[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]






          TRADE WITH CHINA HELPS SMALL BUSINESS EXPORTERS WORK

=======================================================================

                                HEARING

                               before the

               SUBCOMMITTEE ON TAX, FINANCE, AND EXPORTS

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             WASHINGTON, DC
                              MAY 16, 2000

                               __________

                           Serial No. 106-58

                               __________

         Printed for the use of the Committee on Small Business

                     U.S. GOVERNMENT PRINTING OFFICE
66-396                       WASHINGTON : 2000



                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA M. CHRISTIAN-CHRISTENSEN, 
DAVID M. McINTOSH, Indiana               Virgin Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
MICHAEL P. FORBES, New York          DENNIS MOORE, Kansas
JOHN E. SWEENEY, New York            STEPHANIE TUBBS JONES, Ohio
PATRICK J. TOOMEY, Pennsylvania      CHARLES A. GONZALEZ, Texas
JIM DeMINT, South Carolina           DAVID D. PHELPS, Illinois
EDWARD PEASE, Indiana                GRACE F. NAPOLITANO, California
JOHN THUNE, South Dakota             BRIAN BAIRD, Washington
MARY BONO, California                MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

               SUBCOMMITTEE ON TAX, FINANCE, AND EXPORTS

                 DONALD A. MANZULLO, Illinois, Chairman
STEVEN J. CHABOT, Ohio               CAROLYN McCARTHY, New York
PHIL ENGLISH, Pennsylvania           RUBEN HINOJOSA, Texas
PATRICK J. TOOMEY, Pennsylvania      CHARLES A. GONZALEZ, Texas
                                     GRACE F. NAPOLITANO, California
           Philip Eskeland, Senior Professional Staff Member





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearings held on May 16, 2000....................................     1

                               WITNESSES

Crane, Philip M., a Representative in Congress from the State of 
  Illinois.......................................................     3
Alvarez, Aida, Administrator, Small Business Administration......     4
Olson, James E., CEO, Olson Technologies, Inc., Allentown, PA....    16
Gabbour, Jeffrey, Vice President, Prestige Enterprise 
  International, Cincinnati, OH..................................    18
DeDocker, Sharon K., Vice President, Aqua-Aerobic Systems, Inc., 
  Rockford, IL...................................................    20
Phelps, Robert, Owner-operator, Phelps Farms, Rockton, IL........    22
Parker, Keith, Chairman and CEO, Summit Environmental 
  Corporation, Inc., Longview, TX................................    25

                                APPENDIX

Opening statements:
    Manzullo, Hon. Donald A......................................    29
Prepared statements:
    Crane, Philip M..............................................    31
    Alvarez, Aida................................................    33
    DeDocker, Sharon K...........................................    40
    Olson, James E...............................................    45
    Gabbour, Jeffrey.............................................    51
    Parker, Keith................................................    56
    Phelps, Robert...............................................    61
Additional material:
    Department of Commerce Report................................    64
    Chamber of Commerce Report...................................    82
    GAO Study....................................................   128
    CRS Report...................................................   145
    Senate Bill 2277.............................................   162
    White House Press Release....................................   164
    Summary of U.S.-China Bill Bilateral WTO Agreement...........   167
    The U.S.-China WTO Accession Deal............................   173
    SOCMA News Release...........................................   175
    NAM Statement................................................   176

 
          TRADE WITH CHINA HELPS SMALL BUSINESS EXPORTERS WORK

                              ----------                              


                         TUESDAY, MAY 16, 2000

                  House of Representatives,
         Subcommittee on Tax, Finance, and Exports,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10 a.m., in room 
2360 Rayburn House Office Building, Hon. Donald A. Manzullo 
(chairman of the Subcommittee) presiding.
    Chairman Manzullo. The Subcommittee will come to order.
    Good morning. I have a very short opening statement, and 
Mrs. McCarthy has a very short opening statement, and then we 
will proceed directly to testimony.
    Trade with China helps small business exporters work. There 
is a myth that a U.S.-China WTO agreement is only for big 
multinational corporations who cannot wait to ship jobs to 
Chinese workers. I want to dispel that myth right here and now.
    Few people know that 82 percent of all direct U.S. 
exporters to China are small- and medium-sized companies. These 
exporters generated 35 percent of the dollar volume of all U.S. 
exports to China in 1997. And out of every country in the 
world, China ranks third as the largest growth market for small 
business exporters.
    Today, we will look behind the rhetoric and the trade 
statistics to see if trade with China and, more specifically, 
the recently negotiated U.S.-China World Trade Organization 
Accession Agreement, benefits small business exporters.
    Before the Subcommittee today is a mere fraction of the 
real-life stories of the impact of China trade on small 
business exporters. We all understand that international trade 
is more than raw statistics. This hearing puts real faces 
behind these statistics.
    Who are these exporters? People like Sharon DeDoncker of 
Aqua-Aerobic Systems, Inc. Sharon, I always mess your name up. 
You can pronounce it and we will get it right for the record. 
We have Sharon from Aqua-Aerobic Systems in Rockford, Illinois, 
but she is not alone. Many more small- and medium-sized 
companies throughout northern Illinois export to China. In 
fact, China represents one of the fastest growing export 
markets for Rockford, Illinois. Between 1993 and 1998, exports 
from Rockford to China surged nearly 300 percent.
    Small- and medium-sized companies throughout northern 
Illinois stand to benefit from this agreement with China, 
either directly as exporters or indirectly as suppliers to 
exporters. Some of these companies include Coffee Masters of 
Spring Grove; E.D. Entyre of Oregon; Clinton Electronics of 
Loves Park; Abar-Ipsen Industries of Pecatonica; Modine 
Manufacturing in McHenry, which supplies Chrysler's Jeep 
Cherokee plant in Beijing; Seward Screw Products of Seward, 
Illinois, which supplies more than 80 parts to Harley-Davidson; 
Bergstrom Manufacturing of Rockford, a supplier to the 
construction equipment manufacturer, Caterpillar; Cherry Valley 
Tool & Machine of Belvidere, Kysor/Westram Corporation of 
Byron, and Rockford Spring Company, who are all suppliers to 
the agricultural equipment manufacturer, Case.
    Simply put, this agreement is uniquely beneficial to small 
business exporters. I commend this administration for reaching 
this historic agreement.
    I look forward to the testimony of our witnesses.
    Mrs. McCarthy.
    [Mr. Manzullo's statement may be found in appendix].
    Mrs. McCarthy. Thank you, Mr. Chairman, for scheduling this 
hearing to discuss the impact of the trade agreement reached 
between the U.S. and China and American small businesses. I 
would also like to thank Administrator Alvarez and Chairman 
Crane, as well as our second panel of guest witnesses, for 
taking time out of their busy schedules to be with us today.
    As we all know, the United States reached a trade deal with 
China in November of last year, allowing them to become a 
member of the World Trade Organization. Next week, the House of 
Representatives is scheduled to vote on granting China 
permanent trade status in order to reap the benefits touted 
within the trade agreement.
    History has shown that isolationism does not sustain or 
promote economic growth. Fair trade with other countries can be 
extremely beneficial to both small and large businesses. This 
was exemplified in recently passed legislation that promoted 
trade with African and Caribbean countries.
    However, the trade deal reached with China differs 
significantly from the African trade proposal. Throughout the 
past 10 years, the United States has engaged in an aggressive 
trade policy with China. Unfortunately, the U.S. still suffers 
a large trade deficit with China and encounters numerous trade 
barriers when attempting to enter their markets. Although the 
agreement reached between the United States and China removes 
many of these barriers, I am still concerned over the 
inefficient monitoring mechanisms needed to protect American 
businesses and workers.
    It is argued that China would fall under the same 
disciplinary proceedings as other WTO member countries, but 
this is a slow and daunting process that could take as long as 
2 years before any action is taken. During that time, more 
American jobs and businesses could be jeopardized because of 
China's noncompliance.
    While I believe in fair trade and supported normal trade 
relations with China in the past, I have several reservations 
about granting China permanent trade status. Providing small 
businesses with new markets to export their goods and services 
is one of the many factors we must address before making this 
important step. Although trade with China presents several 
concerns outside the realm of trade, I look forward to the 
testimony from our distinguished guests on the impact on small 
businesses.
    I thank you, Mr. Chairman, and I look forward to the 
testimony.
    Chairman Manzullo. Thank you. Our first witness will be 
Congressman Phil Crane, who is in the neighboring congressional 
district to the one that I represent. He is the chairman of the 
Trade Subcommittee on Ways and Means.
    Mr. Crane.

