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





  



                  EXAMINING BARRIERS AND SOLUTIONS TO


                          ECONOMIC DEVELOPMENT

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

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON REGULATORY REFORM
                        AND PAPERWORK REDUCTION

                                 Of the

                      COMMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                   WASHINGTON, DC, NOVEMBER 22, 1999

                               __________

                           Serial No. 106-72

                               __________

         Printed for the use of the Committee on Small Business


                     U.S. GOVERNMENT PRINTING OFFICE
68-480                       WASHINGTON : 2001

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402




                      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
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania      STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE F. NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                                     MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

       Subcommittee on Regulatory Reform and Paperwork Reduction

                   SUE W. KELLY, New York, Chairwoman
LARRY COMBEST, Texas                 BILL PASCRELL, New Jersey
DAVID M. McINTOSH, Indiana           ROBERT A. BRADY, Pennsylvania
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
JOHN THUNE, South Dakota
               Meredith Matty, Professional Staff Member




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 22, 1999................................     1

                               Witnesses

Marrero, Francisco A., District Director, New Jersey District 
  Office, U.S. Small Business Administration.....................     6
Pucinelli, Dennis, Acting Executive Secretary, Department of 
  Commerce FTZ Board.............................................     9
Hoffman, Deborah, Executive Director, Paterson Economic 
  Development Corporation........................................    13
Miller, Charles, Associate Director, Greater Paterson Chamber of 
  Commerce.......................................................    14
Jara, Daniel, President/CEO, Statewide Hispanic Chamber of New 
  Jersey.........................................................    14
Gross, Ron, President, Vision 2020...............................    25
Russo, Philip, Time Zero/PPI Corporation.........................    27
Waitts, George, President, Crown Roll Leaf, Inc..................    28
Dotoli, Deborah, President, Geneva Metal Products Company........    30

 
        EXAMINING BARRIERS AND SOLUTIONS TO ECONOMIC DEVELOPMENT

                              ----------                              


                       MONDAY, NOVEMBER 22, 1999

              House of Representatives,    
          Subcommittee on Regulatory Reform
                           and Paperwork Reduction,
                               Committee on Small Business,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:30 p.m., at 
the Paterson Museum, 2 Market Street, Paterson, New Jersey, 
Hon. Sue W. Kelly (chairwoman of the subcommittee) presiding.
    Chairwoman Kelly. Good afternoon, ladies and gentlemen. My 
name is Congressman Sue Kelly. I am the Vice Chairman of the 
Subcommittee, the Small Business Subcommittee on Congress.
    We are here today to discuss the barriers and solutions to 
economic development here in Paterson, New Jersey and I look 
forward to focusing on the HUBZone program and the foreign 
trade zones.
    Before I make an opening statement, I am going to defer to 
Congressman Pascrell, he is ranking member of the subcommittee 
and he will make his opening statement first.
    Mr. Pascrell. Thank you, Chairman Kelly, and I welcome you 
to the 8th Congressional District.
    I want to present you with these flowers for coming all the 
way down from the 19th District in New York. West Point is the 
center of that district and you have done such a tremendous job 
as the Subcommittee Chairman, Sue, and you work very hard to 
deregulate and to take away the regulations that have hurt 
business and are continuing to hurt business in our nation.
    I want to present this to you, we are so thankful that you 
took the time to bring the committee hearing down here.
    Let's give Susan a nice applause.
    Chairwoman Kelly. Thank you.
    Mr. Pascrell. Chairwoman Kelly is currently in her third 
term. From the 19th District of New York, as she pointed out, 
she has been particularly involved and has accomplished 
accomplishments to show for her work.
    She has pushed legislation to Congress providing $11 
million for restoration on the Hudson River. Her legislation to 
guarantee reconstruction for women following mastectomy became 
law in 1998 for all involved, each of us that are involved in 
women's health issues in Congress.
    She has campaigned for legislation relieving most 
homeowners of capital gains taxation when they sell their 
principal residence.
    We will get to that soon. Eventually.
    I am very proud----
    Chairwoman Kelly. Actually, it's law.
    Mr. Pascrell. It is law now, right. But we are not finished 
now. We have a lot more to do.
    Chairwoman Kelly. Yes.
    Mr. Pascrell. So it is really a great honor to have a 
Congressional hearing in our district and to have an official 
hearing here in the great city of Paterson and in this museum.
    We planned it that way. And the museum is reflective of an 
old city, over 200 years of age, trying to fight its way back 
in an area which has seen a tremendous loss of manufacturing 
jobs, and as we move to service committees, are we replacing 
each manufacturing job with a service job?
    The answer is no, we are not. And so, this is quite timely.
    Chairwoman Kelly has been deeply concerned about the issue 
of economic development, and as we struggle with the issues on 
the Small Business Committee and I serve with her, she is the 
chairperson of a subcommittee on regulatory reform. I am the 
ranking member on that committee. Her dedication to small 
businesses and economic development is unquestionable. And it's 
truly an honor for us to have you here today.
    Chairwoman Kelly. Thank you.
    Mr. Pascrell. I have sponsored numerous small business 
forums in the past, but this is the first official small 
business hearing that has ever taken place in this district.
    I'm going to proceed in the manner that is consistent with 
that format, so once Chairwoman Kelly gives her opening 
statement, we will then hear the panel's testimony, panel one 
to my left, panel two to my right.
    I hope they can see over there. Okay. And after the panel 
has finished, we will ask questions and then we will open it up 
to the audience, which is unusual at a Congressional hearing, 
but you know that is my forte. You know that.
    This afternoon we are going to explore solutions and 
understand the barriers to economic development in northern New 
Jersey. At the outset, there are no easy answers for the 
problems of economic development, attracting business, 
retaining business, turning around distressed areas.
    This field hearing represents a starting point for all of 
us to find out what is working and what is not working; what 
needs to be improved and what we as a community can do to force 
the economic development.
    We have assembled a panel of economic development 
professionals. And if I say so myself, experts, I can consider 
them experts, from across the state, from Washington, D.C., as 
well.
    In addition, and perhaps most importantly, we will hear 
from the very people that we are attempting to help; the local 
businesses that form the backbone of the Garden State's 
economy.
    Presently our nation is experiencing the seventh year of 
economic growth. Actually, seven-and-a-half years. And if this 
trend continues for another month or so into January, we will 
have a new record for the longest running peacetime economic 
expansion in our nation's history.
    By all measures, the latest national unemployment rate is 
4.1 percent. That is the lowest level in 30 years. New Jersey's 
job employment reached a record high in October. Unemployment 
has declined to 4.5 percent. Inflation, believe it or not, is 
tamed. At this point, it does not represent a threat.
    And what is so unique about this growth is that at the same 
time that we have had this increase in the number of jobs and 
decrease in the amount of jobless, at the same time our 
interest rates are relatively low, but never low enough. 
Greenspan should hear that, right?
    At the same time, what is phenomenal about the last three 
or four years particularly is that the rate of productivity has 
hit a high over the last 30 years.
    Our workers are working. In fact, what is very interesting 
is that many companies now cannot find people, and even the 
most part-time positions, which are seasonal, we have problems. 
And they are good problems to have.
    There are pockets of high unemployment in our state, and 
nothing is good until everyone has equal opportunity and 
everyone can rise with the waive of economic prosperity.
    In many of our communities there are sectors that need to 
be revitalized so that we can attract businesses and create 
jobs. We know in our own district, in many of the suburban 
communities as well, downtown areas have fallen because of 
suburban malls, and if we simply want stores that are empty to 
clutter our downtown areas, pretty soon there is no main 
downtown. Pretty soon we all begin to live in malls and our 
children grow up there.
    I don't like that idea, by the way, but that is on the 
horizon, or it has already happened. Many of the areas that 
suffer from chronic unemployment were once centers of activity 
and provided employment for thousands of people.
    Could you believe that at one time there were 30,000 people 
who worked just in these ten square blocks? Pretty amazing to 
think about it.
    Manufacturing employment in the United States fell 1,500 in 
September to a seasonally adjusted level of 462,000 jobs in 
October. This is no surprise. We have lost 400,000--would you 
shut off your phones please--400,000 manufacturing jobs state-
wide during the past 25 years. 400,000.
    That is incredible. Yet this state has no manufacturing and 
industrial policy whatsoever. And today's location here at the 
Paterson Museum, I think, is of even greater significance. This 
is where the Industrial Revolution began in America, believe it 
or not.
    This city was the crucible of industrialization and 
manufacturing for the continental United States. It all started 
right here. Right here and outside, a stone's throw in every 
direction.
    This museum is very proud of its historic legacy. There is 
so much to exhibit that we could exhibit five times what is 
here. But there is no more room.
    And when you are trying to paste things together and make 
them operate, there are priorities. We cannot squander this 
legacy, and as a nation we have no unified manufacturing 
policy.
    In the meantime we will have to come together and do it 
ourselves, perhaps on an ad hoc basis.
    This afternoon we are going to hear testimony on two very 
promising programs. They are designed to spur economic growth: 
HUBZones and foreign trade zones. ``HUB'' means historically 
under-utilized business zones.
    I don't know who invented those words, but they sound good. 
I will use HUBZones. This was a reality beginning in 1997, it 
was fortunate to be voted for, and it is now a reality.
    It is an empowerment contract program to get folks who do 
business in this area, in the HUBZones that exist in certain 
enumeration districts, census districts, to give them a heads-
up on government procurement.
    The other program is the foreign trade zone, which is not 
new, which goes back to the thirties, which has been renovated 
many, many times.
    I have been a long-time supporter of the HUBZone program, I 
voted for that legislation. I have a deep sense of personal 
satisfaction in witnessing first-hand those actions that have 
been taken to Washington. It has become a reality here at home.
    You will hear some people who are part of the HUBZone 
contracting. The program is relatively straightforward. Its 
purpose is to stimulate economic growth by offering federal 
contracting opportunities to small businesses which all of you 
represent.
    It is important to keep in mind also that the Federal 
Government purchases approximately $200 billion worth of goods 
and services each year. It's something we need to be aware of.
    Clearly, if a portion of this market can be directed to 
small businesses located in our HUBZone, there exists a 
potential for significant economic growth.
    Businesses have called my office indicating that they 
cannot participate in it because they are across the street and 
lie just outside the proper zip code. It's similar to the 
problem of the urban enterprise zones that we had here in New 
Jersey and I fought to help our suburban brothers and sisters 
because it's absolutely insane to have an urban enterprise zone 
in Paterson, New Jersey, and across the street in Clifton they 
can't take advantage of it.
    All that does is separate people and divide. And we cannot 
allow that to happen with the HUBZone plan. So we are going to 
examine that and that is what we are going to do.
    The foreign trade zone designation, on the other hand, is 
not a new program. As I said, it started in 1934. There are 230 
foreign trade zones across the United States. There are five of 
those zones in New Jersey.
    I think the closest ones to us would be Newark and 
Elizabeth. There is one in Morris County. They benefit 
manufacturers by eliminating tariffs on items that are 
resupported.
    Foreign goods and domestic goods held for support are 
exempt from state and local inventory taxes as well.
    Presently 350,000 people across the nation are employed in 
foreign trade zones. They have worked. A total value of the 
goods supported from those zones is $17 billion a year. These 
numbers clearly indicate that this is a success.
    So where are we today? Well, we have the HUBZone program 
running right here in the 8th District, but we don't have an 
FTC designation, and I think personally we need one.
    I would like to recognize who our first panel is. Our first 
panel is--before I do that, I am going to turn it back to the 
Chairlady who is going to say a few remarks and then we will 
continue to hear from our panel.
    Susan, thank you for being here.
    Chairwoman Kelly. Thank you. I thank you and I thank all of 
you for welcoming me to the district to take a look at the 
barriers and solutions to economic development and to focus 
particularly on the potential impact of the Small Business 
Administration's HUBZone program and the Department of 
Commerce's foreign trade zone program because these mean jobs.
    As Phil pointed out, its jobs, its community prosperity. As 
vice chairman of the Small Business Committee and chairman of 
the Subcommittee on Regulatory Reform and Paperwork Reduction, 
I just welcome the chance to drive a little south from my New 
York district to learn more about the possibilities for growth 
of the small businesses in this area that is so rich, as Phil 
pointed out, so rich with industry.
    It is my understanding that the history of this industry 
has left the area with strong capabilities and really promising 
potential for renewed growth. Along that line, the HUBZone 
program seeks to have a most worthy purpose here; to provide 
economic relief to areas of this nation and particularly this 
area, which has historically suffered from the high rates of 
unemployment and low income levels.
    The program is designed to encourage the location of small 
businesses in these economically distressed areas and to 
provide stable employment for people who live in the areas. The 
Federal Government can assist the small businesses in the 
HUBZone by facilitating the contracting process.
    Contracts that get awarded to small businesses in HUBZones 
can mean thousands of job opportunities. HUBZones help 
accomplish this important welfare reform objective as well. It 
provides jobs to individuals who want to get off welfare and 
back into the work--and work in the communities where they 
previously have been getting public assistance.
    I envision today's hearing in Paterson as somewhat of a 
case study in this program. Although a few firms are certified 
in this area, the community and its congressman are looking for 
ways to expand and to improve the HUBZone program.
    The second topic, the foreign trade zones also will spur 
job growth in distressed areas, and it is important to have 
trade zones today and economic development that I think we can 
talk about just a few statistics.
    Since 1970, the total number of trade zones has grown from 
10 to 662, and employment in them has gone from 7,000 to 
367,000 jobs. These zones provide a climate which encourages 
domestic corporations to expand or retain operations in the 
U.S. Likewise, the zones are an economic development tools used 
by communities to maintain and attract business development and 
investment. The favorable tariff and customs regulation 
treatment related to zones contributes to the decision to 
invest in the United States right here in Paterson, rather than 
overseas.
    I think that overall, the result of the business decisions 
that are related to these zones really does mean a much more 
favorable job enhancement program for everyone and that only 
spills over into a larger and larger economic pie, as you all 
know.
    Both of these programs have very lofty goals, and if 
properly administered and accurately focused and thoughtfully 
planned, the programs are going to guarantee economic expansion 
that delivers on the commitment that Congressman Pascrell and I 
and many other members of Congress like us have made to try to 
make sure that we have meaningful job creation and sustainable 
community development.
    Those are not hollow words. Those are things we are truly 
committed to, and I really thank you again, Congressman 
Pascrell, for allowing me to come down here and participate in 
this hearing.
    I look forward to the testimony of our witnesses today.
    Would you like to introduce those witnesses?
    Mr. Pascrell. Thank you, Chairman.
    Today our first panel is--we are going to jump right into 
it. They each have five minutes. We don't have what we have in 
Washington. We don't have all the lights that go on and off, 
but we will let you know when your time is up. We will hear 
then from the Chairwoman, and I will ask questions of the 
panelists, and we will go to the second panel, the same thing, 
and then we will go to the audience. We have agreed that that 
will be our format.
    So our first panel would be Francisco Pancho Marrero, who I 
have worked with extensively since coming to Congress. Pancho, 
as we call him, is the director of the Small Business 
Administration in Newark, New Jersey. He, himself, I consider 
to be an expert in this area, and we are anxious to hear and 
welcome Pancho.
    Thank you for being here today. The SBA has done a great 
job in this area.

