U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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

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

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

81–701 2013

READY TO EXPORT: SMALL BUSINESS POLICY 

RECOMMENDATIONS FOR USTR 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JUNE 26, 2013 

Small Business Committee Document Number 113–026 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMER, Missouri 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

SBREP-219 with DISTILLER

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

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

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

WITNESSES 

Ms. Pam Johnson, President, National Corn Growers, Floyd, IA, testifying 

on behalf of the National Corn Growers Association ........................................ 3 

Mr. Brooke Fishback, International Sales Manager, Health Enterprises, Inc., 

North Attleboro, MA ............................................................................................ 5 

Mr. Gary Hufbauer, Reginald Jones Senior Fellow, Pete Peterson Institute 

for International Economics, Washington, DC .................................................. 7 

Ms. Mariana Huberman, Owner, The UPS Store, Washington, DC ................... 8 

APPENDIX 

Prepared Statements: 

Ms. Pam Johnson, President, National Corn Growers, Floyd, IA, testifying on behalf of the National Corn Growers Association ....................... 24 

Mr. Brooke Fishback, International Sales Manager, Health Enterprises, 

Inc., North Attleboro, MA ............................................................................ 28 

Mr. Gary Hufbauer, Reginald Jones Senior Fellow, Pete Peterson Institute for International Economics, Washington, DC ................................... 35 

Ms. Mariana Huberman, Owner, The UPS Store, Washington, DC ............ 39 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

SBREP-219 with DISTILLER

SBREP-219 with DISTILLER

(1) 

READY TO EXPORT: SMALL BUSINESS POLICY 

RECOMMENDATIONS FOR USTR 

WEDNESDAY, JUNE 26, 2013 

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

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

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

of the Committee] presiding. 

Present: Representatives Graves, Chabot, King, Coffman, 

Luetkemeyer, Mulvaney, Tipton, Herrera Beutler, Hanna, 

Huelskamp, Schweikert, Collins, Rice, Vela ́zquez, Schrader, Chu, 

Payne, Meng, and Schneider. 

Chairman GRAVES. Good afternoon, everybody. We will call this 

hearing to order. 

And I want to thank our witnesses for making the trip to Washington for this very important hearing. I look forward to your testimony. I know some of you have come a long way, and we appreciate that very much. 

This hearing comes at a very important time for the international trade community. Last week, at the G8 Summit in Northern Ireland, President Obama officially launched trade negotiations 

with the European Union. In addition, Michael Froman was sworn 

in as the United States trade representative. It appears that we 

may have some momentum on the trade agenda, which is welcomed news to many small businesses I know. 

This Committee understands the benefits of international trade 

for small firms in the economy overall. In 2012, exports of goods 

and services reached 2.2 trillion, or nearly 14 percent of the U.S. 

gross domestic product. Those exports provide new sales opportunities, and most important, they help create and support good-paying 

American jobs. Unfortunately, along with limited resources, small 

firms face a variety of trade barriers that constrain their participation in the global market. As a result, small businesses that do export rely heavily on the negotiated free trade agreements that remove complex trade barriers, provide protection for their intellectual property, and help streamline the trade process. 

Currently, the USTR is working on a variety of initiatives that 

will help remove barriers and open new markets for small business 

exporters, most notably the Trans-Pacific Partnership, the TransAtlantic Trade and Investment Partnership, and the World Trade 

Organization negotiations regarding services and information technology. These agreements hold great potential for small businesses, 

and we must make these negotiations a priority. 

SBREP-219 with DISTILLER

2 

Earlier this year, the Committee drafted a set of trade policy 

principles aimed at identifying no-cost, common-sense solutions to 

assist small business exporters. The first principle, and the primary focus of today’s hearing, is developing an aggressive trade 

strategy to open new markets for exporters, and we cannot sit on 

the sidelines while other countries negotiate trade agreements and 

put our businesses at a competitive disadvantage. We need leadership from the administration and new USTR to seize these opportunities. 

Today, we are going to hear directly from small businesses about 

the administration’s trade policy agenda, and specifically, how to 

help increase U.S. exports and create good-paying, U.S. jobs. And 

with that, again, I want to thank all of our witnesses for being 

here. And I will turn to Ranking Member Vela ́zquez for her opening statement. 

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

In the last year, international trade has emerged as a bright spot 

in the continuing U.S. economic recovery. According to the Department of Commerce, exports increased 1.2 percent to $187 billion in 

April, the second highest level on record. U.S. businesses are having particular success selling industrial and telecommunications 

commitment abroad, while American-made vehicles and auto parts 

also rose to a high level of $12.8 billion. 

Given the critical connection between trade and job creation, this 

is good news for U.S. workers. With foreign trade on the rise, so 

are opportunities for small businesses as they make up 98 percent 

of all exporters. Recent research confirms this, showing that more 

small firms are exporting today than just three years ago, while 

many more are becoming increasingly interested in doing so. For 

many companies, their success depends in part on their ability to 

access these international markets. 

Small businesses, however, face many challenges. It takes time 

to identify foreign markets, to target new customers, and to learn 

the ins and outs of the exporting process. In fact, nearly half of 

small exporters spend a minimum of a few months a year, as well 

as an average of 8.4 percent of their annual operating revenue preparing to export. Compounding this obstacle is that they often have 

fewer resources to expand on developing a trade strategy or complying with complex regulations. As a result, they consistently 

enter fewer markets than their larger counterparts, with nearly 60 

percent only entering one, while more than half of large firms export to four or five markets. 

In order to help breach this divide, there are several tools and 

resources available to small exporters. The key core are U.S. Export Assistance Centers, which fill a void by providing access to 

technical trade specialists in over 100 cities in the United States 

and 80 countries worldwide. By delivering foreign industry and 

market expertise, as well as trade compliance assistance, small 

businesses are better able to navigate the complex terrain of the 

international marketplace. 

Another top challenge that small exporters face is securing credit, which is essential to finance cross-border transactions. If banks 

are unwilling to provide this funding, companies’ ability to export 

will be severely curtailed. 

SBREP-219 with DISTILLER

3 

To address these very problems, the SBA and the Export-Import 

Bank provide small business specific export financing products. 

Last year, SBA loans generated $1.7 billion worth of small business 

exports, while Ex-Im Bank authorized more than $6.1 billion in financing and insurance for small businesses, a record for the bank. 

These initiatives are critical, especially during periods when banks 

pull back on their own lending to exporters. 

While these nuts-and-bolts challenges always persist, there is another on the horizon that is even more serious—that weak global 

demand could reduce U.S. exports. The recession in Europe continues to put a dent in American sales abroad as exports to the European Union declined nearly 8 percent. With China, the trade deficit rose to $24 billion, the highest level since January, and the 

largest with any single nation. Exports to China decreased by 5 

percent. 

Not only are American exports declining, but imports from these 

foreign nations are rising as the U.S. market remains a top destination. International trade will always be a complex undertaking 

dependent on this complex global macroeconomic climate, as well 

as a country’s specific trade policies and resources. Regardless, it 

is absolutely critical that small businesses are able to participate 

in this marketplace. Doing so gives them access to more customers, 

which in turn fuels their growth and employment, and that of the 

U.S. economy overall. 

I would like to take a moment to thank all the witnesses for 

being here, and I look forward to hearing your perspective on these 

challenges. Thank you. 

Chairman GRAVES. I yield to Representative King for introduction. 

Mr. KING. Thank you, Mr. Chairman. 

I would like to welcome and introduce Pam Johnson, a constituent of mine, but also a friend, and a focused and determined 

and hard-working member of the family farm where she and her 

husband and two sons raise corn and soybeans near Floyd, Iowa. 

She is the president of the National Corn Growers Association, and 

also Pam is very active in national and state advocacy groups. She 

serves as a member of the National Agri Industry Council Executive Committee, and is the current director of the Iowa Corn Growers Association as well. All of that and still time to farm. She is 

testifying on behalf of the National Growers Association, and I 

want to thank Pam Johnson for being here to testify today. 

STATEMENTS OF PAM JOHNSON, PRESIDENT, NATIONAL 

CORN GROWERS ASSOCIATION; BROOKE FISHBACK, INTERNATIONAL SALES MANAGER, HEALTH ENTERPRISES, INC.; 

GARY HUFBAUER, REGIONAL JONES SENIOR FELLOW, PETERSON INSTITUTE FOR NATIONAL ECONOMICS; MARIANA 

HUBERMAN, UPS STORE OWNER. 

STATEMENT OF PAM JOHNSON 

Ms. JOHNSON. Thank you for that kind introduction. 

Chairman Graves, Ranking Member Vela ́zquez, and members of 

the Committee, thank you for the opportunity to testify about exSBREP-219 with DISTILLER

4 

ports and policy recommendations for the U.S. Trade Representative. 

NCGA, as you have heard, I currently serve as president of the 

National Corn Growers Association. NCGA was founded in 1957 

and represents over 38,000 dues-paying farmers. We support a consistent U.S. trade policy that maximizes corn access, market access 

for corn and corn products, and does not disadvantage our industry 

for the benefit of another sector. As farmers, we know that 95 percent of the world’s population lives outside of our borders. That is 

why trade is so important to us and to our nation. 

NCGA members have much to gain from government policies 

that encourage exports and facilitate small, family-owned farms entering the global marketplace. The administration’s current trade 

agenda is ambitious and it is complex, negotiating simultaneously 

with the E.U. and the Asia-Pacific countries will require a tremendous amount of resources and a well-defined set of principles to 

guide the trade talks. Trade is most efficient when policies are predictable, reliable, and designed to encourage, not hinder, the flow 

of trade. During my testimony, I hope to emphasize the recommendations that will maximize family farmers’ access to foreign 

markets. 

