[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
    SMALL BUSINESS TRADE AGENDA: OPPORTUNITIES IN THE 113TH CONGRESS

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


                                HEARING

                               before the

             SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS

                             UNITED STATES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD

                           FEBRUARY 28, 2013

                               __________

                               [GRAPHIC] [TIFF OMITTED] 
                               

            Small Business Committee Document Number 113-004

              Available via the GPO Website: www.fdsys.gov



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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                       BLAINE LUETKEMER, Missour
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                   JAIME HERRERA BEUTLER, Washington
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                       DAVID SCHWEIKERT, Arizona
                       KERRY BENTIVOLIO, Michigan
                        CHRIS COLLINS, New York
                        TOM RICE, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                        BRAD SCHNEIDER, Illinois
                          RON BARBER, Arizona
                    ANN McLANE KUSTER, New Hampshire
                        PATRICK MURPHY, Florida

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director


                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Scott Tipton................................................     1
Hon. Patrick Murphy..............................................     2

                               WITNESSES

Mr. Daniel Ogden, Esquire, Attorney at Law & International Trade 
  Consultant, Carrollton, Texas, on behalf of the National 
  District Export Council........................................     4
Ms. Jennifer Fulton, Chief Pickle, CEO, Miss Jenny's Pickles, 
  Kernersville, North Carolina, on behalf of the U.S. Chamber of 
  Commerce.......................................................     6
Mr. Michael Myhre, Associate State Director, Florida SBDC, 
  University of West Florida, Pensacola, Florida.................     8
Mr. Raymond Arth, President and CEO, Phoenix Products, Inc., Avon 
  Lake, Ohio, on behalf of the National Small Business 
  Association, Small Business Exporters Association..............    10

                                APPENDIX

Prepared Statements:
    Mr. Daniel Ogden, Esquire, Attorney at Law & International 
      Trade Consultant, Carrollton, Texas, on behalf of the 
      National District Export Council...........................    27
    Ms. Jennifer Fulton, Chief Pickle, CEO, Miss Jenny's Pickles, 
      Kernersville, North Carolina, on behalf of the U.S. Chamber 
      of Commerce................................................    55
    Mr. Michael Myhre, Associate State Director, Florida SBDC, 
      University of West Florida, Pensacola, Florida.............    63
    Mr. Raymond Arth, President and CEO, Phoenix Products, Inc., 
      Avon Lake, Ohio, on behalf of the National Small Business 
      Association, Small Business Exporters Association..........    68
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Materials for the Record:
    Hon. Grace Meng..............................................    78


    Small Business Trade Agenda: Opportunities in the 113th Congress

                      Thursday, February 28, 2013

              House of Representatives,    
               Committee on Small Business,
     Subcommittee on Agriculture, Energy and Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360, Rayburn House Office Building. Hon. Scott Tipton 
[chairman of the subcommittee] presiding.
    Present: Representatives Tipton, King, Luetkemeyer, 
Mulvaney, Huelskamp, Murphy, Schrader, and Meng.
    Chairman TIPTON. Well, good morning. I apologize for being 
late. Thank you for being prompt on this.
    We would like to go ahead and call our hearing to order, 
and I would like to be able to welcome our new and returning 
members to the Subcommittee, especially Ranking Member Murphy. 
Welcome to Congress.
    Mr. MURPHY. Thank you.
    Chairman TIPTON. I am glad to be able to work with you here 
on the Small Business Committee.
    I do look forward to working with all of our members in the 
113th Congress, and I want to be able to give special thanks to 
our witnesses here today, taking time away from your full-time 
jobs, I know, to be able to come here and make this trip to 
Washington, and to be able to tell us about some of the issues 
that are inhibiting our ability to be able to grow our economy 
and to be able to grow jobs and export markets.
    Today we will hear directly from small businesses about the 
obstacles and barriers that limit their ability to be able to 
compete in the global market. Given the right circumstances and 
tools, I know America's small businesses can compete with any 
other company in the world.
    There is strong bipartisan support on the benefits of 
exporting. Exports are a major contributor to the nation's GDP, 
totaling $2.2 trillion in 2012. They provide new sales 
opportunities. And, most importantly, exporting creates and 
supports high paying American jobs. However, of the 28 million 
small businesses in the United States, only one percent 
currently export. Increasing the number of small business 
exporters is a key priority for me, as well as this Committee. 
Last year alone, I held three Export 101 events in my district 
so small businesses could learn how to be able to increase 
their exports and how to develop new relationships in key 
trading areas.
    Along with limited personnel, we know that small firms face 
a variety of trade barriers that constrain their participation 
in the global market. A few of the most obstructive hurdles 
include tariff and non-tariff barriers, anti-competitive 
technical standards, and complex foreign and domestic 
regulations. As a result, small businesses that do export rely 
heavily on negotiated Free Trade Agreements [FTA] that remove 
complex trade barriers, provide protection for their 
intellectual property, and help streamline the trade process. 
In 2010, 41 percent of the total U.S. exports went to FTA 
countries.
    FTAs are an important first step, but they are not the sole 
solution. We must also work to be able to reduce the domestic 
bureaucracy and make the overall process easier. The export 
process can be complicated and overwhelming, and many firms do 
not know where to start or go for the necessary information. 
Unlike large corporations, most small firms do not have the 
personnel and resources to navigate the technical trade 
barriers.
    As we begin, the 113th Congress, it is our Committee's job 
to review the federal trade promotion agencies to ensure that 
they are working in a coordinated and an efficient manner to 
best serve small businesses. Moreover, we need to be able to 
support an aggressive trade strategy that opens up new foreign 
markets, streamlines the trade process, and strengthens our 
fight against unfair trade practices. I look forward to working 
with my colleagues to be able to identify common-sense and 
practical solutions that will better assist small business 
exporters.
    Again, I would like to be able to thank our witnesses for 
their participation and their insights, and I would now like to 
recognize our ranking member for his opening statement.
    Mr. MURPHY. Thank you, Mr. Chairman. And thank you all for 
being here.
    As the ranking member of the Subcommittee on Agriculture, 
Energy, and Trade, I am looking forward to working together to 
find common ground and bipartisan solutions. Having been a 
small business owner myself, I know the obstacles small 
businesses face, and I know how essential their success is in 
generating new jobs and driving our economic recovery.
    Earlier this week I sat down with the Distinguished 
Chairman to discuss the important challenges facing America's 
small businesses. There is clearly much to be done, and as I 
said, I look forward to working with the Chairman over the next 
two years, and I feel confident in our ability to drive 
bipartisan solutions through this Subcommittee.
    Today, we hold our first Subcommittee hearing on small 
businesses, and their ability to participate in international 
trade, a realm in which big business continues to have a clear 
advantage, as the chairman said. We have before us four 
extremely knowledgeable witnesses, and I look forward to 
hearing their ideas on how Congress can help small businesses 
export their goods and be more competitive on the world stage.
    Right now, our economy is recovering gradually, and yet, 
unemployment is not expected to drop below 7-\1/2\ percent 
until 2015, which will make six straight years of unemployment 
above 7-\1/2\ percent. As a result, the number one priority for 
this Committee has to be job creation. And one way to boost 
jobs is to open new markets to small businesses, which account 
for 50 percent of all jobs in the United States. Right now, 
small businesses make up 97 percent of all U.S. exporters, but 
only about 30 percent of the goods exported. I believe there 
are measures Congress can take to make international trade more 
accessible to small businesses and help even the playing field 
as demand for U.S. products on the global marketplace--which 
serves 95 percent of the world's consumers-grows.
    Right now, the vast majority of our small businesses still 
do not market their products internationally. Of those that do, 
many only send their goods to our neighbors to the north and 
the south, and do not take advantage of markets in Europe and 
Asia. Clearly, there remains significant opportunity to expand 
the role of small business and international trade.
    To address this area of potential growth, the Small 
Business Administration, the Export-Import Bank, and the 
International Trade Administration each offer programs 
specifically tailored to provide education, networking, 
technical, and financial assistance to small firms engaging in 
international trade, and I am particularly interested in 
hearing about the experiences our witnesses had with these 
programs. This is one area I am particularly concerned could 
suffer from Congress's inability to address the sequestration 
because it is vital these agencies have the resources they need 
to perform their essential work.
    SBA's export programs generated $1.6 billion in sales in 
fiscal year 2010 alone. That translates to real jobs here at 
home. We need to amplify, and not reduce, these successful 
programs, while simultaneously cutting back on programs that 
have proven ineffective. Mandatory cuts across the board to 
SBA's budget would not achieve this.
    Agricultural exports is one area that is poised for 
expansion. Small farms constitute more than 90 percent of the 
sector. In 2011, U.S. agriculture exports reached nearly $140 
billion, outpacing the previous record set in 2008 by 20 
percent. This growth shows that America's farmers have the 
potential to help lead our economy forward, spurring 
development and employment gains across the country.
    This is especially true in my own district in Florida, 
which is recognized for its citrus and vegetable production. 
However, as we examine the best way to stimulate international 
trade amongst small businesses, we must recognize the double-
edged nature of Free Trade Agreements. Lowering tariffs and 
other barriers clearly spurs commerce between countries, but at 
the same time we have seen new imports undercut hardworking 
U.S. businesses by introducing significantly cheaper goods into 
our market. For example, I recently visited Adams Ranch in Fort 
Pierce in my district where I heard from farmers concerned that 
cheap Mexican tomatoes may be disrupting the marketplace for 
our growers. Learning what works and what hurts our small 
businesses is essential for any future trade agreements.
    Issues like these will continue to challenge small 
exporters, but I look forward to small firms' involvement in 
trade continuing to grow. Over the last decade, exports from 
smaller companies have doubled and are now valued at nearly 
$320 million per year. With three-quarters of world's 
purchasing power outside the United States, access to foreign 
markets is no longer optional, but essential, for many 
businesses' continued success. By helping more small firms 
export abroad, we can accelerate economic growth and create the 
jobs Americans so badly need.
    I thank the witnesses in advance for their testimony, and I 
yield back.
    Chairman TIPTON. Thank you, ranking member. And as our 
panel knows, you have five minutes to be able to deliver. I 
would like to be able to explain the timing lights in front of 
you. A little bit like traffic lights. When it is green, you 
are good to go. When it is yellow, speed up. When it gets red, 
stop. And we would appreciate that. And I do know we have 
several members that have some other commitments to be able to 
go to, so I will defer my questions for after your testimony.
    Our first witness is going to be Mr. Daniel Ogden. Dan is 
an attorney, licensed custom broker, and international trade 
consultant. He is also chairman of the National District Export 
Council, also known as DECs. DECs are local organizations 
comprised of international trade experts who volunteer their 
time to be able to provide counseling and best practices for 
small businesses interested in boosting their exports. 
Currently, there are 59 local DECs or about 1,800 members 
covering nearly every region in the United States. He is 
testifying on behalf of the National District Export Councils.
    Welcome, and we look forward to your testimony.