STATEMENT OF HON. PHILIP M. CRANE, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ILLINOIS

    Mr. Crane. Thank you, Mr. Chairman. I thought maybe it 
would be ladies first, but I see it is age before beauty.
    I thank you for inviting me to testimony before your 
Committee in support of granting China permanent normal trade 
relations and its importance to small businesses throughout the 
United States. I would like to enter a copy of my statement 
into the record.
    Chairman Manzullo. Without objection.
    Mr. Crane. Thank you, Mr. Chairman.
    I want to share with you the results of a General 
Accounting Office report I requested on the impact of 
international trade on small- and medium-sized U.S. businesses. 
But, first, I want to talk about the overall importance to our 
country of granting China permanent normal trade relations.
    Approving permanent normal trade relations with China will 
create new jobs for a new economy. We are talking about more 
American jobs, jobs paying a higher wage because export-related 
jobs pay an average of 17 percent more than nonexport-related 
jobs, according to the Department of Commerce.
    [The information may be found in appendix.]
    Mr. Crane. The choice facing us on normalizing trade 
relations with China is historic, perhaps the most important 
vote the House will cast this decade. The new trade agreement 
with China is a one-way deal in our favor because it does not 
increase access to the U.S. market for the Chinese.
    The United States represents only 5 percent of the world's 
population, while China is roughly 20 percent. We can sell only 
a limited number of products and services within the United 
States. In order to keep our economy growing, we have to have 
access to a market the size of China's, not only as it exists 
today, which is huge, but access, as it continues to grow into 
the world's largest consuming market.
    In a global economy, increasing trade with China is not 
only the best way to keep our economy growing, but it is also 
the best way to help improve the standard of living and human 
rights conditions in China.
    This is clearly a win/win for America and for China. While 
we are all in agreement, we need to continue to keep the 
pressure on the Chinese Government to improve human rights, 
labor, and environmental conditions, giving the Chinese people 
access to products and services, manufactured and created with 
our standards, is the best way to improve conditions in their 
country.
    Mr. Chairman, as you know, small- and medium-sized 
businesses are huge exporters of products and services. The 
nonpartisan GAO study I requested shows that over 202,000 
small- and medium-sized businesses in 1997 exported goods to 
countries around the world, a figure nearly double the 112,000 
companies that exported goods in 1992, just over a 5-year time 
frame. I would like to enter the complete study into the 
record. The study also found that companies with fewer than 500 
employees accounted for 97 percent of all U.S. exporters in 
1997, which is the most recent year that data is available.
    [The information may be found in appendix.]
    Mr. Crane. Some of the other highlights of the GAO study 
include: exports by small- and medium-sized firms account for 
one-third of the total value of exported U.S. goods. In 1997, 
these businesses exported goods valued at $172 billion and 
accounted for 31 percent of total U.S. exports. Ten years 
before, small- and medium-sized firms exported $42 billion in 
goods, or 26 percent of all U.S. exports that year.
    Small- and medium-sized businesses represented the highest 
shares of total U.S. exports in miscellaneous manufactured 
goods, 66 percent; lumber and wood products, 64 percent; and 
apparel, 51 percent. By value, U.S. goods exports rose from 
$251 billion in 1987 to $689 billion in 1997. U.S. goods 
exports increased from 5 percent of gross domestic product in 
1987 to 8 percent of GDP in 1997. Similarly, U.S. service 
exports rose from $99 billion in 1987 to $258 billion in 1997. 
Since 1990, small businesses have created 75 percent of all net 
new jobs.
    This study shows that it is not just Wall Street that will 
benefit from trade with China, but Main Street small businesses 
started by American entrepreneurs that represent the heart of 
our economy as well. For hundreds of thousands of these 
businesses, expanded trade has meant more and better jobs, 
higher wages, and better benefits for their employees. This 
report is another indication that expanding trade with China 
will open international markets even more to these diesel 
engines of our Nation's economy.
    In today's international marketplace, small- and medium-
sized businesses are no longer competing here in America, but 
around the world. I hope my colleagues who remain undecided on 
the upcoming vote on China will remember how vitally important 
international trade is to small businesses and the thousands 
they employ in their districts back home.
    Thank you, Mr. Chairman.
    Chairman Manzullo. Thank you, Mr. Chairman.
    [Mr. Crane's statement may be found in appendix.]
    Chairman Manzullo. Our next witness from the first panel is 
Administrator Alvarez. She is the Administrator of the U.S. 
Small Business Administration, a person with whom I have worked 
on several projects and for whom I have the utmost respect. She 
is quite scholarly, and I can tell you firsthand she is an 
excellent administrator.

 STATEMENT OF HON. AIDA ALVAREZ, ADMINISTRATOR, SMALL BUSINESS 
     ADMINISTRATION, ACCOMPANIED BY JIM WILFONG, OFFICE OF 
                      INTERNATIONAL TRADE