Currently, USTR is preparing for the first round of the TransAtlantic Trade and Investment Partnership negotiations. NCGA 

has called for the trade agreement to be comprehensive and to 

tackle the significant hurdles that must be overcome when dealing 

with ag products. For NCGA members, the biggest challenge is the 

approval of corn and corn products that are derived through biotechnology. The E.U. is a market that holds great potential, but it 

is often overshadowed by delays and approvals and regulatory decisions that are dictated by political pressure and not by sciencebased evaluations. 

Unjustified regulations are costing family farmers millions in lost 

sales to the E.U. and could result in even greater losses of U.S. exports if they are adopted by other countries. So we urge USTR to 

keep the following principles in mind as they begin negotiations 

with the EU. 

International trade rules that fully support trade and products of 

biotechnology for planting, processing, and marketing subject to 

science-based regulation. We must oppose de facto bands or moratoria on approvals by Europe and other WTO member countries. 

There is no justification for measures taken under the guise of the 

precautionary principle absent the relevant scientific evidence and 

politically motivated bands or moratoria by WTO member states 

are not consistent with the members WTO obligations. 

NCGA members do not support a ‘‘ take what you can get’’ approach to the bilateral agreement with the EU. The Trans-Pacific 

Partnership negotiating structure should be used as a template for 

TTP. This is the best way to achieve an outcome that the food and 

ag sector can strongly support. TPP is intended to be a comprehensive agreement covering all sectors without exceptions. All topics 

are to be included as a single undertaking, which means that nothing is agreed to until everything is agreed to. Critical SBS provisions must be subject to dispute resolution; otherwise, USTR sends 

a signal that family farmers’ issues are a low priority. USTR must 

SBREP-219 with DISTILLER

5 

keep the concept of competitiveness in mind when addressing international regulatory challenges for ag products derived from biotechnology. Trade disruptions caused by barriers to biotech stand 

to hurt the entire value chain. We encourage USTR to improve the 

international regulatory environment. 

Last month, the USDA released its fourth outlook for US ag trade in fiscal year 2013. USDA projects $139.5 billion in ag exports, which if realized would be a new record. 

In conclusion, ag producers succeed when industry and government work side by side. As a farmer, I cannot and should not assume that our industry will be taken care of in TPP or TTIP. It 

is critical that U.S. negotiators have an appreciation for how increasing exports translates into benefits for family farmers. The 

U.S. economy will not benefit from ag issues being placed on a todo list, so now is the perfect time to eliminate longstanding barriers to ag exports and promote policies that bring economic opportunity back to rural America. Thank you. 

Chairman GRAVES. Thank you very much, Ms. Johnson. 

Our next witness is Brooke Fishback, international sales manager at Health Enterprises, Inc. He is a member of the International Trade Advisory Committee 11, which advises the secretary 

of commerce and the USTR on the small business trade policy. 

Thank you very much for being here. I look forward to hearing 

your testimony. 

STATEMENT OF BROOKE FISHBACK 

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

and members of the Committee, thank you for the invitation to testify at this hearing on international trade policy and for the opportunity to share my views and experiences of our company, Health 

Enterprises. 

My name is Brooke Fishback, and I am the international sales 

manager for Health Enterprises, a leading manufacturer and distributor of first aid and other consumer health products and a true 

American success story. In the early 1970s, Arthur Lehman founded the company in the basement of his home and sold products 

door-to-door to independent pharmacies. Today, still family-owned 

and operated, we sell our products under Acu-Life brand and as 

private label brands to over 25,000 retail stores here in the U.S. 

and have exported our products to over 60 countries worldwide. 

Even with all this growth domestically and internationally, we are 

still a small business, with fewer than 50 employees involved in 

sales, marketing, production, and logistics at our headquarters in 

North Attleboro, Massachusetts. That being the case, and similar 

to small businesses throughout the U.S., we do not have large legal 

teams or in-house regulatory departments to navigate complicated 

international rules for global commerce. Instead, we rely on the 

USTR to negotiate beneficial, easy-to-understand trade agreements, 

so that we can sell our products to those 95 percent of consumers 

that live outside of our domestic market. 

First, I would like to talk about trade agreements, and I have 

two points for USTR. Point one, USTR should strive to include 

Trans-Pacific partnership negotiations as soon as possible so that 

we can begin receiving the benefits of the trade agreement. CurSBREP-219 with DISTILLER

6 

rently, around 36 percent of our export sales are directed to TPPnegotiating countries. We are excited about exploring new sales opportunities and would estimate the market is worth tens of thousands of dollars per year in new business. 

Point two, USTR should energetically enter into Trans-Atlantic 

Trade Investment Partnership negotiations. Around 38 percent of 

our export sales are directed to E.U. member states, with the UK 

being our top market. Tariff rates between the U.S. and E.U. are 

already relatively low, and so the key will be to find common 

ground as it pertains to nontariff barriers, including standards and 

regulatory cohesion. We currently encounter issues of costly and 

time-consuming re-registration with our FTA registered products in 

the European Union. For example, for us to sell a simple finger 

splint, the kind that you would buy in the first aid aisle of a retail 

pharmacy here in the U.S., in the E.U. we need to register the 

product with the member country’s Ministry of Health, which costs 

several thousand dollars and requires many man-hours to complete 

the paperwork. 

Second, I would like the USTR to continue to work on leveling 

the playing field for U.S. companies. For example, USTR needs to 

ensure the countries to whom we grant preferential duty rates to 

enter our market under the generalized system of preferences or 

other programs also grant U.S. exporters equitable access to their 

markets. Brazil, for example, represents the largest market in 

Latin America and should theoretically be a good market for U.S. 

exporters. The problem is they have high duties, taxes, regulatory, 

and other nontariff barriers to keep U.S. exports out, while we 

allow low tariff or duty-free access to most Brazilian exports. 

In conclusion, I would like to leave you with four key points 

which will help small businesses like ours increase exports. Point 

one, free trade. USTR needs to maintain an aggressive trade agenda to assist small businesses in growing their international business. Small businesses are the engines of export growth and exporting stimulates the economy and creates good American jobs. 

Point two, trade promotion authority. The president needs TPA 

for good faith trade negotiations with other countries. Trade agreements should not be renegotiated when sent to Congress but be 

subject to an up or down vote. 

Point three, exporter education. Ensure sufficient funding for the 

SBA’s Small Business Development Centers so that they can provide export education for U.S. small businesses. In conjunction, we 

support your Committee’s work in exploring additional opportunities for coordinating state and federal trade agencies to assist small 

businesses. 

Point four, export promotion. Ensure sufficient funding for the 

U.S. Commercial Service, and in particular, their overseas offices, 

which provide the ‘‘ boots on the ground’’ support that we need for 

market information and which perform the Gold Key matchmaking 

service which arranges meetings for U.S. companies with prescreen 

potential partners in foreign countries. Ensure that costs for U.S. 

commercial service services like their Gold Key, remain affordable 

so that small businesses can actually participate. 

Thank you again for the opportunity to testify. I look forward to 

your questions. 

SBREP-219 with DISTILLER

7 

Ms. VELA ́ ZQUEZ. It is my pleasure to introduce to the committee Dr. Gary Hufbauer, the reginald Jones Senior Fellow with 

the Peterson Institute for National Economics where he has written extensively on foreign trade issues. He was formerly the Maurice Greenberg Chair and Director of Studies at the Council on Foreign Relations, the Marcus Wallenburg Professor of International 

Finance Diplomacy at Georgetown University, and the Deputy Assistant Secretary for International Trade and Investment Policy at 

the U.S. Department of Treasury. Welcome, sir. 

STATEMENT OF GARY HUFBAUER 

Mr. HUFBAUER. Thank you, Ranking Member Vela ́zquez, and 

thank you, Chairman Graves. 

In thinking about the impact of free trade agreements on small 

business, I think it is useful to distinguish between direct exports 

and indirect exports of these firms. Turning first to direct exports, 

over 300,000 American small business firms, defined as firms with 

fewer than 500 employees, directly export goods and services to foreign markets. The number, as Ranking Member Vela ́zquez said, 98 

percent of all U.S. firms that do any exporting. And they contributed about a third of U.S. merchandise exports between 2002 and 

2010. We do not know what their contribution was to services exports. These same firms account for about half of U.S. employment, 

so the direct exports are less than their employment share in the 

U.S. 

Now, turning to indirect exports by small business, this is a very 

important component as suppliers to multinational corporations 

that export everything from heavy equipment to entertainment 

software and so forth. And these indirect exports are combined 

with other intermediates and mobile value chains. This is undercounted. This is underappreciated. But to give a rough idea of what 

is going on, the OECD recently conducted a study of the valueadded and services exports, and they found that when we do it on 

a value-added basis, services exports are about 40 percent of merchandise exports amongst OECD countries, whereas the official 

statistic is only 20 percent. I think if we were able to get data on 

the indirect exports of small business firms we would find that they 

are much more important. And a big recommendation that I have 

is that this Committee press International Trade Commission and 

the Department of Commerce to do a much, much better job on the 

indirect export angle. 

Now, turning to free trade agreements, they are positive for the 

reasons my colleagues on the panel have said. A recent survey by 

the International Trade Commission on Korea—the U.S.-Korea 

Free Trade Agreement found a generally favorable impression by 

small business firms. Standards are an important issue as have 

been mentioned, a very important issue. U.S. firms have done 

much better in the Korean auto market and other examples that 

can be sold. 

