with the preface, but I 

think they are excellent questions. The average dress at Macy’s in 

the Liz Claiborne department is between 125 and 145 bucks. I have 

bought a few for my wife there, that is why I know, and when you 

go back in the history, I know where it is made, how it is made, 

I know where it is patterned, I know how much it costs to transport the dress. Maybe it costs somewhere between $15 and $18, including all of those things. Everybody has got to make a profit, 

they are not going in business for charity. At best that dress should 

cost no more than forty bucks, no more than that, with a 200 percent profit. 

Do you want me to believe that because we aren’t involved in 

these trade agreements that the consumer in America is paying 

22

less for products? Is that what you want me to believe? Because 

you can’t prove it. 

Mr. ALDONAS. My sense is you are paying a lot less for products 

in a number of different categories and you are getting higher quality out of those and innovation out of those industries in part because of competition. Now a lot of that is here but a lot of it comes 

from overseas as well. 

Chairman TOOMEY. Thank you, and I would like to thank all the 

witnesses who provided testimony, the first panel here. Your input 

has been very helpful and constructive. Thank you for being with 

us today. 

At this time I would like to invite the witnesses from the second 

panel to approach the table.

Okay. Why don’t we get started with our second panel. We have 

joining us today Mr. William Bujalos, the Mid-Atlantic TAA Center 

Director from Philadelphia, Pennsylvania, and Ms. Denise Froning, 

Policy Analyst with the Heritage Foundation, and I want to thank 

you both very much for joining us. 

We will be using the clocks, as I think you were here for the first 

panel, so you saw that. So if you could keep your comments to 

about 5 minutes, we would appreciate that and we would have 

more time for questions, and with that I would like to welcome you 

both and recognize Mr. Bujalos. 

STATEMENT OF WILLIAM BUJALOS, MID-ATLANTIC TAA 

CENTER DIRECTOR 

Mr. BUJALOS. Thank you, Mr. Chairman. My remarks have been 

supplied, and I will just be paraphrasing them and they will stand 

on their own. 

I want to first off thank the Committee for giving me this opportunity to discuss the effects of TPA on the small business manufacturer in at least my region and the effects that TAA and its firms 

have on such an event. 

When I was invited to speak here today I was asked to do two 

things very simply: One, explain what it is we do, and number two, 

offer some examples of the results of what we do. It is better for 

me to do that if I ask you to step into the shoes of a typical client 

of mine. 

You are a small businessman. You have invested just about all 

of your savings into starting up, mainly because banks weren’t 

going to give you everything you needed because they are not willing to take as much of a risk as you are. You have very few employees. Chances are your facility or your business is somewhere in 

a semirural area, you are not in a very big city, although some of 

them are, but chances are you are not. You find yourself on any 

given day being the CEO, the CFO, the COO, the plant manager, 

the purchasing manager, the quality assurance manager and any 

other manager you can think of, including sometimes the janitor. 

You are going to work 10, 12, 13 hours a day 6, 7 days a week, 

maybe more. And you are not going to be concerned about things 

like free trade agreements, inventory procedures that are more improved, productivity improvements that may be available, technology improvements that may be available. What you are concerned about is making your payroll by Thursday afternoon. You 

23

haven’t got time to read junk mail, let alone be worried about what 

we are talking about today. 

Now, you will probably come in contact with one of our trade centers. I am the Director of the Mid-Atlantic Trade Center. There are 

12 of them spread all over the United States. My responsibilities 

include the firms in Virginia, West Virginia, Maryland, Delaware, 

Pennsylvania and the District of Columbia. There are three phases 

that you will be faced with if you start a relationship with us, and 

let me mention to you first off our relationship will span years. It 

will not be fast. Our relationship will be very, very detailed. It will 

not be a quick broad stroke. 

The first thing that will happen is you will be visited by one of 

our project managers. That individual will spend probably half of 

a day trying to understand how we can certify you as being bona 

fide negatively impacted by imports. We will interview several of 

your customers so they can confirm to us that they have reduced 

their purchases or even stopped their purchasing from you because 

they can get it cheaper from imports. We will take a look at your 

business volume over the last 2 years and your employee head 

count of the last 2 years to confirm that they are on their way 

down or that there is an imminent catastrophic loss of jobs in the 

next month or two that we can verify. 

In the second phase is you will be visited again by another member of our staff or me personally for a day or two or more, depending on the size of the organization, how many levels in the organizational chart and what the learning curve probably is. What we 

want to know is every single function within your business, your 

marketing, your sales, your financial management, your computer 

systems, your management development, your human resources, 

your quality assurance, all of those things and more that I can’t list 

right now. I want to know how they got where they are, where are 

they weak and why. But I also want to know where are they strong 

and also why. 