    Ms. Alvarez. Thank you so much. That is very kind, Mr. 
Chairman.
    Mr. Chairman, Ranking Member McCarthy, Chairman Crane and 
distinguished members here, thank you for inviting me to 
testify about America's small businesses and trade with China. 
I can only echo what Chairman Crane just said about the 
importance of international trade and the potential 
opportunities with PNTR for small businesses.
    The opportunities, as I said, are growing for small 
business in the international trade arena. This Subcommittee is 
well aware of that and the fact that the voice of small 
business is often ignored in debates on issues of national 
importance, particularly the permanent normal trade relations 
for China, which is why we are here today. It is important to 
note that in the aggregate, small business is big business for 
this economy. It is the engine that drives the economic growth 
in this country.
    As we heard, 97 percent of all U.S. exporters are small 
businesses, generating at least one-third of the revenues 
produced by those exports. With specific focus on China, China 
is actually the tenth largest export market for U.S. small 
businesses. As you said, Mr. Chairman, small businesses account 
for 82 percent--82 percent of the U.S. exporters to China; 35 
percent of the revenues generated. And, the growth rate is 
really impressive. From 1992 to 1997, for example, the number 
of small businesses exporting to China increased 141 percent.
    Clearly, China's growing market is creating unprecedented 
opportunities for American entrepreneurs. We talked about where 
a vast part of the world's population resides, and it is in 
China.
    I know that you will be hearing on the next panel testimony 
from many small businesses that are already trading 
successfully with China, but I am sure you will hear from them 
that it has not always been smooth sailing. It is not easy to 
be a small business trying to do business with China. For small 
businesses, there are continuing problems with a lack of 
published rules, high tariffs, requirements to have expensive 
local partners, requirements to obtain multiple import and 
business licenses.
    What effect, if any, would permanent normal trade relations 
have on U.S. small businesses? I can tell you from my 
experience and in talking to small businesses around the 
country that they believe PNTR would be a big win for them. In 
fact, I would venture to say that small businesses may even 
enjoy greater benefits relative to large companies.
    For example, Boeing, which has a long-standing presence in 
China, has the ability to deal directly with the government. 
Not so for small businesses; small businesses historically have 
not had that type of clout. With the Chinese Government 
lowering barriers and opening up more business-to-business 
contact, we anticipate that the playing field will be 
significantly leveled for untold numbers of small businesses.
    It is not just the owners who benefit from PNTR. We believe 
that PNTR would also be a big win for the people who work for 
small businesses. We know, for example, and we heard some of 
those figures here this morning, small business exporters 
experience 20 percent greater job growth. They pay wages that 
are 17 percent higher, on average. They provide benefits that 
are 11 percent higher, on average, than their nonexporting 
counterparts.
    Let me just highlight a few of the key aspects of the PNTR 
agreement that will help U.S. small businesses. Under this 
agreement, China will cut the average general industrial tariff 
from 24.6 percent to 9.4 percent by 2005; lower information 
technology tariffs from 13.3 percent to 0 by 2005--which is a 
real key, given the number of small businesses involved in 
information technology we see a lot of growth in that sector; 
lower tariffs on key agricultural products from 31.5 percent to 
an average of 14.5 percent by 2004, very important to many 
small businesses that sell processed foods and other value-
added agricultural products; and eliminate the required use of 
Chinese Government-approved middlemen to sell products in 
China.
    U.S. companies will have the right to import and export and 
to have their own distribution networks in China to sell U.S.-
made products directly to customers; allow professionals and 
service providers to operate within China in accordance with 
WTO standards--an important development, since many of the 
accounting law and engineering firms doing business in China 
are small businesses. China must conform its standards and 
inspection procedures to WTO norms, so that rules otherwise 
obscure, will be published, making them more transparent for 
businesses, which reduces the cost of compliance--there are 
really savings involved in these reforms; simplify and make 
uniform customs and licensing procedures, a move that will 
reduce paperwork costs for small businesses significantly--
again, reductions in costs for these small businesses, allowing 
them to do more; expand its obligation to protect intellectual 
property, while at the same time providing injured parties 
access to China's courts and the WTO dispute settlement system.
    This is just a very quick overview of some of the benefits 
to small businesses that would result from PNTR with China.
    We have looked at this issue closely because China will 
enter the WTO regardless of what action the United States 
takes. Our markets are already open to China, and our 
assessment is that we gain nothing by withholding PNTR. Our 
trade representatives, Ambassador Barshefsky and her team, have 
negotiated critical market-opening gains with China. We run the 
risk of ceding those gains to other countries.
    Congresswoman McCarthy made reference to this: We should 
not underestimate the difficulty for China in implementing 
these reforms. These are very difficult reforms for them to 
implement, and they also need to overcome constituencies 
opposed to these reforms.
    Granting PNTR is our chance to support those in China who 
seek to advance the type of market-oriented economic reforms 
that we have been pressing China to adopt, while enabling 
American small businesses to capitalize on the really 
substantial trade liberalization commitments that China has 
made.
    I thank you for the opportunity to appear here today, and I 
would be happy to take your questions.
    Chairman Manzullo. I appreciate that very much. I also 
appreciate your enthusiasm as to what is going on here.
    [Ms. Alvarez's statement may be found in appendix.]
    Chairman Manzullo. Congressman Crane, I have several 
questions, but the one question I really want to zero in on is 
your statement, with which I concur wholeheartedly, that the 
U.S.-China WTO accession agreement is one-sided, in favor of 
America.
    Could you explain that?
    Mr. Crane. Yes, indeed.
    I think it is a vitally important thing for all of us to be 
aware of when this vote comes up, Mrs. McCarthy. There are 135 
member-nations in WTO right now. China's accession will add to 
that number one more; there will be 136 members. If we do not 
grant permanent NTR, 134 countries in the world will suddenly 
have access to that market, with the incredible reduction of 
tariff barriers that will occur, and the only exception will be 
us.
    We are the only ones that will not have access to that 
market, and they will continue to have access to our market. 
That is why, as I indicated--I mean, it is truly a win-win 
proposition, but it is incredible in terms of what the 
potential for increased U.S. exports amounts to in agriculture 
alone. They are talking about $2 billion a year. I mean, it is 
mind-boggling.
    And that is not the only thing. I mean, in the auto 
industry, I can't understand for the life of me why the auto 
unions are expressing--I mean their leaders, at least--are 
expressing opposition to this, because it lowers the tariffs on 
U.S. auto exports 75 percent, and it eliminates quotas on U.S. 
auto exports to China altogether.
    I mean, there are so many provisions in this that are so 
exciting to contemplate in terms of our expanded opportunities 
that it truly--I mean, this is the most exciting opportunity, 
and it has, though, implications beyond economic implications.
    As you know, Taiwan has been up to speed and they have 
sought accession too, and there was a general agreement that 
Taiwan would come in after China, but that means immediately. I 
mean, it is China, and then Taiwan, like that.
    But there are some security problems, as you know, in that 
area. For us to create a situation between ourselves and China 
that distances our improved relations with them since Deng 
Xiaoping led the crusade for Leninist capitalism, it is the 
ultimate oxymoron, but he truly believed in free enterprise and 
he started China down that path. Jiang Zemin embraces it, 
Tenghui Lee is a total believer. He was unilaterally 
privatizing state-owned enterprises. Now, that was not good 
politics over there for him, but he believed in it.
    These are the kinds of reforms we want to see accelerate, 
and the best way to accomplish that is to have that contact, 
that personal contact with them.
    I was in China some years ago and Motorola, which has its 
corporate headquarters in my district--Motorola was visiting 
with the head of their plant over there in Shanghai, and he was 
explaining to me that they have to maintain clean working 
conditions for their employees; they have to pay overtime for 
more than a 40-hour workweek; they have to provide health care 
benefits to their employees. I said, did you bring all that 
over from the United States? He said, no, those were the 
guidelines that the Chinese Government imposes on all foreign 
firms doing business over here. I thought, well, that is a 
little unfair, because they are not imposing those same 
standards on domestic businesses.
    But I thought about it for a moment, and I thought, gee, if 
I am working in some grungy Chinese plant and there are no 
health care benefits, no overtime pay, no clean working 
conditions, and Aida is working for Motorola and she is 
enjoying all of those benefits, and at the end of the long day 
we are having our Tsing-taos together, and I am moaning about 
the working conditions and how terrible it is for me, it is 
only natural Aida is going to say, Phil, why do you work there? 
Come work for Motorola.
    I am reminded, folks, that Ben Franklin made the 
observation, A good example is the best sermon. We are 
providing that kind of good example that does have a ripple 
effect. I mean, it spreads out to help advance the civilized 
values that we mutually embrace. Having that kind of a presence 
there is a decided plus for us.
    The other point I would make is to keep in mind that we 
have been at full employment now for almost 5 years. There are, 
according to Mr. Sweeney, I think, 6 million illegal immigrants 
working in the United States right now, 6 million. And he is 
trying to recruit them to join the AFL-CIO. We are in a 
situation where we almost are required to import labor, because 
of our problems in that regard. This will increase that kind of 
pressure.
    But the thing to keep in mind is that an increase in the 
payment for those people that have jobs related to exports, the 
figures that I quoted in my original statement of, on average, 
a 17 percent higher pay rate than those people who are simply 
working for jobs--I mean, doing jobs for our domestic economy.
    Chairman Manzullo. Mrs. McCarthy.
    Mrs. McCarthy. Thank you, Mr. Chairman. Again, the 
testimony from both of you--as I said, this is going to be a 
tough vote for an awful lot of members, because a lot of us do 
feel both sides are right. I think that should be understood. 
But we are talking about small business today, and I think that 
is where I want to stay.
    The SBA claims that small businesses will benefit from the 
use of the WTO dispute settlement process. With small 
businesses, will they have the direct access to the WTO dispute 
settlement procedures?
    Ms. Alvarez. I believe they will. Prior to the WTO meeting 
in Seattle, we were engaged in conversations with the U.S. 
Trade Representative's office and the Commerce Department, 
because there is a strong interest on the part of the 
administration, for example, to having an assistant secretary-
level person at USTR whose exclusive focus would be small 
business; and we went to Seattle with that in mind. We saw 
Congressman Manzullo there. The idea is that we need to 
incorporate the small business interest at every level of the 
process. I think that would ensure the right outcome.
    Mrs. McCarthy. With my concern following that up, will our 
small businesses be able to go through the procedures and the 
red tape? We know that the WTO, sometimes takes years to have a 
settlement one way or the other. Can our small businesses 
sustain that as far as working with them?
    Ms. Alvarez. Right now we have a relatively modest 
international effort at the SBA. Nonetheless, it is effective. 
We have an international trade loan program, we have an export 
working capital program, we work with the Department of 
Commerce and other agencies that promote U.S. export assistance 
centers. We would have to add to our responsibility the kind of 
assistance and counseling that is necessary to help these 
businesses succeed.
    I think that could happen. More and more, I see us working 
together with other Federal agencies so that we can complement 
what they do in other parts of the world, and I think that that 
would extend to the China commitment.
    Mrs. McCarthy. If I could ask one other question, the 
administration claims that PNTR to China will benefit small 
business subcontractors, supplying large U.S. companies, who, 
in turn, will increase exports to China.
    What will prevent these large companies from moving their 
subcontracting needs to Chinese suppliers?
    Ms. Alvarez. Right now, Boeing, which is a major exporter, 
is also a major user of U.S. small businesses as 
subcontractors. In the case of a company like Boeing--and there 
are many others--we monitor their subcontracting relationships 
with small business. They also do business with the Federal 
Government, and if they want to be competitive vis-a-vis other 
companies in gaining access to the Federal contracting market, 
they have to have a very compelling subcontracting program, 
because we have right now, by law, a requirement that 23 
percent of all Federal contracts go to small business. So that 
may be an indirect way to do it, but I can assure you that many 
of these companies right now maintain a very active small 
business subcontracting--U.S. small business subcontracting 
capacity, because we are monitoring that.
    Mrs. McCarthy. Well, I know we are monitoring that right 
now. My concern is, once we are over there, especially with the 
large corporations, and they have their foot there, I am still 
concerned that our small businesses here could end up getting 
hurt.
    Ms. Alvarez. I think that is a fair concern.
    Chairman Manzullo. If I could interrupt you, Mrs. McCarthy, 
Congressman Crane has a meeting that he has to attend. I beg 
the indulgence of the other members that don't have an 
opportunity of questioning him. But you understand the vagaries 
of the schedules we have here.
    What I would like to do is, if you could just suspend for a 
second, if anybody has a very quick question of Congressman 
Crane.
    Mr. Hinojosa, if you have a question? Do you have a 
question you want to ask Mr. Crane?
    Mr. Hinojosa. First, I want to thank both Congressman Crane 
and Administrator Alvarez for coming to talk to us today.
    Congressman Crane, do you have small businesses exporting 
to China today?
    Mr. Crane. Today, in my district? We had a Trade 
Subcommittee hearing about 5 years ago in my district, and 
Charlie Rangel was out there with me, and I have the corporate 
headquarters in my district of Motorola, Sears, Ameritech, 
United Airlines, Kemper Insurance, and right on my border are 
Baxter & Abbott and AllState Insurance, so I know that my 
district--and I think it is a bigger export district even than 
Don's, and he has a biggee.
    But Illinois was the first largest export State, so it was 
exciting to hear testimony from these people. The revelation 
that came out of that hearing was that better than 90 percent 
of our Illinois exporters were businesses employing 500 or 
fewer, and it was awesome, I mean to Charlie and to me.
    In addition to that, though, I then--about a year later, I 
had a fellow who came in doing business in the Persian Gulf, 
and he handed me a folder and said, Congressman, this is a list 
of businesses in your district doing businesses in the Persian 
Gulf. Do you know how many there are?
    I said, I haven't the vaguest idea.
    He said, Over 150. He said, These are businesses employing 
100 to 150 people.
    I opened it up and I looked at the names of them. There was 
not a single name of those over 150 businesses in my district 
that I recognized. I never heard of them before--I mean, really 
small businesses. But this is the awesome part of the role of 
small business in international trade.
    Well, you know, it has always been; the backbone of 
business in our entire history has been small business. I mean, 
the giants grew out of small businesses, but small business is 
the real backbone. But it is an awesome figure.
    The one unfortunate thing to me is that the message is not 
being properly communicated by the heads of those businesses to 
their employees about the importance of trade to our business, 
and that translates into the importance in preserving your job.
    When I talk about trade at a town meeting back home, people 
start falling off to sleep. Oh, come on, let's talk about the 
important things. I mean, it is sad. It is a sad, sad thing 
that we are not properly getting the message out on the 
importance of trade.