Now, we should expect similar positive outcomes but on a much, 

much larger scale from the Trans-Pacific Partnership and the 

Trans-Atlantic Trade and Investment Partnership. An important 

issue again referenced by my colleagues is trade facilitation. That 

is kind of a gooney phrase but it means a lot. And to be very conSBREP-219 with DISTILLER

8 

crete and blunt, it means cutting down on corruption in a lot of foreign markets, which is a big problem for everyone, but the smaller 

you are, the bigger the problem. And hopefully we will get some 

progress on trade facilitation at the Bali Ministerial Summit from 

the WTO, but also in the TPP and the TTIP. 

I would also mention the new study by the World Bank on the 

so-called eBay effect when we combine Internet. Everybody knows 

about that. And eBay and sales and so forth. It really cuts the impact of distance on cutting down exports. More distance really reduces exports but the eBay effect, which is eBay-type online services plus UPS, FedEx, so forth, really does a great job, and that is 

important to small business. 

There are many actions outside FTAs to help small businesses. 

I recount them in my testimony and you all know them, but I 

would just conclude by saying that this country is really shrinking 

in infrastructure. I mean, really descending. You know, 20 years 

ago when I was out of graduate school we were first. In the 1990s 

we were about third, and now we are about 17th. It is really discouraging because that is a big part of doing business internationally and we are slipping. 

Thank you very much. 

Chairman GRAVES. Our final witness is Ms. Mariana 

Huberman, UPS Store owner that is here in Washington, D.C. As 

a service exporter, she advises and assists small businesses with 

exporting and transporting their products to foreign buyers. Welcome to the Small Business Committee and I look forward to hearing from you. 

STATEMENT OF MARIANA HUBERMAN 

Ms. HUBERMAN. Thank you, Chairman Graves, Ranking Member Vela ́zquez, and members of the Committee for the opportunity 

to appear before the House Committee on Small Business to discuss some small business recommendations for international trade 

negotiations. 

As the chairman said, my name is Mariana Huberman, and I 

have been the owner of a UPS store here in Washington, D.C. since 

2005. The UPS Store network is the world’s largest franchisor of 

retail shipping, postal, printing, and business service centers. 

Today, there are nearly 4,700 independently owned UPS store locations in the U.S. and Canada, and I am proud to say that my store 

is ranked in the top 30 on that list. 

When I decided to open my store, I wanted to provide excellent 

customer service and critical business services that were lacking in 

my neighborhood. My staff knows the names of most of our clients, 

and they know ours. We really consider ourselves to be vital partners in their growth and success. Every day, my staff and I deal 

with small business owners looking to grow their businesses, both 

domestically and internationally. It is our job to make their jobs 

easier, whether by navigating complex custom rules when shipping 

their packages, providing a business mailbox to ensure they do not 

miss important shipments, or printing their marketing materials to 

grow their business footprint. It is also our goal to become an integral partner to each of them and help them access the global marketplace. 

SBREP-219 with DISTILLER

9 

However, these customers face a number of challenges when 

looking to export. For example, we have a couple of art galleries 

and artists who are clients. We ship their artwork all around the 

country and we also try to ship it around the globe, but we run into 

trouble when shipping to Italy because customs regulations there 

require that the Italian Ministry of Arts perform a mandatory inspection on all artwork which could delay artwork for a minimum 

of 10 days. Another customer sells non-prescription vitamin supplements and has a difficult time getting those delivered overseas because countries like Australia require import approval from the Department of Health. And Germany requires a German doctor’s prescription. In the Ukraine, you not only need a doctor’s prescription, 

but you also have to list the ingredients in English and Latin, and 

then their intended purpose in Ukrainian. 

We have a customer who is a potter and sells her items online. 

We tried to ship a set of coffee mugs to New Zealand and could not 

do it because we needed to provide a heavy metal certificate or 

have the item subjected to testing by the New Zealand Ministry of 

Health. We even ran into problems when a customer wanted to 

send some clothing to a children’s charity in South Africa. Once we 

got everything ready to go, we found out that used clothing is not 

acceptable in South Africa and that full duties would be applied to 

any of the unworn items for things being sent to an orphanage. 

When one of these business owners ships an item overseas, we 

try our best to determine before we start if their items are going 

to be held up in customs or not. Once the packages arrive at their 

destinations, we work with UPS and their overseas customs contacts to clear the merchandise as quickly as possible. It is good to 

have a partner like UPS to help facilitate trade for our customers, 

but even UPS continues to face challenges in the customs arena, 

like the ones I mentioned and any improvements to these systems 

would be a great benefit to our customers. 

Small businesses can effectively export to global markets if only 

there are international rules that enable them and their service 

firms, such as UPS that serve them, to move their information, 

products, and services freely across borders. Fortunately, there are 

several international negotiations underway through which the 

U.S. government can eliminate barriers and create new international rules that will greatly expand the opportunities for small 

companies from the United States. 

Important trade negotiations for small businesses are taking 

place in Geneva, Switzerland. The first is the negotiations in the 

World Trade Organization on what is called trade facilitation. 

These are the procedures and rules at the border that determine 

how effectively and economically goods can enter foreign markets. 

Small businesses cannot afford delivery delays to their foreign customers because they do not get paid until their merchandise is delivered. New international rules are needed to reflect all the 

changes in the world since the last set of international rules for 

services was established almost 20 years ago. The United States 

recognizes this efficiency, and last year teamed with other countries to eliminate negotiations on the Trade and Services Agreement. The TSA negotiations could be most helpful to small businesses in the U.S. by establishing open markets and nonSBREP-219 with DISTILLER

10 

discrimination for U.S. service companies enabling to reach the 95 

percent of consumers who live outside the U.S. 

The United States is also negotiating a comprehensive trade and 

investment agreement with the E.U. and the so-called Trans-Atlantic Trade and Investment Partnership and the Trans-Pacific Partnership with the 11 countries around the Pacific Rim. In both these 

negotiations, it is important that the U.S. negotiators seek the 

same high-level ambition as they are seeking in the two sets of negotiations in Geneva. 

Small businesses are the lifeblood of the American economy and 

the services are the central nervous system on which the small 

businesses depend. Small businesses cannot penetrate foreign markets without an array of services to support them, and those services must have free access to foreign markets and nondiscriminatory treatment within those markets. 

Given the several negotiations on new international rules, it is 

timely for the Committee to be holding this hearing today on small 

business recommendations to the newly confirmed U.S. trade representative and any agencies that participate in these negotiations. 

Thank you again, Chairman Graves and the Committee for giving attention to these issues of vital importance to the expansion 

and prosperity of America’s small businesses and their employees. 

Chairman GRAVES. Thank you, Ms. Huberman. 

We have got two votes. We are going to go ahead and I think we 

have time for one question to start off which I will turn to and 

yield to Representative Luetkemeyer and we will recess for a short 

period and come back. Blaine. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

I appreciate everybody’s testimony this afternoon. It was very interesting. 

Ms. Johnson, what percentage of the corn crop is exported right 

now per year roughly? 

Ms. JOHNSON. Well, because of the drought last year we have 

seen a decrease. In 2011, it was 13 percent. This last was 8 percent, and we know that we have lost that market. I have personally 

been to Korea and Japan and China talking and building relationships, telling them their business is important to us and we want 

to be back to being their reliable supplier. 

Mr. LUETKEMEYER. One of the problems that we have with 

the E.U. is the genetically modified corn. Can you describe that 

just a little bit and what, if anything, is being done to solve that 

problem? 

Ms. JOHNSON. Sure. As I talked about in my testimony, solving 

the SPS restrictions is a priority for our members in the E.U. because that is used as a nontariff barrier to block biotech products, 

and in the United States our corn is now 88 percent used as a biotechnology event. As is with our competitors in Brazil and Argentina, we are both up at about the same levels. So those SPS restrictions are hugely important to us in the EU. 

Mr. LUETKEMEYER. You made comment that you liked the 

Trans-Pacific Agreement. You thought it would be a good template 

for our trade rep to use in his discussions with the EU. Can you 

elaborate just a little bit on the highlights of that that you like? 

SBREP-219 with DISTILLER

11 

Ms. JOHNSON. Sure. I think the main thing is, as I said, I think 

the big point is that we know that 95 percent of the population 

lives outside the United States. So using that as a template for 

TPP and TTIP would help us in a framework that would be workable. To hit the ground running I think would help. 

Mr. LUETKEMEYER. Mr. Hufbauer, you talked about indirect 

exports and were very emphatic about being able to use those or 

to expand those in the negotiations. Would you like to elaborate on 

just a little bit? It seemed like you had a lot of good information 

and were quite emphatic in your testimony about how important 

this was. I would like to hear a little bit more about that. 

Mr. HUFBAUER. Well, my guess—thank you, Congressman—my 

guess is that they are as important as the direct exports, but that 

is a guess because the data is so poor. So we need better data. 

Now, what the story of international trade today is increasingly 

becoming are these vast global value chains, which are really— 

there is a U.S.-E.U. There is a U.S-Mexico-Canada. There are 

Asian global value chains. Africa, unfortunately, is not part of this 

very much today. But behind these global value chains are lots and 

lots of suppliers and small businesses are a big part of those suppliers. And what happens is that these global value chains impose 

upon their suppliers all the standards that are required in the final 

market, so all the kinds of things that Ms. Johnson spoke of in the 

agricultural field or standards in any kind of medical area or any 

manufacturing, those are going to descend down to the suppliers. 

And if the supplier does not meet the standard, it is going to be 

knocked out of the chain. 