   STATEMENTS OF DANIEL OGDEN, ESQUIRE, ATTORNEY AT LAW AND 
 INTERNATIONAL TRADE CONSULTANT, CARROLLTON, TEXAS, TESTIFYING 
ON BEHALF OF THE NATIONAL DISTRICT EXPORT COUNCIL; MS. JENNIFER 
FULTON, CHIEF PICKLE, MISS JENNY'S PICKLES, CEO, KERNERSVILLE, 
NORTH CAROLINA, TESTIFYING ON BEHALF OF THE THE U.S. CHAMBER OF 
  COMMERCE; MICHAEL MYHRE, ASSOCIATE STATE DIRECTOR, FLORIDA 
SMALL BUSINESS DEVELOPMENT CENTERS, PENSACOLA, FLORIDA, RAYMOND 
ARTH, PRESIDENT AND CEO PHOENIX PRODUCTS, INC, AVON LAKE OHIO, 
      TESTIFYING ON BEHALF OF THE NATIONAL SMALL BUSINESS 
       ASSOCIATION, SMALL BUSINESS EXPORTERS ASSOCIATION.

                   STATEMENT OF DANIEL OGDEN

    Mr. OGDEN. Thank you. Good morning, Chairman Tipton, 
Ranking Member Murphy. I would like to thank you for this 
opportunity to testify at the hearing and share my views.
    My testimony will cover the importance of trade to the 
well-being and wealth of the U.S. economy, to the health and 
profitability of small business, and to the creation of job 
growth in the United States. I will also discuss the challenges 
to success that small business exporters face from government 
laws and regulations, both foreign and domestic, and the role 
the federal government should play in advancing U.S. and 
international trade interests.
    Initially, it must be stressed that small business 
exporters are small businesses first. They face the same 
challenges to their profitability that all small businesses 
face, and some of the most significant of these challenges 
arise from the U.S. domestic, regulatory, and legislative 
environment. In fact, small business exporters are unique in 
this regard as they face challenges to their profitability from 
both the foreign and domestic arenas. In seeking then to answer 
the question what can Congress do to assist small businesses 
increase their exports, one answer quite simply is to stop 
overregulating, overlegislating, overtaxing small business.
    One specific area that does affect small business exporters 
is U.S. Export Controls Law. While export controls are 
important to our national security and economic vitality, this 
does not necessitate that they be so complex and cumbersome 
that they discourage companies from exporting. The ongoing 
effort to reform U.S. export controls by simplifying both their 
administration and ease of compliance will increase the 
likelihood that U.S. exporters will increase their exports.
    I would also like to make a comment about U.S. trade policy 
in general. International trade contributes greatly to the 
wealth creation of an economy which should be the goal of any 
economic policy. Trade is a two-way street. While exports are 
always praised, imports are not a bad thing. Being able to 
freely source imports and means of production is critical to 
the profitability of many small businesses. In spite of this 
fact, trade protection is a temptation and a disease that is 
bipartisan in nature. Protectionism is not a creator of wealth, 
but rather it is a creator of poverty. Avoidance of a 
protectionist trade policy used either as a strategy or a 
tactic should be at the core of the U.S. trade policy.
    This temptation to engage in protectionist trade policies 
is not, of course, unique to the United States. Protectionist 
trade policies in foreign countries are a fact of life that 
small business exporters have to deal with on a daily basis, 
and this fact makes trade agreements an essential component of 
the U.S. trade policy. The major focus of trade agreements in 
the past has been on tariff reduction or elimination. This has 
resulted in foreign nontariff trade barriers becoming the 
protectionist tool of choice. These barriers are especially 
damaging to our small business exporters. It is imperative, 
therefore, that ongoing and future negotiations on trade 
agreements stress nontariff barrier reduction and elimination.
    There is one thing that Congress can do immediately, which 
is to renew trade promotion authority. This renewal is crucial 
for several reasons. Perhaps most important is the fact that 
the U.S. has fallen behind other nations and entering into 
trade agreements, thereby putting our exporters at a 
competitive disadvantage. The TPA renewal will help to ensure 
that loss to U.S. export sales from belated passage of trade 
agreements does not happen again.
    I would also like to briefly discuss U.S. export 
assistance. Why do U.S. exporters need this assistance? The 
answer is simple and can be stated in one word--competition. In 
an ideal world, American exporters would not have this need. We 
do not live in that world, however, as other countries provide 
assistance through exporters. The federal government therefore 
has a critical role to play in ensuring that exporters have a 
level playing field in which to globally compete by providing 
export assistance. One important feature of this assist is that 
U.S. export assistance centers are in place locally to 
interface directly with exporters, which are, of course, part 
of the U.S. and Foreign and Commercial Service.
    Despite the call over the years to eliminate the domestic 
commercial service, and particularly the USFCS, their continued 
existence is vital and irreplaceable. The ability of USFCS to 
directly interface with foreign commercial officers is also 
critical. It is imperative, therefore, that the U.S. and 
Foreign and Commercial Service remains the unified agency with 
both foreign and domestic operations under one roof.
    An important feature of export assistance also is that 
there should be just one federal agency where exporters go for 
services such as trade counseling. At present, while the U.S. 
and Foreign and Commercial Service plays this primary role, the 
SBA also engages in trade counseling. This duplication is 
unnecessary, wasteful, and confusing. Only one federal agency 
should be involved in international trade counseling, and that 
is the U.S. and Foreign and Commercial Service.
    Further, the amount budgeted for export assistance should 
also be increased. Part of this issue can be resolved by 
transferring to the International Trade Administration from the 
SBA funds that were used by the SBA for the International Trade 
Counseling programs. And I would just say also that taxpayer 
dollars spent on export assistance is money well spent.
    One final issue is the Commerce Department's plan to 
reorganize the International Trade Administration. While one 
positive feature of this plan is the integration of certain 
export services that will both help exporters find new markets 
and customers and actually get their hands into those markets 
or the goods into those markets and the hands of those 
customers, it is also important to ensure that under this plan 
that the operations of the U.S. and Foreign Commercial Service 
continue to be customer and field focused.
    In summary, I am out of time. I would refer you to my 
written testimony as to my specific recommendations. Thank you.
    Chairman TIPTON. Thank you, Mr. Ogden.
    Our next witness is Ms. Jenny Fulton, Chief Pickle and CEO 
of Miss Jenny's Pickles. After being laid off from her 
financial industry job, Jenny Fulton and co-founder Ashlee 
Furr, used Jenny's grandmother's recipes to start making 
pickles. Founded in 2009, Miss Jenny's Pickles is becoming a 
household name. Their products are sold in over 800 stores and 
the company exports pickles all over the world. They were also 
featured in a segment on CBS's 60 Minutes last October. She is 
testifying on behalf of the U.S. Chamber of Commerce.
    Jenny, thank you for being here, and we look forward to 
your testimony.