   STATEMENT OF FRANCISCO A. MARRERO, DISTRICT DIRECTOR, NEW 
   JERSEY DISTRICT OFFICE, U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Marrero. Thank you, Madam Chairwoman and Members of the 
Subcommittee on Regulatory Reform and Paperwork Reduction. Good 
afternoon. Thank you for the opportunity to testify before you 
today.
    I am Francisco Marrero, the District Director for the U.S. 
Small Business Administration's New Jersey District office.
    If I may take a second, I would like to introduce to you a 
member of my staff and the HUBZone technical expert and liaison 
for the state of New Jersey, his name is Richard Sill and he is 
with us, infinitely more capable----
    Mr. Pascrell. Where is Richard?
    Mr. Marrero. Today I would like to discuss with the 
Subcommittee the many economic development programs that SBA 
has to offer and how these programs are helping small 
businesses throughout New Jersey.
    Madam Chairwoman, I request that my testimony be made part 
of the record.
    Chairwoman Kelly. It is so ordered.
    Mr. Marrero. As you know, small businesses are the backbone 
of the U.S. Economy. America's 23 million small businesses 
employ more than 50 percent of the private work force, generate 
more than half of the nation's gross domestic product, and are 
the principal sources of new jobs in America's economy. These 
numbers clearly reflect the importance of small businesses to 
the economy of both the nation and the state of New Jersey.
    In an effort to help keep the small business sector a 
thriving part of America's economy, Administrator Alvarez has 
delineated the following goals for the Agency:
    Increase opportunities for small business success.
    Transform SBA into a 21st Century leading edge financial 
institution.
    Help businesses and families recover from disasters.
    Lead small business participation in welfare to work.
    And serve as the voice for America's small businesses.
    The New Jersey district office is determined to reach out 
to small businesses in an unprecedented way, listen to their 
needs, respond to these needs, report these needs back to the 
Administrator and suggest appropriate initiatives that 
effectively address those needs.
    The goal of the New Jersey District Office is to remain a 
leader in the economic development of the State, as well as 
serving as a catalyst for the growth of small businesses.
    We are focusing our efforts on maintaining high quality 
customer service, improving small businesses' access to capital 
through our lending programs, increasing the level of 
participation of socially and economically disadvantaged firms 
through our Minority Enterprise Development Program, 
encouraging economic development in historically underutilized 
business zones, hub zones, through the HUBZone Empowerment 
Contracting Program, increasing the number of counseling and 
training services we make available to small businesses and 
increasing our aggressive marketing and outreach efforts to our 
network of lenders and their customers.
    At the start of my tenure as District Director, I made a 
pledge to the Small Business Community in this state that the 
SBA would work to become a recognized leader in stimulating 
economic growth and development in New Jersey.
    We have succeeded. During the last five fiscal years, the 
SBA New Jersey District Office has approved 7,394 loans for a 
total of $1.6 billion, more than were approved during the 
previous 16 years combined.
    In the recently completed fiscal year 1999, we approved a 
record $395.5 million in SBA-backed loans to a record number of 
1,572 small business owners.
    One of our highest priorities has been serving the new 
markets small business community, including African-Americans, 
Hispanic-Americans and women.
    Administer Alvarez has often said that economic recovery 
can only succeed when there is total inclusion. We must ensure 
that in a thriving economy everyone is provided with the same 
opportunities. Providing entrepreneurs with access to capital 
creates jobs, increases the tax base and supports a healthy 
economy.
    Our efforts to reach out to the new markets segment of the 
population speaks for themselves.
    From fiscal years '91 to '94, we made a total of 365 loans 
to African-Americans, 78, Hispanic-Americans, 54, and women, 
233.
    But fiscal years '95 through '99, we made a total of 1,926 
loans to these same groups. During fiscal year 1999 alone, the 
SBA New Jersey District Office approved a total 543 loans for 
$105.7 million to these new markets small businesses.
    To keep pace with the rapidly expanding economy, SBA 
developed a number of new loan programs designed to increase 
access to capital while simplifying the process.
    These programs include:
    The prequalification loan program which allows the SBA to 
preapprove an application prepared by an SBA-designated, non-
profit intermediary, before the applicant finds a commercial 
lender to make the loan.
    The LowDoc loan program which features a one-page SBA 
application and a 36-hour approval process.
    The SBA express loan program which allows selective lenders 
to use primarily their own application and documentation forms 
and provides a response from SBA within 36 hours of receiving a 
complete application.
    The Y2K action loan program which enables small businesses 
to become Y2K compliant through Y2K assessments, repairs and 
upgrades both before and after January 1, 2000, and----
    The preferred lenders program under which SBA delegates 
loan approval, closing and most servicing and liquidation 
authority to selected lenders. SBA loan approval is conducted 
at an SBA PLP center and turnaround usually takes less than one 
day.
    These programs have reduced both the paperwork requirements 
and the processing time for SBA loans, not only in New Jersey 
but also across the country and have helped SBA maintain its 
position as a leading source of long-term small business 
financing in the nation.
    In the area of minority enterprise development, we are 
continuing our efforts to aggressively recruit businesses owned 
by individuals that are socially and economically disadvantaged 
into the 8(a) program.
    During fiscal year 1999, the SBA New Jersey District Office 
awarded 198 contracts, 20 contract options and 617 contract 
modifications worth $173.2 million to firms in the 8(a) 
program.
    This past September, together with Congressman Pascrell, we 
introduced the HUBZone empowerment contracting program to the 
New Jersey small business community. This program is designed 
to stimulate enterprise, expand employment and promote 
community-based economic empowerment by offering federal 
contracting opportunities for small business concerns located 
in and hiring employees from HUBZones.
    SBA is responsible for certifying eligible firms, 
investigating eligibility challenges and reporting the results 
to Congress.
    Finally, management counseling and training plays an 
important role in the mission of the SBA. Each year, thousands 
of individuals, both established business owners as well as 
potential entrepreneurs, seek advice and guidance from the SBA. 
This advice and guidance is provided by our major counseling 
resources, the Service Corps of Retired Executives (SCORE), the 
New Jersey Small Business Development Center (SBDC) and the 
SBA's Business Information Centers (BIC).
    Through free management counseling and low cost training 
programs, SCORE, SBDCs and BICs assist entrepreneurs in nearly 
every aspect of starting and managing a successful business.
    During fiscal year 1999, over 28,000 individuals received 
counseling or attended training sponsored by SCORE, SBDCs and 
BICs.
    Madam Chairwoman and Members of the Subcommittee, these 
programs are working for small business owners in every region 
of New Jersey. Together with our resource partners, we will 
continue to develop additional programs and activities and find 
new ways to empower today's small businesses and tomorrow's 
entrepreneurs.
    This concludes my prepared remarks. I will gladly answer 
any questions that Members of the Subcommittee may have.
    Mr. Pascrell. I want to thank you, Pancho, and I am sure 
that you and Rich Sill, who you introduced before, will be 
available to answer specific questions about the HUBZones. They 
are up and going.
    We are talking about access to capital. We are talking 
about small businesses across the board here, anybody with less 
than 500 employees; is that correct, Pancho?
    Mr. Marrero. Yes, depending.
    Mr. Pascrell. And we are very elastic on that, Madam 
Chairlady, but that is where our focus has been in Federal 
contract opportunities, which is what the HUBZone is all about.
    Your numbers are pretty startling. What you have done in 
the past three, four years is truly great and truly wonderful 
and we want that to continue and Sue's job and my job is to cut 
down the bureaucracy which is out there.
    I know your express application is going over very big, and 
this is a program that I have seen it work, every one of those 
programs I have seen work in our own communities.
    Thank you, Pancho.
    Our second panel is Dennis Puccinelli. He is Acting 
Executive Director, United States Department of Commerce, 
Federal Trade Zone board.
    Dennis, thank you for being here today.