Mr. LUETKEMEYER. So how does it get addressed in a trade 

agreement? 

Mr. HUFBAUER. The way it gets addressed is by trying to have 

more objective standards. And the amount—— 

Mr. LUETKEMEYER. Forgive me for interrupting. The objective 

standards versus the punitive standards that are set in some of the 

trade agreements? 

Mr. HUFBAUER. No, as opposed to—a big example of the nonobjective standards is the precautionary principle, which is basically, you know, we think it is going to harm three generations 

down so we do not import it. No scientific evidence for that. 

But that is just one. There are a lot of standards which are 

unique to the standards, are not compatible with international 

standards, and block imports, unless you meet their country’s 

standards. So a major objective of the TTIP is supposedly to get 

regulatory convergence between the U.S. and Europe in lots of 

areas. We have worked over that ground for 20 years without success. This is supposed to be the big initiative, so auto standards, 

electrical products—you go right down the list—we either recognize 

theirs or we convert with them over time. It will be a long-term 

process, but then that feeds down to suppliers. So if you are a 

small business firm to try to make one kind of product with one 

set of standards for the U.S. market and another for the Korean 

market and a third for the European market, I mean, you know, 

it kills you. Financially, that kills you. I headed up a national—— 

Mr. LUETKEMEYER. Basically, you are looking for standardization in this agreement? 

SBREP-219 with DISTILLER

12 

Mr. HUFBAUER. Yeah. More standardization. I headed up a 

committee 20 years ago for the National Academy of Sciences on 

this, and it is a major, major problem. So that will hopefully be addressed to some extent in these agreements. 

Mr. LUETKEMEYER. Thank you very much. I see my time has 

expired. Thank you, Mr. Chairman. 

Chairman GRAVES. We will go ahead and recess, and when we 

come back Ms. Vela ́zquez will have her questions. And so it will be 

about 30 minutes, 20 minutes. We will probably be back in about 

20 minutes. 

[Recess] 

Chairman GRAVES. All right. We will call the hearing back to 

order, and we apologize for the delay. 

I will now turn to Ranking Member Vela ́zquez, who we just 

learned is going to be one of the star players tonight in the congressional softball game. So I hope everybody can attend. 

Ms. VELA ́ ZQUEZ. Thank you. Thank you. 

Dr. Hufbauer, as labor costs have increased in foreign markets 

and transportation expenses remain high, there has been a pickup 

in reshoring. Many U.S. companies, including large companies like 

Apple and Caterpillar, as well as small businesses, are moving production back to the U.S. Do you expect this trend to accelerate? 

Mr. HUFBAUER. Thank you, Congresswoman Vela ́zquez. 

I think there are two very favorable things for the U.S. in the 

next—let us say the next decade. One is that we will probably be 

the low cost energy country amongst major countries, and certainly, by comparison with China or Japan, Europe, we will be 

lower cost. And that will be very favorable. 

And secondly, as your question indicates, wage rates are rising 

fairly rapidly in Asia—not so much in Europe but in Asia they 

are—and that is favorable for the U.S. So I would expect at least 

the trend to continue and U.S. manufacturing to have a fairly good 

decade going ahead maybe compared to the decade of the past. But 

I have to add that productivity in manufacturing in this country is 

very high. Our growth rates in productivity are quite high and 

there is no indication they are slowing down. So it might not be 

such a boom in employment. Sales, yes; employment, less so. 

Thank you. 

Ms. VELA ́ ZQUEZ. What impact would the Trans-Pacific and 

Trans-Atlantic Partnership have on the economic viability of reshoring? 

Mr. HUFBAUER. Well, I think there is going to be a lot of this 

global value chain idea, which is tied in with offshoring and producing goods and services where they are, you know, least cost is 

definitely going to continue and we are just part of the way down 

this historic roadmap. But the TPP, if it succeeds, will cut barriers 

abroad very substantially. Our barriers are generally low. They are 

not zero but they are generally low whereas barriers in many countries in the TPP group are modest to high, especially when you talk 

about the standards and the behind-the-border barriers. So I think 

it will mean good times for U.S. participation in Asia. And if we 

did not have the TPP, I think the headwinds would be much harder for U.S. suppliers. 

Ms. VELA ́ ZQUEZ. Thank you. 

SBREP-219 with DISTILLER

13 

Ms. Johnson, many have questioned the benefits of free trade 

agreements, arguing that they actually divert demand for domestic 

goods to lower costs of foreign goods, which produces poor quality 

jobs abroad. If the Trans-Pacific Partnership is ratified, would U.S. 

corn growers create more jobs as a result of that? Or would the 

benefits flow mainly to foreign producers? 

Ms. JOHNSON. Well, first of all, we have to put it in the context 

of where we think the growth potential is, and TPP is focused on 

a region in the world where we know that the demand for corn and 

corn products and livestock is really growing because of the growth 

of the middle class there and the ability for purchases, and a diet 

that people want more protein. So this is very important to us. We 

think the growth part as we look out to the future, we think it is 

where we can grow our products and exports. And one in 12 jobs 

is directly tied back to agriculture in the United States, and if TPP 

is ratified, we think that it will increase the opportunities for a 

high demand for corn and those corn products, so that we will see 

economic growth on farms from increased exports and then more 

opportunities for the next generation. I have two young sons that 

are back farming and a lot of people their age are able to come 

back if there is opportunity to participate in those jobs. And I think 

that U.S. Corn Growers, we believe that we can compete on quality. And as I said before, you know, we have been—even though 

our exports have gone down to 8 percent, we have been back recreating those relationships so that we can get back in the market and 

be competitive with other countries who are also going after these 

same markets. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Fishback, you spoke about the importance of assistance— 

technical assistance and support for exporters, our American exporters. The recent sequester has reduced funding for the Commerce Department’s International Trade Administration limiting 

export promotion services and trade compliance assistance. What 

will the impact of these reductions to small businesses or small importers be? 

Mr. FISHBACK. Thank you for the question. 

I think one of the primary things to remember is that expenditures on programs that support export promotion actually generate 

revenue, so a lot of expenditures—— 

Ms. VELA ́ ZQUEZ. Yeah. So it is a wonderful thing to actually 

spend money on because it generates the revenue. So by not spending more money on it you are going to have less opportunities for 

especially new-to-export companies entering new markets, you are 

going to reduce potential revenue for those companies, and then on 

the back end, decrease tax revenue from the increased salaries that 

you would experience from someone working in one of those companies, and corporate income taxes from those companies as well. So 

by not spending money on it you are doing great injustice to not 

only small businesses and their ability to grow, but also to the 

overall revenue for the U.S. government. 

Ms. VELA ́ ZQUEZ. Yes. That is why it is so important—— 

Mr. FISHBACK. It is very important. 

Ms. VELA ́ ZQUEZ.—that we come together in Congress and put 

an end to sequestration. 

SBREP-219 with DISTILLER

14 

Ms. Huberman, the U.S. is currently part of the negotiations to 

update rules for the ‘‘trade in services.’’ As a business that provides 

shipping and logistics services, can you discuss how this will impact your franchise, directly? 

Ms. HUBERMAN. I think it will impact my customers in a way 

that makes—levels the playing field and allows them to export 

their goods and services. It will affect my business because I will 

receive revenue, I will be able to hire more people, and pay more 

taxes as we were talking about, which is not necessarily a good 

thing for me anyway. But that is what it is about. It is about leveling the playing field for all of the small businesses who cannot 

get their products overseas. I mean, the delays that we have with 

getting just simple things delivered is just ridiculous for reasons 

like the ones I mentioned earlier. 

Ms. VELA ́ ZQUEZ. And what is the practical impact of these 

delays on small exporters’ bottom line? 

Ms. HUBERMAN. They do not ship. They do not do it. They 

would rather give up the sale than deal with those delays because 

they end up looking back to the customers on the backend, or their 

items might spoil or they will get—sometimes a lot of things get 

lost in customs depending what countries you are shipping to. 

Things just happen to disappear once they get into the hands of 

customs officials overseas. 

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

Chairman GRAVES. Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

I wonder if the panel could just briefly answer this. If you think 

that the U.S. economy and small business exporters in particular 

are better off with a free trade agreement in place or worse off? I 

want to maybe start with you, Ms. Johnson. 

Ms. JOHNSON. Well, as we look at the competition and we see 

that all the free trade agreements that they have been making 

with different countries, I think that we have to be also to be competitive; that we have to be in the game also. And so those are very 

important to us, whatever trade agreements they are. As I said, 

our future is dependent on being able to export. Small business is 

the engine that makes the United States work. And so true for 

farmers, also. As I said, we are only 5 percent of the population in 

the world now, so our growth potential depends on good trade policy and FTAs. 

Mr. COFFMAN. Mr. Fishback. 

Mr. FISHBACK. The last statistic with free trade agreements is 

that we actually have a trade surplus with any countries with 

whom we have a trade agreement. Having a trade agreement in 

place for small business exports only increases our ability to increase our sales in a given market because it reduces our costs and 

improves the avenues that we have for actually facilitating the 

trade; the more free trade agreements, the better, from my perspective, for a small business. In fact, I was just in South Africa a 

month and a half ago doing a Gold Key service in Cape Town, and 

the president came out with his ‘‘ Doing Business in Africa’’ campaign last year but did not back it up with any support for small 

businesses. So while I was there, I found out that the European 

Union has a trade agreement with South Africa, which could reSBREP-219 with DISTILLER

15 

duce some of their tariff rates by 20 percent versus the ones that 

I am paying. And so if we are going to come out with some type 

of agenda item like that, maybe we should back it up with exploring new free trade agreements with companies to help us out. 

