[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                       FULL COMMITTEE HEARING ON 
                       SMALL BUSINESS EXPORTS IN 
                      THE CURRENT ECONOMIC CLIMATE 

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

                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 19, 2008

                               __________

                         Serial Number 110-101

                               __________

         Printed for the use of the Committee on Small Business


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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


HEATH SHULER, North Carolina         STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas              ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington              SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona               TODD AKIN, Missouri
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois               MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas                 STEVE KING, Iowa
DAN LIPINSKI, Illinois               JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin                LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa                   DAVID DAVIS, Tennessee
YVETTE CLARKE, New York              MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana              VERN BUCHANAN, Florida
HANK JOHNSON, Georgia
JOE SESTAK, Pennsylvania
BRIAN HIGGINS, New York
MAZIE HIRONO, Hawaii

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

               Kevin Fitzpatrick, Minority Staff Director

                                 ______

                         STANDING SUBCOMMITTEES

                    Subcommittee on Finance and Tax

                   MELISSA BEAN, Illinois, Chairwoman


RAUL GRIJALVA, Arizona               VERN BUCHANAN, Florida, Ranking
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana              STEVE KING, Iowa
HANK JOHNSON, Georgia
JOE SESTAK, Pennsylvania

                                 ______

               Subcommittee on Contracting and Technology

                      BRUCE BRALEY, IOWA, Chairman


HENRY CUELLAR, Texas                 DAVID DAVIS, Tennessee, Ranking
GWEN MOORE, Wisconsin                ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York              SAM GRAVES, Missouri
JOE SESTAK, Pennsylvania             TODD AKIN, Missouri
                                     MARY FALLIN, Oklahoma

        .........................................................

                                  (ii)

  
?

           Subcommittee on Regulations, Health Care and Trade

                   CHARLES GONZALEZ, Texas, Chairman


RICK LARSEN, Washington              LYNN WESTMORELAND, Georgia, 
DAN LIPINSKI, Illinois               Ranking
MELISSA BEAN, Illinois               BILL SHUSTER, Pennsylvania
GWEN MOORE, Wisconsin                STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania          MARILYN MUSGRAVE, Colorado
JOE SESTAK, Pennsylvania             MARY FALLIN, Oklahoma
                                     VERN BUCHANAN, Florida

                                 ______

            Subcommittee on Rural and Urban Entrepreneurship

                 HEATH SHULER, North Carolina, Chairman


RICK LARSEN, Washington              JEFF FORTENBERRY, Nebraska, 
MICHAEL MICHAUD, Maine               Ranking
GWEN MOORE, Wisconsin                ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York              MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana              DAVID DAVIS, Tennessee
HANK JOHNSON, Georgia

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, PENNSYLVANIA, Chairman


CHARLIE GONZALEZ, Texas              MARY FALLIN, Oklahoma, Ranking
RAUL GRIJALVA, Arizona               LYNN WESTMORELAND, Georgia

                                 (iii)

  




























                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Chabot, Hon. Steve...............................................     2

                               WITNESSES

Johnson, Mr. Cass, President, National Council of Textile 
  Organizations..................................................     4
French, Mr. Jameson, President, Northland Forest Products, 
  Kingston, NH, On behalf of the Hardwood Federation.............     6
Wetherington, Mr. Chuck, President and Owner, BTE Technologies, 
  Hanover, MD, On behalf of the National Association of 
  Manufacturers..................................................     8
Griswold, Mr. Daniel T., Director of the Center for Trade Policy 
  Studies, The Cato Institute....................................    10
Chatterji, Dr. Aaron K., Assistant Professor, The Fuqua School of 
  Business, Duke University, Durham, NC..........................    12

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    29
Chabot, Hon. Steve...............................................    31
Johnson, Mr. Cass, President, National Council of Textile 
  Organizations..................................................    32
French, Mr. Jameson, President, Northland Forest Products, 
  Kingston, NH, On behalf of the Hardwood Federation.............    38
Wetherington, Mr. Chuck, President and Owner, BTE Technologies, 
  Hanover, MD, On behalf of the National Association of 
  Manufacturers..................................................    46
Griswold, Mr. Daniel T., Director of the Center for Trade Policy 
  Studies, The Cato Institute....................................    56
Chatterji, Dr. Aaron K., Assistant Professor, The Fuqua School of 
  Business, Duke University, Durham, NC..........................    61

                                  (v)

  


                    FULL COMMITTEE HEARING ON SMALL
                    BUSINESS EXPORTS IN THE CURRENT
                            ECONOMIC CLIMATE

                              ----------                              


                        Thursday, June 19, 2008

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:06 a.m., in Room 
1539, Longworth House Office Building, Hon. Nydia M. Velazquez 
[Chair of the Committee] Presiding.
    Present: Representatives Velazquez, Shuler, Larsen, 
Ellsworth, Chabot, Akin and Davis.

           OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ

    Chairwoman Velazquez. Good morning. I call this hearing of 
the House Small Business Committee to order.
    It is no secret that the Nation's economy is struggling. 
Just last month, the unemployment rate reached 5.5 percent, 
hitting its highest point in 4 years; and with the rising costs 
of basic commodities, few Americans remain untouched by the 
increasingly fragile economy. During past downturns, America's 
small businesses have helped jump-start the economy through 
trade, but, unfortunately, that has not been the case today. In 
this hearing, we will review the current economic climate and 
explore the barriers hindering this vital sector. History has 
shown trade to be the silver lining in a weak economy.
    In the early 1990s, for example, the country was reeling 
from a demoralizing recession. In fact, the situation was not 
at all that different from the one we face today. But rather 
than allowing the era's weak economy to hold them back, 
American businesses looked to opportunities abroad. As a 
result, U.S. trade led the way into the booms of the late '90s, 
when American exports skyrocketed from $535 million to just 
over $1 billion.
    But today American exports are declining rather than 
rising, and the rate of decline has been extreme. In the 2 
months between February and March of this year, U.S. exports 
dropped $2.5 billion. These figures are simply unbelievable.
    To say that export numbers are declining would be an 
understatement. Export numbers, are not falling, they are 
plummeting. We now know that commerce is falling sharply for 
businesses in the areas of capital goods, industrial supplies, 
and advanced technology. Last month alone, these industries 
witnessed a $100 million drop-off in exports.
    And these kind of declines are not industry isolated, 
either. Trade with NAFTA countries, the bread and butter for 
small business exporters, has also dropped off considerably. In 
fact, commerce has slowed to virtually every foreign port.
    These declines are also manifesting themselves 
domestically, where trade with our major partners in our top 10 
ports is down $100 million. Still, it seems the worst is yet to 
come. Export orders, a leading indicator of future trade, show 
no light at the end of the tunnel. Instead, recently they have 
dropped 6.5 percent for the service industry and slowed for 
manufacturers.
    Members of this Committee are well aware of the integral 
role that small exporters can play in reversing these trends. 
Ninety-seven percent of America's small firms are exporters; 
and, in fact, one-third of all U.S. exports come from 
entrepreneurs. That means that any dent in American exports 
become a crater in the small business community.
    Why then are exports declining in traditionally 
entrepreneur-driven industries? A number of factors have come 
into play, creating what now looks to be a perfect storm. At 
the heart of that storm are shrinking market stakes. On that 
front, the U.S. now stands in third place behind Germany and 
China. It should also be noted that 90 percent of small 
businesses export to only one country, a fact that has made 
them far more susceptible to economic volatility and market 
shifts. But perhaps most troubling is the damage that we have 
done to ourselves. Sadly, the current administration has failed 
its own small exporters by underfunding trade-friendly 
initiatives. In this morning's hearing we will further examine 
these barriers.
    Trade may be on the decline and the economy may be 
suffering, but just as we used trade to turn the economy around 
in the '90s, it can serve as a catalyst today. And what better 
place to begin than with our entrepreneurs? After all, small 
firms are the backbone of American business. They have steered 
us out of past recessions, and they can lead the way again 
today.
    I want to thank all the witnesses in advance for their 
testimony. The Committee is pleased they could join us this 
morning and looks forward to their insights on these issues.
    With that, I now yield to Ranking Member Chabot for his 
opening statement.