                   STATEMENT OF JENNY FULTON

    Ms. FULTON. Thank you. Thank you, Chairman Tipton, and 
Ranking Member Murphy, and Distinguished Members of the U.S. 
House, Committee of Small Business, Subcommittee on 
Agriculture, Energy, and Trade.
    I am Jenny Fulton, and I am the chief pickle at Old Orchard 
Foods, doing business as Miss Jenny's Pickles. Our pickle world 
headquarters is in Kernersville, North Carolina.
    I am extremely honored and grateful for this opportunity to 
share our story with each of you. I am testifying on behalf of 
the U.S. Chamber of Commerce.
    Miss Jenny's Pickles was born out of the financial 
recession. Ashlee Furr was laid off in June of 2009, and my 
layoff followed in January of 2010. Ashlee and I confirmed 
after spending 16 years in the financial industry we were both 
burned out and we decided to take a true leap of faith and 
start our own pickle company. Knowing that 95 percent of the 
world's population lives outside the United States, we decided 
that exporting would be crucial to our success. In May of 2011, 
the North Carolina Department of Agriculture's Export 
Department and the Southern United States Trade Association 
[SUSTA] organized an inbound trade mission for Chinese buyers 
to meet with North Carolina businesses, in which we decided to 
participate.
    Wow. What an adventure. I met Mr. Shen there, and he is our 
Chinese business partner. After hours of reading Chinese e-
mails translated by Google, talking via Skype with a 12-hour 
time difference, and 32 pages of documents later, we finally 
exported our first five pallets of pickles to China. Last year, 
the North Carolina Export Department and SUSTA took a trade 
mission to Shanghai for a food show. I went along there and it 
was then that I had the opportunity to visit the stores that 
carry Miss Jenny's Pickles. I must be honest. I was extremely 
amazed, humbled, and proud to be standing next to our pickles 
on the shelf in China. It was rewarding to know that I was 
representing the United States of America, which has world 
recognized food safety regulations.
    Last year, I also participated in a trade mission to Canada 
arranged by these same good people. It was there that we hired 
a Canadian food broker, and this year I will be going to Hong 
Kong and Germany. And during the early stages of working in the 
international marketplace, we attended a forum in Charlotte 
called Small Business Global Access hosted by Senator Kay 
Hagan, along with chairman and president of the Export-Import 
Bank, Fred Hochberg. I was so impressed with Fred's remarks on 
Ex-Im's efforts to help small business exports that I ran out 
to his car after the forum and I handed a jar of pickles to his 
driver and I said, ``Tell Fred to eat these pickles because we 
want to export this year.'' And today, we partner with the Ex-
Im Bank so that we can offer terms to our foreign buyers which 
increases our sales by having this option. Without the Ex-Im 
Bank, our small business would never have been able to offer 
terms outside the United States. And without my out-of-the-jar 
thinking and pure determination to export, I am not sure that 
our young company would have had such great success.
    Now, if more U.S. small businesses were able to seize 
export opportunities, the gains could be immense. I have seen 
firsthand for the government to improve communications 
regarding U.S. export programs. After our company was featured 
on 0 Minutes, we received hundreds of e-mails and phone calls 
from Americans all across the country. They want to start their 
own company, too. Well, small business needs help paving the 
way to new markets. We are left on our own to find the doors 
and knock on them. The services, expertise, and dedication of 
the state and federal export promotion programs are world-
class, but I know there are many companies not aware of the 
government services that are available to help them break into 
new markets. This is not the fault of America's small business 
owners.
    There are many successful state programs out there that I 
believe could be replicated in other states. For example, in 
North Carolina, the Department of Agriculture is aggressively 
helping North Carolina companies export. These good people 
encourage companies like mine to consult with trade 
specialists, to learn more about trade through workshops, 
seminars, to participate in trade missions, and to meet with 
international buying delegations. They have even opened an 
office in Beijing. Without their help we would not have found 
the international market opportunities.
    On the federal level, the government accountability has 
determined that 17 federal agencies with export promotion 
programs could be made more effective through better 
coordination. As the president of a small company, I truly 
understand the importance of international trade and the impact 
it can have on small business. It is simple. We want to ship to 
more countries, we want to grow our client base, and we want to 
create more jobs.
    Congress can do one big thing that will make a really big 
difference for small businesses today, and that is by creating 
one website with all the resources, all the links available to 
export. You can do it in one click. It is going to be that 
simple because it is really hard out there. And we need to make 
it easy for small business to succeed and not fail in our 
global marketplace. By communicating effectively to small 
business, you will generate billions of dollars in new American 
exports. There are many seasoned exporters among American small 
business, but there are many that have never even considered 
exporting. I know that exporting can be challenging and 
overwhelming, especially for small business, but in the end it 
is all worth it.
    In closing, I challenge each one of you to better promote 
the trade resources that are available to small businesses. 
Thank you for the privilege and opportunity to appear before 
you today. It has been my honor.
    Chairman TIPTON. Thank you, Ms. Fulton. It is easy to see 
why you sell pickles well.
    I would now like to yield to Ranking Member Murphy to be 
able to introduce our next witness.
    Mr. MURPHY. Thank you. Thank you, Mr. Chairman.
    I would like to introduce Michael Myhre, the interim State 
Director of the Florida Small Business Development Center 
Network. Mr. Myhre has over 22 years of experience in small 
business development. Prior to his current role, he was state 
director for the Minnesota Office of Entrepreneurship and Small 
Business Development, responsible for entrepreneurial and small 
business policy development and support services. Mr. Myhre is 
a graduate of the Carlson School of Management at the 
University of Minnesota and is also a certified public 
accountant. Welcome.

                   STATEMENT OF MICHAEL MYHRE

    Mr. MYHRE. This is why we do what we do.
    Chairman Tipton, Ranking Member Murphy, and Members of the 
Subcommittee, thank you for this opportunity to testify.
    My name is Mike Myhre, and I serve as the interim state 
director for the Florida Small Business Development Center 
Network. The Florida SBDC is part of America's SBDC network 
providing the knowledge resources small businesses need to 
start, grow, and succeed. I have prepared a written statement 
and will give you a summary of those remarks.
    In the context of my testimony, I ask you to keep a few key 
statistics in mind on why it is essential to support trade 
policy and investment in the SBDC program for the benefit of 
small businesses. Research shows that companies that export 
grow 15 to 20 percent faster, pay 15 percent higher wages, and 
are 15 percent more profitable than their domestic market-only 
counterparts.
    The mission of the SBDC program is simple--to help small 
businesses grow and compete. With a national network of nearly 
1,000 centers and 5,000 professionals, America's SBDCs offer a 
wide variety of programs and no-cost services to assist and 
encourage their small business clients to expand. In that 
effort, SBDCs retain specialized professional business 
consultants who are driven to help their clients research and 
develop specific strategies to expand into international 
markets and grow revenues. And we know with more revenues comes 
more production and with more production comes more jobs.
    Now, not all small businesses are ready to export and many 
should not. At SBDCs around the country, we strive to identify 
those that are or are close to being export-ready. We provide 
every small business client with an honest and accurate 
assessment of the state of their firm and their state of 
readiness to participate in the global marketplace. We help to 
examine the exportability of their products and services, 
research and identify markets and buyers, develop market-entry 
strategies, establish necessary shipping and distribution 
networks, determine appropriate payment methods, and identify 
export financing and insurance needs.
    A key competitive advantage large businesses have over 
small businesses, access and affordability to business and 
trade data and the means to use it. SBDCs equal the playing 
field through our educational and partners organizations. Our 
professionals have access to a wealth of information on export 
markets, ranging from general country information to 
specialized information on markets to specific industries and 
products and countries worldwide. In some cases, SBDCs can also 
conduct primary research for small business clients needing 
specific information unavailable through secondary resources. 
Further, we employ through our professionals the power to 
interpret and use that data.
    SBDCs also help balance the playing field by offering 
guidance and expertise in the realm of regulations that govern 
international trade. In recent years, the federal government 
has tightened export regulations in response to growing threats 
to national security. By working in partnership with the Census 
Bureau and other agencies, SBDCs help small businesses get 
their documentation right the first time, ensuring compliance 
and mitigating the threat of loss and business. Helping small 
businesses attract and handle financing has always been a 
cornerstone strength of the SBDC network. Navigating what 
resources are most applicable can be confusing without the 
proper guidance. In international trade, SBDCs work closely 
with SBA's Export Loan Program, the Export-Import Bank, and 
conventional financial institutions to help small businesses 
identify and apply for appropriate funding to support their 
international trade activities. Without these funds, many 
businesses would face uncertainty and potentially unnecessary 
risk and loss.
    In conclusion, 90 percent of the world market exists 
outside the borders of the United States. Nonetheless, only one 
percent of our small businesses export their goods and 
services.
    The biggest barrier to going international a small business 
owner faces is fear. And fear is a result of lack of knowledge. 
As you know, international trade assistance is incredibly 
specialized and complex. SBDCs offer a wide range of 
international trade services, including helping assess a firm's 
readiness to export, navigating the regulatory maze, and 
identifying and applying for appropriate funding. But these 
services are extremely resource-intensive. What small 
businesses need to exceed in their further expansion in the 
world marketplace and the advantages that come with it are Free 
Trade Agreements that are clear and focused on small business 
interests, tariff and export controls that are uniform, clear, 
and specific, but above all else, they need the confidence that 
comes with the knowledge they get from their SBDC professional 
that exporting is the right investment for them. Thank you.
    Chairman TIPTON. Thank you for your testimony.
    And our final witness is Mr. Raymond Arth. He is the 
president and CEO of Phoenix Products, Inc., based in Avon 
Lake, Ohio. He started his company with his brothers back in 
1977. Phoenix Products is a small manufacturer that produces a 
line of faucets that are primarily used in recreational 
vehicles and residential homes. Their products are distributed 
throughout the United States and Canada, and they are currently 
working to expand into Mexico and Latin America. He is 
testifying on behalf of the Small Business Exporters 
Association.
    Welcome, and Mr. Arth, you have your five minutes for your 
testimony.