  STATEMENT OF DENNIS PUCCINELLI, ACTING EXECUTIVE SECRETARY, 
                DEPARTMENT OF COMMERCE FTZ BOARD

    Mr. Pucinelli. Thank you, Madam Chair, Congressman 
Pascrell.
    Thank you for the opportunity to appear before the 
subcommittee today to discuss the Foreign Trade Zone program 
and the role that it is playing in improving the international 
competitiveness of U.S. Businesses and communities.
    Foreign trade zones are sites at which special Customs 
procedures can be used. These procedures allow domestic 
activity involving foreign items to take place prior to payment 
of Customs duties. Duty free treatment is accorded items that 
are pre-support and duty payment is deferred on items that are 
sold in the U.S. Market.
    The overall purpose is to encourage domestic activity by 
helping to offset Customs advantages available to overseas 
plants which compete with facilities located in the United 
States.
    The zones program can also assist communities in their 
economic development efforts that are related to international 
trade.
    Mr. Pascrell. Could you hold that microphone a little 
closer? Thank you very much.
    Mr. Pucinelli. Zone sites usually control zoned areas 
within industrial parks designated by the board. The sites are 
supervised by the U.S. Customs Service which controls all 
merchandise entering and leaving zones. Zones site and activity 
remain subject to all federal, state and local law.
    The Foreign Trade Zones board, as you mentioned, was 
established in 1934 to license and regulate foreign trade zones 
in the United States. The board functions like an interagency 
committee with the Secretary of Commerce as chair. The 
Secretary of the Treasury is the other member.
    The Commerce Department takes the lead on economic policy 
and industry impact issues and the Treasury's main 
responsibilities involve the enforcement of Customs laws and 
the supervision of zone activity.
    Customs port directors are responsible for the zones in 
their jurisdiction. The Commissioner of Customs advises the 
Secretary of the Treasury in all zone matters and plays an 
important role in the interagency process.
    Zones and zone activities are subject to regulations 
published by the Trade Zone Board and to regulations published 
by the Customs Service.
    I want to mention that the board regulations were revised 
in '91 following the hearing by the Trade Subcommittee on the 
Ways and Means Committee. The results of these hearings were 
revised regulations which clarify criteria and reduced our 
application process.
    Several domestic industries did express concern about 
potential harmful effects that foreign trade rules can have on 
plants outside the zones, but the revised regulations address 
these concerns by codifying the review process and clarifying 
approval criteria to include industry impact considerations.
    Zone sites fall into two basic categories; general purpose 
zones and sub zones.
    General purpose zones are multi-user facilities designed to 
serve businesses throughout a Customs' port of entry. They 
usually involve cites at airports sea ports, industrial parks 
and warehouse facilities that provide a range of trade related 
services on a public utility basis.
    Sub zones are special purpose zones usually at individual 
manufacturing plants that serve as an adjunct to the existing 
zones for larger facilities that cannot locate within the 
general purpose zone. The primary benefit for users is based on 
the fact that merchandise is not subject to the payment of 
Customs duty while it remains in the zone.
    Zones are similar to other Customs bonded procedures. This 
procedure exempts a zone user from paying Customs duties if 
merchandise is supported from the zone. On merchandise shipped 
to U.S. Markets, a user is able to defer Customs' duties and 
until the merchandise leaves the zone.
    In situations involving the manufacturing of foreign 
components, a user may choose to apply a lower duty rate if 
that, in fact, is the case.
    In addition to the Customs' duty benefits, there are 
certain logistical benefits related to Customs' paperwork. 
These involve the immediate release and delivery of merchandise 
from a port to a zone site and also weekly entry procedures are 
available.
    Foreign merchandise may be exempt from local inventory tax. 
I don't know if you have one in New Jersey; I don't believe so.
    Now, there are some costs associated with running a zone 
and these involve primarily dealing with Customs. You do have 
to post a Customs' bond and you do have to come up with 
Customs' security and an inventory control system that can be 
audited.
    U.S. Communities can benefit from zones also. Communities 
often have to compete globally for the siting of plants and new 
business activity. And in some cases, foreign locations that 
are competing with a local community may offer a more favorable 
Customs environment.
    Availability of zone procedures can level the playing field 
with respect to these Customs' codes and assist state and local 
officials in their economic development efforts related to 
attracting new activity from abroad.
    Zone procedures can also assist companies and communities 
in developing new support activity. A key factor in developing 
a successful zone project for a community involves conducting a 
feasibility study to determine whether there is sufficient need 
and where that need might be focused, as well as selecting an 
appropriate site and integrating zone services into an existing 
zone project.
    As you mentioned, there are two zones already in this area. 
In this broader area, one is in Mount Olive, in Morris County 
and one is at Port Newark, Elizabeth.
    Communities such as Paterson which are located in a Customs 
port of entry area can make zone procedures available to their 
businesses in several ways.
    First, a community can request that one of the existing 
zones in the area can apply to expand their zone to a site in 
this area. For example, upon a new agreement between Paterson 
officials and Port Authority officials, the Port Authority 
could sponsor an application for an expansion of this zone to 
include a site in this area.
    Alternatively, a Paterson area governmental or local 
corporation could apply for a separate and new zone project in 
this area.
    However, there is a special provision in the Act that 
states when you are establishing additional zones in the area, 
that requires a demonstration that there is the need for that 
additional zone.
    However, I should mention that we do have these additional 
zones in a number of the larger ports of entry around the 
country already.
    And finally, another way to immediately provide zone 
services in the area is to form a relationship with one of the 
existing zones in the area where they could sponsor sub zones 
for individual companies that may need zone status.
    This may be for the sub zone application. This--oh, I will 
just briefly mention the application process. We will look at a 
draft application for a community. Once we get a final 
application, there is a public notice and sometimes a hearing, 
if it is a new zone project.
    We need comments from the local Customs' port director, 
then we conduct our analysis and review. We prepare a report 
which does go to the board members. We conduct the voting 
process by mail because of the difficulty in getting board 
members so we have a continual voting process.
    I hope this brief overview gives you a better understanding 
of the options available to area businesses for using zone 
procedures and of the requirements and issues facing the board 
in the review of applications.
    I also want to mention that the Commerce Department has a 
support assistance center in Newark that can assist companies 
that want to expand their business through supporting.
    Mr. Harvey Lubenstein is here and he would be happy to 
answer any questions relating to supporting.
    Mr. Pascrell. Can you give us your web site?
    Mr. Pucinelli. Yes. My web site, I have on my additional 
information page, I have our web site and our phone number.
    Mr. Pascrell. Would you give it?
    Mr. Pucinelli. The web site is ita.doc.gov/import--admin/
records.
    Chairwoman Kelly. Would you do that again more slowly so 
that people who want to copy it down have the ability to do 
that, please, sir.
    Mr. Pucinelli. Yes. It is on my card.
    Chairwoman Kelly. I recognize that, but not everyone in 
this room has it. That is why we want to give them that 
availability.
    Mr. Pucinelli. Thank you. The web site for the Foreign 
Trade Zones board is www.ita.doc.gov/import--admin/records.
    Mr. Pascrell. Thank you, Dennis. Thank you very much.
    Mr. Pucinelli. Yes.
    Mr. Pascrell. And you are going to be available to us to 
answer questions after?
    Mr. Pucinelli. Yes.
    Mr. Pascrell. We do have on the second panel, Dennis, Ron 
Gross, who is part of the Vision 20/20, which is Passaic 
County's moving together to try to get some economic 
development. And that is a county. I don't know if counties can 
apply also as a local form.
    Mr. Pucinelli. I believe I met Ron.
    Mr. Pascrell. Dennis, did you have anything in conclusion?
    Mr. Pucinelli. No.
    Mr. Pascrell. Thank you very much.
    Mr. Pucinelli. Thank you.
    Mr. Pascrell. All right. Our third panel is Deborah 
Hoffman, who is Executive Director of the Paterson Economic 
Development Corporation, a corporation which we help found in 
1993, '94. And Deborah has basically worked very, very hard in 
economic development.
    Deborah, what are your comments for today?

  STATEMENT OF DEBORAH HOFFMAN, EXECUTIVE DIRECTOR, PATERSON 
                ECONOMIC DEVELOPMENT CORPORATION

    Ms. Hoffman. Thank you very much for the opportunity to 
address you today, Madam Chair and Congressman Pascrell.
    As the Congressman mentioned, as Mayor of the City of 
Paterson you led the way to forward our corporation to assist 
companies in relocating into the City of Paterson and expanding 
here. Since January of '93, we have assisted over 80 companies 
in relocating into the city and expanding here with financings 
of over $70 million.
    Through our sponsorship of the greater Passaic County bond 
program alone we have closed $30 million in bond financing 
through industrial revenue bonds, and prior to that we closed 
another $10 million to the City of Paterson bond program.
    The corporation has taken a very aggressive stance in 
relocating companies, trying to identify those incentives that 
make Paterson the place to be for the business community.
    Understand that even though the State of New Jersey has 
witnessed a tremendous economic revival, as has the City to 
some extent, we still have a 9 percent unemployment rate, very 
different than the State's 6 percent.
    In addition to what the County has instituted, it has 
suggested that it will be the slowest growing county in the 
next five years in employment opportunities. We really need to 
maintain our aggressive stance in identifying incentives to 
relocating companies into the City of Paterson, into the county 
of Passaic.
    I believe strongly that the HUBZone and the Foreign Trade 
Zone used correctly can be a way to lead us down that path. 
Obviously, we have tried to take our own aggressive stance 
locally in forming special improvement districts.
    We helped to form two of those in the City of Paterson in 
sponsoring procurement programs for the City in the development 
of Brownfield's program, working with the City government, 
working with the county government, but I want to underscore, 
we have provided a few companies here today from the Paterson 
business community. We look forward to hearing from them. We 
need new tools to create jobs in this business community. It is 
a vibrant community. It needs to grow to remain so.
    Thank you.
    Mr. Pascrell. Thank you, Deborah. If you have not submitted 
written testimony, I know it is tough for the field hearings, 
make sure you submit written testimony. If you have it, we will 
run it off in the back room now. Give it to Chris and we will 
give it to Steve or somebody else so that the committee has it 
on record.
    Ms. Hoffman. Thank you.
    Mr. Pascrell. Our next speaker is Charles Miller. Charles 
is replacing Jim Leonard, who is the vice president of the New 
Jersey Chamber of Commerce who called us this morning. He had 
an emergency.
    We thank you, Charles, from the Paterson Chamber of 
Commerce for being here, and we hope you will be submitting 
some written testimony to the committee which is very necessary 
and very important.
    Charles.