    Mr. Hinojosa. Well, I asked that question because I wanted 
to see if you or the Administrator could tell me how these 
small businesses are financing their accounts receivables and 
what kind of assistance they are getting in ensuring that there 
is prompt payment for their goods or services, whatever they 
may be exporting to China.
    Mr. Crane. Well, I would yield to Aida on that one to 
respond, if I may. But if that--is it for me, Mrs. Napolitano?
    Ms. Napolitano. It would take several hours, sir, and I 
yield to you.
    Mr. Crane. Well, I will catch you on the floor. Thank you 
so much.
    Mr. Chairman, I appreciate it. Thank you.
    Chairman Manzullo. Thank you, Mr. Crane.
    Why don't you go ahead and answer the question here?
    Ms. Alvarez. I know that Congresswoman McCarthy had also 
asked----
    Chairman Manzullo. Let's finish the answer to that 
question.
    Ms. Alvarez. The other thought, Congresswoman, is, I went 
out to Washington State, I toured the Boeing plant, I met with 
the people who are in charge of their small business activity, 
and I met with some of these small businesses.
    These are very sophisticated companies. The people who 
perform work for these major companies, the small businesses, 
have very specialized skills. These are not low-skilled 
activity. There may be nothing to prevent this from happening 
in China, but I don't know that they have the capacity, the way 
we do, to generate--to produce small businesses that have the 
level of sophistication that we do. Those are the businesses 
that the ``Boeings'' and these other companies are hiring.
    Part of it is an outgrowth of the reengineering of 
businesses. When big businesses started to break up and 
reconfigure themselves, they lost sophisticated workers who 
went off and started their own companies--and then eventually 
were actually hired back with their employees by these big 
companies. This approach lends more flexibility to the 
operations of the big business. Many big businesses decided 
that they had core expertise, and that all of the other areas 
that were required could be provided by small businesses; and 
that is the sort of model that they are using in this country.
    I just don't see these companies, not in the near term, 
suddenly discovering that China has that kind of a capacity. 
They will not discover that kind of capacity in China. I do not 
believe so.
    Mrs. McCarthy. Thank you.
    I think this is really a complicated question, because even 
as you answer, I start thinking for the future. I happened to 
think of Japan after World War II when we helped them so much 
and certainly they started copying everything that we did, and 
pretty soon, they were competing with us tremendously; and for 
a long period of time, we did lose jobs because of that.
    I am really just trying to find my way through this, 
because we are supposed to protect our small businesses. I want 
to make sure that we are protecting our small businesses. 
Because, gosh knows, you know, even if it is only 5 to 7 years 
down the road--and I tend to think that certainly in China they 
have extremely bright people, they are going to be educated, 
they are going to be trained for jobs, and pretty soon we are 
going to be competing with them.
    Of course, on our end, I happen to think very strongly that 
we have to take many of our workers and start upgrading them 
now, not waiting for when they might lose jobs down the road. 
So that is where I am coming from.
    Thank you. I appreciate it.
    Ms. Alvarez. Yes. I understand.
    Chairman Manzullo. Congressman Hinojosa.
    Mr. Hinojosa. Yes. I asked the question about how----
    Ms. Alvarez. Financing.
    Mr. Hinojosa [continuing]. The small businesses take care 
of financing their accounts receivables and what type of 
assistance do they get for prompt payment.
    Ms. Alvarez. I think that is really a good question, and it 
is certainly one of the challenges that we are facing at the 
SBA. We have a couple of programs that are meant to assist 
small business and financing, but we find that our programs are 
actually underutilized, partly because nobody knows about them. 
Many people, small businesses and the banking community, don't 
know about them. We experience the same sort of frustration as 
Congressman Crane expressed at the lack of interest or 
awareness out there. That is why this hearing is so important.
    We have an international trade loan program where we 
guarantee loans up to $1.25 million for small businesses doing 
international activity. We also have an export working capital 
loan program in which we provide a 90 percent guarantee up to 
$750,000.
    There are different ways of financing transactions. The 
export working capital program relies on accounts receivable, 
and inventory for collateral. Under the international trade 
loan program, the collateral is fixed asset-based. These 
programs, however, I think are underutilized. Small businesses 
tend to find financing in other ways.
    Jim Wilfong is the head of our Office of International 
Trade. Jim has been out there visiting with not only the small 
businesses, but with the finance community, and exploring 
precisely the question that you just asked.
    Chairman Manzullo. Could you spell your name for the 
record, please.
    Mr. Wilfong. Jim Wilfong, W-I-L-F-O-N-G.
    Chairman Manzullo. You need to bring the mike closer to 
you.
    Mr. Wilfong. Mr. Chairman, as the Administrator said, I 
have been trying to really find out why small businesses have 
not been using our programs or some of the Ex-Im programs for 
small companies as well, and it is exactly as she described.
    I called on one area in New England to make sure that I 
could figure it out in one spot. I went to 15 banks, most of 
them community banks, because a lot of small business people 
are doing business there. Before I came to the Small Business 
Administration, I was an exporter for 25, 30 years. I was doing 
my business with community-based banks as well.
    What I found is that they do not know about our programs. 
For the most part, they do not know when they have exporters. 
If I bring 20 to 30 relationship managers from those banks 
together for each one of the banks, which we did, maybe one of 
the people who was working there knew that they had an 
exporter. So it is really a question of education.
    They are financing these loans on second mortgages on their 
houses and with credit cards; they are financing them with 
irrevocable international letters of credit, wire transfers, 
cash in advance, a whole host of different ways; but what would 
really help them is if they really knew more about the export 
working capital program that we have, which allows them to 
finance on the basis of the transaction.
    Ex-Im has the same program. We handle the smaller accounts 
in small business, and they handle the larger ones. So I hope 
that answers your question.
    Mr. Hinojosa. Mr. Chairman, I want to share with the group 
that yesterday morning at 7:30 a.m. I was in my district, and 
thanks to the University of Texas Pan American at Edinburg, 
Texas, we had a digital teleconference with China. We had 25 
small businessmen and women from my district talking to about 
12 businessmen and women from--I think they were all men, from 
Shanghai; and we had a terrible connection, so that we could 
not see them clearly, but we could hear them very clearly, and 
they said that they were getting a good picture in China.
    But I want to share with you that we talked for about an 
hour, and it was to introduce ourselves to them and to find out 
what kind of interest they had to bring American products and 
what Chinese products they had to let us buy from them. So we 
could not match the businesses on this first try.
    In 30 days we hope to have another one of these digital 
teleconferences and succeed.
    But we did talk about the concerns that there was lack of 
knowledge about--how do we get the product there, who finances 
it, how are we going to be assured payment--the kinds of 
questions that any small businessman who has never exported so 
far would have.
    Now, if we had sent merchandise to Mexico because we happen 
to be in south Texas, adjacent to Mexico, then that is a lot 
easier. But we just do not have a lot of experience. In looking 
at some data that was provided to us this morning, I see that 
in our metropolitan merchandise export totals from my 
congressional area, there has only been $117,000 exported in 
1998, which is peanuts, you know, for what is being sent to 
other countries. So obviously, there is lack of information, as 
the Administrator said, about what help is available.
    I was very pleased that for the first time, we brought the 
Department of Commerce together with the SBA representatives to 
this meeting so that they could begin to share with our 
participants in this teleconference that there are programs 
like the Administrator mentioned, and we just need a lot of 
help for other small businesses in regions of the country where 
we do have the capacity to manufacture and to produce 
agricultural products, and we are just not doing a good job. I 
can only tell you, we are not doing a good job in workshops and 
in some way making this help and assistance available.
    I look forward to working with you to make it happen.
    Ms. Alvarez. Yes. I couldn't have said it better. I totally 
agree.
    There has been an evolution, I believe. When I became the 
Administrator 3 years ago, it was very clear to me that going 
into the 21st century there were three areas that were of 
necessary focus for small business: one, the incredible 
diversity of the small business community; that means women and 
minorities, which are among the fastest growing of new small 
businesses. Secondly, the critical importance of technology for 
small businesses to be competitive. It is not optional; it is 
necessary. And third, there is a global marketplace for small 
business.
    Now, to me, that makes total sense, and all of my 
experience bears that out, but frankly it is a new direction, 
because we have not been positioned in the past to promote 
these programs. We have been holding seminars and sessions; we 
have embarked on agreements with other countries where there 
are strategic alliances already in place at the level of the 
President and the State Department and so forth, and where we 
view our expertise is value-added to the peace process; and in 
the course of that, we believe we will open doors for small 
business, because it is all about people-to-people.
    Next week, there are trade missions going to Egypt and 
Mexico. We have played a key role in organizing those, working 
with the Department of Commerce and our sister agencies. This 
has not happened before, and it reinforces relationships, very 
important relationships, that we have with Mexico and Egypt.
    When we start to think big picture we see how to minimize 
the cost to the taxpayer by maximizing connections across 
agencies. And finally I do believe that when the President made 
SBA a Cabinet-level agency, he was acknowledging the fact that 
small business was a critical component of our economy.
    Mr. Hinojosa. Administrator Alvarez, I want to say that one 
thing you could do is inform all the members of the Small 
Business Committee months in advance before these trade 
missions, because I knew nothing about Egypt and Mexico trade 
missions, and I have heard nothing in 3 years that I have been 
in Congress about your missions. So we are not informed, the 
left hand does not know what the right hand is doing.
    Ms. Alvarez. We need to do a better job.
    Mr. Hinojosa. I think you ought to send to Members Only, so 
that it will come straight to our desks.
    Ms. Alvarez. There are a lot of channels that we go 
through, and it does not get to you.
    Chairman Manzullo. Thank you very much.
    Congresswoman Napolitano.
    Ms. Napolitano. Thank you, Mr. Chairman, and I beg your 
indulgence for a minute because I will have to go to a markup 
quickly.
    Ms. Alvarez, since I sit on Small Business and I ask all 
kinds of questions and I am very involved in providing access 
to SBA for my district, my concern has been, in the past, 
because in California we did a survey a while back, that NAFTA 
had adversely impacted small business.
    Now, if that is so, what has the SBA done to be able to--if 
we are going to be working on China, if the WTO is given to 
China, the PNTR, as SBA, what is the administration going to be 
doing to prevent the same type of negative impact to small 
business that was experienced because of NAFTA?
    Ms. Alvarez. Well, we are just asking Jim if we had 
statistics on it. There is no question that during my tenure, I 
was brought into this issue of the impact of NAFTA on small 
business. I think we could have done a better job.
    When I was brought into it, we started playing a very 
active role in trying to help displaced workers, for example, 
set themselves up as entrepreneurs, if that was their interest, 
and we started giving them priority in terms of loans, which 
they might not have had prior to that initiative.
    We view the overall effect of NAFTA as very positive. I 
myself have gone on trade missions to Mexico with U.S. small 
businesses, largely from California and Texas, and they have 
all been very enthusiastic about the access that NAFTA has 
created for them.
    Ms. Napolitano. I understand that, and that is not really 
where I was going.
    I think maybe what my concern is, is that--and you did 
slightly hit upon the retraining issue for entrepreneurships--
but, then again, the small businesses that lost because of 
NAFTA, whose employees are unable to locate jobs, comparable-
paying jobs, and thus, it becomes a problem of unemployment in 
our districts, such as mine that is still losing jobs.
    It is unfortunate that we have not set forth a program 
involving SBA, Labor and Education, to be able to do just that, 
those employees, those companies, those secretaries that are 
affected negatively. They should have something to benefit them 
out of the benefits of any trade agreement, and that is one of 
my biggest concerns, because that is where I am coming from.
    Ms. Alvarez. I totally agree with you. I think we need to 
do a better job of that, and I think it needs to be coordinated 
across agencies. The fact is that as you look at patterns, what 
often happens is, people lose a job; and then they actually 
migrate somewhere else and find a better-paying job. We have 
seen studies that show that, but it means they leave your 
district, it means that the action is somewhere else, given 
their skills set.
    But in the meantime, we need to do a better job of 
retraining people, I agree.
    Ms. Napolitano. One other quick question. Because of NAFTA, 
of course, right after--it is given to us that as a result of 
NAFTA, the Mexican peso was devalued, so consequently it 
eliminated any benefits from the lowering of the tariffs.
    What will happen with WTO--with PNTR? Do you think that the 
yuan might be devalued and thus negate any benefit to our 
American companies?
    Mr. Wilfong. I am not a currency expert, but I do not think 
so. I don't think that that is going to happen, because the 
peso was traded on the international currency markets and I 
don't believe that the Chinese yuan is traded that way. I don't 
think--it is not traded over the counter that way, so I don't 
think that that is a factor at this point.
    Ms. Napolitano. Thank you, Mr. Chairman.
    Chairman Manzullo. Do any other members have a follow-up 
question for Commissioner Alvarez?
    Thank you very much.
    Ms. Alvarez. Thank you very much. I appreciate the 
opportunity.
    Chairman Manzullo. All right. Let's have our second panel. 
We want to get started as soon as possible because of other 
committee meetings that are taking place.
    We have our second panel, and what I would like to do is to 
have Congressman Toomey introduce Mr. Olson from Olson 
Technologies, and then we will start our testimony with him.
    Mr. Toomey. Thank you, Mr. Chairman. I want to thank you 
for allowing me the opportunity to recommend Mr. Olson to this 
Committee, and I want to thank Mr. Olson for coming to 
Washington today to be with us. I know you have a very hectic 
schedule, running a thriving business.
    I want to say just a couple of words about Olson 
Technologies that Mr. Olson may not get a chance to tell us, 
and that is that this is an amazing success story in the Lehigh 
Valley, right in the heart of the Lehigh Valley of 
Pennsylvania, which is in my district and in the city of 
Allentown, which has often been characterized as an area which 
experienced and lived through the decline of heavy industry, 
which very, very fortunately--some would say miraculously--has 
been largely offset by an emerging high-tech service sector and 
an export-oriented part of our economy. So the economy 
generally is thriving.
    But Mr. Olson and Olson Technologies are in some ways the 
exception because they still represent heavy manufacturing in 
the heart of an old industrial city, and they are doing a 
wonderful job, and they are very successful and they are 
thriving I think largely due to the fact that they recognize 
that the future and their success depends on innovation and 
expanding markets, which Mr. Olson is going to talk to us about 
today, and not trying to turn the clock back and erect walls 
and barriers to prevent trade and to protect narrow sectors of 
the economy.
    So I am just delighted that Mr. Olson was able to come down 
here today. His company is, as I say, a great success story, 
and I welcome and look forward to his testimony and that of the 
other members of this panel.
    Thank you, Mr. Chairman.
    Chairman Manzullo. Okay. We are going to get this timer 
going here. We would like to limit your testimony to 5 minutes.
    Mr. Olson, please.