                   STATMENET OF RAYMOND ARTH

    Mr. ARTH. Well, good morning. And thank you, Chairman 
Tipton, Ranking Member Murphy, and the Members of the Small 
Business Subcommittee on Agriculture, Trade, and Energy. I 
appreciate the opportunity to be here to testify today.
    As you heard, Phoenix Products is a manufacturer of 
plumbing faucets, and I am here to represent that company. And 
I am also here on behalf of the Small Business Exporters 
Association, the country's oldest and largest nonprofit 
organization devoted to promoting small business and medium-
sized export activities. It is an international arm of the 
National Small Business Association.
    Phoenix Products is the last stand-alone company that makes 
our product category--low cost, primarily plastic faucets. And 
as you heard, recreational vehicles and factory-built HUD code 
homes. Think Winnebago motor homes or double-wide mobile homes 
as the target market.
    This is a market that has a lot of demand, but 
unfortunately, over the last 10 years it has come to be 
dominated by suppliers from China and Taiwan who are able to 
offer products at much lower prices than we can meet. So today 
we are faced with the unpleasant reality of diminishing market 
shares in our core markets, and we have had to turn to foreign 
partners to provide some low-end and high-end products. So we 
are having faucets manufactured for us in addition to what we 
make in our own factory.
    I am pleased to report that in 2012, 70 percent of our 
faucet sales revenues were derived from the faucets we make in 
our factory from domestic components. But in 2008, 85 percent 
of our faucet sales were from domestic products, so our share 
is diminishing, and we are at-risk of losing the critical mass 
we need to sustain our manufacturing operation. We need a 
certain level of activity to make it all make sense. And so we 
have identified export sales as the important element that will 
determine whether or not we continue to be a manufacturer of 
products or evolve into more of a braded distributor of 
imported products.
    In 2009, I spoke with folk at the Small Business Exporters 
Association, and they suggested we get in touch with the U.S. 
Export Assistance Centers [USEAC] as a resource to help us make 
our efforts. And we had selected Mexico for a number of 
reasons. We contacted the USEAC in March of 2009, and four 
years later I am sorry to report that we have yet to make our 
first sale in Mexico, our target market. We have learned a lot. 
We have had a lot of--we have taken a lot of important first 
steps, but we are still not able to close that last little gap. 
So I have a couple observations I would like to share based on 
our failure so far to crack into this market and how it might 
affect what you are thinking about as we go forward.
    As you have heard, it is very hard for a small business to 
negotiate and enter into new international markets. There is a 
knowledge problem finding out who the prospects are, where to 
go. We have got all the compliance issues dealing with U.S. law 
and regulations and the laws and regulations of our target 
country. So the efforts to consolidate technical assistance and 
coordinating all the providers is an important step that you 
folk can take. Overall, I will give the USEAC fairly good 
grades, but the service has been uneven, and the Cleveland 
office has worked very hard for us, but the commercial officers 
in Mexico City have not been able to provide the same level of 
support as the domestic offices.
    Related to information, Chairman Tipton, I do want to 
recognize the transparent rules allowing direct export of trade 
act for small business and jobs that you introduced in the last 
session and then suggest that you consider reintroducing it in 
this section.
    A second important factor is that Free Trade Agreements do 
matter. We have selected Mexico as our first target market 
because our goods cross the border duty-free, while Chinese and 
Taiwanese imports face substantial tariffs at the border. This 
makes our products more competitive vis-`-vis the foreign 
competition and improves our chances for success in Mexico. In 
other countries where we have Free Trade Agreements, I think 
the same rules apply. And Canada, with whom we have had the 
longest running relationship, we do not even consider to be an 
export sale. Sometimes we worry more about selling to 
California than Canada.
    Finally, the Ex-Im Bank you have heard is very important 
and getting paid is the end of the whole cycle. And there is no 
way for a company like ours to really have entered the market 
internationally, been able to offer credit terms, identifying 
credit worthy accounts in the first place, and then the loan 
guarantees and other programs that Ex-Im Bank can bring to 
support our efforts will be a key element when we finally make 
that final step and secure customers outside the United States. 
Should we prove to be successful beyond our wildest dreams, 
they may even then serve the role of providing some working 
capital financing to help us support the growth. We are 
confident we can support everything in our plans.
    So in the time allowed, those are my summary comments 
today, and you can find more in the written testimony. Thank 
you very much.
    Chairman TIPTON. Thank you, Mr. Arth. And I appreciate the 
pitch for our bill. We will be introducing that transparency 
bill again.
    We will now begin the questioning portion of our Committee 
hearing, and I would like to begin with Mr. Mulvaney.
    Mr. MULVANEY. Thank you, Mr. Chairman.
    Questions for a couple different folks.
    Mr. Arth, we will pick up right where you left off, which 
is you are saying that you are having--you have identified 
Mexico as a potential export market. You did that because your 
goods cross the border relatively easily, but then you said you 
had compliance issues. I thought we had a Free Trade Agreement 
with Mexico that would make it easier to trade down there. Has 
that not been your experience? Aside from getting the things 
across the border, what has NAFTA done for you?
    Mr. ARTH. Well, the biggest thing NAFTA has done for us is 
the fact that our products do cross duty-free, which helps 
level the playing field with Chinese and Taiwanese imports. 
There is one compliance issue that is different with respect to 
plumbing standards. The United States and Canada have a 
harmonized standard so that if *
    Mr. MULVANEY. Have or have not?
    Mr. ARTH. Have.
    Mr. MULVANEY. Okay.
    Mr. ARTH. A harmonized standard, so if I design and build 
my faucets to the standard of the United States, it is the same 
as the standard in Canada.
    Mexico has a whole different certification process. It is a 
NOM certification, and I am told that the exact certification 
is somewhat dependent upon the classification that is assigned 
at the border. And apparently, it is not as clear cut as some 
might think. So we are trying to find what we would like as a 
Mexican agent, a sales rep, or trading company, or some partner 
in Mexico that we can work with who can actually take the 
product across the border so we can make that final 
determination on which standard we need to get to and complete 
that regulatory hoop.
    Mr. MULVANEY. Gotcha. Now, you talked a little bit as well 
about competing with China and Taiwan, saying you are having 
some difficulty competing with them at certain price points. 
Where is their competitive advantage coming from? Is it all 
labor? Is it also regulatory environment in China and Taiwan? 
Do you get a feel for where their advantages lie?
    Mr. ARTH. I think there are some structural advantages that 
they do have, and it probably is more regulatory and compliance 
issues at our end than--or they have fewer of them.
    Mr. MULVANEY. Can you give me an example?
    Mr. ARTH. Well, I can tell you that the material costs that 
we are paying are probably all pretty much global material 
costs.
    Mr. MULVANEY. Okay.
    Mr. ARTH. My cost for a product at the very end of my 
assembly line is not that far different if I take just direct 
labor and material from the invoice price for a product I am 
importing from China.
    Now, I have got a whole lot of factory overhead that has to 
be added into that, and then I have got my own administrative 
staff and the cost of people that we have.
    A quick example. My father sold his company in 1971. He had 
135 employees. I can kind of go through all the capacities they 
had. They did not have a human resource manager--135 employees. 
They did their payroll in-house because you took hours worked 
time s the rate, you paid people, and once a month or once a 
quarter you sent in your payroll taxes.
    I have got 31 people on my payroll. I have a college-
educated, part-time HR manager who works for us 20 hours a 
week. I have my payroll processed by an outside agency because 
I have got eight payroll deposit periods a month. I mean, all 
of these things add onto the cost of just running the essential 
functions of a business here in the United States today.
    Mr. MULVANEY. Gotcha. A couple quick questions for both you 
and Ms. Fulton regarding the Export-Import Bank. Would you tell 
me specifically, Ms. Fulton, what they did for you? How you 
used the Export-Import Bank as a small business?
    Ms. FULTON. Well, we actually are their number 500 customer 
on their express insurance, so I will be meeting with Mr. Shen 
on Tuesday. And he was our first importer of Miss Jenny's 
Pickles in China.
    Mr. MULVANEY. Right.
    Ms. FULTON. So I am going to be able to give him terms, 
which is going to also allow him to buy more pickles from me. 
So the Ex-Im Bank, without the insurance, I could not afford to 
take that risk because, you know, normally we would have made 
them pay upfront. Well, if they pay 100 percent upfront, they 
reduce their sale order.
    Mr. MULVANEY. So it is a bridge loan essentially?
    Ms. FULTON. Basically, it is insurance. And their 
guaranteeing the invoice or the purchase order that Mr. Shen 
gives me up to 97 percent, 96 percent. And I can afford to take 
a 4 percent risk. I cannot afford to take 100 percent risk.
    Mr. MULVANEY. Mr. Arth, same question to you. How do you 
all use the Export-Import Bank?
    Mr. ARTH. It is pretty much exactly what you have heard 
here. The first step would be we need to be able to offer 
credit terms to buyers in other countries, and the Ex-Im Bank, 
number one, does have knowledge, information resources to help 
us qualify credit-worthy buyers. And then the second piece is 
this credit insurance that they offer so that if we are not 
paid after a 60- or 90-day period--I forget exactly--the Ex-Im 
Bank will step up, basically buy the debt from us at better 
than 90 percent of its face, and then they will take steps to 
collect the money.
    Mr. MULVANEY. And last question for you, Mr. Myhre. You 
mentioned very briefly that you wish the Free Trade Agreements 
that we have and that we are negotiating now would be more 
focused on small business. Give me two or three examples of how 
we can do that as we go through these negotiations.
    Mr. MYHRE. Well, we know that Free Trade Agreements tend to 
provide preferential treatment to larger businesses. And small 
businesses tend to be an afterthought in the Free Trade 
Agreements that currently exist.
    Mr. MULVANEY. But give me specifics as we sit down at the 
table and say this is what we need for small business.
    Mr. MYHRE. I could not probably isolate two or three 
examples. I can get those for you and provide those to you at a 
later time.
    Mr. MULVANEY. That would be great.
    Thank you, Mr. Chairman.
    Chairman TIPTON. Thank you. I would now like to recognize 
Ranking Member Murphy for his questions.
    Do we have anybody else? He will defer here as well.
    Kindly, the ranking member is willing to defer his time.
    Mr. Huelskamp.
    Mr. HUELSKAMP. Thank you, Mr. Chairman. I thought this was 
in violation of the rules. Two republicans in a row. Is that 
permitted here? I guess so. I apologize.
    Thank you for joining us today, and I appreciate the 
testimony, especially folks from the real world and Jennifer 
and Mr. Arth.
    I had a follow-up question first though for Ms. Fulton. I 
appreciate your testimony. I am fairly new to exporting. Could 
you give a little more insight on what you think the biggest 
barrier to expanding your sales in the future, whether it is in 
China or are you looking at other countries as well?
    Ms. FULTON. Thank you. It has just been a wonderful 
opportunity.
    You know, I knew that 95 percent of the world lived outside 
the United States being in the financial background. So if I 