After that is done, that is a diagnostic phase, another phase 

starts, same day, where we will sit down with the ownership, employees and management, sometimes individually and sometimes 

in groups, depending on what we have to discuss, to try to understand what do we have to do specifically in terms of projects to 

take every one of those weaknesses and turn them into strengths, 

and take every one of those strengths and try to make them bulletproof and what it is going to cost and how long it is going to take 

and how it is going to be done specifically by listing the number 

of specific projects that have to be done and trying to think of a 

logical means, a logical progression of making this take place. 

Once that is done, it is all put together in this kind of a book. 

This is an AP. This is, for lack of a better expression, a business 

plan and it may be, if you are a typical small business, the first 

time you have ever done one, except maybe the first one you did 

for a bank, but we all know that bankers don’t ask really, tough 

questions. This one is really detailed. This is sent to Washington 

and we get concurrence from EDA. 

Third phase is the implementation phase. We will sit down with 

you again and try to come to an understanding of what we have 

agreed to do on the plan, and get it started. We want to make sure 

24

we start within the first 6 months. Then our relationship may span 

1, 2, maybe even 3 or more years where we are implementing these 

projects, one after the other. 

When it came to creating this document, you paid one quarter of 

the cost. When it comes to actually implementing you are going to 

pay a half of the cost, not all at once because as we are invoiced 

by professional providers in the private sector every 30 days, two 

invoices will be issued, one to me and one to you, and we will split 

the costs as we go through from project to project. 

That in essence is what we do. There are some nuances but not 

too many. The thing I want to emphasize is that TAA for firms is 

unique in the sense that it is not one size fits all. That is one of 

the reasons, for instance, we don’t have any people on our staff 

that are professional consultants. We don’t go out and sell their talents to keep them busy. Our job is to see what is necessary to turn 

the corner with your company. Our job is to work with you so that 

you will think differently about the way you distribute, manufacture, develop and sell your products. Maybe even consider different 

products than you make now. 

If you think that perhaps this is just another form of corporate 

welfare, consider several things. One, if you are the client you are 

going to pay for it. Two, it is really tiny. The Mid-Atlantic region 

is serviced by four people Three, most of the time when a client 

and I work together, they determine what they want to do and we 

determine how to do it with them, but it is only a small part of 

a much larger strategy they have in mind. In many cases they are 

buying more equipment, they are putting in more powerful software, they are putting in more technology and they are creating 

larger buildings all on their dime. 

And finally, the kicker is this. We have taken your company, and 

it is now quicker, faster, smarter, brighter and better than it was 

before in many ways. Your jobs now are more productive, stronger, 

more positive than before. It was less costly for us, to save your job 

than try to put something on the table after you had lost it and 

try to retrain you to get you a new one. 

I understand we have to stop. So I will be glad to take any questions later on. 

[Mr. Bujalos’ statement may be found in appendix.] 

Chairman TOOMEY. Thank you for your testimony. Ms. Froning. 

STATEMENT OF DENISE FRONING, POLICY ANALYST, THE 

HERITAGE FOUNDATION 

Ms. FRONING. I would like to thank the chairman and members 

of the Subcommittee for the opportunity to speak here today. I 

would really like to address today not so much whether we should 

have compensation for workers who have lost their jobs because I 

think a number of people feel strongly about that, but rather 

whether the TAA program itself is delivering the benefits that it 

is meant to do, and the answer to that is by and large it is not. 

There are several problems with the current program. I am going 

to highlight just two and then mention what many have floated as 

an alternative. 

The first problem is that there is insufficient monitoring of the 

program’s effectiveness. Specifically, criticism is focused on the proVerDate Aug 23 2002 17:41 Aug 30, 2002 Jkt 081127 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HR\OC\A863.XXX A863
25

gram’s inadequate attention to performance measures and failure 

to conduct proper evaluations on what results program participants 

achieve. The TAA program does not measure results. Instead the 

Department of Labor sets goals for the number of assistance programs each center implements per year, not whether the aid proves 

successful. 

While the Department of Labor tightened controls after a 1993 

Inspector General’s report found that the system was subjected to 

a number of abuses, the controls themselves have not been evaluated for their effectiveness. 

Second, TAA has largely turned into a cash payout program. The 

TAA program has become a mere compensation procedure, effectively acting as a disincentive for workers to quickly find new jobs. 