Mr. COFFMAN. Mr. Hufbauer. 

Mr. HUFBAUER. Thanks. 

I think that free trade agreements are a very big plus for small 

business. There is a lot of evidence that trade internationally is 

much smaller than it is domestically, and there are a lot of barriers 

and free trade agreements tend to cut into the barriers. 

The one additional point I would make is that it is really too 

costly and too cumbersome for a small business firm to bring a dispute under a trade agreement. These things, these disputes that 

you read about, the legal costs start at $100,000, and you can 

quickly march up to a million dollars. So what the government 

should do, in my opinion, and of course, it will require money, is 

be more aggressive on looking at barriers which adversely affect 

small businesses and bringing cases on their behalf. GE can take 

care of itself but small business firms cannot. 

Mr. COFFMAN. Ms. Huberman. 

Ms. HUBERMAN. I can only speak to it from a practical everyday interaction with my customers, and I can tell you that the 

trade deal we have with Canada makes my customers’ ability to 

get their products into Canada much easier than any place else 

right now. 

Mr. COFFMAN. Well, I want to thank you all for your testimony 

here today. I think that small business is the engine that certainly 

drives economic development in this country; that drives job creation. And so I think whatever we can do to facilitate more export 

markets, particularly for small business, I think is such a plus for 

the U.S. economy. 

Mr. Chairman, I yield back. 

Chairman GRAVES. Mr. Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. 

I am just really happy to hear all the stories of small business 

exporting, and you are right, 95 percent of the people are elsewhere. Every small business wants to grow, and I think every 

small business wants to export, and most of them do not. They look 

at it. They know they should be doing it. 

So I guess Mr. Fishback is somebody who sells what you sell. 

What advice would you give to that small business person, and 

what role do our free trade agreements play versus just all the regulations getting started. How do they get started? 

Mr. FISHBACK. That is a great question. And your Committee 

is actually working on some things to assist that by looking at 

ways to take government resources and blend them together to 

make more clear points of contact for companies that want to start 

exporting. And it comes down to education; making sure that there 

are channels for those companies to get education on exporting, 

which comes through looking at what we currently have in place 

with states and with federal governments, finding ways to bring 

the state and the federal government together so they can work together to train these people so that they are able to do it. 

SBREP-219 with DISTILLER

16 

In looking at that, our belief is that the SBDCs in the states do 

the best job of the initial counseling with companies that are new 

to exporting or wanting to export. In Massachusetts, we have the 

Mass Export Center that does a fantastic job and should potentially be considered a model for the nation. And then once they 

have that understanding of how it works, it is basically a template 

that you can follow into other markets and then bring in the UCX 

and the commercial services—— 

Mr. COLLINS. Do you think finding a partner, I mean, in some 

cases the government helping you find that partner in that first 

key export market where you can get your product over there but 

you have got somebody doing the heavy lifting is key to a new 

small business putting their toe in the water? 

Mr. FISHBACK. That is a huge amount of assistance. I did three 

Gold Key services here already this year using the services of the 

U.S. Commercial Service, and the commercial attache ́ at the embassies overseas. It provides companies with access to a group of 

prequalified companies that they would not normally be able to get 

in front of working with the U.S. government provides instant 

credibility for these new export companies. And it works. And one 

of the points that I made in my testimony was that the U.S. Commercial Service is looking to increase costs on small businesses for 

their international services, and if they do that then small businesses will not use them because it will be too expensive. And for 

us, by using them we have seen and experienced quick and good 

sales growth. 

For example, I was in New Zealand about a month ago doing a 

Gold Key service in Auckland, signed up a new distributor right 

away. The Gold Key cost $700. We have already had about 

$14,000–$15,000 in sales from it. So you already see the revenue 

generation that can happen from it. So those services, the ‘‘ boots 

on the ground’’ overseas are essential for our companies to be able 

to compete. 

Mr. COLLINS. Good. Thank you. 

One other interesting thing as we look at the TPP, and there is 

concern I think with Japan and their currency and their situation 

with the value of their currency dropping, and I have heard folk 

talk. What role does the trade representative play in the currency 

world in free trade versus Treasury? I wonder, Mr. Hufbauer, if 

you have just got a thought on that. 

Mr. HUFBAUER. I could give you a three hour dissertation but 

that is not what you want. 

Mr. COLLINS. No, we have one minute and 20 seconds. 

Mr. HUFBAUER. Exactly. 

The turf between USTR and Treasury is closely guarded. Treasury does not want USTR to be involved in this area, and they have 

been very explicit on that when I was in government 30 years ago; 

the same story today. But there is growing recognition that the 

currency issue is critical in trade agreements because of the argument, you know, currencies can drop 5 percent overnight. You 

spend three years negotiating tariffs down. So I expect this will 

play a role in the TPP, and maybe in TTIP as well. 

Mr. COLLINS. Thank you. 

Mr. Chairman, I yield back. 

SBREP-219 with DISTILLER

17 

Chairman GRAVES. Mr. King. 

Mr. KING. Thank you, Mr. Chairman. 

I want to thank the witnesses for your testimony. It is not always an easy thing to leave your busy lives and come here to help 

advise us on the path that we need to take, plus sometimes it just 

puts us in a position where we are given advice on down the line 

as well. 

But I was interested in what I heard in your testimony, Ms. 

Johnson, when you were speaking, I believe, of the Trans-Pacific 

partnership, asking for a comprehensive agreement. And I like the 

language, ‘‘ Nothing is agreed to until everything is agreed to.’’ And 

I was not clear whether that also applies to TTIP as well as TTP— 

TPP, excuse me. 

Ms. JOHNSON. Thank you for that question. 

Yes, it does. I think that is a key point that you picked up on 

is it has to be comprehensive, and so we said that it will be a template for TPP, so a comprehensive plan on TTIP and then comprehensive plan on TPP also is I think one of the most critical recommendations that we would give about going forward. 

Mr. KING. And then to embellish that point, when I sit down 

and talk to the Europeans about trade, and I do more of that than 

I ever thought I would coming into this job, they are constantly trying to pull us back from why do they not say—they say, why do 

you not exempt GMOs and then we will apply our sanitary and 

phytosanitary specs to your things, and then we can go ahead and 

do business. I would guess that you have been in some of those negotiations I have just described. Could you describe some of that 

for the panel, please? 

Ms. JOHNSON. Well, I think the point that you bring up is, and 

my point in the testimony, is that it has to be a comprehensive 

package; that we cannot leave certain things out to renegotiate 

later because it will come back to really hurt agriculture. So, you 

know, SPS has been used in the E.U. to prevent a lot of our ag 

products, a lot of our corn products, livestock issues, our production 

practices here. They have used the SPS against us. So I believe it 

is very important that we make sure that we do not leave anything 

off the table; we do it right the first time. 

Mr. KING. And I point out also it is really interesting that I can 

sit down with, say, German intellectuals, industrialists, or agriculture people and they all come to the same point. It is agriculture 

that is our barrier in our trade, and most everything else we seem 

to be able to get worked out but agriculture is a barrier. Is that 

your experience, too, Ms. Johnson? 

Ms. JOHNSON. Yes, it is. And, you know, I am still hopeful that 

once in a while you hear something optimistic about the comment 

out of the U.K. now that maybe the E.U. should take a different 

look at biotech. So we are still very hopeful that that will happen, 

and as America’s National Corn Growers Association, we have been 

working with the Corn Growers Associations in Brazil and Argentina saying yes, we are competitors, but there are certain things 

that we need to collaborate on. And it is just what you are saying, 

is the trade barriers, the trade disruptions that are due to biotechnology and modern farm practices hurt everybody and curtain 

SBREP-219 with DISTILLER

18 

the ability of agriculture no matter where you are from to be able 

to grow in a global marketplace. 

Mr. KING. And I recall as GMO, roundup ready soybeans came 

to the floor in Argentina but not Brazil, but they found their way 

across the border and essentially washed over the continent, and 

now I see that the European Union seems to be the citadel that is 

locking those products out. And I think that they are going to end 

up being—they will be the last stand but eventually productivity 

and the demands of that and the health of the food will become apparent. 

I spoke with an elected member of the German Bundestag who 

represented a region—I better not say where because I will identify 

him then—but he said, ‘‘ I agree with you that there is no sound 

science that says that GMOs are a risk to healthy, but we have to 

take this position.’’ And I said, ‘‘ Why do you not just take my position?’’ He said, ‘‘ Well, I cannot do that; I am elected.’’ I said, ‘‘ How 

about I will go with you and I can take this position and you can 

nod your head?’’ And he said, ‘‘ I would be voted out of office.’’ It 

is a political position that has grown. The Green Party, for example, in some countries in Western Europe, it does not exist anymore 

because it has been so absorbed by the other parties. It is not true 

in very case, but I think we have to just keep pushing the GMOs 

and push the sound science that we have. If we do that then eventually this trade component of this thing will wash over that continent and we will get it done. 

But I wanted to turn quickly to Mr. Fishback, and you mentioned 

regulations, how difficult it is to fill all the paperwork out. Have 

you compared how difficult it is for someone who wants to export 

to the United States when they fill out our paperwork? Are we also 

putting the barrier up like that for them? 

Mr. FISHBACK. That is a great question. And I have not had 

the opportunity to do that but my natural reaction is they must be 

doing something if they are not going to budget on their end. 

Mr. COLLINS. The clock has run down. I appreciate all the witnesses. And Mr. Chairman, I thank you and I yield back the balance of my time. 