decided to keep our sales just to the United States, I am 
missing a huge opportunity of clients. What would help us is 
resources, like I am getting ready to export to Canada. Well, 
that is a bilingual label that has got to go on there. Well, I 
have had to contact five different people to figure out how to 
get that done. Fortunately, the North Carolina Ag Department 
Export has been essential and crucial and SUSTA. But, you know, 
I am not saying everybody has got to put everything together, 
but if we could have a nice umbrella for people to get to to 
where, okay, if I want to export to Germany because I am going 
to Germany and that is one of my goals for 2013, I would like 
to know a little bit of steps in advance on what I have got to 
do to get my product over there without having to contact 20 
different places. So to me, we have got the technology. We have 
got the resources. Let us put it all together and help us 
because that is time and money. That is important in our world.
    Mr. HUELSKAMP. Thank you, Ms. Fulton.
    Mr. Ogden, I had a question. I have got a small company in 
my district called Vortex Valves that specifically cited 
tariffs as a real barrier around the world. What markets do you 
see that present the biggest opportunity for us to open up 
markets, particularly for small businesses if we are able to 
reduce tariffs? What should be our next targeted place that 
would be most small business friendly?
    Mr. OGDEN. Well, of course, we have ongoing talks, Trans-
Pacific Partnership, and there are a lot of markets in Asia 
that small businesses are able to go to. The perspective trade 
agreement with the European Union is essentially--and let me 
just follow up a little bit on what some others have said. Some 
of these barriers specifically that really affect small 
businesses, one of them is standards. One of my fellow North 
Texas District Export council members, and I mentioned in my 
written testimony, the International Chem-Crete Corporation, 
they make construction materials used all over the world. And 
they comply with the, I think it is the ASTM standards, which 
are internationally recognized for construction materials but 
what happens is in many of these other countries that they have 
to deal with will have different standards. And Mr. Arth talked 
about this as well, what he is facing.
    So what happens is you have to go--to get your product into 
that country, you have to modify it in some respect, perhaps 
even change the nature of that product. That adds up to your 
costs and that puts you at a competitive disadvantage against 
local producers in that market. And so standards are a big 
deal. Intellectual property protection trade circuits is a huge 
deal. I know the Deputy Under Secretary Blank just came out 
with a new strategy that the Commerce Department has in trade 
secrets.
    So these are just two examples of these barriers. But in 
terms of specific markets, you know, Asia is very much a 
growing region right now. I think another area where we need to 
pay attention to is Latin America. You know, it is always South 
America. It is always kind of the backwater, so to speak, but I 
think there are opportunities there. There are frankly 
opportunities all over the world. We just need to make sure 
that we have really good commercial diplomacy, really good 
trade agreements in effect, and that we are very forward 
thinking in that respect.
    Mr. HUELSKAMP. Thank you, Mr. Ogden.
    Last question for Mr. Arth. And I also have a constituent 
that is having difficulties exporting to Mexico, and concerned, 
we have NAFTA. Why are those happening? Could you describe, I 
mean, something more general you are seeing outside your 
particular industry that you say small businesses are trying to 
export to Mexico. What are some barriers that perhaps we could 
reduce with our efforts up here?
    Mr. ARTH. Well, the problem that I have had really relates 
to finding a partner in Mexico to work with. The commercial 
services did a great job. They had a wonderful forum in Mexico 
City that the Trade Winds Forum on Mexico and the Americas--it 
was underpriced. Let me make a point that you did not charge 
enough for that, and so if they had charged more there might 
have been more resources available at the point people came 
back.
    I had four Gold Key meetings, which were very productive 
identifying prospective customers. I was ready to go, and I did 
not expect the Commercial Services staff to work those accounts 
on my behalf. I need to find a partner in Mexico to work with 
me.
    And where in Cleveland the ICX seems to have connections to 
local governmental and private sector organizations that are 
involved in trade, the Commercial Services in Mexico City were 
not really equipped to connect me to people or even identify a 
trade rep organization or industry councils or those kinds of 
folks where I might go to find those people who could assist 
us.
    Mr. HUELSKAMP. I appreciate the comments, and I yield back 
my time, Mr. Chairman.
    Chairman TIPTON. Thank you, Mr. Huelskamp. And now I would 
like to recognize Ranking Member Murphy for his questions.
    Mr. MURPHY. Thank you, Mr. Chairman.
    Mr. Myhre, thank you for your testimony and for the Small 
Business Development Centers' invaluable work assisting small 
businesses grow domestically and overseas. It is heartening to 
know that the SBDCs help provide some clarity in the maze of 
U.S.-foreign government regulation and trade.
    You noted in your testimony that we need clear, Free Trade 
Agreements and uniform tariffs and export controls to help make 
90 percent of the world's markets accessible to our small 
businesses. Can you provide more specifics on what measures 
would be most helpful for small businesses to expand 
internationally?
    Mr. MYHRE. Well, I cannot specifically answer. I would go 
back to our national association to get that specific 
information and recommendations. But what I can tell you is 
that SBDCs are really working with the agencies to help those 
businesses navigate the regulatory requirements to making sure 
that they meet the compliance requirements necessary to do 
business in international markets.
    Mr. MURPHY. That leads to my follow-up. In Mr. Ogden's 
testimony he stated that SBA's trade counseling program should 
be eliminated and funding transferred to the U.S. and Foreign 
Commercial Service. What is your view of that?
    Mr. MYHRE. I would not agree with Mr. Ogden's opinion. You 
know, the SBDC program has been working and doing trade 
assistance and trade consulting with small businesses for more 
than 35 years. And we know that the mission of SBA is to help 
small businesses in all aspects. And as an SBA Economic 
Development Program, SBDCs are instrumental to that process. It 
sounds nice to put it underneath a single umbrella with a 
single focus, but we know that small businesses need more than 
just simply trade assistance when they are expanding into 
international markets. It changes their business model in a lot 
of ways and in SBDC assistance, the broader assistance that we 
provide is necessary.
    Mr. MURPHY. Do any of the other witnesses have any comments 
on that?
    Mr. OGDEN. Yes, Ranking Member Murphy.
    My position is that the SBA does a great job when someone 
comes in and says, ``Hey, I want to start a business. How do I 
get started? How do I, you know, develop a business plan? How 
do I maybe get some access to start-up capital?'' Everything 
that you would call the pre-export phase. And they do a great 
job in that, and that is really what they were created to do.
    But I think when a company is in the position where they 
have got some domestic sales, they have got themselves 
organized, then there needs to be one place they go for export 
counseling in all respects. And I am not talking about the SBA 
Export and Loan Program. That is a completely separate thing. 
In fact, the USEACs work very much with the SBA. What I am 
talking about is the trade counseling. And this is not just 
coming from me. This is coming from numerous exporters. In 
fact, every single District Export Council member I have talked 
to agrees with me on this, that the expertise that is in the 
U.S. and Foreign Commercial Service, they should be the place 
where export assistance and trade counseling is done. And Ms. 
Fulton talked about some of this, you know, where do I go for 
assistance? Well, if there is one federal agency providing that 
assistance, it is going to make it much easier to exporters to 
go.
    And so the point is I think that there is a duplication of 
effort and the U.S. Foreign Commercial Service has the 
resources to have the orientation. All they do is provide--they 
are involved in exports. Export assistance. And trade 
counseling. And that is their mission. That is their focus. And 
I just do not think the SBA should be involved in that part. 
They are certainly great in helping companies get started but 
when it comes to exporting, that function should go to the U.S. 
and Foreign Commercial Service.
    Mr. MURPHY. As we sit here on the Small Business Committee, 
I would like to hear your thoughts on if it was all under one 
umbrella, how many small businesses, how Ms. Fulton, for 
example, would compete with the Microsofts of the world; and 
how those huge corporations, they would probably deserve and 
probably get a lot more attention than Ms. Fulton, for example.
    Mr. OGDEN. Well, actually, that is a real good question. 
And the simple answer is that the Microsofts really do not need 
the U.S. export assistance centers. They have got the internal 
resources and the staff to do a lot of things. The biggest 
consumer of the Gold Key Programs, for example, which is a 
crucial component of the Foreign Commercial Service, are small 
businesses. Small businesses are the ones that go to the Export 
Assistance Centers. That is really where their focus is. In 
fact, the District Export Councils, even though we have large 
companies that have members on the DECs, our focus is the SME 
market. And that is the same focus the Foreign Commercial 
Service has.
    And the idea that a small business is going to be at a 
disadvantage from a larger company to go and to use that just 
is not--that is just factually incorrect and it is just the 
opposite. So that is just not a concern that I have.
    Mr. MURPHY. I am sure you are familiar with Boeing and 
their use of it.
    Mr. OGDEN. Export-Import Bank, right.
    Well, first of all, this idea that the Ex-Im Bank is 
Boeing's bank, that is a ridiculous idea. The Ex-Im Bank is the 
bank for people like Ms. Fulton. Most of their--for example, if 
you talk about the export credit insurance programs, most of 
the consumers of those programs are small businesses. Again, 
large companies, they have the internal resources and the 
staff. They do not need a lot of the services provided by the 
USEACs. And of course, the USEACs are separate from the Ex-Im 
Bank anyway. It is a completely different agency.
    So the fact that eliminating the SBA's trade counseling 
program would in no way inhibit small businesses from going 
either to the SBA or the Ex-Im Bank for the export financing 
needs. Again, we are not talking about--I am not advocating at 
all the SBA get all the export financing aspect. That should 
remain. Okay? So I want to make that clear. But the fact that 
the SBA is involved in trade counseling is not going to affect 
small business in my opinion. In fact, it will help the 
situation.
    Mr. MURPHY. Ms. Fulton.
    Ms. FULTON. Well, being the small business person, all I am 
asking--I do not care who is doing what--is to put it up on the 
website and say here is what you need to do. Because this is 
crazy. I am just telling you. All you want to know is, hey, if 
I want to export here, then I contact the U.S. Export 
Department or the U.S. Commerce, or the North C Carolina--it is 
a mess. You cannot find it easy. We have got to grow jobs. You 
talked about 7-\1/2\ percent unemployment. I take a phone call 
every day from somebody who wants to start their own business 
and they do not know what to do. They call me. That is not--I 
mean, I do not mind but then I cannot do my business. We need 
just an overall website that says if you want to start your 
business, start with Small Business. Start with SCORE. You do 
not know how many people I have told go see SCORE. You know, or 
go here to Export.
    So I am just saying you all got to fix this.
    Mr. MURPHY. Thank you. And I think that is part of our job 
here, is to push the President on some of his initiatives that 
he has laid out to centralize everything into one website, 