This is possible under the TAA program because workers are allowed to obtain a training waiver which allows them to collect the 

cash payouts, the trade readjustment allowances, without enrolling 

in any classes. 

According to the Department of Labor, 38 percent of TAA participants who left the program in 1999 received some type of training 

waiver, more than the number of displaced workers that enrolled 

in those training courses. The numbers bear out this fact. Between 

1995 and 1999 TAA spent over $900 million for basic and additional allowances to displaced workers. Meanwhile, only a third as 

much went to training costs in the same time period, and only $9 

million, or one-hundredth, as much over those 5 years went to job 

search and relocation costs, in part because so few of the TAA eligible workers chose to use these elements of the benefits program. 

According to the GAO October 2000 report, most State officials 

we surveyed said job search and relocation benefits have not been 

heavily utilized because workers are reluctant to move to new 

areas primarily because of family commitments or ties to the community. 

If more funds had gone to training aspects of the TAA program, 

the Institute for International Economics, among others, criticized 

the training programs themselves for lack of effectiveness. It points 

out that, quote, workers have no guarantees of employment when 

they finish the training programs. For this reason, there is broad 

consensus that the best training is delivered on the job or if workers are already at a job, then in supplemental programs that workers help pay for themselves and choose to attend at night or other 

off hours. 

Thus, the TAA program does not work as it is designed. The current TAA program has failed to provide effective assistance, one of 

the crucial factors for a successful adjustment program. 

If the aim of such programs is to help workers find new jobs, 

then we should eliminate TAA over time and fund a program that 

provides incentives, not disincentives, for workers to do just that. 

Wage insurance is one such proposal that has won widespread support. 

Robert Litan of the Brookings Institute and Lori Kletzer of IIE 

proposed putting wage insurance at the center of a more effective 

adjustment program. Wage insurance would allow qualifying displaced workers to receive benefits upon reemployment, protecting 

workers from the loss of income that can result from finding a new 

26

job that does not pay as well. The program would provide benefits 

to full-time workers who have been dislocated for any reason, not 

just trade, from jobs they had held for a minimum of at least 2 

years. 

Most importantly, Litan and Kletzer argue that wage insurance 

would fix a deficiency in the current program. Unlike TAA, which 

works as a disincentive for rapid reemployment, the proposed wage 

insurance program would strongly encourage workers to quickly 

find new jobs since they would not receive the assistance until this 

takes place. 

A central issue in this reauthorization debate is the question of 

what is the proper role of government in the United States. If we 

decide that among government duties is to give money to workers 

who have lost their job for whatever reason then we should do it 

efficiently and effectively, ensuring the existence of an effective 

program to fulfill our responsibility to all Americans whose livelihoods are affected through the taxes they have to pay in order to 

make any such program possible. It is a betrayal of this responsibility to continue to fund a program that has been proven ineffective and which cannot even measure its own results or lack thereof. 

Thank you. 

[Ms. Froning’s statement may be found in appendix.] 

Chairman TOOMEY. Thank you. I think it is fair to say we have 

somewhat different perspectives on the trade adjustment assistance. See how astute I am. But let me start by pointing something 

out which is probably obvious to everyone, but there are two different aspects of the Trade Adjustment Assistance Program, and 

Mr. Bujalos was referring primarily to the program that assists 

small businesses through what strikes me as a consulting process, 

while Ms. Froning was describing the assistance that goes indirectly through States to workers. 

So these are two different aspects, but it might be helpful, Mr. 

Bujalos, if you feel comfortable doing so in commenting on the 

other aspects of the TAA, but first, if you could, my first question 

to you is, help us a little bit more to understand the structure of 

this organization. There are 12 regional centers. Are the people 

who work there, are you a Federal employee? Do you work for a 

private company that contracts with the Federal Government to 

provide these services? They do sound as consulting services. Do 

you not compete against fully private sector consulting services? 

Maybe you could address some of those structural issues for me. 

Mr. BUJALOS. Good question. To answer the question in reverse, 

no, we don’t compete. As a matter of fact, we hire them. None of 

the people who work in trade centers are government employees. 

As a matter of fact, to my knowledge none of them ever have. Most 

of them have had pretty high level executive experience. Some of 

them have even owned their own businesses at various times in 

their career. Some of them have been management consultants at 

various times in the private sector. As I said before, we do not consider ourselves in competition with them. We consider ourselves to 

be those who, through a competitive bidding hire consultants from 

the private sector. 