  STATEMENT OF JAMES E. OLSON, CHIEF EXECUTIVE OFFICER, OLSON 
             TECHNOLOGIES, ALLENTOWN, PENNSYLVANIA

    Mr. Olson. Good morning. My name is James Olson. I am the 
CEO of Olson Technologies in Allentown, Pennsylvania. I would 
like to thank Chairman Manzullo and Congressman Toomey and all 
of the members of the Subcommittee on Tax, Finance and Exports 
for inviting me here to come and testify in support of 
Permanent Normal Trade Relations with the People's Republic of 
China.
    Olson Technologies is a small manufacturer located in 
eastern Pennsylvania, in downtown Allentown. The company was 
founded in 1862, and was purchased by the present management in 
1984. We employ 47 people and our shop floor is currently 
represented by the United Steel Workers of America.
    One segment of business produces large-diameter butterfly 
valves for infrastructure projects around the world. These 
large-diameter valves range from 42 inches in diameter to 12 
feet in diameter, and they are used primarily in controlling 
water in electrical power plants, wastewater treatment plants, 
and fresh water drinking plants.
    Olson Technologies has been involved in international trade 
for over 25 years. Our international business started with what 
I affectionately call ``piggybacking'' with large Fortune 500 
companies who secured international projects around the world, 
and we supplied the valves for them. We would secure a contract 
to supply a complete set of valves, sold and delivered here in 
the United States, and the Fortune 500 companies would, in 
turn, install them in the countries. This business has amounted 
to about 10 percent of Olson Technology's overall sales and at 
times has risen to as high as 25 to 30 percent of our business.
    Today, Olson Technologies can point with pride to having 
installed large-diameter valves at numerous Korean nuclear 
power plants, Pakistani power plants, power plants in Thailand 
and in a number of other countries throughout the world. Our 
need to piggyback with Fortune 500 has lessened to some degree, 
and we now compete directly for infrastructure projects in the 
international market.
    Because of my company's experience in dealing in the 
international market and in dealing with China, I support 
permanent normal trade relations with China. Our experience 
relating directly to China involves buying products from 
Chinese foundries and from Chinese machine shops and shipping 
them into this country. We also build in our shop these large-
diameter butterfly valves to the specific Chinese national 
standard, which is a technical standard we have to meet in 
China, and then turn around and ship them into China.
    Because of this experience, we believe full membership in 
the permanent normal trade relations with China will provide 
Olson Technologies with a number of concessions that we don't 
currently have, but our Chinese valve companies do have these 
concessions. One of these concessions would lower the tariffs 
on our products so that we could compete more favorably in the 
Chinese infrastructure market.
    Another concession would remove restrictions on having our 
own sales force, which would be able to operate in China and 
free us from using a restrictive Chinese sales force.
    Finally, these concessions would allow me to set up my own 
distribution and communications inside China to assist in 
getting my products directly to the markets.
    Of course, these concessions wouldn't really mean much if 
China wasn't such a large, growing economy. In the next 25 
years, I believe China is going to build out its 
infrastructure, the same way as other emerging countries around 
the world have. This will mean a large increase in power plant 
projects and a large need for the large-diameter valves 
produced by my company.
    It will also mean building wastewater treatment plants, and 
the specific valves that are designed in my company that the 
Chinese do not have the technology for. This will all mean 
building numerous plants and the need for valves.
    In the next 25 to 30 years, the production increase at 
Olson Technologies could be anywhere from 25 to 150 percent. 
This would mean new hires in Allentown, increased business with 
our suppliers, and a general boost to the economy for Olson 
Technologies.
    As I mentioned before, Olson Technologies has had 
experience in dealing with China in both purchasing and 
selling. Over the past 10 years, at least, China has had more 
favored terms in selling their products in the United States, 
and a number of my valve company associates have suffered from 
the importing of valves into the United States. I am sure many 
of them are also now purchasing machine parts and castings made 
in China at very favorable prices.
    In conclusion, I would like to state that the recent loss 
of a large bid for the Beijing water treatment plant number 9 
was a very low point in my U.S.-China relationship, but the 
future of infrastructure built out and improving conditions for 
the Chinese with new plants and products makes the prospect of 
doing business in China extremely exciting.
    I therefore urge your support for permanent normal trade 
relations with China for the benefit of Olson Technologies and 
other mid- and small-sized manufacturers.
    Thank you, Mr. Chairman.
    [Mr. Olson's statement may be found in appendix.]
    Chairman Manzullo. Thank you very much. I am going to try 
to calm down these troops outside in line for the 
Appropriations Committee. I will be right back.
    [Brief pause in the proceedings.]
    Chairman Manzullo. Mr. Chabot, do you want to introduce the 
next witness?
    Mr. Chabot. Yes. We have a witness that we are very pleased 
to have here from Cincinnati, Ohio, Mr. Jeffrey Gabbour, who is 
Vice President and co-owner of Prestige International, Inc. It 
is a private enterprise based in Cincinnati, Ohio, and it was 
established in 1977, I understand. Its former name was Robbins 
International, Inc.
    The Prestige Robbins Group is a group of manufacturers and 
exporters of quality residential commercial hardwood floors, 
and they also have special designer parquets that are often 
used in commercial, as well as specialized sports systems for 
multipurpose sports applications. They are used in school 
gymnasiums, health clubs, recreation facilities, sports 
centers, et cetera.
    They have headquarters in Cincinnati, and they also have 
manufacturing facilities in Michigan, Wisconsin, Tennessee, 
North Carolina and Arkansas.
    Mr. Gabbour understands and speaks a number of languages--
French, English, Japanese, Italian, and reads Spanish as well. 
He is responsible for manufacturing and overlooking businesses 
in 55 countries worldwide and working with over 210 
distributors and representatives. He is responsible for 
managing the continued growth of the company and ensuring 
future development of business within new territories of trade.
    He has traveled in mainland China 10 times in the past 10 
years and has engaged in business with China since 1976.
    We are very pleased to have him here and we look forward to 
hearing his testimony, and we welcome him here.