   STATEMENT OF CHARLES MILLER, ASSOCIATE DIRECTOR, GREATER 
                  PATERSON CHAMBER OF COMMERCE

    Mr. Miller. Madam Chairwoman and Congressman Pascrell, 
thank you for inviting me here today. I have always been taught 
in business to be brief, and I will be so.
    The Greater Paterson Chamber of Commerce, which represents 
over 100 businesses in the Paterson area, fully supports 
efforts to provide access to federal contracting opportunities 
for small businesses in underutilized business zones, and such 
efforts spur private investment and a creation of growth of 
jobs in those areas.
    The areas impacted are generally those with low income and 
high unemployment, and certainly we want a piece of that $200 
billion in the federally contracted business.
    HUBZones represent a very positive economic stimulus to 
areas that have not yet shared in the economic prosperity of 
recent years, and such an effort earns the support of the 
business community.
    And if I may, I would now like to make some remarks 
concerning the foreign trade zones.
    As we have heard before, foreign trade zones are really 
areas in this country that the government pretends are outside 
the U.S. Customs' territory and Customs' procedures in those 
zones permit duty-free imports of items that will be 
resupported and a deferral of duty payments on imports to be 
sold in the United States.
    Therefore, federal foreign trade zones have very 
significant advantages. First, they even the playing field for 
U.S.-based businesses that must compete with foreign 
competitors who enjoy customs advantages. And foreign trade 
zones will offset those advantages.
    Two, they enable companies to lower costs and raise 
profits.
    Three, they are incentives for the development and growth 
of international trade and they facilitate and expedite such 
trade.
    And four, they spur state and local economic development, 
and very importantly, they create jobs. And certainly we need 
jobs.
    In conclusion, foreign trade zones are a win/win situation 
for business and for the growth of the economy.
    Thank you.
    Mr. Pascrell. Thank you very much, Charles. I know you will 
be available for some questions.
    Our final speaker on the first panel is Daniel Jara, who I 
have known for many years. He is president and CEO of the 
Statewide Hispanic Chamber of New Jersey.
    Madam Chairlady, he will be submitting written testimony as 
well.
    Daniel has been very, very involved in the entire State of 
New Jersey with the Hispanic community, with the business 
community and, beyond that, the total community. So Daniel, 
thank you for being here today.