Chairman GRAVES. Thank you, Chairman. 

Mr. HANNA. Mr. Hufbauer, you mentioned, to pick up on what 

Ms. Vela ́zquez says, the ranking member, things that encourage 

other companies to come back. You mentioned energy, which is yet 

to be seen but is clearly on the horizon. You mentioned productivity. 

I am going to ask you two questions. What other things are 

there? I mean, as an economist, what other items specifically are 

there? And then I want to dig a little deeper. In your testimony you 

talk about transportation and how other countries are so far ahead 

of us. And I wondered if you could be more specific about both of 

those items. The reason companies are coming back besides those 

two and how big of a barrier and how big a problem transportation 

is and how you might quantify that for me. 

Mr. HUFBAUER. Thank you, Congressman. Let me start with 

your last point on transportation. 

The way this is typically measured is the turnaround time in 

ports and the cost per container. No one is better than Singapore 

SBREP-219 with DISTILLER

19 

on both counts. Singapore’s cost for entering a container is about 

$400, is a standard container. In the U.S. it is about $1,800. That 

is a big difference. The turnaround time in Singapore, but also impressively in Shanghai, Hong Kong, and a few other ports around 

the world, you know, that is 24 hours. We are not there. We take 

longer. Long Beach is really congested and you can go right 

through a lot of ports. You can find their turnaround times. World 

Bank does this. And we are up into days. And that adds to the expense, and then we do not have the intermodal transportation we 

should from some of our ports to the inland. The rail does not connect as efficiently as it should or the roads for the trucks do not 

connect. 

You know, we are way behind, and not just Asia. We are behind 

Netherlands. We are behind the U.K. We are not good at ports the 

way we were years ago comparatively. And we are behind Canada. 

That would be my comment on transportation. 

On air transportation cargo, we are quite good. We are not 

maybe the best but we are very high on that. And obviously, for 

an increasing amount of trade done by Internet and so forth we are 

top of the game. So that is a big plus. 

Now, as for other factors that are going to favor the U.S. economy—I do not want to be all negative—but another way we are relatively losing—not in an absolute sense but relative to other countries—is our educational system, as I am sure you have heard 

many times, is not keeping us far ahead of the competition. And 

there a lot of things in technical vocational education and so forth 

where we could learn from other countries, but still we are tops but 

others are catching up with us on the education, engineering sides, 

the whole lot of it. But still we are tops and we do produce and 

extremely wide variety of products and goods and services which 

other countries do not usually have that same variety, and that is 

a great strength of the U.S. because you can have these networks 

which combine all these inputs. We are very inventive in terms of 

biotech and medical and so forth and so on. Those are our 

strengths going forward and I think they will prevail. 

Mr. HANNA. And other reasons why companies might come here 

that once looked to leave? 

Mr. HUFBAUER. Well, it is those strengths. Let me just be very 

specific. On technical vocational—the Germans pioneered this— 

they linked up their equivalent of our technical vocational schools 

with companies. We are not doing that. That is a reason companies 

will locate here because they can get a college, whatever it calls 

itself, to train people for the very specific kind of either computer 

or mechanical or whatever that they need. And that is a big reason 

to be here. 

In terms of labor relations, you know, every country has difficulties from time to time, strikes. Our strike rate or labor disturbance 

rate is very low compared to other countries. You have a good 

workforce in this country, and that is a big plus. And we are not 

tops. Tops in terms of honesty for countries goes to Finland, but 

we are not too far down. We are like five or six on the World Bank 

rankings, and that means we are a very honest country, and that 

makes a lot of difference to companies who do not want to have to 

deal with corruption. 

SBREP-219 with DISTILLER

20 

Mr. HANNA. Thank you for that, sir. I yield back. 

Chairman GRAVES. I have one question. 

As far as the U.S. Trade Representative goes, how would each of 

you grade his performance in terms of working with small businesses to try and improve some of the prospects out there? 

Ms. JOHNSON. I do not really have a good answer for that because I do not know enough to comment on it, but one thing I 

would like to say is that I think good trade policy is really necessary to move everything forward for all of us. And I was asked 

earlier about jobs and how important that is and how important it 

is for the USTR for us in agriculture. And we form partnerships 

with public-private partnership with the government for market access programs and foreign market development, and so the statistics from that is every billion dollars that we have in ag exports 

that the USTR helps us with supports approximately 6,800 U.S. 

jobs. So extremely important to us that position. 

Chairman GRAVES. Mr. Fishback. 

Mr. FISHBACK. Yeah. I would say that they have done a good 

job in the last couple of years of reaching out to small businesses, 

even creating small business liaisons within different departments 

to specifically address the needs of small businesses. Now, the key 

is that that continues. Now we have a new trade representative 

who follows the president’s agenda but also has his own line items 

that he wants to run through as well, so the key now is that they 

have started to reach out to small businesses more, which we appreciate. I think that just needs to continue moving forward. 

Chairman GRAVES. Mr. Hufbauer. 

Mr. HUFBAUER. I will be a little more negative. 

The USTR is absolutely overwhelmed. Our trade ministry compared to the trade ministry of other countries is very small and the 

budget was cut as Ranking Member Vela ́zquez said, and they are 

suffering from the sequester as well. 

I was recently in Surabaya—and I do not know if you travel to 

Indonesia very much. It is a long trip. It is an exhausting trip. I 

was fortunate to go business class. The U.S. reps went economy 

class. I mean, that is a tough trip and they are exhausted when 

they get there. They are younger than I am. They marshaled 

through the meetings. There was an Asia-Pacific Economic Cooperation (APEC) meeting. This is amazing that we do what we do 

with the budget that we give—that we as a country give USTR. 

And I just do not think that they have enough resources to do what 

they are supposed to do. And certainly, I would think they need 

more resources to do a proper job for small business. 

Ms. HUBERMAN. And chairman, I appreciate you asking me the 

question but I really do not feel qualified to answer it. 

Chairman GRAVES. Mr. Huelskamp. 

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

opportunity to ask some questions. 

Ms. Johnson, particularly as a farmer, good to see you here, and 

I look at our ag exports and the opportunities out there, I mean, 

it is tremendous. And as we discuss our Farm Bill, I hope we continue to look forward to the export side of the equation because 

that is tremendous growth and resulting prosperity for rural AmerSBREP-219 with DISTILLER

21 

ica. Whether it be corn or other commodities, what do you see as 

the best prospects for ag exports around the world? 

Ms. JOHNSON. That is a great question. And I think one thing 

that we are very optimistic about is the potential for growth for 

rural communities and farmers and all ag exports and corn and 

coal products. So corn and DDGs and livestock, especially now 

when we are looking at countries like China, considering what food 

security means to them and what they have to do and what they 

have to learn from us, possibly the Smithfield purchase. And that 

will translate into millions of dollars worth of exports, whether it 

is raw greens or it is meats. So I think that potential is huge. 

Before you came in we talked about how we are 5 percent of the 

world’s population now. So if we are going to look at what our future is going to look like, we are going to have to figure this out. 

So I really appreciate the Committee’s recognition about how important exports are to small businesses, including agriculture. 

Mr. HUELSKAMP. And in your opinion—I appreciate that, Ms. 

Johnson—in your opinion, whether it be the U.S. trade representative or other offices, do you think they do a sufficient enough job 

promoting ag exports? Oftentimes, those of us in ag country feel 

that perhaps it is not high on the agenda for these big negotiations 

and happens to get lost. Past administrations have clearly not been 

very supportive of agriculture. But I am just curious of your current take on the efforts and negotiations. 

Ms. JOHNSON. Thank you for that question. That is why I am 

really thankful to be at the table today and to be able to give input 

on what our recommendations would be going forward with TPP 

and TTIP is because we think they have to be comprehensive trade 

agreements and that no single thing is agreed to until everything 

is agreed to and how important it is to agriculture. Now that that 

framework is established going forward, I think it is critical to 

making these trade agreements fruitful for the future of agriculture 

and the future of rural America and small businesses in general. 

Mr. HUELSKAMP. Absolutely. And whether it is the beef industry, which is very big in my district; wheat, which half of it leaves 

the country generally; and numerous products, what is driving our 

growth and prosperity in rural America is that ability to export 

and feed the world, fuel the world, and in some cases, clothe the 

world. And I appreciate the chairman’s bringing folks in here to 

talk about that because it has an impact obviously on some of the 

very large businesses in this country, but for the very small businesses it is amazing how highly dependent they are on export markets, whether it is another 20 cents on the price of a bushel of corn 

or whatever the numbers are today, it makes an incredible difference in rural America. So I appreciate your testimony. 

I yield back. 

Ms. JOHNSON. Thank you. 

Chairman GRAVES. Go ahead. 

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

Mr. Hufbauer, and I invite anyone on the panel to comment, 

given the fact that here we are discussing the important role of 

small businesses as exporters—98 percent of all exporters are small 

businesses—they represent 30 percent of the all the revenues when 

it comes to export-import. And 60 percent of small exporters enter 

SBREP-219 with DISTILLER

22 

one market, and in that market only one customer. So there is so 

much that can be done to increase the role of small exporters. 

My question to you is we have the Office of the USTR, and in 

that office we do not have anyone whose sole responsibility is to be 

at the table whenever we are negotiating any trade agreements 

that represent the interests of small businesses. 