                OPENING STATEMENT OF MR. CHABOT

    Mr. Chabot. Thank you, Madam Chairwoman, for holding this 
important hearing on small business exports.
    I would like to welcome our distinguished panel of 
witnesses and thank them for taking time out of their busy 
schedules to provide this Committee with their testimony. And 
we wish you all a good morning and welcome here to the 
Committee.
    One of the most important functions of this Committee is to 
look for solutions to help entrepreneurs gain access to global 
markets. Not only do we look for new and innovative ways to 
help small businesses conduct international trade, but we must 
also conduct the requisite oversight to ensure our current 
programs are effectively keeping up with the changing times.
    Last year, this Committee worked in unison in order to put 
together a piece of legislation, H.R. 2992, the SBA Trade 
Programs Act of 2007, that passed the House with broad 
bipartisan support. This legislation brings changes in the 
SBA's operation of its programs to enhance small business 
participation in the global economy. H.R. 2992 represents the 
Small Business Committee's continued commitment to promotion of 
international trade by America's small businesses.
    The Small Business Administration has a number of general 
entrepreneurial assistance programs that provide technical 
advice to small business owners. However, international trade 
is an area that is fraught with regulatory hurdles, requiring 
specialized knowledge that may not be available from the SBA's 
entrepreneurial partners.
    It is not surprising to find that the SBA created other 
programs to meet the needs of small business exporters that 
rely on personnel with specialized knowledge about the 
international trade regulatory regime. These programs, as well 
as the SBA efforts to coordinate with other agencies such as 
the Department of Commerce, have enhanced the worldwide profile 
of many U.S. exporters.
    There are about a quarter of a million small businesses in 
the United States that export. There is no doubt that small 
businesses are playing a vital role in reducing America's trade 
deficit. Continuation of this success, and even greater 
emphasis on small business exporting, will undoubtedly benefit 
the American economy.
    Additionally, this Congress has the opportunity to pass 
legislation enacting free trade agreements with several of our 
allied nations, including Colombia, Panama, and South Korea. I 
remain hopeful that Congress will work together to pass 
legislation that will implement these pending trade pacts. 
These agreements should be supported by Congress.
    The administration, particularly former U.S. Trade 
Representative Rob Portman and the current USTR, Susan Schwab, 
have worked hard over the years to make sure the trade pacts 
addressed concerns about labor, environmental violations, and 
intellectual property theft in certain regions of the world. 
These pacts can also be useful in spurring negotiations for 
larger trade discussions, such as the Doha trade negotiations. 
Non-free trade countries may feel compelled to work with other 
nations to ensure that they are not isolated from the rest of 
the world.
    In the U.S., free trade agreements have enabled local 
businesses to expand their market base, as well as provided 
consumers with greater access to different products at more 
competitive prices. In Ohio, my State, trade has enabled 
businesses to grow. More than 11,000 companies export goods 
from my home State to places all across the globe. Eighty-nine 
percent of those companies can be defined as small- and medium-
sized businesses, ones that traditionally and rightly have been 
called the backbone of the American economy. In addition, one-
fifth of all manufacturing workers in Ohio depend on exports 
for their jobs.
    It appears clear to me that exporting is a critical part of 
building the American economy, especially for small businesses. 
We have an excellent panel with us today to help us identify 
some of the obstacles that remain in encouraging trade among 
small- and medium-sized businesses, and I think that we all 
look forward to hearing their testimony this morning and asking 
questions.
    So thank you for holding this hearing, Madam Chairwoman. I 
yield back my time.

    Chairwoman Velazquez. Thank you, Mr. Chabot.
     Now I have the pleasure of introducing Mr. Cass Johnson. 
Mr. Johnson is the President of the National Council of Textile 
Organizations. NCTO represents the entire domestic textile 
industry, including producers, manufacturers, and suppliers of 
these products.
    You will have 5 minutes to make your presentation.

 STATEMENT OF MR. CASS JOHNSON, PRESIDENT, NATIONAL COUNCIL OF 
                     TEXTILE ORGANIZATIONS

    Mr. Johnson. Thank you very much, Chairwoman Velazquez and 
Ranking Member Chabot and distinguished members of the 
Committee. We look forward to testifying today and outlining 
the U.S. textile's industry's perspective on the state of small 
business exports.
    As a sector, the textile industry is one of the Nation's 
most successful exporters. At $16 billion last year, we export 
one out of every three products we make. However, almost three-
quarters of our exports go to the Western Hemisphere. Only one-
quarter go to the rest of the world; and that includes the 
rapidly developing, rapidly growing economies in Asia, 
particularly China and India. In fact, we send China, a country 
with a population of 1.4 billion and which consumes more 
textile apparel products by far than any other country in the 
world, only $500 million a year in exports.
    And China, in fact, looks great compared to India-- 1.1 
billion population, one of the largest textile apparel 
consumers in the world--where we send only $55 million a year 
in textile exports. We send more to the United Arab Emirates 
each year than we do to India.
    Why is this happening? In the macro sense we see, in 
addition to high duties, we see three major barriers. These are 
the VAT, currency manipulation, and government subsidies. Of 
these three, probably the least understood is the VAT, or 
value-added tax.
    The VAT is a tax that averages 15 percent that is levied on 
exports from the United States to countries with a VAT system, 
and that is most countries in the world. The problem with the 
VAT is that U.S. exports are essentially taxed twice. They are 
taxed at home, companies pay corporate income taxes, and then 
they are taxed when they go overseas. They get an average 15 
percent tax in addition to the duty.
    When goods are exported from VAT countries, they get no 
taxes. These countries rebate the 15 percent tax, and then they 
are not charged any U.S. corporate income tax. So you have a 
situation where our goods being exported are taxed twice, and 
goods coming from VAT countries have all taxes rebated from 
them. So it is a basic inequity.
    It has been estimated that the VAT tax costs U.S. 
manufacturers $341 billion every year. That is a huge stealth 
tax that holds back exporting in the United States.
    There is an answer to this. It is the Border Tax Equity 
Act, H.R. 2600, by Congressman Michaud, a member of this 
Committee. We request that you look carefully at this Act. It 
is a three-pronged approach to remove the VAT disadvantage from 
U.S. exporters.
    The second barrier is currency manipulation, an issue that 
we have all heard about. One thing we haven't necessarily heard 
about is the tax this puts on exports. We all know that China 
can--we import a lot more from China because of manipulation of 
currency. The flip side of that equation is we can't export 
nearly as much to China because of the currency manipulation. 
It places the same 25 to 40 percent tax on exports as the 
advantage it gives to imports from China.
    There is an answer to this problem. It is H.R. 2942, the 
Currency Reform for Fair Trade Act, co-sponsored by Tim Ryan 
and which has been supported by many members of this Committee. 
If Congress would pass this Act, it would send a strong signal, 
the most powerful we can imagine, that China needs to float its 
currency.
    The third major problem are subsidies, particularly in 
China, India, and Vietnam. In a recent textile case, the 
government found that China offered its textile industry 24 
different subsidies in order to export products cheaper to the 
United States, and they assigned countervailing duties of 27 to 
359 percent. Most medium-sized--small- and medium-sized 
companies cannot afford to file CBD cases. They start at a 
million dollars apiece. The government needs to do more, and we 
suggest that Congress needs to send a strong signal that the 
government needs to do more.
    NCTO sent to USTR a list of 63 subsidies that China offers 
it its textile industry. We sent that over a year ago. We are 
still waiting for a response. We know many of these subsidies 
are WTO illegal and should be the genesis of a case against 
China, but we have been told by USTR that they simply do not 
have the resources right now to go after these 63 subsidies.
    We believe that Congress should change USTR's focus for the 
next 5 years from negotiating new agreements to reviewing and 
enforcing existing agreements. USTR's resources should be 
reoriented towards verifying China and others live up to the 
agreements they have signed; and, if they are not, they should 
file cases against them at the WTO.
    With these steps, we believe we can usher in a new 
renaissance for the U.S. manufacturing sector and its workers, 
and we thank the Committee very much for looking at this very 
important issue.
    [The prepared statement of Mr. Johnson may be found in the 
Appendix on page 32.]

    Chairwoman Velazquez. Thank you, Mr. Johnson.
    Our next witness is Mr. Jameson French. Mr. French is the 
President of Northland Forest Products, which is a family run 
business selling hardwood products located in Kingston, New 
Hampshire. He also serves as Chair of the Board of Directors 
for the Hardwood Federation, which is an industry trade 
association that represents over 14,000 businesses, 30 trade 
associations, and over one million hardwood families. Welcome.

 STATEMENT OF MR. JAMESON FRENCH, PRESIDENT, NORTHLAND FOREST 
 PRODUCTS, KINGSTON, NEW HAMPSHIRE, ON BEHALF OF THE HARDWOOD 
                           FEDERATION