Remember now, our client is a very hard working individual who 

if he hasn’t got time to read his junk mail hasn’t got an awful lot 

27

of time to evaluate consultants—matter of fact he probably doesn’t 

even like the word ‘‘consultant’’. He or she needs someone who has 

the wherewithal and the capability of evaluating as his advocate 

what is available, who is qualified and who can do the work. The 

only thing we can’t do is we can’t determine the chemistry. So 

when we do a bidding process we always try to have three, four or 

five possible candidates meet personally with the client so they can 

take the measure of each other and so they can conclude whether 

or not they can work together, but whether or not they are qualified, yes, we can determine that. 

Chairman TOOMEY. Now, the services you provide are paid in 

part by the company, paid in part by the Federal Government; is 

that correct? 

Mr. BUJALOS. Yes. 

Chairman TOOMEY. The total budget that you operate with is 

how large? 

Mr. BUJALOS. $10.5 million. The total budget that I personally work with for the Mid-Atlantic region is $718,000. 

Chairman TOOMEY. Okay. So the 12 offices split in some fashion the $10 million odd, and the criteria for being eligible for what 

amounts to a federally subsidized consulting service is that your 

business had to have an adverse impact from trade, but there is 

no other criteria. If, for instance, technology leapfrogged ahead of 

the product that you made as a company, that would not qualify 

you for this service? 

Mr. BUJALOS. No. In fact, your business probably could be suffering because of that, but no, you would not be certified as being 

negatively impacted by the importation of goods. 

Chairman TOOMEY. Okay. Thank you. Since my time is running 

out, Ms. Froning, I wanted to ask you, you have suggested that a 

wage insurance program might be a better alternative than the 

current regime for paying displaced workers. I am not entirely 

clear on how that would work. Specifically, would this contemplate 

making up the difference between the income earned at a new job 

and the income a worker used to earn at his previous trade impacted job? 

Ms. FRONING. Well, the proposal that I mentioned by Litan from 

Brookings suggests that it could either replace part or fully the 

amount lost by changing to a job that pays less, and they suggest 

that perhaps you can consider such things as age and occupation 

that go into that. It is one of the better known wage insurance proposals out there, and it seems to be a more pragmatic approach to 

addressing the issue. I think the details could be worked out. 

Chairman TOOMEY. The idea being it diminishes the incentive 

not to work, to simply remain unemployed so you can collect this 

payment? 

Ms. FRONING. And I am not suggesting that it is because people 

are lazy. I think it is human nature. You do what you have to do. 

And sometimes it takes time and, you know, it is a little bit easier 

to go out and find a job if you don’t have the money coming. 

Chairman TOOMEY. You have made the comment if I understood 

you correctly, if I can paraphrase, that we don’t have a valid assessment of the effectiveness of the program. Do we not have statistics as to how many people participating, how much they have 

28

benefited, how long they are on for, what kind of wage change they 

have experienced, those kind of basic figures; are they not available? 

Ms. FRONING. Well, what the GAO recorded was that while there 

is information on the number of people that have taken part in this 

program, there is more on what results were achieved or how many 

people found new jobs. Those are areas where it is harder to quantify. Studies that have actually tried to measure how well it has 

worked have not also compared it to other workers that have not 

used this program. So the bases for measurement are not the same. 

Chairman TOOMEY. I am going to finish there, but I am going to 

instruct our Committee staff to get the reports from the TAA to 

find out exactly how they evaluate their own effectiveness because 

that is part of our role as oversight. 

Mr. Pascrell. 

Mr. PASCRELL. Thank you, Mr. Chairman. I would like to start 

with Ms. Froning if I may. I want to take exception on the second 

page of your testimony. Of course I think it goes to the very core 

of what you were saying and I think what you said was very valuable. 

Second paragraph that based on the, third sentence, based on the 

rationale that job displacements caused by foreign competition are 

no different from job displacements caused by any other form of 

competition, the Reagan and first Bush administrations each attempted, et cetera, et cetera, et cetera. 

I would contend and I would like your reaction and response if 

I may, that there is a very big essential, not quantified or 

qualifiable difference but an essential difference between a person 

who loses their job in an industry or be it service or whatever, 

where that job is eliminated because of national policy, compared 

to a job that is lost, for instance, in the domestic market. I think 

there is a large deep difference between the two. You disagree? 

Ms. FRONING. No, I don’t disagree, but I think I was looking at 

it from the perspective of the worker who loses their job. To them 

they are out of a job regardless whether it is due to trade or not. 