Mr. HUFBAUER. I could not agree with you more. They are 

stretched but if you want it to happen you have to kind of legislated on a line item basis or something to have the kind of people— 

they might come from the Small Business Administration or whatever—who are delegated to USTR to really zero in on the problems 

of the, for example, the health care products industry might be 

quite different than the problems of say the software, the small 

software products and so forth. So the person or persons have to 

have some industry expertise and really have to drill down into the 

barriers. I will not go on at length, but I did review a thesis from 

a very able Ph.D. student at the Hebrew University a couple of 

years ago who looked into small business representation in the 

WTO and found it was lacking. Generally, it is not just the U.S. 

Generally, small business just does not get the attention it deserves given the potential that you have outlined. Thank you. 

Ms. VELA ́ ZQUEZ. Mr. Fishback. 

Mr. FISHBACK. I would echo those remarks. I think it is essential, as you mentioned, just based on the statements that you made 

that we have a seat at the table—that small business have a seat 

at the table during these trade negotiations. 

I know recently—and I mentioned Brazil previously as a probable market for small business exporters—I know recently there 

was a Federal Register notice to try to get a small business executive as a part of the CEO Forum. So at least that is a voice at the 

table. But to the extent that you can have a small business government official at the table advocating on behalf of small businesses 

who like the members of the panel understand what it takes to run 

a small business is essential. 

Ms. VELA ́ ZQUEZ. Ms. Johnson. 

Ms. JOHNSON. I think as Congressman Huelskamp outlined for 

us, that certainly in these new, huge opportunities in trade we do 

not want agriculture left out of the picture as it has sometimes in 

the past. So I would appreciate a voice at the table and make sure 

that the agreements—because agriculture is so important to our 

country, it is also important for the growth of our country. And I 

know you outlined some good points but it is also the way we are 

going to bring the next generation back not just to farming but to 

small businesses and all those processes that go down the line for 

value added processes and products, whether it is livestock and 

corn products. 

Ms. VELA ́ ZQUEZ. Thank you. 

Thank you, Mr. Chairman. 

Chairman GRAVES. With that, I want to thank you all for participating today. This Committee is going to continue to make sure 

that the small businesses are a priority for the U.S. Trade Representative during international trade negotiations. And we have 

invited Ambassador Froman to address our Committee on the status of the negotiations and how the administration is working to 

SBREP-219 with DISTILLER

23 

help increase exports for small businesses, and we look forward to 

hearing—or hosting him, I guess, later this year. 

But with that, I would ask unanimous consent that members 

have five legislative days to submit statements and supporting materials for the record. Without objection that is so ordered. 

And with that the hearing is adjourned. Thank you. 

[Whereupon, at 2:53 p.m., the Committee was adjourned.] 

SBREP-219 with DISTILLER

24 

A P P E N D I X 

SBREP-219 with DISTILLER


Insert offset folio 24 here 81701.001
25 

SBREP-219 with DISTILLER


Insert offset folio 25 here 81701.002
26 

SBREP-219 with DISTILLER


Insert offset folio 26 here 81701.003
27 

SBREP-219 with DISTILLER


Insert offset folio 27 here 81701.004
28 

SBREP-219 with DISTILLER


Insert offset folio 28 here 81701.005
29 

SBREP-219 with DISTILLER


Insert offset folio 29 here 81701.006
30 

SBREP-219 with DISTILLER


Insert offset folio 30 here 81701.007
31 

SBREP-219 with DISTILLER


Insert offset folio 31 here 81701.008
32 

SBREP-219 with DISTILLER


Insert offset folio 32 here 81701.009
33 

SBREP-219 with DISTILLER


Insert offset folio 33 here 81701.010
34 

SBREP-219 with DISTILLER


Insert offset folio 34 here 81701.011
35 

House Committee on Small Business 

Hearing 

June 26, 2013 

Impact on Recent and Pending Free Trade Agreements 

on Small Businesses 

Statement by 

Gary Hufbauer 

Reginald Jones Senior Fellow 

Peterson Institute for International Economics 

SBREP-219 with DISTILLER

36 

1Sean Miner, Research Analyst at the Peterson Institute, gave valuable assistance in preparing this testimony. 2SBA, Office of Advocacy, FAQ http://www.sba.gov/sites/default/files/FAQ—Sept—2012.pdf 3http:www.ustr.gov/about-us/press-office/blog/2013/june/ustr-celebrates-small-business-week 

4See National Small Business Association and the Small Business Exporters Association Survey http://news.yahoo.com/small-business-exports-picking-survey-040313009.html. For more than 

half of small business exporters, exports account for less than 10% of revenue. Exports account 

for more than half of revenue for only one in seven small business firms. 5OECD - WTO http://www.oecd.org/industry/ind/measuringtradeinvalue-addedanoecdwtojointinitiative.htm 

Chairman Graves and members of the Committee, thank you for 

inviting me to testify. My name is Gary Hufbauer and I am a Senior Fellow at the Peterson Institute for International Economics, a 

non-profit, non-partisan policy research institute.1

In thinking about the impact of free trade agreements (FTAs) on 

US small business firms, it is useful to distinguish between direct 

exports and indirect exports of these firms. Trade agreements improve both channels. 

Direct Exports by Small Business 

Over 300,000 American small business firms, defined as firms 

with fewer than 500 employees, directly export goods and services 

to foreign markets. These firms number 98% of all US firms than 

export; between 2002 and 2010 they contributed about a third of 

total US merchandise exports, and this share seems to be rising.2

Since small business firms account for almost half of US employment,3 their direct export share is somewhat less than their employment share.4 However, small businesses that export usually 

grow faster, increase employees, and pay higher salaries than those 

that just sell domestically. Canada is the top destination country 

for small business exporters, followed by China, the United Kingdom, Mexico, and Australia. It is not a coincidence that the United 

States has free trade agreements with three of these countries, and 

that the English language is spoken in three of them—features 

that make doing business abroad much easier. 

Indirect Exports by Small Business 

Small business firms play an important role as suppliers to multinational corporations that in turn export everything from heavy 

equipment and aircraft to entertainment and software. A large volume of exported goods and services are intermediate products that 

are combined with other intermediates in global value chains 

(GVCs). Again, small business firms supply a large share of goods 

and services to these GVCs. Unfortunately, official statistics do a 

poor job of tracking indirect exports of small business firms. To 

give an indication of how important such sales might be, a recent 

evaluation by the OECD and WTO concluded that, after properly 

accounting for specialized business services purchased by manufacturing exporters, services contribute fully 40% of the value of world 

exports, about twice the direct export figure reported in official statistics.5 My guess is that a similar calculation of indirect exports 

by small business firms would boost their contribution perhaps to 

50% of US exports. The US Department of Commerce and the US 

SBREP-219 with DISTILLER

37 

6 ITC: U.S.-Korea FTA effect on SMEs http://www.usitc.gov/publications/332/pub4393.pdf 7 ITC: U.S.-Korea FTA effect on SMEs http://www.usitc.gov/publications/332/pub4393.pdf 8http://www.whitehouse.gov/sites/default/files/email-files/ 

South—Korea—Trade—Agreement—Overview.pdf 9http://www.wto.org/english/thewto—e/whatis—e/tif—e/agrm4—e.htm#TRS 10World Bank: How eBay Reduces Trade Costs http://www-wds.worldbank.org/servlet/ 

WDSContentServer/WDSP/IB/2012/10/25/000158349—20121025161729/Rendered/PDF/ 

wps6253.pdf 

International Trade Commission should do a much better job of 

tracking the indirect exports of small business firms. 

Impact of Free Trade Agreements 

FTAs make a significant positive impact on small business exports by lowering the fixed and variable costs of doing business 

abroad. They do this by eliminating tariffs, cutting red tape at the 

border, simplifying international payments, and allowing multiple 

entries on a single business visa. 

A recent survey by the International Trade Commission on the 

effects of the Korea-US FTA on small and medium size enterprises 

(SMEs) found that respondents viewed the FTA in a favorable 

light, and expected benefits to grow over time.6 The report stated 

that small manufacturers experienced an improved trading environment in Korea by opening new business opportunities, strengthening business relationships, and fostering more regular sales. US 

agriculture firms also increased their exports, especially where 

high tariffs were cut or eliminated. Service sales improved, often 

attributed to the better environment for intellectual property rights 

(IPR).7

Standards for suppliers often serve as a barrier to entry for 

smaller American companies looking to export. US auto companies 

that wanted to sell to Korea’s market before the FTA often faced 

strict safety standards, limiting their business opportunities, particularly for firms that were exporting smaller volumes.8 Another 

obstacle addressed in FTAs is the arbitrary use of environmental 

standards for protectionist purposes. Provisions in the FTA seek to 

ensure that environmental standards answer genuine problems.9

We should expect similar positive outcomes, on a much larger 

scale, if the Trans-Pacific Partnership (TTP) and the Transatlantic 

Trade and Investment Partnership (TTIP) are concluded. Here are 

some examples. ‘‘Trade facilitation’’ will be an important payoff. 

This is the technical jargon for agreed measures that cut red-tape 

at customs ports and upgrade hard and soft infrastructure. Another 

payoff, both in the TPP and TTIP, will be convergence of standards, 

or mutual recognition of standards, so that small business firms 

can sell their goods and services abroad without expensive modification. Improving the channels for online marketing will be another benefit. A new study by the World Bank shows how the 

‘‘eBay effect’’ lowers the negative impact of distance on international sales by some 65%.10 The alliance between online marketing firms, such as eBay, and express carriers (FedEx, UPS, 

DHL) will make it much easier for small business firms to reach 

foreign markets. 