  STATEMENT OF DANIEL JARA, PRESIDENT/CEO, STATEWIDE HISPANIC 
                     CHAMBER OF NEW JERSEY

    Mr. Jara. Thank you, Madam Chairwoman and Congressman 
Pascrell. I am really honored and privileged to be here before 
you.
    The Statewide Hispanic Chamber of Commerce of New Jersey 
has been for many years trying to be the most efficient Chamber 
of Commerce. Even though we are a Hispanic chamber, 35 percent 
of our membership is made up of known Hispanic companies, in 
that we have a lot of mainstream businesses, African-American 
businesses and Asian-American businesses.
    The Statewide Hispanic Chamber of Commerce has taken the 
task of being in the forefront, in promoting the State of New 
Jersey, not only throughout the country but in the 
international scene.
    As you know, there's been a magnificent growth of Hispanic 
businesses that has grown by 86 percent in the last five years. 
It's estimated that right now in the Garden State there are 
30,000 Hispanic businesses that generate $7.5 billion in sales 
and supports over 128,000 jobs.
    We, as any other small business, face the same hurdles, one 
of them being lack of capital. And I need to recognize the 
labor of my dear friend Pancho because under his leadership the 
Small Business Administration has set records in terms of loans 
given to Latino businesses.
    We feel that international trade is a major aspect in 
economic development. As you know, the market today for capital 
commodities and labor is truly an international market.
    Therefore, we need to position ourselves for a global 
economy. Mexico has become New Jersey's second largest trade 
partner. We have supported trade missions from New Jersey to 
Latin America. Latin America presents as a viable market for 
New Jersey's products and services, a market that is loyal to 
these services and a market that will open opportunity for New 
Jersey companies with their 600 million consumers.
    The Latino market, as you know, has been a very attractive 
market. It is a $340 billion market in the United States.
    As we see historically, specifically in this history, or in 
the late sixties, most of the big companies were fleeing the 
urban areas. There were Hispanic entrepreneurs that came in and 
took the challenge and had a vision. And they flourished 
without using any of the resources that were really available 
to any other small business.
    While little Hispanic businesses have not been very active 
in procurement as a matter of fact, there are fewer Latino 
companies involved in procurement activities with the Federal 
Government than there are from other minority groups.
    There are many reasons for that: Number one, Latino 
businesses feel they have been part of the process. So 
therefore, they don't feel attracted by it.
    I think the new changes that this administration at the 
federal level is taking will insure a more attractive market 
for Latino business. It's really important to develop economic 
development in the urban centers. We feel that economic 
development is and should be everyone's business.
    So therefore, we will support any efforts that are made out 
to help these programs become viable and important for us.
    I thank you.
    Mr. Pascrell. Thank you very much, Dan.
    Madam Chairlady, it's time for us to ask some questions of 
panel number one.
    Would you like to lead us off? I will re-emphasize again 
that written testimony be given to the committee. That is 
something we must insist upon.
    Chairwoman Kelly. It's helpful for us because if you give 
us some written testimony then we can insert it in the record 
as a part of the record, even though we do have a stenographer 
here taking a record for us. You may want to add things as well 
that you have not included in your verbal testimony. So we 
would encourage you to do that, please.
    I would like to, first of all, ask a question of Mr. 
Marrero.
    The HUBZones, I am wondering if you expect to see an 
increase in HUBZone certified firms in this area. Do you think 
there is going to be an increase in the number of them? Is 
there a way we could help that happen?
    Mr. Marrero. Chairwoman, I think in the long run the answer 
is yes, but I think part of the issue with the HUBZone is that 
although it is a job creating program, the--often the HUBZones 
by definition are located in areas of high unemployment and 
usually populated by African-Americans, Hispanics and 
individuals and groups who have not shared, if you will, in 
this economic recovery.
    So that the types of businesses that would be in a position 
to greatly benefit from the HUBZone and by virtue of the fact 
that they have the ability to contract with the federal 
government often are not there. A thriving--seems to me that 
one of the key things that we have to do in and what our agency 
is focusing on is in the area of new markets, in bridging the 
gap that exists with African-Americans, women and Hispanic-
Americans, bridging that gap of percentage of business 
ownership vis-a-vis the percentage of the population because 
ultimately, we have to create businesses in these communities 
to provide a long-term benefit to the community, that 
ultimately being benefit from the HUBZones.
    I don't think the HUBZones--I don't think--I would not say 
we are going to see dramatic increases in firms signing up for 
HUBZones. I think we are going to undertake, for example, in 
September a very aggressive campaign.
    We have been issuing letters to every elected official, 
every mayor in every city located in the HUBZone to 
aggressively pursue it. But it happens that most of these types 
of businesses that deal with the federal government are not 
located there.
    Chairwoman Kelly. Do you have a backlog currently?
    Mr. Marrero. We have approved nine HUBZones in the State of 
New Jersey, and I think nationwide there are 439 firms 
certified nationally.
    I would like to say it's relatively new, but still, it is 
not--I think it is a valuable program if you are there, if the 
firms are there, but not every HUBZone has the type of 
business, mostly in the communities, in our communities that by 
definition are at the margin of this recovery, the type of 
business that you are going to find.
    There is the type of business that provides services for 
citizens of the community, the bodega in the Hispanic bario, 
the laundry, the type of businesses that are not in a position, 
if you will, to deal, you know.
    So it seems to me that the ultimate success of the HUBZone 
relies on our ability to promote entrepreneurship in those 
communities and ultimately understanding that it's small 
businesses that truly provide a long-term economic basis for 
recovery.
    Chairwoman Kelly. You spoke in your testimony about having 
resource partners to help build these businesses so they could 
be a part of the procurement process.
    Mr. Marrero. Correct.
    Chairwoman Kelly. Who are your resource partners?
    Mr. Marrero. Our Business Corp. Of Retired Executives. 
Small business development. We have 20 branches. We have an 
understanding with the Chamber of Commerce. We work with 
economic development folks in the various communities. I mean, 
we try and establish and bring--one of the things that we have 
been able to do is bring our programs to the communities rather 
than the old mindset, the culture of our agency which used to 
be that over here if you can find us, great. If not, well, you 
know.
    You have got to take it out and work in establishing a 
partnership, and we have been very active in that, establishing 
new partnerships with economic development organizations, 
chambers, I mean, you name it, we are out there searching.
    Chairwoman Kelly. Are you working currently to help people 
get certified so they can become procurement partners?
    Mr. Marrero. Sure, constantly. I mean, we have been holding 
seminars.
    Chairwoman Kelly. Have you held seminars?
    Mr. Marrero. Sure, we have held them here in fact with the 
Congressman, we are heading down Vineland in southern Jersey to 
hold one.
    We extend an invitation to every mayor in every city in 
every HUBZone to offer our services and go out there, speak 
about what we are doing and just offer our services.
    Chairwoman Kelly. Do you work with SBA and SBICs?
    Mr. Marrero. Yes.
    Chairwoman Kelly. You do.
    Is there any particular kind of feedback that you would 
like us to take back with regard to this program? We need to be 
able to give you as much help as we can, so anything that you 
can give us to take back to Washington is going to be helpful.
    Mr. Marrero. Well, if I heard the news correctly, I think 
we are off to a great start since I believe our new markets 
initiatives have been funded in the new budget and that--the 
small business investment companies traditionally have not been 
a centerpiece of what we do.
    Administrator Alvarez has now, you know--has now brought 
them into focus and rightfully so. Again, it's your tool to 
provide the capital side rather than the debt side for business 
creation and we are involved right now in promoting our small 
business investment companies that I admit to you until 
recently has been a well-kept secret.
    Chairwoman Kelly. It has been a well-kept secret exactly. 
That is one of the problems.
    Mr. Marrero. But it is also----
    Chairwoman Kelly. Maybe we just need to get the secret out.
    Mr. Marrero. Understand, Madam Chairwoman, that it is a 
program that has undergone dramatic changes in the last years 
from the way it used to be and in the President's new market 
initiatives and the funding--we are waiting for the funding. 
Now we will aggressively move to promote the programs.
    Chairwoman Kelly. Well, holding this hearing is one way 
that Congressman Pascrell is getting the word out and it does 
not really cost a whole lot. We don't need a lot of money from 
the federal government. We need people to get out and let 
people in the community know that it's possible, I think.
    And I am just trying to find out from you what more we can 
do that does not really cost a whole lot of tax dollars out of 
people's pockets who are already overtaxed and don't have more 
money to give the government for a new initiative, just let 
them know what is out there.
    Let them utilize what's there, that is why I ask you about 
your resource partners.
    Mr. Marrero. Again, I think we are working well with our 
resource partner. The money is for the specialized small 
business investment companies. I meant it to be used that way 
because I think that will go a long way toward providing 
specialized companies to develop new markets.
    That is what I meant, but in terms of partners, I believe 
our small business development centers' funding is--they 
receive what they ask for and I think we are working well with 
partners, and I appreciate obviously every forum that I have to 
get the word out and I appreciate the opportunity.
    Chairwoman Kelly. Thank you very much. I am just simply 
saying that I wouldn't wait around for new markets, I would 
simply get going on what we've got and I think you have done an 
admirable job so far, and I want to make sure we can help you 
to continue to do the job you are doing to get the word out 
because we need to encourage that job growth, we need to 
encourage our small businesses and we need to make sure that in 
these HUBZones these people are able to get government 
procurement contracts.
    I know for a fact that the women and minorities portions 
are just simply--we are not meeting our goals. Women who own 
businesses, there is a mandate that women who exist many years, 
from the government, saying to the federal government, which is 
actually the procurer of goods and services to the tune of 
about 50 percent of everything that is bought in the nation, we 
said: You have got to have at least 5 percent going to women-
owned businesses and the women aren't getting even 5 percent of 
the context. That is the kind of thing that we have to enhance 
and we have to grow, where we have to go for jobs.
    Mr. Pascrell. May I add something?
    Chairwoman Kelly. Sure.
    Mr. Pascrell. Pancho, I want to tell you how serious this 
is. We ask in the general committee for numbers, and that is 
the reason why.
    We had to downturn such applications in '97, '98 and then 
there was a review on whether this was being promulgated, 
communicated and do people really know about the programs to 
begin with. And that is part of the problem.
    And I am almost giving the same speech as I gave in front 
of the veterans two weeks ago. Most of our veterans do not know 
what their benefits are.
    Most small businesses do not understand what all of these 
programs are and how they can sink their teeth into them, and 
that is something that we need to do to communicate to the 
small businesses because, first of all, small business loans 
are not simply HUBZoned, oriented or focused.
    That is for everybody in any town regardless of what the 
town looks like economically.
    Is that correct?
    Mr. Marrero. Correct.
    Mr. Pascrell. We focused on the HUBZone, but we are 
basically talking generally here about all the programs that 
exist in SBA, and when you focus on HUBZone, it's the least 
amount of knowledge about those sub zones in those enumeration 
districts that are very, very eligible.
    Chairwoman Kelly. I would like to switch now and go to----
    Mr. Marrero. If I may just make one comment, our web site, 
www.sba.gov. That is it.
    Chairwoman Kelly. Repeat that.
    Mr. Marrero. It's www.sba.gov.
    Mr. Pascrell. And if you want to deal just with the 
HUBZone, put ``/hubzone'' at the end of that. It will come up 
on the screen.
    Mr. Marrero. Absolutely.
    Mr. Pascrell. Very good.
    Chairwoman Kelly. However, we want to make sure that people 
who don't have a computer, don't know how to operate a 
computer, don't even have access to a computer, know what is 
there and available to them from the SBA.
    We want them to know that it's available to them in a 
HUBZone and in a Foreign Trade Zone. We want them to know that 
these things are out there. That it's possible, because that is 
the only way we are going to grow the largest engine of the 
U.S. Economy, which is our small businesses.
    Now I want to talk about the foreign trade zones a little 
bit.
    Dennis, like the Foreign Trade Zone program, the import 
support bank program was created in 1934. I want you to kind of 
discuss, if you will, the relationship, if there is any, 
between the importance of these international trade efforts. I 
want you to talk about what kind of relationship there is 
between these two.
    Mr. Puccinelli. The Foreign Trade Zone program and the 
import support bank, they were created at the same time with an 
ideal and I want you to talk about that, if you will.
    Well, I'm sorry, I can't answer that question. I don't know 
much about that other program.
    Chairwoman Kelly. The import support bank?
    Mr. Puccinelli. Yes, I'm not an expert on that program.
    Chairwoman Kelly. Well, perhaps you could answer that 
question in writing to us, because I am going to hold this 
hearing open then to give you an opportunity, write that 
question down and give me an answer to that in writing, please. 
You may want to go back and check with your agency.
    Mr. Pascrell. I would think that would be a very critical 
question if we are talking about accessibility to capital. I 
think we need to know what the relationship is, as the 
Congresswoman has asked, and I would like to know that 
response, so perhaps by the middle of next week you can get 
back to us, we can keep the record open, and respond to that, 
because we are going to be looking into this further on with 
total committee.
    Chairwoman Kelly. Dennis, I would also like to ask you 
about the way the foreign trade zones in New Jersey are 
working.
    Are there mostly import zones right now? Are there actually 
supports getting out of those zones?
    Mr. Puccinelli. There are $17 billion in supports, but 
zones are primarily focused on the U.S. Market. That is where 
most of the business is these days.
    Chairwoman Kelly. By that, let's be clear about this. What 
do you mean by that?
    Mr. Puccinelli. Well, first of all, it's neutral in terms 
of imports or exports. The program is designed to encourage and 
expedite foreign trade, and our government is concerned about 
other governments that promote supports over imports.
    Our government regards foreign trade zones with other 
countries that are just for support as a subsidy that may not 
be living up to WTO rules. So our program is neutral in terms 
of imports and supports.
    Mr. Pascrell. Well, if I may, Sue----
    Mr. Puccinelli. I say the biggest benefit is on supports 
because it does give you total forgiveness of duties.
    Mr. Pascrell. I think the committee will want to know what 
the stats are on this because if we continue to support 
American jobs with our own programs, this only exacerbates the 
program I talked about concerning the loss of manufacturing 
jobs in this program, and I was going to ask you this question, 
if I may, Madam Chairwoman.
    Chairwoman Kelly. Yes.
    Mr. Pascrell. It would seem lately in looking at, in 
reading what I have seen, companies have focused more on 
diminishing the inverted tariffs on components, and rather than 
supporting the finished product, importing it with a lower 
tariff, and what we don't want this program to be, this is a 
huge program, is simply another way for folks to take 
manufacturing off land and sent to another country.
    Now, I would like to know, my question is this: Could you 
explain the significance of what I am talking about so that 
everybody here will understand what are the nuances?
    Mr. Puccinelli. Well, I fully agree with you. We don't want 
this program to be used to negatively affect domestic industry.
    In fact, that is why we have fairly strict criteria to be 
able to take advantage of this inverted tariff, the lower duty 
rate.
    In order to take advantage of this benefit, we have to 
review each case on a case-by-case basis. We want to see that 
this will encourage activity that might otherwise be done 
abroad.
    In other words, we are looking for situations where the 
U.S. Companies are competing with foreign companies and that 
the Foreign Trade Zone will help it encourage activity to be 
conducted here that might otherwise be done abroad.
    If the activities were going to displace another domestic 
company or displace a domestic supplier, we would not approve 
that type of case.
    Mr. Pascrell. Say that again.
    Mr. Puccinelli. If we found that the use of the Foreign 
Trade Zone was to reduce the tariff that would in turn 
encourage foreign supply over domestic supply, we would not 
approve that. That would not meet our net economic effect 
criteria.
    Mr. Pascrell. Is that one of the criteria to make sure that 
in terms of balance of payments, for instance, which is a long-
range effect, that in terms of balance of payments, that we 
make sure that this program and the bank which you are going to 
get back to us about what they are doing, contributes to the 
precipitation of manufacturing jobs in the United States and is 
not basically, whether intentional or not, contributing to the 
increase in manufacturing jobs in Honduras, for instance.
    I mean, can you review the numbers and tell us whether it 
is or it isn't? What would you say?
    Mr. Puccinelli. We would say because in every case that we 
approve, we are looking for evidence that the competence faced 
by the domestic company that is applying to use this benefit is 
primarily abroad, and it is not competing with a domestic 
company, so therefore--and we are also looking at what does it 
import and what is it going to get the lower tariff duty on. We 
want to see some good reason why it is importing the product.
    If I can give you an example----
    Mr. Pascrell. I am going to give you an example; you give 
me yours first.
    Mr. Puccinelli. We have some pharmaceutical companies with 
firm status in New Jersey and they are global companies, they 
are on a couple of their components. They are saying these are 
made by our foreign plants abroad, the ingredients, all the 
duties on pharmaceutical products and most ingredients have 
gone to zero, but they are saying that a couple of components 
still have a duty rate.
    We make them abroad. In order to make this product in the 
U.S., we need to have the lower duty rate on the component or 
else we will make it abroad.
    That is the kind of scenario we are looking to improve.
    Mr. Pascrell. Go ahead, Sue.
    Chairwoman Kelly. No, finish your line.
    Mr. Pascrell. Let me have that example now. It is pretty 
close to your example.
    Let's say--let's pick a company that may be in the HUBZone, 
I don't think it is. Let's say Liz Claiborne. That is a nice 
company. 90 percent of their goods are made offshore, patterned 
here.
    Let's say they existed in a HUBZone. Let's say they existed 
in a HUBZone. They pattern it here, they send it to planet X. 
They finish the product on planet X offshore and then they 
bring it back here, okay.
    Would their duty be free because their company exists in 
that HUBZone, in a Foreign Trade Zone rather? Would that be 
duty free, that product?
    Mr. Puccinelli. If the board gave them authority to do 
that.
    Mr. Pascrell. You mean the board can do that?
    Mr. Puccinelli. They could--somebody could make an 
application to bring in foreign textiles and cut it and send it 
abroad and bring it back in here and yes, they could end up 
getting duty free, but----
    Mr. Pascrell. Then your wife and my wife go to Macy's and 
buy that dress for $125. These are all intricately connected 
with trade and what we pay $125 for, even though, of course, 
it's $4.50 to make in planet X. They could give them that duty 
free?
    Mr. Puccinelli. Right, but that is why we have our criteria 
to demonstrate this is going to have a net positive effect on 
the U.S. Economy.
    Mr. Pascrell. What do you mean by ``net positive''? Do you 
mean we are creating more jobs within that particular industry 
or do you mean simply that business is making a lot more money?
    Mr. Puccinelli. It's the former. We want to see that there 
are more jobs here as a result of giving them the zone. We want 
to see that the--I'm sorry?
    Mr. Pascrell. Go ahead.
    Mr. Puccinelli. We want to see that this is encouraging 
activity in the U.S. That might otherwise be done abroad.
    Mr. Pascrell. This is very important to me and it's very 
important to this district and very important to Essex County 
and Passaic County. We have lost so many of these manufacturing 
jobs, whether you are talking about pharmaceutical, footwear, 
textile. We are talking about a lot of things here.
    Mr. Puccinelli. Yes.
    Mr. Pascrell. It's critical that we stop this hemorrhaging 
in that we, in the programs that we have at our disposal, 
effectuate a change. In some manner, shape or form, it is not 
going to be dramatic, but we need to stop the hemorrhaging of 
those jobs, and that is why these folks sitting in this room 
want work and the people who work for them want work but the 
only way we are going to do that is if we are all on the same 
page.
    Right?
    Mr. Puccinelli. Yes.
    Mr. Pascrell. Okay.
    Mr. Puccinelli. I should add that another important 
criteria is that we would not approve any tariff rate change 
which was inconsistent with our government's policy.
    Mr. Pascrell. You don't want to go into that. Does he want 
to go into that, Sue?
    Chairwoman Kelly. No.
    Mr. Pascrell. Right.
    Mr. Puccinelli. But we have never approved a situation in 
the textile or a particle industry like you are talking about 
for the reasons that you are talking about.
    Mr. Pascrell. But the import tariffs in this country are 
exceedingly low compared to the countries that are making the 
products that are coming back to the United States, that your 
wife and my wife continue to buy and that is the problem.
    And that is why--since you brought it up, that is why there 
are many questions about the WTO and how it affects the very 
business people in this community and in this area.
    You know, we live in a global economy. Sue is just as much 
a globalist as I am, but we don't like giving away the store. 
And the proof of the pudding is that the support gap increases, 
the import gap increases, and the balance of payments gets 
worse.
    Something is wrong with that. And that something is 
depriving people in my city that I grew up in and still live in 
and in this entire area the ability to work, and their bosses 
the ability to stay in business, and that is why we have lost 
manufacturing jobs in this area.
    I don't know how much clearer to put it to you and I am not 
going to get off this case, and I'm sorry if I am taking too 
long and we want to get to the second panel, but this has to be 
a concern and that is why I wanted you to enter into the record 
and give to us the answers to the Chairlady's question, which I 
think is crucial to what we want to do to help the northeast, 
particularly our area.
    Mr. Puccinelli. Could I make one further comment? In our 
public review process, we do publish how long some industries 
might be affected.
    For example, within the textile and apparel area, we go to 
the Commerce's Office of Textile and Apparel and they----
    Mr. Pascrell. You go where?
    Mr. Puccinelli. The Commerce Department Office of Textile 
and Apparel.
    Mr. Pascrell. What did they tell you?
    Mr. Puccinelli. They usually tell us that we can't do it.
    Mr. Pascrell. That is why we have these crazy trade 
agreements which are not reciprocal by any stretch of the 
imagination, and put folks in this room, regardless of what 
their industry is or their service is, really at a 
disadvantage, we need to understand that this is all 
interconnected.
    It is fine to talk about HUBZones, and it's fine to talk 
about all the other programs available to small business, and 
it's fine to talk about the foreign trade zones, there's no two 
ways about it, but if the sum total of all this is a negative 
in terms of jobs that continue to hemorrhage, we are doing 
something wrong and we are facilitating those industries who 
are probably not represented here today.
    That is what I am concerned about. Sue can speak for 
herself, but that is what I am concerned about.
    Thank you.
    Chairwoman Kelly. I just want to make one follow up on 
this.
    I totally agree with Congressman Pascrell, but I want to 
know what you actually do, what does your office actually do to 
provide assistance to the Foreign Trade Zone grantees once you 
got a Foreign Trade Zone; what are you doing out there to help 
those people?
    Mr. Puccinelli. Well, we do--there is an association, a 
private association of these grantees, the National Association 
of Foreign Trade Zones.
    Chairwoman Kelly. Wait a minute. That is them helping 
themselves. Excuse me, sir, but I am asking you what you are 
doing----
    Mr. Puccinelli. We partnership with them. We hold 
conferences that they attend and we put on educational seminars 
with them to train people on how to use the zone.
    Chairwoman Kelly. And that is the limit of it?
    Mr. Puccinelli. Yes.
    Chairwoman Kelly. You participate with them at their----
    Mr. Puccinelli. We participate with them. They are the ones 
who set up the conferences, we are the ones who provide 
training.
    Chairwoman Kelly. Who pays for the conferences, just out of 
curiosity?
    Mr. Puccinelli. They do.
    Chairwoman Kelly. Okay. I think there are more questions 
that you as panelists will be getting from us, but at this 
point I believe it is time for us to move on to the other 
panel, and I will do that right now.
    Thank you very much, panel number one. We appreciate your 
cooperation. We appreciate your good testimony. I think we have 
all learned something from you, so we appreciate you being 
here.
    Mr. Pascrell. Anybody who thinks that this is a staged 
hearing, anything but in Small Business, you never know what to 
expect from us and we have some fun in Washington, and we are 
going to have some fun here today.
    Now we are going to get down to the nitty-gritty. I hope 
you are taking notes. We are going to have a short break so we 
can change--all of this has to be taken down, so if you just 
bear with us.
    Chairwoman Kelly. Let's make it a five-minute break.
    [Whereupon, a recess was taken.]
    Mr. Pascrell. If everyone would please take their seats, we 
will move on here.
    Chairwoman Kelly. By the way, I want to introduce Harry 
Katrichis. And--Harry is general counsel of the Small Business 
Committee in Congress. This is my staff member, Meredith Matty, 
who has come up from Washington so she can be a part of this 
hearing today, because this is a real hearing. This is the way 
it is done in Washington. We have--actually Congressman 
Pascrell has brought Washington to you. You don't have to go to 
Washington, D.C., to see a hearing.
    We have a stenographer taking notes, the witnesses and the 
written testimony, all of that is in order so what you are 
witnessing here is really something many people never get a 
chance to see.
    You get a chance to see this because of Congressman 
Pascrell.
    Mr. Pascrell. Thank you.
    I would like to introduce my staff. This is Chris Blanda. 
He is here from Washington. Chris works on all small business 
matters. He also has worked on the census, and what else, 
Chris?
    Mr. Blanda. Trade, foreign policy.
    Mr. Pascrell. I thought of Abbott and Costello when I heard 
trade, like Niagara Falls. And Stephen Schwartz from our 
office. Our chief of staff is also here, Eddie Forner. A lot of 
people know Eddie.
    So before you strangle me, strangle that person, but thank 
you for being here, everybody, today, thank you for your 
patience.
    I would like to start, if I may, Madam Chairlady, with Ron 
Gross from Vision 20/20.
    Thank you.