    Mr. French. Thank you. Thank you very much, Madam Chairman 
and the Committee. I appreciate the opportunity to be here 
today. And thanks for the introduction. It saves me a few 
seconds of my time.
    I would note that I am proud to be a fourth-generation 
member of the hardwood lumber industry. And we have a fifth 
generation coming along, but they are wondering whether it is 
going to be worth it because of the difficulties that our 
industry is facing, particularly--in all parts of the country, 
but in New England, where we saw the demise of the textile and 
shoe and the computer hardware businesses. And we wonder 
whether the forest products industry will be the next one to 
fall.
    As you noted, the Hardwood Federation, 14,000 businesses 
around the country, small family businesses, key strong parts 
of the world's economy in many of the Eastern States. We 
actually have members in all 50 States, but the bulk of the 
forest resource, of course, is east of the Mississippi. We are 
a major exporter. About almost $3 billion worth of hardwood 
forest products are sent around the world, hardwood lumber, 
plywood, flooring, pallets, kitchen cabinets, all these types 
of products.
    These are tough times for our industry, as you can imagine, 
with the housing crisis and all of the domestic economy 
recession. It has been a great challenge. And the export side 
of the business has been one of the most important sort of 
lifelines for people in a very difficult domestic economy.
    You will see in my written testimony the key products that 
we export and the countries that we send them around the world. 
Of course, Asia has become very significant. Europe has the 
highest values.
    Our industry represents a lot of very independent people in 
rural parts of this country. And we tend to be libertarian, and 
we tend to be very free trade people. But we are really 
concerned about the lack of a level playing field, and we want 
fair trade and a chance to compete in the global marketplaces.
    There are three specific areas of concern, all of which are 
in my written testimony: the increase in fees from APHIS, the 
freight and shipping charges, and the foreign procurement 
policies, which particularly in Europe and Japan may require 
some documentation and some issues that involve legality and 
sustainability that may be very difficult for our members to 
comply with.
    I won't spend much time at all on the fee issue. It is a 
relatively small thing. It doesn't sound like a lot, but you 
can imagine if you aren't making any money, to have a doubling 
of your export certificate fees could make a big difference.
    The shipping problem is a huge one. The sudden rate 
increases that have occurred, doubling some of our container 
charges around the world in the last 6 months, has killed many 
of us. It is a huge problem if you have advance contracts, say, 
to China where you have sold many loads forward at a fixed 
price, and suddenly the rate goes up by 50 percent or more, and 
there is no containers.
    And we are very concerned that the business practices of 
many of these foreign-owned shipping lines are dubious; and we 
would urge this Committee to investigate this area. Because we 
feel we have been unfairly penalized as to our low-value 
products, that they have substituted the higher-value products 
and left us hanging dry. It has been a big problem.
    The procurement issue is quite complicated and hard to 
explain in a short bit of time, but I want you to know that we 
take this issue very, very seriously.
    We have a wonderful, sustainable resource in this country. 
The eastern hardwood forest is the woodbasket of the world, and 
we are very concerned about illegal logging in foreign 
countries like Indonesia and Russia, and we are very 
appreciative of the support that has happened with this 
amendment to the Lacey Act, which we strongly supported with 
the environmental organizations. But there are some concerns 
that the European countries and others are going to force us to 
have more documentation about the sustainable or certification 
of our forest resource. This is very difficult for people, with 
90 percent of all the land that's owned in this country in the 
forest is by small private landowners.
    In my little State of New Hampshire, we have 22,000 people 
that own 25 acres or more. So it is very difficult for the 
chain of custody and the procurement policy to certify these 
kinds of lands, and it is a very diverse and fragmented 
industry. And the paperwork and the necessary costs to ensure 
legality and sustainability would be a great challenge.
    We have a great story to tell. The U.S. Forest Service 
tells us we have 50 percent more growing than is being cut in 
the last 50 years, that we have independent studies showing our 
risk assessment is very low and that legality is very high. So 
we would really love to have some support around this issue to 
make sure that we do not face unfair and uncompetitive 
disadvantages abroad around this thing.
    So we thank you for your interest. We want fair, level 
playing field trade. We are very grateful for the support of 
the American Hardwood Export Council funding for the FAS market 
promotion fund. This is an area that has been very well 
supported and funded, and we are grateful for that.
    We thank you for your time. Thank you.
    Chairwoman Velazquez. Thank you, Mr. French.
    [The prepared statement of Mr. French may be found in the 
Appendix on page 38.]

    Chairwoman Velazquez. Thank you, Mr. French.
    Our next witness is Mr. Chuck Wetherington. Mr. 
Wetherington is the President and owner of BTE Technologies, 
located in Hanover, Maryland, which produces work simulation 
and physical therapy equipment. He is also a board member of 
the National Association of Manufacturers, representing small- 
and medium-sized manufacturers. Welcome.

 STATEMENT OF MR. CHUCK WETHERINGTON, PRESIDENT AND OWNER, BTE 
  TECHNOLOGIES, HANOVER, MARYLAND, ON BEHALF OF THE NATIONAL 
                  ASSOCIATION OF MANUFACTURERS

    Mr. Wetherington. Thank you. Good morning, Madam Chairman 
and members of the Committee.
    I am Chuck Wetherington, as you said, President and an 
owner of BTE Technologies, a small company headquartered in 
Hanover, Maryland. We have offices in Denver, Colorado, as 
well.
    I have prepared a statement for the record and will make my 
remarks brief at this time.
    At BTE, we have 78 employees and produce a range of medical 
devices focused on physical therapy, industrial rehabilitation, 
and sports medicine. In 2001, we made a decision to place 
greater focus on exports. We have the good fortune of being in 
a product space where U.S.-flagged goods are held in very high 
esteem in the world marketplace.
    I am happy to say that since 2002 our exports have grown 
tenfold, from 3 percent of our revenues to now 35 percent. We 
currently export to 28 countries in the world.
    Exports, obviously, have been a key part of our company's 
strategy and success. So how important is small business to 
U.S. exports? Of U.S. companies that export, over 97 percent of 
them are small- and mid-sized businesses. Yet those companies 
only represent 30 percent of the total dollar value of all U.S. 
exports. This is because two-thirds of all smaller exporters 
sell to just one country, and two-thirds have fewer than five 
export sales per year. We have a lot of room to grow, and with 
the right conditions U.S. small companies can flourish in the 
global marketplace.
    Today, I would like to mention four things that are 
critical for U.S. companies, especially small companies, to be 
able to successfully export.
    First, we need currencies that reflect market values. When 
the dollar is excessively strong against other currencies, U.S. 
goods become expensive in global markets and exports decline. 
When the dollar has adjusted to a more realistic value, exports 
grow. Of course, this sounds like common sense, but it is a 
fact that is too often overlooked.
    We have just seen this play itself out in the past decade. 
As the dollar came off its 2002 high, our exports have grown 
dramatically. NAM hears every day from companies who say the 
value of the dollar has allowed them to be internationally 
competitive again. Many companies, particularly small- and mid-
size, say the primary reason they are doing well is their 
export performance, which has offset softening domestic demand.
    Second, we need free trade agreements that open markets for 
U.S. goods. I recognize that there are concerns about our free 
trade agreements, but I must say, from the perspective of a 
small business trying to export, they have been very important 
to us. The United States is already open to the world. Much of 
the rest of the world has a higher tariff and non-tariff 
barriers to U.S. exports. We need these agreements to open 
foreign markets for our goods.
    Third, it is very important that we see the removal of 
standards and regulatory barriers, one of those non-tariff 
barriers I spoke of, for the sale of U.S. goods in foreign 
markets. This is one of the big hurdles we face at BTE.
    A good example is the medical device directive in the 
European Union. One would think that the EU would be about the 
easiest place after Canada and Mexico for the U.S. company to 
export, and in many ways it is. But this directive has made it 
very expensive and very difficult and time-consuming for us to 
be certified. We are seeing signs that others are starting to 
follow the EU's lead.
    The government could help by working to develop some level 
of standardization. This might include negotiating global 
standards, or at least reaching agreements for reciprocity 
between certifying agencies. Multiple standards greatly 
increase the costs of production and the costs of bringing new 
products to market, and this would be especially helpful for 
small companies.
    The fourth priority is the U.S. Government export 
assistance. At BTE, we have found a range of services provided 
by the U.S. Commercial Service to be instrumental in our 
success. We worked with the Baltimore Export Assistance Center 
to help us find distributors overseas, conduct background 
checks on potential customers and agents and do country 
analysis, identifying markets for our products.
    I have to add at this point that this has also been a 
marvelous place for us to see State associations working with 
Federal associations through the Maryland Department of 
Business and Economic Development. Working hand in hand with 
Commercial Services, we have been able to get the best possible 
solutions for our needs.
    For small companies, these services are essential to 
success in exporting. Most of us don't have the resources to 
have large export divisions or offices overseas to ferret out 
new business. One problem is the increasing shifting of costs 
of these promotion programs back to the U.S. businesses. This 
is in contrast to the support that other governments provide to 
their exporters.
    Some of these countries pay up to 70 percent for their 
companies to attend trade shows. In BTE's experience, we have 
spent over $100,000 in just the last 4 years just to attend 
MEDICA, the annual trade show that covers our field.
    The Australian Government, for example, recently announced 
that grants for economic export development would be boosted to 
$200 million. By contrast, the comparable U.S. program is 
funded at $2 million, although we have significantly more small 
companies that could benefit.
    Another important export service is export financing. My 
company has taken advantage of small business services at EX-IM 
Bank, and it has made a significant difference in the number of 
our recent sales. I strongly encourage you to continue support 
for these import financing opportunities for small companies.
    In conclusion, I would like to thank you and the members of 
the Subcommittee for this opportunity to testify on such an 
important issue. We are in a globalized world, and our small 
businesses need to be in a position to avail ourselves of 
global opportunities in order to improve the standard of living 
of all Americans. Certainly a determined export promotion 
effort, focusing on increased participation of America's small- 
and mid-sized companies in world markets should be an important 
endeavor. My prepared statement contains more specific 
suggestions.
    Thank you, Madam Chairman.
    [The prepared statement of Mr. Wetherington may be found in 
the Appendix on page 46.]

    Chairwoman Velazquez. Thank you, Mr. Wetherington.
    Our next witness is Mr. Daniel T. Griswold. He is the 
Director of the Center for Trade Policy Studies for the Cato 
Institute. He has authored or co-authored studies in 
globalization, trade, and immigration.