     STATEMENT OF JEFFREY L. GABBOUR, PRESTIGE ENTERPRISE 
                INTERNATIONAL, CINCINNATI, OHIO

    Mr. Gabbour. Thank you, Congressman. That was half my 
speech.
    Chairman Manzullo, Mr. Chabot and other distinguished 
members, I really appreciate this forum to voice our views and 
experience, and appreciate that people really want to hear from 
us and what PNTR means to small businesses like ourselves.
    Our company was set up almost 25 years ago as an export arm 
to a large U.S. manufacturing firm that was set up in 1896. Our 
small firm represents 20 percent of overall sales. That means 
80 percent of the manufacturing is supported within the U.S. 
market, the other 20 percent is due to international markets. 
Our main growth has really been throughout Asia. That is really 
what spearheaded us in our wave of growth, except for China.
    China has really been left out of our mix. It only makes 
up, currently, 1 percent of our overall sales. Why? For two 
reasons: tariff barriers and nontariff barriers. So I am going 
to do my best to share some personal experience on what we have 
done in China for the past 15 years and what PNTR means to us.
    Until now, we have had a number of hurdles for import 
contracts. In order for us to do business in China currently, 
we have been constantly asked to move our operations over to 
China, meaning to move our operations, whether it be from 
Cincinnati or Arkansas, and to manufacture in Shanghai, 
Beijing, Hubei and other provinces.
    They have asked us to invest. They have asked us to 
transfer technology. When we do refuse, then they see where we 
can use local content. They will actually break up our product 
and say, why don't we have 30 percent of your content be 
supplied from local Chinese companies?
    Our main objective is to use 100 percent North American raw 
materials and to manufacture 100 percent made in USA goods.
    Now, the reason--another reason for this, and this will 
answer a question that Mrs. McCarthy had--is that we maintain 
certain industrial standards on our products. We have to meet 
certain ASTM, FIBA, different association standards. Therefore, 
we guarantee that all of our subcontracts will be delegated to 
American factories, because these factories are accredited and 
certified to manufacture under standards. And that has been our 
main point, why we can't have local content, because as soon as 
we have local content, then we lose certification.
    Right now, China is pushing to meet certain international 
standards. We are in the building industry, and they are trying 
to meet certain international building codes. Our most 
successful example was in 1997 when we supplied the China 
national games, their version of the Olympic games. It took us 
4 years to promote a three-stadium project. It took numerous 
meetings, numerous trips to China.
    What is the moral of this story, of us being able to supply 
these projects? Is that after the supply of this job to the 
government sector, they have actually changed their views on 
the building industry and building codes and how to build 
future facilities, again, in the sports industry.
    So we feel, even as a small business, we have actually made 
an impact on a certain industry, and because these were 
national games, we had people from every single province in 
China, who attended the national games in Shanghai. So now we 
started getting inquiries from Xi'an and Hubei and other 
regions because of what we were able to do in one region.
    We have a business philosophy, whether it be for China or 
international, we call it the ``planting seeds philosophy.'' We 
went into China really in 1980 when very few American companies 
were going there. People thought we were crazy to go there. Our 
idea at that time was to plant seeds, to set a foot in the 
door, to try to change and influence ideology on our products.
    We have proven that after 10, 15 years of patience, we were 
able to write our first contract in Mainland China. That is why 
we are a big supporter of PNTR, because whether changes will 
take place today or 10 years from now, all we are doing is 
planting seeds. Without the seeds, we will not be able to 
influence what kind of business we can do in China.
    By lowering the tariffs and also eliminating some of the 
nontariff barriers, it is going to allow business-to-business--
it is going to allow face-to-face meetings. Numerous times I 
have met with my Chinese counterparts who want to import our 
goods because they base it on technical merit, but so many 
times what is the stopping block is that the tariffs are too 
high. We are eliminated anywhere from $2 million to $5 million 
contracts because of this.
    Now, in closing, I would just like to state that the irony 
of all of this is that China is actually welcoming our American 
products into the market, and by voting no, we would basically 
be putting sanctions on ourselves.
    So I strongly urge Members of Congress--and I hope you can 
understand the point of view of a small business and how it 
does impact our community and our people and our families.
    Thank you very much.
    Chairman Manzullo. Thank you very much.
    [Mr. Gabbour's statement may be found in appendix.]
    Chairman Manzullo. I have the pleasure of having two 
constituents here at this hearing, but I guess that is my 
prerogative when you are chairman. But aside from prerogatives, 
it is also the area of expertise.
    I have asked Sharon DeDoncker from Aqua-Aerobics to 
testify. Sharon has been at Aqua-Aerobics for almost 30 years. 
Bob Phelps, who is a local farmer, to will testify, too.
    We will start first with Sharon. Sharon is Vice President 
for International Sales at Aqua-Aerobics in Rockford. Their 
international sales and market activities are about $45 million 
a year, dealing with wastewater treatment equipment.
    Sharon, we welcome your testimony.