         STATEMENT OF RON GROSS, VISION 20/20 PRESIDENT

    Mr. Gross. Madam Chairwoman, Congressman Pascrell, it is a 
privilege and an honor to share with you the Passaic County 
Vision Trade Zone Task Force.
    In a time of robust national and state economies, Passaic 
County suffers from stagnation. While surrounding counties 
enjoy low unemployment rates and a spurt in their economic 
growth, our county lags far behind.
    Long range plans to revitalize our moribund economy ought 
to be devised and implemented for all residents and for future 
generations.
    A cursory view of the present literature and of the best 
ideas of economic experts and planners make clear that economic 
growth and its concomitant benefits often result from the 
planned confluence of:
    1. Historic preservation.
    2. Environmental protection.
    3. Economic redevelopment.
    The interplay of these approaches works especially well in 
densely populated and environmentally stressed areas.
    The synergisms of these three elements have been 
successfully demonstrated in many places throughout the 
country.
    1. San Antonio, Texas, Riverwalk.
    2. Baltimore, Maryland, Harbor Redevelopment.
    3. Boston, Massachusetts, Rebirth.
    What are Passaic County's assets? Passaic County is rich in 
history and American lore, even predating the American 
Revolution. The county has been amply blessed with many unique 
natural and man-made historical, educational and recreational 
sites including:
    1. The Great Notch in Little Falls and West Paterson, the 
location of General Washington's rifle camp during the period 
of Washington's encampment at the Dey Mansion in Wayne.
    2. The Great Falls in Paterson, the second largest 
waterfalls in the eastern United States and the birthplace of 
the American Industrial Revolution.
    3. Garret Mountain with its stone observation tower and 
refurbished Lambert Castle which houses the Passaic County 
Museum.
    4. The majestic Watchung Ridges which bisect the county 
from the Great Notch through Ringwood and acted as a fortress 
wall protecting the nation's lifeline during the Revolutionary 
War.
    5. Our wonderful county park system aligned along the First 
Watchung Ridge and then to Goffle Brook Park in Hawthorne, site 
of General Lafayette's headquarters.
    6. The Passaic River and its tributaries that wend their 
ways through many Passaic County towns and cities.
    7. The convenient network of highways and railroads which 
give ready access to the area from all directions.
    A Foreign Trade Zone, I will give the classic definition 
for that--the Foreign Trade Zone is a site within the United 
States, in or near a U.S. Customs port of entry, where foreign 
and domestic merchandise is generally considered to be in 
international commerce. Foreign or domestic merchandise may 
enter this enclave without a formal Customs entry or payment of 
Customs duties or government excise taxes.
    Merchandise entering a zone may be: Stored, manufactured, 
manipulated, repackaged, displayed, repaired, salvaged, 
relabeled, assembled, sampled, destroyed, processed, tested, 
mixed and cleaned.
    There are two types of foreign trade zones. A general 
purpose zone is established for multiple activity by multiple 
users. A general purpose zone must be operated as a public 
utility and must be located within 60 statute miles or 90 
minutes driving time from the outer limits of a U.S. Customs 
port of entry, Passaic County is situated within the applicable 
limits, FTZ projects may consist of one or multiple sites, 
e.g., a single building, an industrial park, a deep water port, 
or an international airport.
    While activities including storage, inspection and 
distribution are permitted at all FTZs, other activities 
including processing or manufacturing require special 
permission from the Foreign Trade Zones Board.
    In instances where a firm wants foreign trade zone status 
for its own plant or facility, or when the existing general 
purpose zone cannot accommodate the firm's proposed activity, 
the designation of subzone may be granted. There is no real 
difference in the types of activity that may be undertaken in 
the general purpose zones or subzones.
    Typically, subzones are designated for an individual 
company's manufacturing operations. Subzones can be located 
anywhere within a state, so long as a sponsoring Foreign Trade 
Zone licensed grantee of a general purpose zone exists in the 
state and the U.S. Customs Service can fulfill its proper 
oversight functions at the proposed location of the subzone.
    1. All fifty states as well as Puerto Rico have established 
Foreign Trade Zones. Here in New Jersey we have five: Port 
Newark/Elizabeth, Camden, Mercer County, Lakewood and Morris 
County.
    Mr. Pascrell. Ron, you have another minute.
    Mr. Gross. Okay. Also important is the county's proximity 
to a world class sports complex, New York City and major 
international airports all positive attractions for visitors 
and businesses and Passaic County, which brings us to the 
discussion of the need for a foreign trade zone in Passaic 
County.
    We envision a foreign trade zone as a prime economic 
vehicle that will spur our economy by providing many jobs and 
revenue and will afford occupants with certain federal tax and 
tariff benefits.
    Thank you for allowing the Passaic County Vision 20/20 to 
submit this testimony for your consideration.
    Mr. Pascrell. Thank you, Ron. We appreciate that.
    And now Time Zero/PPI Corporation, Philip Russo.
    Philip, thank you for being here today.