STATEMENT OF MR. DANIEL T. GRISWOLD, DIRECTOR OF THE CENTER FOR 
            TRADE POLICY STUDIES, THE CATO INSTITUTE

    Mr. Griswold. Chairwoman Velazquez, Ranking Member Chabot, 
thank you for inviting to testify here today.
    Globalization is a fact of life in 21st century America, 
and our nation's small businesses should be allowed to take 
full advantage of the opportunities. Since 1990, exports have 
grown sharply as a share of the U.S. economy. Three-quarters of 
the world's spending power and 96 percent of the world's people 
live outside the United States. This represents a huge 
potential market for American business.
    Our growing engagement in the global economy is one of the 
bright spots of the U.S. economy today, and we definitely need 
bright spots. Exports and earnings on foreign investment are 
booming. Exports of goods and services jumped by 12.6 percent 
last year from the year before, and earnings on U.S. investment 
abroad jumped 20 percent. That expanding opportunity to serve 
foreign markets has allowed U.S. companies, including small 
businesses, to better weather the current economic slowdown.
    One of the most important and fastest-growing markets for 
U.S. companies, including small businesses, is China. Last 
year, Americans exported $65 billion worth of goods to China. 
China is our number three export market behind only our NAFTA 
partners Canada and Mexico. Since China's entry into the WTO in 
2001, U.S. goods exports to China have grown at a compound rate 
of 22 percent. That is three times faster than our exports to 
the rest of the world, despite complaints about their currency.
    Small- and medium-sized U.S. businesses are basking in this 
export success. Nearly 20,000 small- and medium-sized U.S. 
companies account for 35 percent of U.S. merchandise exports to 
China. If Congress enacts legislation that ignites a trade war 
with China, small businesses will be among the first 
casualties.
    Far from a time out, Congress should work with this 
administration and the next to approve comprehensive trade 
agreements to abolish barriers and promote two-way foreign 
investment. Such agreements benefit U.S. small businesses in 
three particular ways.
    First, trade agreements help to reduce red tape and 
increase transparency. Small businesses often lack the 
resources and the foreign partners abroad to navigate through 
the opaque legal systems and customs duties of foreign 
countries. Numerous fees and other non-tariff barriers can be 
deal-breakers for small companies. Trade agreements streamline 
rules, reduce non-tariff barriers, and provide arbitration 
procedures.
    Second, trade agreements open up opportunities for U.S. 
small businesses to compete for procurement contracts with 
foreign governments. And this is a huge market. Trade 
agreements guarantee U.S. companies a fair shake at the 
important government procurement market. They also lower 
thresholds so businesses, small businesses, can submit bids.
    Third, trade agreements lower tariffs and other barriers to 
trade that are more difficult for small businesses to work 
around. You know, large multinationals can circumvent tariffs 
by locating production in affiliates abroad. Small U.S. 
companies don't have that option. Many of them export from a 
single domestic location here in the United States. The 
reduction and elimination of tariffs allows them to export from 
their domestic facilities without facing barriers that could be 
discriminatory and prohibitive.
    The 110th Congress has the opportunity right now to enact 
three trade agreements with Colombia, Panama, and South Korea 
that will help small U.S. companies boost their exports. All 
three of these agreements would reduce barriers and eliminate 
tariffs while guaranteeing fair treatment for U.S. companies 
that invest abroad. They would streamline those customs 
procedures, enhance transparency, and open up government 
procurement for small U.S. businesses; and these agreements 
would allow thousands of U.S. small companies to export to 
these markets for the first time.
    For example, nearly 8,000 small- and medium-sized U.S. 
companies already export to Colombia, accounting for more than 
one-third of our exports to that country. The Colombia 
agreement would eliminate the large majority of tariffs on 
those product. Their goods already enter the United States duty 
free because of the Andean Trade Preference Act. This would 
give us the level playing field that we all say we want. 
According to the U.S. International Trade Commission, the 
agreement would boost U.S. exports to Colombia by more than a 
billion dollars, with small businesses ready to claim a big 
slice of that expanding pie.
    U.S. companies do not need Federal subsidies to compete 
effectively in global markets. We have a lot of advantages in 
this country. Those markets are currently awash in private 
capital, ready to finance new trade and investment 
opportunities. Congress and the administration, if they want to 
increase opportunities for U.S. small business, they need to 
work together to reduce barriers to international trade and 
investment, whether abroad or here in the United States.
    Thank you very much.
    [The prepared statement of Mr. Griswold may be found in the 
Appendix on page 56.]

    Chairwoman Velazquez. Thank you, Mr. Griswold.
    And our next witness is Dr. Aaron K. Chatterji. Dr. 
Chatterji is an Assistant Professor at the Fuqua School of 
Business at Duke University and a Fellow at the Center for 
American Progress. His research focuses on innovation policy, 
entrepreneurship and small business issues, and corporate 
social responsibility. Welcome.

 STATEMENT OF DR. AARON K. CHATTERJI, ASSISTANT PROFESSOR, THE 
   FUQUA SCHOOL OF BUSINESS, DUKE UNIVERSITY, DURHAM, NORTH 
                            CAROLINA

    Dr. Chatterji. Thank you very much.
    Madam Chairwoman, members of the Committee, thank you for 
inviting me to testify on this important economic policy issue, 
one that, with the exception of the good work of this 
Committee, often does not receive the attention that it 
deserves.
    In my view, American small businesses are not just the 
backbone of our economy. They are also the linchpin of our 
society. In the places I have lived across this country--
upstate New York, where I was born and raised; northern 
California, where I did my graduate studies; and now the 
research triangle in North Carolina--I have seen that small 
businesses are one of the most are important variables 
affecting the overall economic health in a region. I have also 
observed that many immigrants to this country, like my parents, 
have started small businesses as a way to provide for their 
children. Finally, I have studied how global economic forces 
have changed the competitive landscape, yes, providing new 
threats to small businesses but also new opportunities.
    However, in the current policy debates, American small 
businesses are often an afterthought. Some recommendations seem 
to be driven by the assumption that what is good for the 
Fortune 100 is obviously just going to trickle down to small 
businesses. I think the real story is a little bit more 
complicated than that, frankly.
    I think Federal, State, and local governments have numerous 
tools at their disposal to help small businesses, especially in 
the current economic environment. At the end of the day, it 
will be the widely admired entrepreneurial initiative for the 
American people and their entrepreneurs that drives success, 
but the government can actually help to harness that initiative 
rather than hinder it. I think this is the difficult challenge 
of public policy that we face today.
    In that spirit, let me offer a few thoughts on some of the 
issues being discussed today, in particular the export outlook 
for American small business.
    While there are many reasons to be concerned about the 
future of the American economy--rising energy costs, the 
turmoil in the mortgage markets, and the increase in the 
unemployment rates--until recently American exports were one 
bright spot. They increased 16.6 percent from last year, 
although the chairwoman's new data suggests this year might not 
look as good. When we look beyond the data, we might be 
concerned that the majority of American businesses, namely 
small businesses, are not benefiting as much as they could be 
from what was a favorable climate for exports until recently.
    According to the Small Business Export Association, 240,000 
of our small businesses are exporting, accounting for $450 
billion in value. That sounds like a big number, but these 
businesses only represent a small fraction of small businesses, 
less than 1 percent in most cases. Furthermore, over 60 
percent, as mentioned in the chairwoman's opening statement, 
are only exporting to one country, which makes it much more 
volatile if local conditions in that country decline.
    Also, as prefaced by the other remarks, most of these 
exports are also regionalized in the NAFTA countries, 
particularly Canada and Mexico. We have a lot of opportunities 
in China and India that are not being exploited.
    When you had look at the ratio of exports coming from small 
businesses, it amount to about 29 percent of total value. I 
think that is an important number we need to keep in mind. It 
is not necessarily the number of small businesses exporting, it 
is the percentage of value that matters a lot as well. That 
percentage of 29 percent has stayed pretty constant over the 
last few years. I think there is a lot of room for growth.
    On the other hand, during the same time we have seen 
double-digit increases in the overall value of exports, 1.4 
trillion to 1.6 trillion last year, an increase of 12 percent. 
That is on top of another increase of 12 percent the year 
before. So as exports have been going up, small business's 
share has stayed pretty much the same.
    I think that is where the focus of this Committee can lie. 
So while we hear some encouraging statistics here about the 
percentage of exports for small business, I encourage you to 
focus on percentage of total value.
    I also think we need to look at those industries which are 
dominated by small businesses for special study. Ninety-four 
percent of machinery manufacturers are small businesses. 
Ninety-three percent of computer producers are small 
businesses. We have some disturbing data showing that exports 
in some of these industries are actually going down in 2008, in 
addition to lumber and textiles. These are the industries we 
need to be focusing on, where the majority are small 
businesses.
    Now, I should caution you that there are several caveats 
and exceptions embedded in these data. But taken together with 
the current economic climate, they indicate, in my view, that 
we should consider policies to aid U.S. small businesses in 
accessing foreign markets. They clearly need the help, and 
there is potential for growth. So let me briefly conclude by 
describing a few of the challenges faced by small business and 
where I see some potential policy responses.
    The first challenge is a general lack of awareness on the 
part of small business about the opportunities to do business 
abroad. You think about a multi-tasking entrepreneur who barely 
has time to run their own business and manage family affairs, 
much less think about entering a foreign market. We need more 
information for these small business owners and particularly 
the information about these tremendous opportunities abroad in 
China and India.
    Large markets here like China and India have increasingly 
large aircraft markets, for example; and the U.S. machine tool 
industry could supply these markets. The fact of the matter is 
small businesses in developing countries are not 
technologically sophisticated enough to source the large 
businesses in their domestic regions. This is a huge 
opportunity for U.S. domestic producers if they can seize it.
    Trade promotion at all levels of government needs to be 
consolidated and better coordinated and provide practical and 
clear information about foreign markets and foreign cultures as 
well. Let's not make missteps by not understanding foreign 
cultures when we are doing this.
    Many people have said this, but I want to add one more 
thing. Entrepreneurship is a very social process. Most 
entrepreneurs founded firms based upon people they knew, 
raising money from friends and family. We need to leverage 
their social networks to get the word out about how to access 
foreign markets. Immigrant entrepreneurs have already 
established strong ties with their home countries that we can 
use to access foreign markets. These things need to be 
considered, the social network aspect of entrepreneurship, when 
we think about policy.
    Finally, I think, while advances in technology have made 
communication easier, nothing replaces face-to-face contacts. 
It is just simply so expensive for small businesses to do the 
due diligence required to appraise foreign partners. The Gold 
Key Program by the U.S. Export Assistance Program is one good 
one; and, as the ranking member mentioned, I think it is a good 
idea to continuously evaluate these programs and see whether 
they continue to improve.
    Finally, I will make a personal appeal, but it actually has 
broader implications. I think we need better data on small 
business. So much of the data here today that I was looking at 
in preparing for this testimony does not include very critical 
parts of the story. Service exports in particular might be as 
large as 40 percent of the overall picture, and are not 
included in the data. So I would like to see more of that data 
collected, and maybe this Committee can help on that account as 
well.
    In conclusion, I think we all agree U.S. small businesses 
are a critical part of the economy. The question is how to 
harness that entrepreneurial initiative going forward. I think 
some of the policies suggested here today are a step in that 
direction.
    I want to thank you for your time, and I look forward to 
your questions.
    [The prepared statement of Dr. Chatterji may be found in 
the Appendix on page 61.]

