Hearing of the House Small Business Committee - Opening Statement of Rep. Nydia Velazquez, Hearing on Accomplishments and Challenges at the SBA's Office of International Trade

Hearing

Year after year, we are told that small businesses are the catalyst for the growth of the U.S. economy -- and rightly so, as they create nearly two-thirds of net new jobs and are responsible for countless innovations. A critical subset of this group is small exporters. In fact, 300,000 small businesses are sending their products across the world -- and 3 in 5 non-exporting firms are now interested in following suit.

Firms that export grow faster, generate more jobs, and pay higher wages than other businesses. Clearly, for our economy to continue gaining steam, it will increasingly depend on global commerce to fuel expansion.

Despite the advantages that come with trade, it remains exceedingly difficult for small businesses to enter foreign markets. Just one percent of small firms in this country are exporting their goods overseas.

And even though small and medium-sized businesses account for 97 percent of American exporting companies, their exports account for only a third of all U.S. goods shipped overseas.

The challenges small firms face are multi-faceted. It takes time to identify foreign markets, to target new customers, and to learn the "ins and outs" of the exporting process. Nearly 40 percent of small businesses say they do not export because they simply do not know where to start. Over half of small-business exporters spend a minimum of three months and nearly 10 percent of their annual operating revenue just preparing to export.

Compounding these obstacles is that they often have fewer resources to expend on developing a trade strategy or complying with complex regulations.

As a result, they consistently enter fewer foreign markets than their larger counterparts, with nearly 60 percent only entering one, while more than half of large firms export to five or more markets.

These difficulties are something we must be mindful of as the Administration works to negotiate NAFTA. In theory, balanced free trade agreements have the potential to be a significant driver of growth. By eliminating tariffs and other barriers to trade, they can help small firms expand sales globally and create jobs at home.

In order for these benefits to be fully realized, however, we must hold our trading partners accountable for unfair trade practices and ensure that our small businesses receive the level playing field they were promised.

Truth-be-told -- small businesses often face challenges when it comes to competing with foreign imports produced in countries with lower labor and non-existent environmental standards. Time-and-time again we are told about new markets -- but little discussion is given to the low-priced goods that will spill onto our domestic marketplace. Good for consumers? Maybe. Good for small businesses? Definitely not.

Regardless of this larger debate, it is absolutely critical that small businesses are able to compete with their larger counterparts by participating in this global marketplace.

I would like to thank our witness. I look forward to hearing how SBA's export promotions are serving our small businesses.

Source