      STATEMENT OF PHILIP RUSSO, TIME ZERO/PPI CORPORATION

    Mr. Russo. Well, thank you for inviting me. And Congressman 
Pascrell, fortunately mine is short and right to the point, and 
I am going to really address how HUBZones affect us as an 
economy.
    Mr. Pascrell. Good.
    Mr. Russo. Basically, ours is a high-tech company that 
moved to Paterson around 12 years ago. We were welcomed and it 
has been a good experience ever since.
    Thank you, Deborah, and everyone connected with the city. 
It has been a good experience for us.
    What has happened in the past years, we have tried 
unsuccessfully to vote on government contracts, and henceforth 
have stopped putting any effort in that area.
    The reasons primarily for not being successful were: (1) 
pricing; (2) unclear or overburden some documentation. 
Competing against large government contractors who have had 
more resources than us to either be able to purchase components 
at lower prices or perhaps just have some more powerful 
connections as far as being able to generate some of the quotes 
that we could not, which could be understandable.
    We were never turned down for our technical ability. We 
always had the technical ability to be able to do these kinds 
of contracts.
    It is my understanding that HUBZones will create certain 
areas that will enable us to be more competitive with 
economically similar type companies which I think is very 
important in this whole HUBZone program.
    We have been identified by several of our existing 
government contractors. We deal with GECs and IWMs and the 
firms like Allied Signal and we have been identified as being a 
HUBZone, and they have been wanting to give us more 
consideration on contracts that might make us win more 
contracts.
    Because of the fact that we are in a HUBZone, unfortunately 
we find that we are two blocks away from the nearest HUBZone.
    According to what Mr. Marrero mentioned earlier, we do have 
the company, the resources and the people around us, but we 
can't get at them. So if we could get some help there, that 
would be really great. You just have to stretch it two blocks.
    I think the entire program is very beneficial to all areas 
including Paterson, and I would like to recall the greatness 
Paterson once had as an industrial city. The high tech 
manufacturing industry in which we are has no boundaries nor 
does it require any special services.
    I hope Paterson once again can attain this greatness. As 
industries flocked to Silicon Valley 30 years ago, let's get 
them to flock to Paterson for manufacturing services. I think 
we can do it.
    But there is one last thing I would like to mention, which 
has been true to my heart for all the years I have been in 
manufacturing, and I won't say what I think about big business, 
what they have done to the United States as far as supporting 
jobs, I can only speak for myself. But you give me a Foreign 
Trade Zone that means something, and you give me $10 million 
and I will start to make T.V. sets in Paterson and I will start 
shipping them and selling them to the Japs.
    Mr. Pascrell. Japanese.
    Mr. Russo. Japanese, very sorry. I am not politically 
correct, very sorry.
    Thank you very much for inviting me here, and I hope my 
testimony means something.
    Mr. Pascrell. Thank you very much, Phil.
    I am just reminded that maybe the census will move you two 
blocks the other way. Don't forget all of this is dependent, 
HUBZones, that is, in terms of the census, on your track, your 
census tracks, and that could change very easily and move very 
easily up.
    Aside from that, though, Pancho, here is another example 
of, again, what I used as a parallel example with your ban 
enterprise zones. It seems absolutely irrational that 
businesses close to Paterson will not have the same benefits, 
do not have the same opportunity to those benefits anyway, 
simply because they are not in that particular enumeration 
district.
    But I like what you said also about the trade zones. I 
think this is very, very important, very critical that we 
understand and then we pursue and get more knowledge on those.
    So, thank you. I just want to go quickly through all of 
those departments that when we talk about federal procurements 
and when we talk about what is available, we are talking about 
the Department of Agriculture, Defense, Energy, Health and 
Human Resources, Housing and Urban Development, Transportation, 
Veterans Affairs, Environmental Protection Agency, General 
Services Administration and the National Aeronautics and Space 
Administration.
    We want to get our business and our HUBZones to be able to 
get in and they can do that if we provide them the credits that 
they deserve.
    So thank you very much, Philip.
    Mr. Pascrell. And now the president of Crown Roll Leaf, a 
very large company in Paterson.
    George, thank you for being here today.

  STATEMENT OF GEORGE WAITTS, PRESIDENT, CROWN ROLL LEAF, INC.

    Mr. Waitts. Madam Chairwoman and Congressman Pascrell, 
thank you very much for inviting me. I will try to be short and 
not sound like we are blowing our own horn here, but Crown Leaf 
started--Crown Roll Leaf started back in the early '70s, '71, 
located here in Paterson, mainly because of the reason that it 
was available to the New York metropolitan markets.
    It had good road infrastructure. It had good--a city with 
an ample employee force to draw upon, and we figured it would 
be a good spot to settle in so that we could advance and grow.
    Over the years, we have grown from 4,400 square feet to 
150,000 square feet here in the city. We also got integrated 
into some of the higher tech products that are out there. Most 
of our products started out with--we manufactured coating 
polyester films to decorate greeting cards, books, just about 
anything that can be decorated, can be hot stamped.
    From there we branched that into holography, making two-
dimensional, three-dimensional images. We are the only 
commercial rolling company in the United States which can 
integrate the whole system from start to finish and it's done 
here in Paterson.
    We also determined several years back that it was truly 
going to be a global market, that a lot of the business had to 
be taken overseas. And rather than start a plant in Mexico or 
open up shop in the UK, even though we did look into all those 
aspects, we decided to stay right here in the United States, 
right here in Paterson and deal with our competition here. 
Mainly by utilizing the work force, being more innovative 
product-wise, listening to our customers and what they needed 
and also supplying it and getting it out to them.
    Nowadays, for the most part, the trade zone becomes a very 
important aspect of this, the reason being, that with this, 
just in time and needing product, nobody wants to keep stock, 
they have to pay taxes on their inventory.
    We found that between the freight duty and taxes, that 
17\1/2\ percent of the almost $13 million in business we do 
internationally goes towards those taxes and duty fees.
    We also find that when we use--by normal means, by 
container or by sea, the overall expense to that is 6\1/2\ to 
7\1/2\ percent in duties and taxes.
    On a customer basis, looking to getting it there quickly by 
air, by today's standards, et cetera, it's a little difficult 
dealing with that because we have to pass on those costs in our 
products and in our pricing.
    It is not a level playing field. Things we have looked to, 
even sometimes, absorb some of that in order to maintain a 
better customer base and a happier customer for the reordering.
    We projected that ongoing we would like to be more of a 
global market. At this point, we deal with about 48 different 
countries around the world. We are looking to open it up as 
much as possible. We employ about 300 people here in Paterson.
    Most of the Paterson base fluctuates between 35 to 40 
percent of the actual residents working at our firm. We also 
opened up an office warehouse in Chicago, California, Georgia; 
we opened one in Canada, Germany and we are looking to open one 
in Brazil.
    All the manufacturing stays here in the United States. This 
is to help try to be more competitive and get the product out 
there and have the customer base be able to draw from it at 
those locations rather than have it all come directly from 
here.
    Trade zones, in effect, would be very helpful in a sense, 
dealing outside, as well for the county, as well as for other 
customers. And other businesses looking to either grow or 
expand or jump into a global market, this could be one of the 
ways, one of the vehicles that they could use to do that 
because it would give them more of a level playing field in 
which to get into these markets.
    I think that more of it has looked at the point of 
importing and I think it has gone more so to buy the present 
things that are out there. It has worked out, it's very easy to 
get around and get it imported into the United States but 
getting it out into the global market isn't as easy or as cost 
efficient for the most part.
    Thank you very much and I appreciate the opportunity to 
speak to you.
    Thank you.
    Mr. Pascrell. George, thank you very, very much. I know the 
great work that you have done at your establishment, and I have 
spoken to the Chairlady about that.
    I want to send her a sample so we understand what we are 
talking about. I can't really describe it. It's really 
fantastic work, and since you are the only one in the United 
States, we would like to see it.
    Chairwoman Kelly. George, he is a big booster.
    Mr. Pascrell. Thank you very much.
    And now, Deborah Dotoli. Thank you very much for being part 
of the HUBZone program. You will talk to us about that today. 
Deborah is president of Geneva Medical Metal Products in 
Passaic, New Jersey.