because like you said, we do have the technology. Let us put it 
to use. So I think that is something that we could probably do 
in a bipartisan manner here, is to urge the president to do 
this in a timely fashion.
    Ms. FULTON. Thank you so much.
    Mr. MURPHY. Did you have a follow-up?
    Mr. MYHRE. I do. Just a response to Mr. Ogden's comment. If 
SBA's mission was to only help pre-venture individuals start 
businesses then I would completely agree with him. But the 
reality is that SBDCs help and primarily dedicate their 
resources, their consulting resources to the small- and medium-
sized enterprises that offer the greatest potential to add jobs 
to our economy.
    So in Florida, I can speak specifically that 75 percent of 
the consulting that we do, the hours that we dedicate in human 
resource professional consultant time goes to small- and 
medium-sized enterprises. And a big part of that is helping 
them develop market expansion strategies and international 
trade assistance is an important part of that. In Florida and 
in the national SBDC network, I know our SBDCs are working in 
partnership with the USEACs and have a very cooperative working 
relationship with them. We also have in Florida a step program. 
We help businesses develop export marketing plans where we sit 
and research and develop those specific strategies and then 
pass them on to the Gold Key service as part of a program that 
we have specifically for those small- and medium-sized 
enterprises.
    Mr. MURPHY. Thank you.
    Mr. Arth, you point out that the NAFTA created an 
opportunity for your company by ensuring that products sold to 
Mexico are duty-free. What are your views on the more recently 
enacted trade agreements with Korea, Panama, Colombia? And do 
you feel these agreements will create similar results?
    Mr. ARTH. When I was at the Trade Winds Forum in Mexico 
City I also met with the senior commercial officers from a 
number of Latin American countries. You mentioned Colombia. The 
senior commercial officer from Colombia was very enthusiastic 
about my product and in that time, before we had a Free Trade 
Agreement, it looked like a good opportunity for me. I have 
tried to move slowly and not bit off more than I could chew. 
Mexico could be a huge market for us so I focused all my 
attention there. But it seemed as though there was a good 
opportunity for us there potentially before the Free Trade 
Agreement came into effect, and I would imagine now it could be 
an even better opportunity for us. I wish I had the resources 
in-house to understand. I do this when I am not visiting 
Winnebago or working with an RV dealer or doing all the other 
things I have to do as company president.
    So I do believe that these will create opportunities. For 
me, I am not so sure Korea is a great market. Calls to 
Newcastle kind of situation. But I do think in the Western 
Hemisphere clearly and perhaps the Trans-Atlantic Trade 
Agreements that are being discussed with the European Union 
could be worthwhile for a company like mine.
    Mr. MURPHY. Thank you.
    You noted the important role that Ohio--the state--that 
they play in your efforts to export. And Ms. Fulton, you 
praised the state of North Carolina in your trade initiatives. 
Have you found that the states are filling a void that in some 
areas should be filled by the federal government? And if so, 
what are some recommendations you have?
    Ms. FULTON. Thank you.
    I would say in North Carolina they absolutely are filling 
some voids. And the fact that they are holding our hand, they 
are bringing qualified buyers in to North Carolina for North 
Carolina products. So I think a lot of other states can take 
note because I worry, when I walked in that room and Mr. Shen 
said I want to buy Miss Jenny's Pickles, I knew it was okay. 
Where, you know, maybe that is something we do at a federal 
level. I do not mind the state doing it. I am just telling you 
it was really hard and there is, I know, a lot of information 
out there that I still do not know that I probably need to 
know. But being only three years old and exporting is our new 
focus and one of them, it would just make everything easier to 
help out. And I do think, you know, everybody is busy. I mean, 
you are busy. I am busy. We have just got to make it simpler. 
And the state of North Carolina has done a fantastic job.
    Mr. MURPHY. Mr. Arth.
    Mr. ARTH. I am not sure there is that big a void right now 
as much as the coordination of all the efforts. As you may be 
aware, Ohio used to maintain their own international trade 
offices in a half dozen or more countries around the globe. 
They had a trade office in Mexico City, and I was working with 
the folks in Colombia, as well as the USEAC as I was going 
forward. When things kind of ground to a halt with the USEAC, I 
was disappointed that Ohio had closed their trade office, but 
that was really a duplicative function that if it was being 
doing well once in Mexico City, we should not need them both 
doing it.
    So this whole notion of making, you know, a central point 
of information and trying to coordinate all these resources, in 
four years working with the USEAC, I thought I had identified 
all the good resources and had either gone to work with them or 
determined that they did not apply quite yet. Yet, this 
morning, talking with Mr. Myhre and Mr. Ogden, I have 
discovered that both the SBDC and the DECs have some support 
features that may well serve what we are going to do going 
forward. And so I have got a couple more phone calls and 
contacts to make as we try to cross the border into Mexico.
    Mr. MURPHY. Great. I yield my time back.
    Chairman TIPTON. Thank you, ranking member.
    I would now like to recognize Mr. Luetkemeyer.
    Mr. LUETKEMEYER. Ms. Fulton, thank you for your testimony 
today. It is great to see an entrepreneur, somebody who made--
you had a difficult situation. You made lemonade out of lemons 
or pickles out of cucumbers, whichever one you want to talk 
about.
    Ms. FULTON. Thank you so much.
    Mr. LUETKEMEYER. But it is nice to see that the American 
dream is still alive.
    Ms. FULTON. Thank you.
    Mr. LUETKEMEYER. You are an example of that; that hard 
work, initiative, entrepreneurial spirit can make it all work. 
I know it is difficult to work yourself through the maze of all 
of the different rules and regulations, programs, policies, and 
all the other things, but you have done a good job and need to 
be congratulated for that.
    Ms. FULTON. Thank you so much.
    Mr. LUETKEMEYER. Whenever you said you all fix it, be 
careful what you wish for.
    Ms. FULTON. I understand.
    Mr. LUETKEMEYER. You know, part of the medical creed is 
first you do no harm. So according to the federal government, 
maybe that is what we need to do, too, first do no harm.
    You have experienced some things obviously that are 
important from the standpoint of seeing how the system works, 
what can actually be done and what cannot be done. Just a quick 
question with regards to do you have an SBA loan by any chance?
    Ms. FULTON. I do not.
    Mr. LUETKEMEYER. Okay.
    Ms. FULTON. I do have a line of credit but I could not get 
that line of credit until last year when we had been in 
business right at three years. We did talk to the SBA about a 
loan in the beginning, and because, remember, I was a financial 
advisor, not a pickle maker, I had no experience so there was 
no opportunity for me to get funding.
    Mr. LUETKEMEYER. Okay. Very good. Well, I was just curious 
about it.
    What percentage of your business comes from foreign trade 
right now?
    Ms. FULTON. Five percent, and I want to take it to 25 
percent.
    Mr. LUETKEMEYER. Twenty-five percent?
    Ms. FULTON. Yes, sir. That is my goal.
    Mr. LUETKEMEYER. Have you had any problems with, at this 
point, with currency manipulation, currency valuations between 
the countries that you are dealing with? Is that a problem for 
you at all?
    Ms. FULTON. Well, I will tell you, a little bit. And that 
is a great point. One thing that we learned is, on our label--
and again, these are going to be left for you all to have 
later--is by putting that America flag on there----
    What I was going to say is when people outside the United 
States see that American flag on our label, they know it is a 
premium product. They know there are food safety regulations 
that have produced this product, and they are willing to pay a 
premium. So in the beginning, you know, our price point in 
China was a little high. The good news is we have got that 
American flag on there. You know, not every Chinese person 
speaks English, so we came up with the international sign. If 
you want to know how to communicate, it is a thumbs up. And 
that is what they gave me when they tried Miss Jenny's pickles 
in Shanghai. And we have also reduced our price. But it was a 
problem in the beginning. But the flag on the label made a big 
difference. I will just tell you that.
    Mr. LUETKEMEYER. Okay. So you deal with China.
    Mr. Arth, you deal with mostly the Latin American countries 
at this point; is that right?
    Mr. ARTH. Actually, we do buy materials from China and 
Taiwan.
    Mr. LUETKEMEYER. Okay. Okay. Have you found a problem with 
currency valuations between the countries at all?
    Mr. ARTH. Are you talking about fair valuation?
    Mr. LUETKEMEYER. Yeah. Right. Because I know the Chinese 
are trying to manipulate the currency a little bit and it kind 
of causes some problems for some of our manufacturers who buy 
products.
    Mr. ARTH. You know, it is very difficult for us to be able 
to point to that and say with any certainty that they are 
manipulating the currency. It has been relatively stable. I 
mean, our contracts for purchasing materials always have a set 
exchange rate. And that is true with the Taiwan dollar as well 
as the R&B.
    Mr. LUETKEMEYER. Okay. You are in a business where you 
compete probably against a lot--I think you made the comment 
with regards to other products from other countries, especially 
with a metal product. I know that there is a lot of dumping 
that goes on, especially from the Chinese, Taiwanese, 
Philippines, that area of the world, the Asian-Pacific Rim. I 
have some companies in my own area that have problems with 
that. Have you experienced that at all with those countries 
dumping stuff here that compete against your products and need 
some trade protection perhaps?
    Mr. ARTH. I am not sure that dumping is going on today with 
respect to our core products, which would be the plastic 
faucets. Metal faucets are going through a whole new adventure 
right now because of the pending lead law that is going to take 
effect in January of next year. There may be dumping going on 
now just to get rid of old inventory while it is still 
saleable.
    With respect to the plastic faucet commodity, I do not 
think there is a great deal of manipulation or games being 
played in other countries to promote that product. When they 
first came into this country there were some prices that looked 
pretty strange, below material cost almost. But today I think 
things have normalized.
    Mr. LUETKEMEYER. I have just got a few seconds left. One 
quick question for you. You represent the Small Business Export 
Association. What percent of small businesses export their 
products out of this country?
    Mr. ARTH. Oh, geez. It is in my testimony, and I do not 
remember the number off the top of my head. I believe it is 
less than one percent. Or just over one percent. Two hundred 
eighty seven thousand small businesses out of the 27.9 million, 
so a little over one percent are actively exporting.
    Mr. LUETKEMEYER. Okay. Do you have an idea, just very 
quickly, the number of businesses that actually sell a part or 
a product to another country that export that product then?
    Mr. ARTH. That I do not have a clue but I am confident that 
my faithful staff can provide a response to that.
    Mr. LUETKEMEYER. I am just curious because it all ties 
together with regards to, even though you may not import or 
export directly, if you are having problems with--if the 
country that you sell your product to has problems, then that 
means you have problems as well.
    Mr. ARTH. Correct.
    Mr. LUETKEMEYER. Thank you for our testimony. I am out of 
time.
    Mr. Chairman, I yield back.
    Chairman TIPTON. Thank you, Mr. King for your questions.
    Mr. KING. Thank you, Mr. Chairman. And I thank the 
witnesses for your testimony.
    As I am listening to this I am starting to think, I 
remember back in 1975 when I started a business my biggest fear 
was government regulation and how many different hurdles did I 