Actions outside FTAs to Help Small Business 

SBREP-219 with DISTILLER

38 

11SBA Credit Availability Effects on Small Business http://www.sba/gov/sites/default/files/files/ 

rs404tot(3).pdf 12http://thehill.com/blogs/regwatch/business/296035-obama-forges-ahead-with-overhaul-of-export-controls 

Unlike the situation two decades ago, US infrastructure is far 

from the world’s beset. The United States is well behind several 

Asian and European countries—meaning that our roads, ports and 

airports are second class. These deficiencies adversely impact US 

exports. Small business exporters are further hindered by the scarcity of finance. A report from the Small Business Administration’s 

Office of Advocacy concluded that small business relies more than 

big business on bank finance, but that credit conditions have been 

tight.11 For some small business firms, export controls are an important issue. The vice president of international affairs at the 

Aerospace Industries Association, Remy Nathan, said ‘‘The existing 

web of regulations spans across multiple agencies and is so complex that some smaller firms are hesitant to attempt exports for 

fear they might break the law.’’ 12

These subjects call for action in the United States, under Congressional leadership, Shortcomings that curtail America’s export 

potential will not be cured by event the most ambitious FTA; they 

require reform here at home. 

Thank you, Chairman Graves and members of the committee. I 

am happy to answer questions. 

SBREP-219 with DISTILLER

39 

Testimony of Mariana Huberman 

Owner, The UPS Store #5259 

Before the House Committee on Small Business 

Ready to Export: Small Business Policy Recommendations 

for USTR 

June 26, 2013 

Thank you Chairman Graves, Ranking Member Velazquez, and 

members of the Committee for the opportunity to appear before the 

House Committee on Small Business to discuss small business recommendations for international trade negotiations. My name is 

Mariana Huberman and I have been an owner of The UPS Store 

#5259 in Washington, D.C. since 2005. 

The UPS Store network is the world’s largest franchisor of retail 

shipping, postal, printing and business service centers. Today, 

there are nearly 4,700 independently owned The UPS Store locations in the U.S., Puerto Rico and Canada. And I am proud to say 

my UPS Store is ranked in top 30 of these Stores. 

When I decided to open my Store, I wanted to provide excellent 

customer service and provide critical business services that were 

lacking in my neighborhood. My staff knows the names of most of 

our customers and they know ours. We really consider ourselves to 

be vital partners in their growth and success. 

Every day my staff and I deal with small business owners looking to grow their businesses both domestically and internationally. 

It is our job to make their jobs easier—whether by navigating complex customs rules when shipping their international packages, 

providing a business mailbox to ensure they don’t miss an important shipment, or printing their marketing materials to grow their 

business footprint—it is also our goal to become an integral partner 

to each of them and help them access the global marketplace. However, these customers face a number of challenges when looking to 

export. 

For example, we have a couple of art galleries and a number of 

self-represented artists who are clients. We ship their artwork all 

around the country and we also work to ship it all around the 

globe, but we run into trouble when shipping to Italy because, customs regulations require that the Italian Ministry of Arts perform 

a mandatory inspection of all the artwork which could delay the delivery for a minimum of 10 days. 

SBREP-219 with DISTILLER

40 

Another customer sells non-prescription vitamin supplements 

and has a difficult time getting those delivered overseas because 

some countries, like Australia, require import approval from the 

Department of Health and in Germany, the supplements can only 

be shipped to a German pharmacy with a German doctor’s prescription and copy of the pharmacy order. To ship to the Ukraine, 

you not only need a doctor’s prescription, you also have to list the 

contents in English and Latin and then their intended purpose in 

Ukrainian! 

We have a customer who is a potter and sells her items online. 

We tried to shop a set of coffee mugs to New Zealand and ended 

up not doing it because we needed to provide a Heavy Metals Certificate or have the items subjected to testing by the New Zealand 

Ministry of Health. 

We even ran into a problem when a customer wanted to send 

some clothing to a children’s charity in South Africa. Once we got 

everything ready to go, we found out that used clothing was not acceptable into South Africa and that full duties would be applied to 

any of the unworn items—for items being sent to an orphanage! 

When one of these business owners ships an item overseas, we 

try to determine before we start processing their packages if they 

are going to be held up in Customs or not. While we cannot control 

things like customs duties, we try to inform our customers of the 

current regulations and restrictions before shipping their items. 

Once the packages arrive at their destinations, we work with UPS 

and their overseas Customs contacts to clear their merchandise as 

quickly as possible. It is good to have a partner like UPS to help 

facilitate trade for our customers but even they continue to face 

challenges in the Customs arena, like the ones I mentioned, and 

any improvements to these systems would benefit our customers. 

Particularly since UPS operates one of the world’s largest, most sophisticated, intermodal transportation service networks and is one 

of the world’s largest customs brokerage firms. 

Why American Small Businesses Need New Trade Agreements 

The United States is the world’s largest and most competitive 

provider of services, with a trade surplus of more than $150 billion 

last year. But around the world, U.S. services firms are not able 

to compete fairly because of entry barriers, discriminatory treatment, and a general failure to keep international rules aligned with 

new technologies and the realities of modern business practices. 

Small businesses are least able to cope with these barriers and outdated rules. 

The digital revolution, especially the development of the Internet, 

has made it possible for small businesses to provide our services to 

foreign countries. But small businesses do not always have the resources to break down the barriers that they face. We need the 

U.S. government to negotiate and enforce fair international rules 

in services and customs procedures. 

SBREP-219 with DISTILLER

41 

As a result of the Internet, small businesses can advertise our 

products and services across the globe at negligible cost. We can receive payments from our customers across the Internet. We can determine the various requirements and standards in foreign markets from the various websites. And, of course, we can ship our 

products directly to foreign customers by UPS and other express 

delivery companies. 

Small entrepreneurs can realistically aspire to serve foreign markets without having to be physically present in those markets. 

However, this only is possible if there are international rules that 

enable these small businesses, and the services firms such as UPS 

that serve them, to move their information, products, and services 

freely across borders. 

It also is essential for small businesses that governments be required to publicize their various regulations, product and service 

standards, and customs rules, and to provide due process for dealing with compliance issues. 

Fortunately, there are several international negotiations underway in which the U.S. government can eliminate barriers and create new international rules that will greatly expand the opportunities for small companies and professionals from the United States. 

Two important trade negotiations for small businesses are taking 

place in Geneva, Switzerland. 

Negotiations on Trade Facilitation in the WTO 

The first is the negotiations in the World Trade Organization 

(WTO) on what is called ‘‘trade facilitation’’. These are the procedures and rules at the border that determine how efficiently and 

economically goods can enter a foreign market. This is extremely 

important for the small business customers of UPS and other express delivery companies. 

Small businesses cannot afford to have their products delayed in 

being delivered to their foreign customers because they won’t get 

paid until the customer receives its merchandise. While some large 

companies may have the financial resources to wait for payment, 

small businesses rarely have that ability. 

Also, small businesses do not have the resources or the ability to 

fight discrimination or other forms of unfair treatment by foreign 

customs officials. There needs to be predictable, enforceable, and 

fair treatment for the exports of small U.S. businesses. 

Efficient and speedy customs processes, coordinated between the 

U.S. and its global trading partners, will constitute a huge step towards removing the bottlenecks found in global supply chains. By 

embracing the opportunities of e-commerce and meeting the growing demands of international trade flows through effective trade facilitation, the global economy stands to gain immensely. 

Chokepoints at the border, such as costly customs procedures, inefficient facilitation programs, and burdensome regulations, reduce 

the critical predictability of the supply chain, and as a result can 

have the same stifling impact on trade as tariffs. 

SBREP-219 with DISTILLER

42 

Negotiations on the Trade in Services Agreement (TISA) 

New international rules are needed to reflect all the changes in 

the world since the last set of international rules for services were 

established twenty years ago by the World Trade Organizations in 

the General Agreement on Trade in Services (GATS). The United 

States recognized this deficiency and teamed last year with other 

countries to initiate negotiations on the Trade in Services Agreement (TISA). The purpose of these negotiations is to increase access to international markets for services firms and to establish 

new rules for services. These negotiations now include 50 countries 

accounting for over 70 percent of world trade in services. 

The TISA negotiations could be most helpful to small businesses 

in the United States by establishing open markets and non-discrimination for the U.S. services companies upon which U.S. small 

businesses depend. Among the services which facilitate the exports 

of small businesses are: express delivery, electronic payment services, information and communications technology services, retail 

services, and insurance services. If these services are not able to 

operate freely in foreign markets, then small businesses in the 

United States will not succeed in reaching the 95 percent of consumers who live outside the United States. 

Other Negotiations 

As the United States negotiates the trade facilitation in the WTO 

and the TISA, it also is negotiating a comprehensive trade and investment agreement with the European Union, the so-called Transatlantic Trade and Investment Partnership (TTIP) and the TransPacific Partnership (TPP) with eleven countries around the Pacific 

Rim. 

In both these negotiations, it is important that the U.S. negotiators seek the same high-level of ambition as they are seeking in 

the two sets of negotiations in Geneva (Trade Facilitation and the 

Trade in Services Agreement). 

Conclusion 

Small businesses are the lifeblood of the American economy, and 

services are the central nervous system on which small businesses 

depend. They cannot penetrate foreign markets without an array 

of services to support them. And those services must have free access to foreign markets and non-discriminatory treatment within 

those markets. 

Given the several negotiations on new international rules, it is 

timely for the Committee to be holding its hearing today on small 

business recommendations to the incoming U.S. Trade Representative and the many agencies that participate in these negotiations. 

Thank you again, Chairman Graves and the Committee, for giving attention to these issues of vital importance to the expansion 

and prosperity of America’s small businesses and their employees. 

Æ 

SBREP-219 with DISTILLER