    Chairwoman Velazquez. Thank you, Dr. Chatterji.
    I would like to address my first question to Mr. Johnson.
    In your testimony, you note that many countries pegged 
their own currency to ours, which effectively neutralizes any 
price advantage from a devalued dollar. Do you believe the U.S. 
should prompt these countries to cease manipulating their 
currency, or are there other alternatives you would recommend 
to promote U.S. exports?
    Mr. Johnson. Well, I think this is probably the largest 
export barrier to goods coming from Asia. The problem is not 
just China. It is a mercantilist export regime that have been 
set up for decades in the Far East by countries--not only 
China--Taiwan, Korea, Japan, Indonesia, India, Pakistan. Many 
of the export powerhouses have manipulated and controlled their 
currencies in order to get an export advantage; and until we 
get that under control, we are simply not going to be able to 
export and take advantage of these rapidly growing markets like 
we should.
    I think Alan Greenspan and Federal Chairman Bernanke have 
both said this is an export subsidy. H.R. 2442, the Ryan-Hunter 
Act, will allow injured U.S. companies to file countervailing 
duty cases against countries that manipulate their currency. It 
is an export subsidy. We should have the tools to defend 
ourselves from it. I think if we get those tools it will 
encourage those countries, because the U.S. market is still the 
biggest market in the world, to allow their currencies to float 
and to allow free markets to finally prevail.
    Chairwoman Velazquez. You don't think we have tools at our 
disposal at this time that the U.S. Government can use to 
pressure those countries in terms of the manipulation of their 
currency?
    Mr. Johnson. Absolutely not. I mean, the U.S. Government 
can and should file a WTO case, because this is an illegal 
subsidy. The Bush administration has refused.
    Chairwoman Velazquez. How many has this administration 
filed?
    Mr. Johnson. I think it has been filed three times by 
Members of Congress as well. And after the first filing, we 
would be at the decision point at the WTO right now if that 
case had gone through, because I think it has been 3 years. 
So--
    Chairwoman Velazquez. Thank you, Mr. Johnson.
    I am going to recognize Mr. Chabot, and then when we finish 
with our members here, I will come back and make a question to 
the other witnesses.
    Mr. Chabot. Thank you very much, Madam Chair.
    Just following up on the same general area--and I will 
begin with you also, Mr. Johnson--what can we do, especially 
with respect to China and India, to help our corporations be 
more successful in exporting there? And other than the currency 
manipulation, because we have discussed that at some length.
    Mr. Johnson. Well, I would add that looking at the VAT 
issue--and that is a very big issue to look at, but it has a 
very big impact. I mean, it is double taxation of U.S. exports. 
And how we get around that, there is one piece of legislation 
that I think people should seriously review, because it 
proposes some ways to do that.
    The other issue that we point out is this problem of 
government subsidies. And I note with interest that Mr. 
Griswold in his testimony writes that--I thought I had it right 
here--writes, says, big headline, no export subsidies, no trade 
barriers. And he is talking about should the United States 
offer subsidies to its companies to allow them to export more 
and should the United States impose countervailing duties?
    Well, I think where the argument fails is that he is not 
saying we should go after China. China has more export 
subsidies than any other country in the world. We have 
identified 63 just for the textile industry. And yet there is 
no suggestion on the other side of the table that these are 
harmful or prevent U.S. exporters from participating in these 
export markets.
    We have a five-to-one trade disadvantage with China. China 
exports over $300 billion to us; we export 50, $60 billion to 
them. That is the most rapidly growing, largest, fastest-
growing economy in the world. We should be exporting double or 
triple that much, but we can't when the Government of China 
layers subsidy after subsidy after subsidy onto its domestic 
manufacturers and makes it almost impossible for us to compete, 
particularly on the manufactured goods side.
    So I think USTR needs to beef up its resources. The United 
States needs to look into these sector-specific subsidies, file 
WTO cases. Under the WTO, if a sector is benefiting from 
subsidies and damaging another sector overseas, a WTO case can 
be brought that that sector should remove the subsidies.
    Mr. Chabot. Okay. Let me go to my next question.
    Mr. Griswold, let me go to you. Do you want to respond?
    Mr. Griswold. Yes. I have no doubt that China, as well as a 
lot of other governments around the world, as well as our own 
government, subsidizes domestic production; and I would like 
governments everywhere to stop doing that. I think the free 
enterprise system, the free market should determine trade 
flows. But just because other countries engage in self-damaging 
practices doesn't mean we should follow suit.
    Let me talk a little bit about the currency. I think this 
excuse is rapidly dissipating. You know, the Chinese currency 
has appreciated by 20 percent within the last 2 years. That 
appreciation has been accelerating.
    I think the textile industry appears to be an outlier among 
U.S. industry. As I pointed out, U.S. goods exports to China, 
manufactured goods, agricultural goods have been growing at a 
compound rate of 22 percent since China joined the WTO. That is 
three times faster than our exports to the rest of the world. 
So, clearly, a lot of U.S. companies of all sizes are enjoying 
a lot of success exporting to China.
    I don't think we should step in and mess up that very 
beneficial relationship. I think legislation like the Ryan-
Hunter bill would just raise barriers to trade and jeopardize 
those export gains that small businesses have made to China and 
elsewhere.
    Mr. Chabot. Okay. Thank you.
    Mr. French, you had mentioned that one of the things that 
you are dealing with that is causing real problems in your 
industry is the high cost of energy, which is obviously 
affecting people at the gas pump, and diesel has gone out of 
sight, et cetera. And I think you mentioned that some of the 
containers in 6 months it will double. And what does one do 
about that? Would you talk about that briefly, how that does 
affect your industry?
    Mr. French. It has been a huge impact. Of course, the 
lower-value products are more dramatically impacted by the 
percentage increase. So think of a relatively--and one of the 
issues with China that we have is a lot of the products that 
are going over there are the lower value end of the lumber 
products, because the Chinese want to buy the cheapest wood 
they possibly can to make into the cheapest furniture. That, of 
course, is putting the American furniture industry out of 
business.
    But what has happened with these freight increases is that 
they have come very, very rapidly. And, yes, of course we know 
fuel prices have gone up, but they haven't gone up 100 percent 
in 6 months. And the global trade patterns, we have a 
relatively low-priced product. The fees have been relatively 
low over time. And several years ago, of course, they loved us. 
The freight lines wanted this bulk cargo because all of the 
imported goods were coming in from Asia, and there were lots of 
empty containers here, and they were delighted to take grain or 
wastepaper or logs or lumber back to Asia.
    Those trade patterns have changed. There is less goods 
coming in because of the recession in the U.S. economy. And the 
shipping companies pretty arbitrarily suddenly decided, well, 
we don't want any of these low-market products. We have guys 
that are small family businesses, they don't have the 
sophistication of negotiating big deals with freight companies. 
They may be only shipping five or six or ten loads a month. And 
suddenly they have contracts that are forward at fixed prices, 
and they have a 500 or a 700 or a thousand dollar increase in a 
container with a value of only $20,000 on the container. That 
may be their entire profit. So it has been very arbitrary and 
random, and you know, no notice. It has been a huge impact on 
my own business.
    Mr. Chabot. Let me ask you this. In relation to energy--and 
I would like to ask the whole panel this question--obviously, 
you know, many of us believe that we need a comprehensive 
energy policy that we really follow through on that deals with 
alternative sources of energy and all the rest. But it has been 
Congress' policy not to allow us to go after the oil that is in 
ANWR and the Outer Continental Shelf for quite a few years now. 
Many of us have voted consistently for it. We haven't had the 
opportunity to vote in this Congress yet on that issue. I hope 
we do in the future. But do any of you all think that it is a 
good idea for small businesses or medium or large businesses in 
this country to keep ANWR and the Outer Continental Shelf off 
limits?
    Chairwoman Velazquez. Would the gentleman yield before--
    Mr. Chabot. Well, let me see if there is a show of hands.
    Mr. French. I would be happy to respond. I think it is a 
very short-term solution, and it is not necessarily good 
environmental policy.
    Mr. Chabot. To keep it off limits, you mean?
    Mr. French. We need to invest in alternative energy. And as 
wood energy looks at cellulosic ethanol, biomass and other 
types of things, it may be a savior for the hardwood lumber 
industry for some serious Federal investment in alternative 
energy, particularly utilization of wood.
    Mr. Chabot. Again, could I see by a show of hands if 
anybody here thinks that we ought to continue to keep ANWR and 
the Outer Continental Shelf off limits? Does anybody think we 
should?
    Mr. French. Okay. I do.
    Mr. Chabot. You do. Two of you.
    Mr. French. I think we need to be very guarded, whatever we 
do. And we made a commitment on ANWR. And it is a short-term, 
band-aid solution. It's not a long-term solution to our energy 
problems.
    Mr. Chabot. I can tell you that the two of you are not 
representative of the business folks, especially small business 
folks that have talked to me.
    Mr. French. I am not speaking for my industry now. I am 
speaking as an individual--
    Mr. Chabot. For yourself. Okay.
    Mr. French. --from the State of New Hampshire.