have to leap over that I did not know existed. And I would find 
them usually at my peril. So the burden of even domestically 
starting a small business that many years ago has to be 
multiple times greater today. And once you jump through all 
those hoops it would seem to me that you would be acclimated to 
get through a few more in foreign countries. However, different 
hoops in each country, and that can be the barrier.
    I am curious, and I go first to Mr. Arth, how many 
countries do you do business in? Export to?
    Mr. ARTH. Today we sell--we have distributers in Canada 
that we sell to, and then also U.S. distributors who take our 
products across the border into Canada. We do very small export 
sales to Australia, to Colombia. We used to do Panama. I am not 
sure if that is still current. I did list the countries in my 
testimony. There are a handful. But we are not yet selling 
anything into Mexico.
    Mr. KING. And the reason I ask that question is how many of 
those countries, just to get a general understanding, I do not 
need to pry into your business practices, but a general 
understanding of how many of those countries you travel to 
before you can open up a market in order to build a network 
that you can work with?
    Mr. ARTH. To tell you the truth, I have never been to 
Australia or any of the other countries with the exception of 
Canada, which if you live in Cleveland, Ohio, is right across 
the lake. So they are our next door neighbor. Travel to that 
country has not been--to those countries has not been a crucial 
element. But in all of those cases we may have kind of fallen 
into--those were accidental export markets as opposed to 
deliberate accomplishments where we can say we are selling 
products into Colombia.
    Mr. KING. But generally speaking, you had accidental 
markets, but when you decide you want to sell into a country do 
you make a commitment that you travel there and build a 
network?
    Mr. ARTH. At this point I am not working on those other 
incidental markets. Canada I visit and I do work some shows in 
Canada on a regular basis.
    Mr. KING. Thank you.
    Mr. ARTH. But the others are small pieces right now.
    Mr. KING. Ms. Fulton, I know that you have some ambitious 
export plans, so I am curious as to how that networking has 
worked for you in the past and what countries you are shipping 
to now and how that is going to work for you to build your 
network in the future.
    Ms. FULTON. Well, thank you. We export to China. I did go 
to the country and Canada last year and meet with buyers to 
build that market. And we hired a Canadian broker. And so we 
should be exporting to Canada hopefully within the next 60 to 
90 days. I have also met with buyers from Mongolia. We also 
have buyers in Europe that I have met with, but I do not have a 
presence in Hong Kong. I do not have a presence in Germany. So 
I am going over there to pave the way to get our product over 
there.
    Mr. KING. I brought that up because that is my suggestion. 
It is just my belief that this world runs on networks and if 
you are looking people in the eye and taking the measure of 
them you can be a lot more effective than if you are 
transferring things electronically these days. It still comes 
down to people, and it comes down to trust and professionalism 
and efficiency. So, and you mentioned Germany. How do you 
intend to crack into that market?
    Ms. FULTON. I forgot to mention, so thanks for coming back 
to me, as a small business though, without SUSTA, the Southern 
United States Trade Association, I would have never been able 
to go to Germany or Hong Kong. And so what we are doing is we 
get subsidized once we go over there. We get reimbursed for 
part of our airplane and our hotels. And they also set up one-
on-one buyer meetings for me so that I am not wasting my time 
because, again, I have never been to Germany. I am going to 
have to figure it out. But by having SUSTA and North Carolina 
Export with me, holding my hand a little bit, even though they 
will not knock on the door and they know I will, but they are 
going over there with me, and that makes a big difference.
    Mr. KING. I think as Mr. Myhre said, the biggest barrier is 
fear of the unknown. Absolutely.
    Do you run into any sanitary or phytosanitary issues trying 
to market into Europe?
    Ms. FULTON. I have not got that far yet but I will get back 
to you on that.
    Mr. KING. I will be looking forward to that.
    We are in the process of opening up our negotiations with 
the Trans-Atlantic Trade Agreement. I do not know if that was 
mentioned here before I arrived, but those issues have been 
huge barriers, especially from the agriculture and the food 
side. And one of those things is an issue that I see is trade 
protectionism on how we process chickens that are not allowed 
into Europe right now. I actually just came back from some 
fairly intense negotiations over there on this, and I am not at 
this point optimistic we are going to get something done 
because trade protectionism is often masked in those kind of 
issues, like sanitary, phytosanitary issues, GMO issues, et 
cetera. But I am going to take it those are natural-born 
cucumbers turned into pickles at your place.
    Ms. FULTON. Yes, sir.
    Mr. KING. And I appreciate the chairman for holding this 
hearing and all of the witnesses. It is a breath of fresh air 
for me, as Blaine said, to hear from real people doing real 
work. I think that was you, Blaine, but maybe not. But I know 
that is what you believe.
    Thanks. I yield back.
    Chairman TIPTON. Thank you, Mr. King. And we are going to 
have votes called in just a couple of minutes.
    I had a couple of questions but I would like to yield to 
Ranking Member Murphy. You had a couple of follow-up questions 
you wanted to ask.
    Mr. MURPHY. Just one more and then I yield back.
    Mr. Myhre, as you highlighted in your testimony, 
regulations on exports have been an increasingly significant 
part of what is happening nowadays. In addressing national 
security concerns though, these rules place a high degree of 
scrutiny on products, but they also demand more resources from 
firms to navigate the complex and time-consuming process. Do 
you believe there can be a more balanced approach between 
security and commercial interests and implementation of these 
export controls?
    Mr. MYHRE. Certainly. I do not have any specific 
recommendations. I have to go back to my area experts to find 
out what those are but there certainly has to be a balance we 
understand and understand the challenges which you have to 
balance national security with the red tape in which, you know, 
small businesses have to navigate. What we try to do is make 
sure that we mitigate that by staying attune to what that red 
tape is and then working with those small businesses to work 
through those.
    Mr. MURPHY. Do these more stringent controls compel foreign 
companies to avoid U.S. products or to retaliate against their 
American competitors?
    Mr. MYHRE. I have not heard that there is any resistance 
against it.
    Mr. MURPHY. Okay. All right. Thank you.
    Chairman TIPTON. Great. Just to be able to follow up on 
that just a little bit, can, maybe very briefly because they 
have now called votes for us to go over, can you give us a 
month, two months, about how long does it take you to be able 
to get all of the information you need together, you know, for 
the foreign transactions to actually take place?
    Ms. FULTON. Well, I will just answer real quickly because I 
met Mr. Shen in May, and we did not export until October. And 
it took actually seven weeks to get my product from the boat 
all the way over there. So again, met in May and then it left 
my dock on October.
    Chairman TIPTON. Okay.
    Mr. MYHRE. That is the fast track. I would say that the 
normal experience for most of our small business clients, we 
work intensively with them. It takes anywhere from 80 to 100 
consulting hours to research, to develop, and then identify 
specific market strategies. But then they have to go to, as the 
congressman highlighted, to the country to develop the 
networks, find the buyers, et cetera. We find that it takes 
anywhere from 6 to 12 months at a minimum.
    Chairman TIPTON. You know, I am a small businessman and 
that has always been our experience. And time investment and 
capital investment to be able to create those markets to tell 
the field, if you will, and then to be able to ultimately get 
there and then have 60-90 days before you get that first check 
coming back after you have established the market is always a 
real cost that we have got to understand.
    I believe our panel almost unanimously has stated that some 
of the largest barriers to exporting is understanding and 
complying with those foreign regulations. Can you explain, and 
again, if you keep it brief--I apologize for our time 
constraints on our end here--how you keep up with those foreign 
regulations, including technical barriers and changes to the 
tariffs.
    Ms. FULTON. What I would say to that, Chairman, I keep 
different folders for each different country, and I print off 
everything that is supposed to go to China, everything that is 
going to Canada, and keep it totally separate and keep a large 
file on it. But again, I am sure there is information out there 
I need to know that I do not.
    Chairman TIPTON. All right.
    Mr. MYHRE. From our professional expertise, all of our 
people are certified in their area of expertise, so they are 
required to continue to have professional development training 
to stay attune to their area of expertise.
    Chairman TIPTON. Okay.
    Mr. ARTH. We do anticipate when we finally get going in 
Mexico that we will actually retain counsel in Mexico to keep 
us appraised of the situation in that country and then working 
with domestic resources, USEAC, and others to stay up on U.S. 
trade regulations.
    Chairman TIPTON. Believe me, I have a lot of great empathy 
for the idea of having one-stop shopping to be able to get that 
information. I think having a myriad of different websites to 
be able to go to when we are starting out and all we want to do 
is make pickles or to be able to sell faucets, that is our real 
business. And the better position I think from the federal end 
of the world, and we have some great examples in North Carolina 
and in my home state of Colorado as well, being able to work 
with people wanting to be able to export going out. I think 
simplification and consolidation of that information is going 
to be really critical for us.
    I guess just for me to be able to close here, just real 
quickly if I could get maybe Ms. Fulton and Mr. Arth to be able 
to explain, if you just had one bit of quick advice to be able 
to give other businesses that wanted to be able to export, what 
would that be?
    Ms. FULTON. Take the risk. Do it. It is worth it in the 
end.
    Chairman TIPTON. Great.
    Mr. ARTH. You know, call USEAC was the best advice I got. 
It has not been complete and totally satisfactory, but they 
have done a good job and I think I would make the same 
recommendation to someone who asked me.
    Chairman TIPTON. Great. Well, thank you all so much for 
taking the time to be able to come in for this I believe 
important Committee hearing. This is about jobs. I believe Ms. 
Fulton this is probably your family if I am seeing the same 
eyes sitting behind you.
    Ms. FULTON. Yes, sir. Very proud.
    Chairman TIPTON. It is about these kids. It is about their 
future and it is about American entrepreneurialism to be able 
to get this country moving and to be able to get our people 
back to work. And small business can help lead the way. And 
when we have only got one percent of small businesses having 
that opportunity to be able to really get in right now there is 
a big market for us to be able to capture and to be able to put 
that American flag on our products. No country in the world 
does it better than the workers and the entrepreneurialism of 
this country.
    Thank you again. First meeting together with our new 
ranking member here as well. This Committee will continue to 
closely follow the barriers and issues faced by small business 
exporters, and I look forward to working with you and my 
colleagues in Washington on new solutions to be able to make 
overall trade practices and processes easier for small 
businesses.
    I ask unanimous consent that the members have five 
legislative days to submit statements and supporting materials 
for the record. Without objection, so ordered. This hearing is 
now adjourned. Again, thank you.
    [Whereupon, at 11:21 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