 STATEMENT OF DEBORAH DOTOLI, PRESIDENT, GENEVA METAL PRODUCTS 
                            COMPANY

    Ms. Dotoli. Thank you. I would like to thank you for 
representing my company today. It is a small business, a woman-
owned business and HUBZone company.
    Good afternoon. My name is Deborah Dotoli and I am the 
president of Geneva Metal Products Company. I have held that 
position since 1988.
    Geneva Metal is a precision sheet metal fabrication 
facility established in 1954 by Ludine F. Dotoli. Mr. Dotoli is 
a salesman who with no knowledge of sheet metal fabrication saw 
a need to be diverse from his plating business which then 
existed and offered a sideline of metal products to standing 
customers.
    Up until the 1980s Geneva metal products had decent 
revenues for a small company. But when Mr. Dotoli passed away, 
our one man sales force became non-existent. Sales dropped 
drastically and our manufacturing facility decreased from 10 to 
3 employees. I was faced with making a very important decision, 
was I going to close shop or do the best I could not only to 
survive personally but bring back a company that had been an 
excellent comrade and supporter throughout the years.
    In my search for a new customer base, I was faced with a 
question that kept arising. ``What does your company have that 
is different from other sheet metal facilities?''.
    Consequently I felt the need to search out and find out 
what do I have or what can I change to make my company stand 
out from the many sheet metal companies in our area.
    One of the answers that came about was certifications in 
areas that would make Geneva Metal more desirable to larger 
companies. The first step was to achieve certification by the 
State of New Jersey as a woman owned business. In March of 1997 
this was completed.
    From there my company became involved in a consortium run 
by the State of New Jersey to become ISO 9002 certified, 
spending 1\1/2\ years learning, teaching and implementing 
quality procedures into my manufacturing system.
    During this time another certification was brought to my 
attention. Something called HUBZone. This program encourages 
economic development in historically underutilized business 
zones through the establishment of preferences. It is a very 
simple process to go through and can be done over the Internet.
    Basically a small business must be located in a classified 
zone, owned by a U.S. Citizen and have at least 35 percent of 
its employees residing in the HUBZone area.
    Company information was completed within a day, submitted, 
and within 30 days Geneva Metal was certified as a HUBZone 
company. To date the most receptive of all certifications in 
acquiring bids from various government related agencies has 
been the HUBZone.
    Since 1988 with the combination of various certifications, 
perseverance and exposure through different government 
programs, I have increased sales, workforce and added over 
200,000 of new production equipment.
    If small business has any chance of survival today people 
must be aware of different programs available to them such as 
HUBZone. These programs make small business stand out and be 
recognized, allowing companies such as mine to have that one 
different thing that allows us to be considered for and 
hopefully acquire contracts. By growing we can contribute 
further education and growth in urban enterprise and welfare 
communities.
    Mr. Pascrell. Thank you, Deborah. Thank you for your 
testimony.
    Madam Chairlady, any questions?
    Chairwoman Kelly. I just simply want to thank all of you.
    Mr. Gross, I do have a question for you. What roadblock do 
you see for your communities in setting up or in getting 
through the Foreign Trade Zone public process?
    Mr. Gross. The fact that there are already two----
    Mr. Pascrell. Could you use the microphone, please? Thank 
you.
    Mr. Gross. The fact that there are already two foreign 
trade zones in this area, and to have another trade zone in 
this area, you would have to justify a reason for that as we 
are now in the process of getting the information that would 
justify the need for another Foreign Trade Zone in Passaic 
County.
    Chairwoman Kelly. That is the only roadblock you believe 
that is out there, that you see?
    Mr. Gross. Yes, at this particular time.
    Chairwoman Kelly. Okay, great, that is good.
    Mr. Pascrell. Physically, they are not that far, but 
demographically, it is like years apart?
    Mr. Hoffman. Yes.
    Mr. Pascrell. I hope that is taken into consideration in 
reviewing the plans. And the more people you have trying to be 
helpful in applying for a trade zone, I would think that that 
would indicate the interest as well as the eligibility, of 
course, that has to be met in a qualification.
    This helps everybody in the zone, be it a salesman of 
automobiles, be it a widget maker, whatever. So this would be 
critical.
    And you have heard today, Dennis, very critical to the 
growth of the economy in our area, which as someone said 
before, the prognosis is not very, very bright for Passaic and 
Essex Counties in terms of job growth.
    Both counties have held their own in terms of economic 
growth but that is about it. We have not moved to the next 
level. And again, I hope this is seen as a tool to do that. And 
that application needs to be strong and I am sure you will make 
it strong.
    Mr. Gross. Yes, sir.
    Chairwoman Kelly. I will let you pick up questions here. 
The only thing I would say, Mr. Gross, I assume that you are 
working with the Chamber of Commerce and with the Department of 
Commerce and with the SBA and all of the other agencies to try 
to make sure that this becomes realty.
    Mr. Pascrell. You have to speak up.
    Mr. Gross. Yes.
    As I pointed out, we have worked with those agencies, we 
recognize how vital that is to our application process.
    Mr. Pascrell. Okay. I just have some very quick questions 
so we can turn it over to our audience.
    I want to reemphasize what the Chairwoman just said, and 
that is the more inclusive the application becomes in terms of 
reaching out to the very manufacturing and service areas, I 
think the more we increase our possibility for being granted 
this kind of zone.
    If I go back to Dennis a second, I don't know if you have 
ever talked to each other, but how long does the basic 
application take?
    Mr. Puccinelli. The review process?
    Mr. Pascrell. Yes.
    Mr. Puccinelli. Can you all hear me?
    Mr. Pascrell. Yes. Speak up.
    Mr. Gross. The application process takes about 10 to 12 
months. That allows for a comment period, Customs review and 
then the interagency voting process at the end.
    Mr. Pascrell. What do you think is the most helpful thing 
to Ron and those within our area who want to make this a trade 
zone? What do you think is the most helpful thing to them that 
you could tell them about putting this application together?
    Mr. Puccinelli. We have talked before and I think that it 
sounds like they are on the right track to me. We would be glad 
to look at a draft application and give them some comments.
    Mr. Pascrell. How many pages is this application?
    Mr. Gross. It is a book form. There are many pages to the 
application.
    Let me point out that we have worked closely with the trade 
center at Mount Olive. They are working with me as a 
consultant.
    Mr. Pascrell. Is it better that they go piggy-back or try 
to do this on our own?
    Mr. Puccinelli. We would be glad to talk to them. They have 
both of those alternatives available and it just depends on 
what they want to do.
    I know the other zones in the area would probably work with 
them, or they could apply for their separate zone if they 
believe that they really have enough separateness here in terms 
of their economic development initiatives, and that is kind of 
what I am hearing; isn't that right, Ron?
    Mr. Gross. That is true. We have also been in touch with 
the Newark, New Jersey Foreign Trade Zone who has promised us 
to work closely, if we want their assistance, to work with us 
on the application process. It's part of the already 
established trade zone.
    Mr. Pascrell. Thank you, Ron. I want to thank Phil and 
Deborah also for shaping this because they have the experience 
of what the zone is about and also how ineligible you become if 
you are a few steps away. That to me is kind of crazy and 
insane.
    Chairwoman Kelly. I just wanted to thank you all also, but 
I have another question actually for those of you who are 
business people.
    This committee, this regulatory reform paperwork reduction, 
which I am chairing the subcommittee, which of the agencies 
that you deal with ask for the most amount of paperwork, and do 
you have any, and do you have any suggestions there where we 
can perhaps give you some help?
    Mr. Waitts. Well, most of our paperwork comes from, 
surprisingly enough, from the DEP over the years----
    Mr. Pascrell. Gee, that is a surprise.
    Mr. Waitts. Yes. But most of the government regulation in 
what we deal with--and other parts of it are very small 
compared overall to that department in comparison.
    Mr. Pascrell. You know, we have been struggling with that 
in Congress. All of us want to protect the environment and all 
of us want to leave our children a healthy legacy, but what we 
need to do is also understand the opportunities about economic 
growth. They need not be in contact with one another.
    Mr. Waitts. True.
    Mr. Pascrell. We need to make sure that they are 
complementing one another and that we do not go to an extreme 
to cut off our nose to spite our face.
    I don't know how you feel about this, but I see in terms of 
environmental regulations much more of a civil attitude about 
environmental prerogatives and more of an attitude of abating 
problems rather than prosecuting them.
    I mean, there are only a few fakers. Most people are 
sincere in trying to deal with their environmental 
responsibilities, and I think we should make sure we develop 
that abatement process, and we have done that with SuperFund, 
we have done that with Brownsfield which is part of the budget.
    We don't have too much time to read the thing, but I want 
to read specifically what is in here about Brownsfield. I think 
it is very, very important. We can't compete--industry can't 
compete in America if we have this standard, and countries 
where we are supporting jobs with no standards and we are 
foolish enough to think that our trade relationships with these 
countries are going to, you know, we are going to be protecting 
the environment by giving away jobs. I want to protect the 
environment. I am very proud of my record on the environment 
but we need not cut off our nose to spite our face.
    Mr. Russo. I think over the past years I have seen actually 
less of a requirement for controls. Our particular industry is 
kind of environmentally clean as it is, but with programs like 
the City has put out, where they have these programs of 
hazardous waste materials, for instance, they have a program 
now where once a year they come by with a truck and they pick 
up all the hazardous waste of all small businesses, which I 
think is a great thing.
    Where it used to cost us thousands of dollars previously, 
they have come up with ideas where it is now much less, a 
smaller percentage of that. But the documentation and 
everything from the State itself, seems to me to be less 
anyway. That is my perception.
    Mr. Pascrell. The reason why I brought that up is because 
we mentioned the environmental question. But I see State 
governments, particularly in the northeast, and the Federal 
Government trying to come to closure on many of these 
environmental issues so that it does not become a noose around 
one's neck in protecting the environment and in developing the 
economy.
    These are tough issues. These are issues that we need to 
address in paperwork in and of itself that have hurt us. I 
mean, if we think that throwing out more paperwork is going to 
clean up a piece of property, we are nuts.
    On the other hand, I know there needs to be some paperwork 
and I know that there needs to be some response. We are not 
going to back off on high standards on the environment, whether 
it is clean water and clean air.
    However, I believe that removing ourselves from that 
extreme position is going to be very helpful so that we can 
bring closure, and this is what people really want. And I know 
that Sue has done everything in her power, since she has been 
in Congress, not only to protect the environment but to move 
the economic development.
    I want to make two points before we finish and the 
Chairwoman will then conclude the meeting and we will open it 
up to questions.
    I believe that the establishment of a Foreign Trade Zone in 
our area is critical if we ought to sustain job growth. I am 
going to form a committee--I hate to even say that, you know 
what I think about committees--for the express purpose of 
securing Federal Trade Zones in our area.
    It will not be a paper committee. None of our committees 
are, but one that is focused on a single goal, and I would 
hope, George, that you would be involved in that, and Ron, I 
don't know if this is the first time you met George, but it's 
people like George Waitts that we need to get on this committee 
in terms of practical application, what we are talking about.
    And we have the proper personnel here and you will be able 
to get a hold of them, not only because you have the web 
number, but because you have everything else, except their age, 
weight and whatever. But we need to understand that this is 
going to mean a lot of communication.
    The second thing that I am going to adjust to the best of 
my ability is the HUBZone program so that it does not exclude a 
business only because it's across the street from a certain zip 
code, and maybe that can be worked out through a regulatory 
process rather than simply a bill that we can generate.
    We generate millions of bills, but we want to get something 
done and I know Sue feels the same way about that, this gray 
zone of eligibility, and with that I would like to turn it over 
to the Chairlady and again, thank you so much for your 
tremendous input here and your cooperation.
    Chairwoman Kelly. Well, with that I want to thank all of 
you for being here this afternoon. It has been a very 
interesting and good hearing and I hereby adjourn.
    I now think we are available for questions.
    Mr. Pascrell. Please make your questions short and we will 
make the answers short so we get to more people.
    [Whereupon, at 4:45 p.m., the subcommittee was adjourned.]

                                
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