STATEMENT OF SHARON K. DeDONCKER, VICE PRESIDENT/INTERNATIONAL, 
         AQUA-AEROBIC SYSTEMS, INC., ROCKFORD, ILLINOIS

    Ms. DeDoncker. My name is Sharon DeDoncker, and I am Vice 
President of International Sales with Aqua-Aerobic Systems; and 
I am here today as part of the U.S. Chamber of Commerce PNTR 
support group.
    Aqua-Aerobic Systems is a privately owned company in 
Rockford. We manufacture and market equipment used for water 
and wastewater treatment. We sell both to municipalities and to 
industries. The company has been in business since 1969. We 
have annual sales of $45 million and we employ 135.
    The U.S. market is a mature market for our product, so if 
we are going to grow, we have to really look at the 
international market. We have assigned our resources 
accordingly into that area. Currently, international sales are 
about 10 to 15 percent of our business, but we are looking at a 
growth to 20 percent of our business within the next 2 years. 
One of the best markets for our products is the China market.
    In 1997, China spent $7.2 billion on their environment, 
making it one of the best markets for U.S. environmental 
technology products. We have aggressively pursued this market.
    Over the last year, we now have a rep who works full-time 
in that area dedicated to China. We have taken part in 
technology exchange groups. I have been to China three times 
myself last year, working on relationship-building. Our 
technical staff has worked with local engineers on writing 
designs and specifications. We have also hosted many groups at 
our plant in Rockford, and we worked with the government 
officials of Rockford's sister city in Changzhou. In other 
words, we believe in China and we have invested accordingly.
    We are a typical small company with very limited resources. 
If we are successful in an area, it is because we use resources 
outside of our plant, such as government resources, and that 
has been crucial to our success in these areas and maintaining 
business there. But I have to believe, if PNTR does not pass, 
that the resources for supporting government activities in 
China will also be limited, which is a real shame for small 
companies like us since we really desperately need the 
government's support to maintain our efforts in foreign 
countries.
    We have not been active in China that long, probably only 2 
years that we have been aggressively working that market. In 
that 2 years, though, we have started to see success already. 
Just last year, we booked a $2.8 million job which we will be 
shipping next month. That one job will represent 6 percent of 
our company's total bookings for this year.
    One benefit that we like about China is that it is so 
large. Not only are there a lot of projects there for us, they 
are huge projects compared to what we normally do. A small 
project there starts at half a million, and for us, $1 million 
in additional sales equates to an additional employee.
    With passage of the PNTR, we feel our sales to China can 
grow at a rate of 20 percent a year and sales to this area 
could represent 50 percent of our international sales in a very 
short period of time.
    Passage of PNTR is very important to Aqua-Aerobic Systems. 
In fact, it is crucial to our continued work in this area. If 
it does not pass, there are just too many obstacles for us to 
overcome, and it is very possible that we will decide to 
totally suspend our activity in this area. Not only would we 
lose out on the largest market in the world for our product, 
but we would lose the time and the money that we have already 
invested in this area.
    The key reason why this is important to us is the price 
issue. China has agreed to significantly reduce tariffs as a 
condition of WTO membership. However, without PNTR, China can 
deny the tariff reductions to U.S. companies while continuing 
to grant them to the other WTO members. We are talking about 
reductions in the range of 10 to 15 percent. If you are a 
salesperson, no matter how well you do, this is a really 
difficult obstacle to overcome; 10 and 15 percent is a huge 
difference.
    We need equitable tariffs to maintain our price 
competitiveness with other international companies, which we 
can get if PNTR is granted. Without having an equal playing 
field, we cannot be a viable participant in this market.
    The U.S. is the largest producer of water and wastewater 
treatment equipment in the world, and China has a tremendous 
need. The government there is developing and enforcing 
pollution regulations, so with passage of PNTR, we can take 
advantage of this need. Without passage, no U.S. company can 
benefit, while our international competitors can.
    As I said, we are typical of U.S. small companies. We need 
the same backing that our international competitors get from 
their governments. We need passage of this measure in order to 
compete on an equal basis with our international competitors.
    I would like to thank you for giving me this opportunity to 
express our support of passage of PNTR. Thank you.
    Chairman Manzullo. Sharon, thank you very much.
    [Ms. DeDoncker's statement may be found in appendix.]
    Chairman Manzullo. Our next witness is Bob Phelps who lives 
in Rockton, Illinois, in Winnebago County. He has farmed the 
family farm since 1974 in partnership with his dad. Bob holds a 
Bachelor of Science degree in Agricultural Economics from the 
University of Illinois. He is a member of the Illinois Farm 
Bureau board of directors. He is also local school board member 
and former president. He is a graduate of the Illinois 
Agricultural Leadership program in 1992, and was a member of 
the McCoy Fellowship, the American Council on Germany, in 1996. 
He is here today instead of planting his crops.
    Bob, we welcome your testimony.

  STATEMENT OF ROBERT ``BOB'' PHELPS, OWNER-OPERATOR, PHELPS 
                    FARMS, ROCKTON, ILLINOIS

    Mr. Phelps. Thank you very much, Mr. Chairman and members 
of the Committee.
    Chairman Manzullo. Bob, are the crops in, or is it still 
too wet to get them in?
    Mr. Phelps. We have been planting. In fact, I think 
somebody is planting at home today. So hopefully tomorrow we 
will finish, I think.
    Chairman Manzullo. If you could pull the mike closer to you 
while you testify. Thank you, Bob.
    Mr. Phelps. Again, Congressman Manzullo, members of the 
Committee, I appreciate the opportunity to come before you and 
present today.
    My name is Robert Phelps and I am a family farmer. My 
family has farmed for five generations in Rockton Township 
north of Rockford, Illinois. We primarily raise corn and 
soybeans and feed beef cattle. We also raise lesser amounts of 
wheat and alfalfa.
    I am sure you have all heard the numbers surrounding the 
granting of permanent normal trade relations to China. The 
amount we export in agricultural commodities, their value, the 
number of people affected both here and there, and the tariffs 
and their expected reductions have all been examined and 
reexamined, and I am not going to reiterate them here. They are 
all with merit, and they are all important to me.
    While I personally do not export a product, the vast 
majority of my grain and oilseeds do enter the export channel. 
I know very well the importance of expanded markets and what 
happens to farm prices when markets are taken away or their 
existence threatened. History has shown that when markets are 
removed through embargoes, increased tariffs, or the threat of 
retaliation, farm prices drop.
    For me, this issue is all about incentives and choices. I 
am one of the early links in the food chain and for the last 
few years, I have been selling a product to the next link in 
that chain for a price that is at or below my cost of 
production. In any other industry, I could establish my price 
received based on costs and reasonable return on my investment, 
but in agriculture, I can only accept or reject a bid offered 
me, a bid independent of those costs or returns. This is 
certainly not conducive to profitability.
    Additionally, I currently have few, if any, meaningful 
noneconomic incentives to produce that food product. 
Regulations and restrictions from various agencies and units of 
government that I must comply with are increasing, all bearing 
a cost with no means of recovery, while my foreign competitors 
face far fewer barriers. The majority of my net income in the 
past few years has come from the government, not the 
marketplace.
    I listen to Alan Greenspan tout the growth of the American 
economy while rural America stagnates. All of these factors 
weigh very heavily as I try to economically justify producing 
food for a growing world.
    I believe it is time for a real incentive. There are, in 
fact, 1\1/3\ billion of them, the people in the People's 
Republic of China.
    Producing a product that someone wants, is willing to pay 
for, and having the increased market access that we talked 
about during the discussion surrounding the creation of the 
1996 farm bill is an incentive. Creating enough demand to 
result in a price for my product that moves toward 
profitability and away from government subsidization is an 
incentive for all involved. Increased trade is the safety net 
we need.
    Nobody can predict how much commodity prices would rise 
with the granting of permanent normal trading relations with 
China, but increased market access will certainly positively 
shift the demand curve. If the increased access and resulting 
demand can generate a modest 5-cent increase in the price of a 
bushel of corn, a 10-cent increase in the price of a bushel of 
soybeans, it would, for me, generate enough income to equal the 
amount that my wife and I pay towards 1 year of our daughter's 
college education, or it could be used to pay down long-term 
debt more quickly, or to replace equipment in a more timely 
fashion.
    I might add, it would also offset the cost of last year's 
interest rate hikes by the Fed and they are talking about that 
again today. In any case, those dollars are immediately pumped 
back into the economy. The ripple effect is profound. Every 
penny per bushel that comes from the marketplace is a penny per 
bushel that the Federal Government does not have to provide 
when prices are below loan rates.
    I believe another incentive for me would be the knowledge 
of an improved standard of living for the 1\1/3\ billion 
Chinese, primarily in the form of better nutrition. The demand 
for pork and beef in their diets will have a very positive 
impact on their nutritional well-being. We enjoy in this 
country an abundant, diverse, safe and affordable food supply. 
There is no reason the citizens of China should not as well.
    Earlier I mentioned choices, and I realize that I do have 
choices. I have the choice of what I grow on my land or how it 
is used based on what the market tells me. One choice I have is 
the option of growing houses, and much of my land is well 
suited for them. I live in a high-demand area for rural real 
estate, real estate that satisfies the desire of those who want 
a place in the country.
    I also have the option or choice of producing food for 
people who need it.
    Granting permanent normal trade relations to China gives me 
an incentive to make the choice of using my land for food 
production. I think that is the right choice. It is the best 
way I know how to wisely use our resources for the outcome and 
benefit of a worldwide society.
    Again, thank you for providing me the opportunity to 
present my views.
    Chairman Manzullo. Thank you very much, Bob.
    [Mr. Phelps' statement may be found in appendix.]
    Chairman Manzullo. I have to run off to the Banking 
Committee. I am asking Congressman Chabot if he would come over 
and chair the rest of the hearing. I don't know if I will have 
an opportunity to come back. If I don't, again, I want to thank 
you for coming out, and we really appreciate your interest in 
traveling all the way to Washington to tell us your life story.
    Mr. Chabot [presiding]. Thank you for the witnesses' 
testimony so far.
    Our next and final witness on this panel is Mr. Keith 
Parker. Mr. Parker achieved the honor rank of Eagle Scout at 
the age of 13. He is the last 4-sport letterman to graduate 
from Longview High School, Longview, Texas, and is a member of 
the LHS Athletic Hall of Fame. He had a college scholarship in 
three sports and later spent 3 years playing professional 
football as a tight end.
    Mr. Parker in his professional career is a licensed 
financial planner with expertise in finance and tax planning, 
and has earned numerous industry sales awards. He first met Dr. 
Mohsen Amiran in 1994 and purchased the patent rights to this 
new fire technology in April of 1998, while Summit was in the 
registration phase with the Securities and Exchange Commission. 
He has arranged and attended several nationally recognized 
demonstrations where FlameOut has been certified according to 
industry-recognized ratings, Federal Aviation standards and 
military specifications.
    Mr. Parker has been known to set himself afire, put a 
blowtorch to his arm, or even hold a 5,300 degree piece of 
magnesium in the palm of his hand to demonstrate the fast-
acting and lifesaving benefits of FlameOut. He has dedicated 
his life to showing the world an entire line of environmental 
products whose benefits are totally environmentally friendly. 
Keith Parker founded Summit Environmental Corporation.
    Mr. Parker is a pre-law graduate of Texas A&M University, 
where he majored in both political science and behavioral 
psychology. He continued his pursuit of higher education at 
Southern Methodist University and Southwest Texas University 
with graduate studies in tax law, estate planning and 
philosophy.
    We welcome you here, Mr. Parker. We would like to hear your 
testimony.