    Mr. Chabot. I would be happy to yield to the gentlelady.
    Chairwoman Velazquez. Let me just say I want the record to 
reflect it seems that ANWR is the answer for everything now, 
and next the gentleman will say that because we have not 
drilled in ANWR is the reason the Mets fired Mr. Willie 
Randolph.
    Thank you for yielding.
    Mr. Chabot. One never knows. I haven't been able to make 
that point in the past, but I appreciate the gentlelady making 
that.
    Chairwoman Velazquez. And I am a Mets fan.
    Mr. Chabot. I am a Cincinnati Reds fan. I have some more 
questions, but I will yield back to allow some other panel 
members to ask their questions.
    Chairwoman Velazquez. Sure. Mr. Larsen.
    Mr. Larsen. Thank you, Madam Chair, for calling this 
hearing; and I appreciate the testimony.
    Just a quick commercial for H.R. 3273, which is the Small 
and Medium-Sized Export Act of 2008 that several of us have 
introduced to increase our government's capacity to help small- 
and medium-sized exports to China. As I tell folks, whether you 
love China or hate China, you will love this bill, because this 
is designed to get our stuff into that market, not the other 
way around. So people can have any view they want on currency 
or subsidies from China and still support H.R. 3273. So I throw 
that in.
    I am also pleased to hear that this hearing is more than 
just about currency manipulation versus free trade agreements, 
because it is hardly the debate we ought to be having. And but 
what I didn't hear more of is the idea of a competitiveness 
policy and what elements that would take. And, Dr. Chatterji, I 
would ask if you would have some thoughts on what it would take 
to maintain a foundation of competitiveness in this country. 
Because I think what some folks do in Congress or push in 
Congress on trade--and I generally have been supportive of 
trade agreements--have been a trade policy, but it is nowhere 
near a policy to keep us competitive.
    Can you chat a little bit about that, Dr. Chatterji?
    Dr. Chatterji. Thank you.
    I think it is an excellent question and a point well taken 
that we have these conversations in isolation when we should 
probably be thinking about a competitiveness policy that 
includes trade, that includes workforce development, and also 
includes immigration, quite frankly, one of the most 
contentious issues, and particularly high-skilled immigration.
    Around the world, several countries have programs based on 
a points basis so they can bring in high-skilled immigrants for 
specific jobs. That has been discussed. Bringing in people with 
specific skills is clearly important.
    Also, the people we have here on H-1B visas. Why shouldn't 
we be stapling a visa to their diplomas when they do a Ph.D. in 
an advanced engineering subject?
    Currently, more than 50 percent of engineering graduates, 
Ph.D. students, are from foreign countries. And increasingly I 
have seen at Duke University, in contrast in a generation ago, 
when my parents came here, the Indian students now are saying 
we are going to go back to India. We can have a better life in 
Bangalore than we can here in Durham. To me, that is sort of a 
tragedy of our immigration system today. They find it to be 
better going back to India than staying here, when they could 
be producing and contributing to our economy.
    In addition, we can't forget about investing in the folks 
who are already here; and science and math education has got to 
be part of that. American students are lagging behind in those 
areas.
    I think there is a lot of scare tactics talking about 
engineering graduates from China and India. Yeah, there is 
about a million a year in each place, but it is very variable 
in terms of the skills they actually have.
    That being said, it is better to sort of be on our guard, 
even if the threat is not as large. I think we have to take 
this more seriously, especially among minority students, who 
are lagging behind in these areas.
    Now, what is that going to take? It is going to take a 
strong commitment not just in sort of secondary education but 
all the way back to primary education. I don't think American 
students are challenged enough in the math and sciences at an 
early age, and it is going to take sort of a reformulation of 
the way we think about education. That would be the second part 
of it. So high-skilled immigration is one area, education and 
workforce development would be the other.
    The last one is retraining programs. I think we talk a lot 
about it, but I am not sure if we are evaluating it the way we 
should. When someone loses their job in the textile industry, 
for example, in our State of North Carolina, you know, can they 
be retrained to do something in that industry or in another 
industry? What kind of guidance are they being given?
    You know, we have a good experience in some aspects in 
North Carolina taking low-end textiles and actually moving up 
to the higher end; and we have been quite successful in that. 
How can we retrain folks who used to work at the old textile 
mill to work in the new one? That is a key issue. I don't think 
enough attention is being put into those. And your point is 
well taken, if we can think about those components along with 
trade policy we might end up with something better.
    Mr. Larsen. Mr. French, a question for you. Have you 
approached or talked to anybody at the Federal Maritime 
Commission regarding the ocean freight charges issue?
    Mr. French. We haven't as a federation at the moment.
    Mr. Larsen. Are you planning on that?
    Mr. French. I think it is something we need to do.
    Mr. Larsen. We have them before the Coast Guard Committee 
at 2 o'clock, if you are around this afternoon. I am sure they 
would love to hear from you. I am sure they wouldn't love to 
hear from you, but we can probably help them hear from you.
    Just a last general question for the members, if anyone 
else wants to weigh in on my first question that Dr. Chatterji 
responded to. Mr. Griswold?
    Mr. Griswold. Congressman, I do think that is a very good 
point, that free trade, as important as it is, is not a magic 
bullet and it is not the single answer. We need to have as good 
a domestic business climate as possible; and that includes 
reasonable regulations, reasonable taxation.
    And I just want to echo what my friend to my left here says 
about a skilled workforce, and I do think Congress should 
reexamine the H-1B program. This is important to small 
business. It just isn't a Fortune 500 issue. This is important 
to small business.
    There was a study at Duke University a year or two ago that 
found that a quarter of U.S. high-tech and engineering start-up 
companies had a foreign-born person as a co-founder. If you 
want to encourage not just small business entrepreneurism 
generally but the high-tech, innovative kind, we need to reform 
our visa programs; and these companies often have connections 
abroad that encourage some of our highest-value exports to the 
rest of the world. So it is a package. You make a very good 
point.
    Mr. Larsen. Thank you.
    Let's go to Mr. Wetherington and Mr. Johnson.
    Mr. Wetherington. Yes, I am a supporter of assistance to 
help with exports to China. I think it is a marvelous program. 
I have been a beneficiary, as I said, of those programs in a 
number of countries.
    At the risk of throwing another log on the fire, though, 
the one fear that I do have that keeps me up at night, having a 
high-technology product, is that of intellectual property. 
Fortunately, my sales to China now are below the radar screen. 
My fear is that, with success, I would get to a point where it 
would become a point of interest; and it is very, very 
difficult for a small company to be able to deal with that and 
stay innovative enough to be ahead of the copying.
    Mr. Larsen. Thanks.
    Mr. Johnson?
    Mr. Johnson. Our members, the concerns they most raise are 
the price of energy, health care, and also taxation. If you are 
going to have a competitiveness policy, I suggest looking at 
those.
    But I don't think you can ignore in a competitiveness 
policy the fact that the biggest exporters in the world have 
erected large industrial policies that make their goods--make 
it difficult for us to compete against their goods. And you can 
either raise barriers to those goods, you can subsidize the 
United States industry, which I don't think our country wants 
to do, or you can go after those subsidies. And until you start 
going after those subsidies, which are very often WTO illegal, 
and can be gone after, you are going to have our companies 
competing against State governments. And we can compete against 
the Chinese textile mills, but what we cannot compete against 
is the Government of China, and that is what is being set up 
for us.
    The textile industry in China has now been gifted with its 
11th 5-year plan for the textile industry by the Chinese 
Government. There are no plans for the textile industry in the 
United States, and we don't want them. But we do want a fair 
playing field, where the U.S. Government starts going after 
these 63 subsidies the Chinese Government is offering its 
domestic manufacturers.
    Mr. Larsen. I am sorry. I am out of time. So out of respect 
for the chairwoman I want to thank the chairwoman.
    Folks, where I come from, Washington State, you know, we 
actually have a trade surplus with China. So it kind of depends 
where you sit sometimes in this country as well about how you 
approach these things.
    Chairwoman Velazquez. Mr. French.
    Mr. Larsen. Thank you.
    Mr. French. Thank you.
    I would just like to add a little bit on the complexity of 
the wood industry's relationship with China. Because, of 
course, they are a very, very important and large customer, but 
they are also a huge competitor, because of all of the products 
that they are making, some from our wood and some from other 
woods around the world.
    Of course, some of that is illegally felled from places 
like Papua, New Guinea, and Indonesia and the Russian far east; 
and they have all of the subsidies that have been talked about 
in their factories. They have these products that are coming in 
from these dubious sources, and then they are selling their 
manufactured products to our potential customers in other parts 
of the world. So the stair part that might have used to have 
been made in the U.S. that was going to be shipped to Europe at 
a very high value ends up being made in China from perhaps 
illegally felled Russian logs, you know, in a factory of 