They are not having the income coming in anymore. I was kind of 

looking at it from that perspective, how can we help those people, 

and I understand there are different ideas about trade, and we 

might disagree there, but fundamentally also you can lose your job 

from domestic competition because the government chooses to protect one industry over another, say steel over a steel using industry 

such as the automobile. 

So that is also national policy that could affect the worker’s job, 

and so all I am saying is that to the worker they would rather just 

get another job, they would rather have that income. 

Mr. PASCRELL. These are the companies, Ms. Froning, that have 

been helped in my District, about 14 of them, going back from 1998 

to the present moment, and they are varying manufacturing companies that have been certified on the TAA. I understand your criticism, that if there is no monitoring obviously this is not going to 

work. We talked about that just a little while ago. If there was better monitoring, it probably would work a lot better, but I think the 

TAAs are doing a great job out there, could do a lot better, and I 

think your criticisms are really on target. 

29

I am very interested in the wage insurance proposal that you put 

forward. What you are saying, correct me if I am wrong, is that in 

this program the worker would have to wait till he gets another job 

and that difference would be paid only after he got the second job. 

I think that is an interesting idea. It might provide an incentive, 

and I think this is part of what you are talking about. How do you 

see that being initiated, through which program, Federal program 

or would it be a Federal program? 

Ms. FRONING. It is not my proposal specifically but Litan and 

Kletzer’s that I cite, through the Department of Labor, and they 

have the details. And I have the report, but I would be happy to 

send it to you, that that they offer. 

Mr. PASCRELL. I think it is a pretty decent idea. We ought to explore it, but I wouldn’t explore it without and at the same time 

eliminate the TAA program. 

Mr. Bujalos, many critics of the TAA for businesses argue that 

the free market should be allowed to run its course, and if a few 

businesses have to be shut down as a result of free trade or whatever, so be it. We should not be providing government assistance 

to private corporations. How would you respond to that argument?

Mr. BUJALOS. I forget the number of businesses there are in the 

United States, it is in the millions. Every single one of those once 

upon a time was in a garage or a car or someone’s basement. Every 

single one of them had some sort of assistance somewhere along 

the way, not all of it always government assistance, but I would 

bet my next paycheck it was more than 50 percent of them. Every 

single business we had and have now goes through some sort of 

help. 

Consider 30, 40 years ago. At the end of the Second World War 

the United States was king of the hill. If you were an American 

businessman in the United States at the end of the Second World 

War, you had to work at failure because nobody was out there to 

compete with you. Things change. This is now, that was then. The 

world is different today. 

Today, the U.S. isn’t just the only king of the hill. Today the average businessperson has to compete with the huge wave of change 

in technology that is taking place that we don’t even address. 

These are other things that are in his universe that weren’t there 

30 or 40 years ago. 

Mr. PASCRELL. And you know what you say makes a lot of sense 

because a lot of the companies that have folded in my district, a 

lot of the manufacturing companies, be it small machinery parts or 

fabric, textile, folded not because the workers weren’t up to snuff, 

the boss was not up to snuff, did not produce the state of the art 

in that particular industry, but can’t compete with a factory in 

Honduras where that factory owner does not have to deal with any 

environmental standards, can pay his workers whatever the heck 

he wants, doesn’t have to worry about sick time or leave or anything like that. We can’t compete against that. But we can compete 

on a level playing field. 

Mr. BUJALOS. But I would extend the argument even further. We 

are going to pay for it one way or the other. If, God forbid, your 

business closes, it gets hammered and it cannot respond for a variety of reasons, well, the other side of TAA is going to be there to 

30

help. We will be paying for it. My argument is it just makes sense 

because it is cheaper to do it before the job is lost and before the 

closure takes place. 

Mr. PASCRELL. Thank you. 

Chairman TOOMEY. Thank you. Mr. Schrock. 

Mr. SCHROCK. I have no questions. 

Chairman TOOMEY. Thank you. Mrs. Napolitano. 

Mrs. NAPOLITANO. Quite a few interesting points that both of you 

have brought up, and I am intrigued by the worker assistance, but 

when you look at that viewpoint specific in there, like mine, when 

there is people with families that will have no income, that is crucial, I mean that hurts. So you know it is going to have a lot of 

tweaking before something specific to an initial problem is addressed via—I don’t know what the report says but I would certainly like to have a copy of it. 

Mr. Bujalos, I am wondering how big is your staff. 

Mr. BUJALOS. Four people, including me. 

Mrs. NAPOLITANO. And you are able to spend time, a whole day 

with a business? 