    STATEMENT OF B. KEITH PARKER, CHAIRMAN AND CEO, SUMMIT 
        ENVIRONMENTAL CORPORATION, INC., LONGVIEW, TEXAS

    Mr. Parker. Thank you, Mr. Chairman and distinguished 
members.
    Mrs. McCarthy, I would like to thank you for your comment 
earlier about the access for resolution to disputes, because 
that is a concern of a small company like Summit Environmental.
    I think Summit Environmental represents the true spirit of 
entrepreneurship in the United States. As my resume says, I am 
a licensed financial planner. I was in that business for 25 
years until I met Dr. Mohsen Amiran in 1994, and the man 
changed my life because of a product that he developed that I 
learned about.
    In 1992, at the Geneva Peace Conference, a fire-fighting 
agent, which is the most popular agent that was ever developed 
in the world called Halon, was banned because it depletes the 
ozone and its toxic runoff gets into the groundwater. The 
United States Environmental Protection Agency under the Clean 
Air Act set up a program called Significant New Alternative 
Policy, and Dr. Amiran's formulation was the first product ever 
approved under the program as a replacement for Halon.
    Through the long and the short, I founded in 1997 Summit 
Technologies, which was our initial company, and then in 1998, 
after going through the SB-2 process, our registration was 
approved as a public company, Summit Environmental Corporation.
    Today, because of the technology we own the patent rights 
to, we are dealing with the Federal Aviation Agency on 
replacement of all of the Halon fire extinguishers on board, 
commercial aircraft, which is a mandated replacement through 
what is called the minimum performance standards.
    We are in current tests with the United States Navy, Naval 
Research Laboratories' misting system for passenger cabins for 
this product.
    As you have heard in my resume, I have set myself on fire. 
This is truly a unique product because it prevents reignition. 
Once fuel has come in contact with this product, it molecularly 
reorganizes the hydrocarbon chain and renders it nonflammable.
    We are currently dealing with the Naval Warfare Center at 
Patuxent River for the development of another product we have, 
a turbine cleaner for jet engines that is being tested on the 
F-16, and we have an absorbent for cleaning up all types of 
semiliquids and liquids which has U.S. EPA, Department of 
Agriculture, World Health Organization, California Title 22 
approvals. So we are--this is the process that we have entered 
into.
    We do our marketing through Strategic Alliance Partners, 
and all of these contracts with the Federal Aviation Agency and 
the United States Navy have come about because of our strategic 
alliance with a company called International Aero, which is the 
largest reconfiguration company for commercial aircraft in the 
world.
    In 16 short months after becoming public, we have been able 
to forge agreements in 48 countries for the acceptance of our 
product. Tested just recently, we received the approval of the 
Forestry Service and the State Fire Department in the 
Government of Chile. But all of these countries, which are 
included in my paper submitted as an exhibit--despite all of 
these 48 countries, is the situation that we run into with 
China. We have had four attempts that have failed. I would like 
to just kind of cover those, because they are issues that have 
been talked about today.
    China wants the manufacturing of finished goods domiciled 
in order to keep their own citizens employed. They request 
review of patent-pending files under the disguise of verifying 
their existence. However, when qualifications such as no tape 
recorder, no cameras, no note pads, no computers, pens, 
pencils, pads, et cetera, are added, they are no longer 
interested in seeing if we have a patent pending.
    An increasing line of handouts with regards to requests for 
monthly retainers have come from a myriad of Chinese citizens 
within the United States, professing to give us introductions 
which we have no way of verifying whether that introduction 
will lead to another introduction for another retainer.
    The infusion of your own company's capital is often 
requested as a sign of good faith. Of key importance to Summit 
is obviously the market size vs. population growth, the product 
needs and environmental issues which center around the fact 
that modern firefighting, as it is known today, began in the 
Province of Hainan in China. We feel like we could be 
recognized very easily with this technology there.
    In answer to Mr. Hinojosa's question earlier about 
financing, we are forced to deal with either irrevocable 
letters of credit or 50 percent deposits and the balance due on 
shipping to ensure that the financial stability of our company 
stays intact because, like I said, we are a young public 
company.
    I thank you for the opportunity to address the Committee. 
Thank you.
    Mr. Chabot. Thank you very much.
    [Mr. Parker's statement may be found in appendix.]
    Mr. Chabot. We may be able to get in if we limit our 
questions to about 3 minutes or so, finish this up before we go 
over to vote, if that would be okay with others.
    Mrs. McCarthy. I have an amendment coming up, so that means 
I have to be at the Rules Committee probably by 12 o'clock.
    Mr. Chabot. Okay. I will tell you what I will do. We will 
limit our questions to 3 minutes, and I will defer to you and 
let you go first.
    Mrs. McCarthy. I thank you for that.
    This is very hard for me, because I think I have been a 
fighter for my business people, and I will continue to do that. 
But I guess I have just so many questions, but I think, you 
know, here we are dealing with business. On one of my other 
committees we deal with national security, and then I deal with 
human rights issues. So, I mean, I have to be honest with you.
    For 7 months, I have probably met with over 80 different 
groups, almost all businesses, trying to get my way through 
this issue. So it is probably with a very heavy heart--no 
matter how I vote, it is going to be a hard vote for me, 
because as I said earlier, I think both sides are right, and I 
also think there are some things wrong. So I just want to say 
that.
    My question, I am going back to you, Mr. Olson, because my 
concern again--and you are in the high-tech industry--so from 
your testimony, you stated that companies such as yours will 
effect numerous changes in human rights, working conditions, 
environmental and a number of other social concerns if PNTR is 
granted to China.
    Can you give me some examples of how Olson Technologies can 
effect these changes?
    Mr. Olson. Thank you, Congresswoman.
    Yes, I feel that the potential of sending some of my people 
in my plant over for repair of valves and for the installation 
of valves into the People's Republic of China--that would 
include sending over some United Steel Workers--I think would 
have a major impact on the potential changes in what they see 
and the way they deal with the Chinese.
    I also feel that the valves that we make go into the kind 
of projects that I think need to be built in China and will be 
built in China, and that the increase of that potential for 
valves will bring us in closer contact with the Chinese where 
we have to go over and install, set up, turn them on, actually, 
when the plant gets started; and I think that the continuous 
interface with the Chinese will effect those kinds of changes.
    Mr. Chabot. Thank you. The gentlewoman's time has expired.
    I am going to keep my questions and comments brief.
    I have given a lot of thought to this, as well, on both 
sides, and it is my determination that it is in the best 
interests of this country that we do approve permanent normal 
trade relations, and it is my intention to vote accordingly.
    But one of the things that I think that the business 
community needs to do a better job of is actually educating the 
work force, the people that work in the plants, the people that 
work on the line, because they are getting a lot of 
information, especially from the unions on one side of this, 
and I don't know that the business community has done as good a 
job as we need to to educate the workers about how many future 
jobs are dependent upon trade and how the American standard of 
living is dependent upon trade, and just how important it is.
    Mr. Gabbour, especially since you are from my district, I 
would be interested to hear anything you might have to say 
about how we can better get the work force into this whole 
process and make sure that they understand how significant 
trade is to actual jobs in this country.
    Mr. Gabbour. Thank you. Actually, I have very specific 
examples regarding this. Many years ago when the U.S. economy 
was not doing so well, I remember the phone calls from the 
various plants to our small office in Cincinnati asking us 
whether we had any new international orders, because if we did 
not, then they would have to shut down the plant 2 days a week 
and only operate 3 out of 5 days a week. The biggest problem 
with that was the morale of the people, letting them go home 2 
days out of the week and not getting paid for it, because there 
was just simply not enough work to be done.
    When the Asian economy really started taking off, our 
orders started coming in and we kept those plants, not just in 
Ohio, but in Michigan and Wisconsin and Arkansas, running at 
full capacity, because we could not even keep up with the 
orders. Most of them were coming from the thriving economies 
like Thailand, Korea and Japan, all but China. And what was 
devastating to us is that every time we looked at projects in 
China, they were in the range of, like I said, anywhere from 
half a million to 2 million, up to $5 million that we simply 
did not have access to because people could not afford our 
products.
    So we have directly seen how it has impacted the work 
force, even within our own industry, not just the 15 people 
that work in our headquarters, but there are 1,000 workers that 
are directly and indirectly related in our field that are 
affected by this. And because of the Asian economy thriving, we 
kept the plants running at full capacity.
    Now that the U.S. market has come back, we are at full 
capacity still, and now we cannot even keep up with orders, and 
we are still making up 20 percent.
    Mr. Chabot. Thank you very much.
    Mr. Hinojosa. Only 5 minutes left to vote and we do not 
want to miss it.
    I just want to commend you because your presentation was 
excellent, and I am encouraged because the area that I 
represent does not trade with Asia, and I am convinced that 
what I learned in China was that there is a great deal of need 
for lots of services, especially environmental services like 
what you all represent--medical services, medical equipment, 
those were some of the things that stood out in what they are 
asking for. I just hope that the day will come soon, and Don 
Manzullo says he will make it happen, that we could put you on 
a video teleconference to visit with some of our business 
people in south Texas so that they can see examples of those 
who are successfully trading with China and that maybe that 
might be a way in which we could turn things around for an area 
like ours.
    Mr. Chabot. Thank you very much.
    Mr. Hinojosa. We thank you for coming and we appreciate 
your time.
    Mr. Chabot. We thank the panel for their testimony here 
this afternoon. This is a very important issue, and you have 
made an important contribution to Congress as it deals with 
this issue.
    At this time, we are adjourned.
    [Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]
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