dubious environmental regulations, and shipped to Europe. And 
it puts us out of business in that marketplace. So it is very 
complicated.
    Thank you, Madam Chairman.
    Mr. Larsen. Thank you, Madam Chair.
    Chairwoman Velazquez. Mr. Shuler.
    Mr. Shuler. Thank you, Madam Chair.
    Dr. Chatterji, you know, what provisions have we--you know, 
looking at future trade policies and agreements, what 
agreements should we be having to ensure that small businesses 
take advantage of the overseas markets?
    Dr. Chatterji. It is a difficult policy question. I think 
that there is two things.
    One is, despite all the fluctuations with currency, I don't 
think we can ever count on U.S. goods being the low-cost 
product in the market. I think we need to continue to focus on 
adding value to the products we provide. I think that is the 
only way.
    Even China, if you look at a recent article today in the 
New York Times, it talked about how they are becoming a little 
too expensive for some folks and people are moving to Vietnam. 
And that process will continue to happen over time. U.S. cannot 
be sort of the low-cost provider. We have to add value. The 
question is how to do that.
    I think you have to have an active Small Business 
Administration, an active trade procurement policy. You have to 
promote these things, to work with small business to identify 
new markets.
    I think the gap right now is these industrial behemoths in 
China and India who need to be sourced. They need parts. They 
need supplies. They need people. American small businesses have 
an opportunity to source them.
    Investor services is one area I have been reading a lot 
about. We have an opportunity to provide all these new 
companies with the type of value-added services that companies 
in their countries don't yet provide.
    So I think it is a question of matching what we do well, 
which is going to be the high-value-added services, to what the 
developing country firms need; and I think that is going to 
take an active partnership between government and business. 
There really aren't any easy answers, but I don't think we can 
rely on currency fluctuations alone to guarantee our 
competitiveness.
    Mr. Shuler. Thank you.
    Mr. French, what has been your experience with the rates 
and availability of equipment in your dealings related to 
shipping products and exports?
    Mr. French. As I mentioned, the rates have been very much 
increasing rapidly. I think one of the other areas is this lack 
of availability of equipment; and if you can imagine the 
sensitivity of some of the products we do ship, like logs from 
your area in North Carolina, it basically killed the business 
if the freight line said, well, sorry, we don't have any space 
for 6 weeks or 8 weeks and your product can't make it to the 
marketplace. So it has been the erratic and unstable ability to 
ship the product.
    And you can imagine using wood. We don't have any 
alternatives besides the ocean carriers. So it has been an 
enormous--and, of course, the huge increase in diesel prices 
and the costs of inland transportation has clobbered people. It 
has been, again, the rapidness of it.
    And the fact that we are a relatively low-value product has 
made us less desirable for people. Of course, if they are only 
going to take a certain number of runs in their trucks, they 
are going to get the highest-value cargo.
    So it is a low-margin industry, and we are more 
dramatically hit by all of these costs, whether it be insurance 
costs, freight costs, trucking costs. All of these things have 
a much higher impact perhaps than on the more value-added 
manufacturing. And we need to continue to promote our value-
added manufacturing. It is one of the things we have to do to 
survive.
    Mr. Shuler. Madam Chair, just for the record--I would be 
happy to yield.
    Chairwoman Velazquez. If you would yield, Mr. French, I 
want you to know that, last month, the Committee held a hearing 
on freight and railroad costs for small businesses.
    I yield back. Thank you for yielding.
    Mr. Shuler. Thank you, Madam Chair.
    Just for the record, we talk about subsidies that China 
continues to give. I mean, we have seen through this 
administration and still a continuation, the more money we 
borrow from China, the more opportunities they are going to be 
able to have to subsidize their companies. And so we have 
continued to see that over and over and over again. So we 
certainly have to put a stop to that in the future; and I am 
looking forward to that in the very near future, that we put a 
stop on borrowing the money from China and other countries that 
continue to take our textile businesses and our manufacturing 
businesses out of North Carolina. We lost over 300,000 jobs in 
North Carolina alone in the textile industries--300,000.
    And, last comment, we got 10,000 permits on Federal lands 
to drill. Have at it. We don't need ANWR. Ten thousand permits. 
Ten thousand permits.
    Mr. Chabot. Would the gentleman yield?
    Mr. Shuler. Absolutely, since this is an energy hearing.
    Mr. Chabot. Does the gentleman know on which of those 
10,000 they have actually identified that there is oil there?
    Mr. Shuler. On 250,000 acres. We just had the hearing in 
Natural Resources: 250,000 acres, 10,000 permits, no 
encumbrance from any type of environmental issues. They have 
been sitting there for 5 years unwilling to--and on top of 
that, we export our own petroleum, some 5.8 billion barrels a 
day.
    Mr. Chabot. But what I am saying, I don't know if the 
gentleman--maybe I didn't speak clearly enough, but when you 
say 250,000 acres, that is the total of all the permits. That 
is the acreage that is there. Correct?
    Mr. Shuler. That is the acreage that is there that has been 
identified from the oil industry that there is available.
    Mr. Chabot. That there might be oil on--
    Mr. Shuler. That there are available oils.
    Mr. Chabot. But they haven't determined on which of those 
places there is oil--
    Mr. Shuler. Yes.
    Mr. Chabot. --until they drill or until they identify it.
    Mr. Shuler. Well, there is geologists that obviously--that 
is why they have deemed it to be oil. Oil in North Carolina--
    Mr. Chabot. If the gentleman will continue to yield, 
because I have seen this talking point out this past week, and 
I saw Rahm Emanuel talking about 68 million acres or whatever 
he is talking about that they can already drill so they don't 
need to go in ANWR. But, oftentimes, oil hasn't been 
identified. That is just speculative as to where it might be. 
So it doesn't mean there is oil in all those particular 
locations. So it is somewhat misleading when Rahm throws out a 
number like 68 million and acts like, well, we don't need to go 
in ANWR or the Outer Continental Shelf because we have got all 
those places they are not drilling now.
    Mr. Shuler. Madam Chair, reclaiming my time, reclaiming my 
time, thank you for holding this Small Business hearing; and we 
will get to energy policy.
    Chairwoman Velazquez. If the gentleman would yield for a 
second?
    Mr. Shuler. I would be happy to.
    Chairwoman Velazquez. But I would like to ask a question to 
the ranking member. If we go into ANWR, will that bring us 
relief, immediate relief, that we need?
    Mr. Chabot. Will the gentlelady yield?
    Chairwoman Velazquez. Yes. I am asking you a question.
    Mr. Chabot. I thank the gentlelady for yielding, because 
the point that I have heard about we don't--even if we drill in 
ANWR now we won't see that oil for another 5 years or 10 years, 
that is why we should have done this 5 or 10 years ago; and I 
voted 11 times in the last 14 years to do that. Now, so, no, we 
are not going to have that oil for a couple years.
    However, much of the price, for example, $58 a barrel to 
$140 a barrel in the last year or so, is speculation as to what 
we think oil is going to be available in the future. So if we 
passed--and I would urge the Speaker to do that, to allow 
Congress to have a vote and we passed going into ANWR, I think 
you would see an immediate impact in the price out there 
because it would say that we are finally serious. And 
apparently we weren't very serious at 2.30 a gallon. We sure as 
heck ought to be serious at $4 a gallon.
    Chairwoman Velazquez. Reclaiming my time, let me just say 
there has been legislative initiatives that passed through the 
House, are sitting at the President's desk, and others that 
have been signed into law and have not been implemented. H.R. 
6, for example.
    Mr. Chabot. Does that allow us to drill in ANWR?
    Chairwoman Velazquez. I am sorry? We are not talking about 
ANWR. We are talking about price gouging. We are talking about 
providing relief to small businesses to be able to purchase 
technology that will bring their electricity consumption down. 
That is the type of legislation that has been signed into law 
and that the administration refuses.
    Yield back.
    Mr. Shuler. Madam Chair, this is, of course, my first term 
in Congress. Could you just tell me which party was in total 
control of the White House, the Senate, and the House?
    Chairwoman Velazquez. I am sorry, I wasn't listening.
    Mr. Shuler. This is my first term. Can you tell me which 
party was controlling the White House and the Congress for the 
last 12 years?
    Chairwoman Velazquez. For the last 12 years, the Congress 
was controlled by the Republicans, and for the last 8 years the 
White House.
    Mr. Shuler. I yield back.
    Chairwoman Velazquez. Well, I guess that we have to go back 
to trade.
    Mr. Chabot. It is our side's turn for questioning, right?
    Chairwoman Velazquez. Yes, it is your side for questioning.
    Mr. Akin?
    Mr. Akin. Are we going to talk about the Small Business 
hearing or you want to talk about energy? I am all ready to go 
on energy. Let's talk about the fact that the Republicans 
passed a bill year after year to develop American energy, and 
it was killed by the Democrats in the Senate. When you add up 
all the votes on American energy, you find out the bottom line 
is that Republicans 90 percent of the time supported American 
energy, and Democrats 90 percent of the time have voted against 
all different kinds of things, from ANWR to nuclear to 
recycling nuclear to coal shale.
    Chairwoman Velazquez. Would the gentleman yield?
    Mr. Akin. Yes, I will be happy to. We will have a little 
discussion here.
    Chairwoman Velazquez. Last thing I know is that the Senate 
was controlled by the Republicans 2 years ago. So how did they 