Mr. BUJALOS. Without exception. We just make sure we do it. We 

have to—see, put yourself in my shoes. 

Mrs. NAPOLITANO. No, I understand, and I totally agree. I wish 

there were more of you. 

Mr. BUJALOS. I wanted to make one point though. TAA, one of 

the things we are paid to do is improve the productivity of the clients we work with. How can we possibly not be as productive as 

we possibly can ourselves if we are doing that? 

Mrs. NAPOLITANO. Then the question is, how many clients do you 

get? How many people apply? How many can you help? How many 

do you find are justifiable clients or clients that you may be able 

to pick up legitimately and how many of those you actually save? 

I mean there is a question there, with four people for that many 

States, it begs the question of how thin are you spread. 

Mr. BUJALOS. Well, we are spread thin, I won’t argue that point 

at all, and you raise a very good point. Consider, I said that my 

yearly budget now is, $718,000. My backlog, that is, the dollar 

amount of approved assistance that I can’t do, is over $1.8 million. 

Mrs. NAPOLITANO. And why can’t you do it? 

Mr. BUJALOS. I don’t have the money to do it. I barely have 

enough money to take care of the clients that are coming into our 

doorway now. 

Mrs. NAPOLITANO. Are you translating hours into dollars for 

helping business or is it personnel that you can’t hire to get the job 

done? 

Mr. BUJALOS. No, no. I am not being clear here. That $1.8 million is the value of just the amount of grants that we would use 

in hiring professionals to help companies. It has nothing to do with 

our salaries, which of course should be added. 

Mrs. NAPOLITANO. That is hiring professionals, I am sorry, that 

is the same thing. Having personnel is somebody to work and do 

the job, the outreach, the assistance to the small business. 

Mr. BUJALOS. That is right. 

Mrs. NAPOLITANO. In other words, you are short-handed. 

Mr. BUJALOS. Well, yes and no. For instance, last week. 

31

Mrs. NAPOLITANO. You have got a backlog, you have got to 

be——

Mr. BUJALOS. I know, I know, but listen to me for a second. 

There is a point to be made. I get invited to make speeches all the 

over the place by a lot of different organizations. The last time was 

21⁄2 weeks ago in Erie, Pennsylvania, where I got a chance to stand 

in front of about 200 and some odd tool and die manufacturers. I 

gave remarks that did not exceed 6 minutes. Yesterday I was given 

a fax containing eight clients, eight companies who within that 

short period of time want to become part of this program from that 

one event, and that happens all the time. 

Mrs. NAPOLITANO. I don’t argue that. That is my point, is that 

four people in as many States are not capable of handling what is 

out there that can be helped. 

Mr. BUJALOS. You are absolutely right. 

Mrs. NAPOLITANO. So how do we remedy that? 

Mr. BUJALOS. The obvious way to remedy it is to change the way 

it is funded. 

Mrs. NAPOLITANO. What way is that? 

Mr. BUJALOS. I would—if you were asking me——

Mrs. NAPOLITANO. I am asking you. 

Mr. BUJALOS. I would make it a stand-alone program, and I 

would fund it out of funds, say from tariffs or other means, so that 

we don’t have to worry about this appropriation every 12 months 

year in and year out. That is if I were doing it. 

Mrs. NAPOLITANO. Okay. Tariffs based on what, on the people 

you help or on the overall general tariff? 

Mr. BUJALOS. Some thought would have to be given to that. I am 

not sure which one or the other. I do know that the government 

now has a very, very tight budgetary situation and I understand 

that, and virtually every dollar that goes to one thing has to come 

from something else. I am only proposing that a separate way of 

handling this might exist. 

Mrs. NAPOLITANO. I don’t mean to be disrespectful, but we were 

in a flush year and we are not able to do some of the programs we 

want. Never mind getting into the whys and wherefores, but somehow we are missing the point in helping small business, and that 

has been my gripe for many years, is that we put into programs 

that help mega business, they can take care of themselves, but the 

small business that is the backbone of our economy keeps getting 

shafted, and my support to you for TAA is to do more outreach, because I see what it does, and I agree with Mr. Pascrell, businesses 

might have been helped, but how do we help expand the program 

to help more small business that can help our economy grow, and 

that is one of my biggest concerns. 

Mr. BUJALOS. The only way to do that is to increase our budget. 

There is no other way. 

Chairman TOOMEY. Thank you both very much for your testimony. The hearing is adjourned. 

[Whereupon, at 3:45 p.m., the subcommittee was adjourned.]

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