the Democrats kill the bill?
    Mr. Akin. Certainly you know, but maybe other people in the 
room don't, and that is because all you have to have--you have 
to have 60 votes to pass a bill. The Democrats killed that 
energy bill in 2001. The Democrat Senators killed it in 2002. 
They killed it in 2003. They killed it in 2004. We aren't 
picking winners and losers. But it had the whole thing in 
there. Finally, a watered-down version in 2005.
    Chairwoman Velazquez. There was a lot of subsidies for oil 
companies.
    Mr. Akin. It wasn't subsidies for oil companies. People 
jump in with this deal about, oh, the obscene profits of the 
oil companies. The only reason they are making obscene profits 
is because we don't have enough supply. If there is more 
supply, they couldn't charge those high prices. So what we need 
to be doing is developing American energy in a whole lot of 
different forms.
    But I didn't really have a question for our witness, Madam 
Chair. I just thought we could talk about that a little bit if 
you want.
    Chairwoman Velazquez. Enough said?
    Okay. Mr. Davis?
    Mr. Davis. Thank you, Madam Chairwoman; and I do appreciate 
the panelists being here.
    And, as you can see, energy is on a lot of people's minds 
here in Congress; and I think it is on a lot of people's minds 
across America. It is definitely on people's minds back in east 
Tennessee. Just a month ago, I met with Earl Humphreys, who 
owns Lawn Boyz Lawn Care Center; and he is talking about having 
to close his business because of the high cost of energy.
    Since you are here to testify, and could you tell me what 
energy costs actually does to each one of your industries? And 
what would happen if we could actually become an energy policy 
that would bring it down from $4 a gallon maybe to $2 a gallon, 
where it was when the Democrat majority took over last year?
    Mr. Johnson. I can just say that energy prices have a huge 
impact on the textile industry. We are a very large consumer of 
energy because of the weaving, and particularly the dyeing and 
printing of textile materials require enormous amounts of 
energy.
    So when they go up and, you know, they don't go up 
overseas, and one of the--I don't want to keep bringing China 
in, but they are our biggest competitor. When China starts 
increasing its subsidies for energy, as I think has been well 
documented by the steel industry, that China is now subsidizing 
the electrical costs for its manufacturing sector by hundreds 
of millions of dollars a year, we become less competitive.
    But I would like to mention--I don't know about the bill 
and about the small business energy upgrades--we have a very 
large mill in Trion, Georgia, one of the most impressive mills 
in the United States, one of the largest mills, and it makes 
apparel yarns and fabrics, goods for the U.S. military, and 
they cannot afford to upgrade to get more energy efficiency out 
of their furnaces. And they know how to do it. They know they 
need to do it. They don't have the money to do it.
    So if there is some assistance that you can give to smaller 
companies so that they could get the energy efficiencies that 
are available out there, I think that would be very, very 
important. They mentioned that to me specifically, is if you 
can find a way to help me increase my energy efficiencies, this 
plant may stand a good chance of surviving.
    Mr. Davis. That is very good. Thank you.
    Mr. French?
    Mr. French. Of course, it is a huge, huge problem for 
industry, our industry, loggers, everything else. But we need 
to recognize that the Europeans have paid double the prices we 
have paid for a long time. I think the shock is the rapid 
increase and the fact that, quite honestly, we have been living 
with very low energy costs in this country for a long time. And 
I would really urge and I think a lot of small businesses would 
benefit from government support in grants in terms of 
conservation, in terms of alternative energy issues, investment 
in alternative energies.
    We have got to solve this. We have got to reduce our 
dependency on the fossil fuel economy, and we need to get other 
products and other energy sources into the marketplace as 
quickly as we possibly can. And I think you have got an 
industry on the wood industry side that is very eager to work 
with the government in looking at these alternative fuels and 
things like geothermal, solar, wind, all these alternative 
energies, and getting government support for small businesses 
to use those alternatives.
    At the moment, the payback is pretty long. But if we had 
some tax and other incentives to invest in these things in our 
plants and put in wood boilers and put in windmills and other 
things, and we got some support in the short term, in the long-
term we would be dealing with climate change, we would be 
dealing with energy efficiency, and we would be making these 
businesses more profitable.
    So I think there is a lot of positive things that can come 
out of this, and I hope that the Congress will look at these 
things and think about it.
    Mr. Davis. I certainly agree with what you just said. I do 
think we have to have all of the above. I think we need green 
energy. I certainly support it as a conservative in Congress.
    My main question was, gas prices have gone from $2 to $4 a 
gallon. What has it done? What impact has it had on the 
Hardwood Federation.
    Mr. French. It has had a huge negative impact, particularly 
the internal costs of fuel and the diesel increase in such a 
rapid way.
    Mr. Davis. Has it cost jobs in your industry?
    Mr. French. It has cost jobs in our industry, yes.
    Mr. Davis. We need an energy policy. That was my point. And 
I yield back.
    Chairwoman Velazquez. Okay. Time has expired.
    Mr. Johnson and Mr. French, as part of the H.R. 6 bill that 
we passed, the energy bill, we included in that package 
legislation that we reported out of this Committee, and it was 
a well-thought-out package that includes financial relief for 
small businesses to purchase technologies that would allow for 
them to bring those prices down.
    And this is the time to implement it. It was signed into 
law. So what we need is to get the Small Business 
Administration, the White House to implement the program.
    Mr. Griswold, you mentioned that currency manipulation is a 
regular practice among countries and, further, that China has 
increased the value of the yuan over the last couple of years. 
But American manufacturers still contend that the yuan is 
undervalued by as much as 40 percent. Clearly, there is market 
intervention.
    Our responsibility is to work to help our businesses be 
competitive. What is your suggestion to upset this 
disadvantage?
    And, Mr. Johnson, you know, they all mentioned the 
disadvantage that their industries are facing due to not only 
currency manipulation but the tax imposed to the products. So 
what do you offer? How can we provide a level playing field?
    Mr. Griswold. Madam Chairwoman, thank you.
    I don't think I used the phrase "currency manipulation." 
You know, half the countries in the world have a fixed currency 
or some kind of a hard peg. So it isn't that unusual. And the 
U.S. and the other Western countries had fixed currencies for 
several decades after World War II.
    I do think freely floating exchange rates are the ideal. I 
think Milton Friedman was right. They work the best.
    But China is making progress. You know, they are in many 
ways still a developing and underdeveloped economy. They have a 
poorly developed financial system. I don't think a freely 
floating exchange rate is probably the right idea for them 
right now. But let's give them credit. They are moving rapidly 
in the right direction.
    A 20 percent appreciation is significant, this at a time 
when the U.S. dollar has been depreciating. I would say let's 
not put too much stock in exchange rates. Let's not worship at 
the altar of a depreciated currency.
    This is where trade and energy come together. One reason 
why the price of oil has gone up so much in the last few years 
is the depreciating dollar. When dollars are worth less, oil 
producers are going to demand more dollars. This feeds through 
to the costs.
    Over half of what we import to the United States are 
imported by businesses. They are raw materials, wood, energy. 
They are intermediate products, parts that go into final 
products. They are capital equipment. And small businesses are 
importing those things.
    So a depreciated currency that we have, our U.S. currency 
has depreciated significantly, that is a two-edged sword. It 
helps us export, but it is also feeding into raising the costs 
that these gentlemen's industries are paying.
    So I don't think that we can wave a billy club over China's 
head and tell them they need to appreciate their currency 
another 20 percent. It is not going to make a dramatic 
difference. Our exports to China are booming despite their 
currency policies.
    Chairwoman Velazquez. Mr. French and Mr. Johnson, you know, 
we have some trade agreements pending: Korea, Panama and 
Colombia. If there is a provision that you feel that should be 
made part of that agreement that will provide a level playing 
field for small businesses, and particularly for the industries 
that you represent, what will that be?
    Mr. Johnson. Well, I mean, I will go back to the issue of 
currency manipulation. Korea was one of the originators of the 
export scheme to devalue your currency so you could export 
more. And USTR had guidance in Trade Promotion Authority saying 
that it needed to address currency manipulation practices. And 
there was nothing in that agreement that says Korea cannot do 
whatever it wants with its currency, regardless of the damage 
it can do to U.S. business. So I think that tends to undermine 
even the possibility of benefits from an agreement.
    Mr. French. I don't have anything specific. Korea is the 
only one of those countries that is a reasonably significant 
market for lumber products, and we haven't had too many 
difficulties there. But I will ask our people here to see if 
there is anything specific and get back to you.
    Chairwoman Velazquez. Thank you.
    Well, gentlemen, thank you all for being here today.
    I ask unanimous consent that members will have 5 days to 
submit a statement and supportive materials for the record.
    Without objection, so ordered.
    This hearing is now adjourned. Thank you.
    [Whereupon, at 11:26 a.m., the Committee was adjourned.]

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