[GRAPHIC] [TIFF OMITTED] 


    The U.S. Chamber of Commerce is the world's largest 
business federation representing the interests of more than 3 
million businesses of all sizes, sectors, and regions, as well 
as state and local chambers and industry associations.

    More than 96% of Chamber member companies have fewer than 
100 employees, and many of the nation's largest companies are 
also active members. We are therefore cognizant not only of the 
challenges facing smaller businesses, but also those facing the 
business community at large.

    Besides representing a cross-section of the American 
business community with respect to the number of employees, 
major classifications of American business--e.g., 
manufacturing, retailing, services, construction, wholesalers, 
and finance--are represented. The Chamber has membership in all 
50 states.

    The Chamber's international reach is substantial as well. 
We believe that global interdependence provides opportunities, 
not threats. In addition to the American Chambers of Commerce 
abroad, an increasing number of our members engage in the 
export and import of both goods and services and have ongoing 
investment activities. The Chamber favors strengthened 
international competitiveness and opposes artificial U.S. and 
foreign barriers to international business.

    Positions on issues are developed by Chamber members 
serving on committees, subcommittees, councils, and task 
forces. Nearly 1,900 businesspeople participate in this 
process.
    Thank you Chairman Graves, Ranking Member Velazquez, and 
distinguished members of the U.S. House of Representatives 
Committee on Small Business Subcommittee on Agriculture, Energy 
and Trade. My name is Jenny Fulton, and I serve as the Chief 
Pickle Officer/Chief Executive Officer of Old Orchard Foods, 
LLC or Miss Jenny's Pickles. Our pickle world headquarters is 
located in Kernersville, North Carolina. I am extremely honored 
and grateful for this opportunity to share our story with each 
of you today. I am testifying today on behalf of the U.S. 
Chamber of Commerce, which is the world's largest business 
federation representing more than three million businesses and 
organizations of every size, sector, and region, as well as 
state and local chambers and industry associations.

    Starting Miss Jenny's Pickles

    Miss Jenny's Pickles (www.missjennypickles.com) was born 
out of the recession. Ashlee Furr, my business pickle partner, 
was laid off in June 2009, and my layoff followed in January 
2010. Ashlee and I confirmed that we were both burned out with 
the financial industry and decided to take a true leap of 
faith--like many during the hard economic times--and start our 
own company.

    Coming from financial backgrounds, we had very little 
knowledge in the food industry, but using a family recipe we 
decided to start our very own pickle company. We began by 
researching other small food businesses, but we needed help. 
The first resource we turned to was Service Corps of Retired 
Executives (SCORE) in Greensboro, NC. After they stopped 
laughing at us, they began to point us in the right direction 
and were instrumental in helping us start a small business. 
However, we faced another hurdle. We needed a certification to 
manufacture food products for mass markets. Ashlee & I attended 
NC State University for three days of chemistry in food science 
and looked to the North Carolina Department of Agriculture for 
guidance.

    For the first two years we grew our own cucumbers and 
jarred every jar. We formed a partnership with a local YMCA to 
use its kitchen which saved us thousands of dollars by not 
having to build a commercial kitchen to produce our product. We 
still use the YMCA kitchen today for some of our products but a 
co-packer makes the majority of Miss Jenny's Pickles. This 
allowed us to expand our market and brand.

    In the beginning, we knocked on doors of local independent 
stores to carry our product and attended local food shows to 
meet buyers from grocery stores. Once we were approved by the 
stores we had to deliver inventory which consisted of very 
early morning deliveries to stores, then returning home to get 
our children to school, then returning to the field to pick 
cucumbers, and then taking them to the YMCA for processing. We 
did this day in and day out. By the end of 2010, we had our 
pickles in 50 stores. By the end of 2011 we had pickles in 200 
stores, and by the end of 2012 we were carried in over 800 
stores.

    In our short three years, Miss Jenny's Pickles has grown 
its business to five full-time employees and a part-time CFO, 
Barry Safrit who is wonderful with our planning and financials. 
We have created jobs through the growth of exports. We have 
been exporting for two years now, with pickles going to China, 
and soon to Canada, Hong Kong and Germany. Today, we continue 
to look for new markets, bringing our products to customers all 
over the world. I am pleased to be before you today to discuss 
the opportunities that small businesses would like to see made 
more available, so we can grow even more.

    Breaking into the International Market

    Knowing that 95% of the world's population lives outside 
the United States, we decided that exporting would be crucial 
to our success. In May 2011, the North Carolina Department of 
Agriculture's Export Department (www.ncagr.gov/markets/
international) and the Southern United States Trade Association 
(SUSTA) (www.susta.org) organized an in-bound trade mission for 
Chinese buyers/distributors to meet with North Carolina 
businesses, in which we decided to participate. Wow, what an 
adventure! It was there that we met our business partner in 
China, Mr. Shen. After hours of reading e-mails translated 
using Goggle Translate, talking via Skype with a twelve-hour 
time difference, and 32 pages of documents, we finally received 
our first order from China. The North Carolina Export 
Department was wonderful to work with. They stuck by us through 
the good times and the bad. Miss Jenny's Pickles sent off its 
first five pallets of pickles to China, and from there started 
to receive more inquires about our products and expanding our 
exports.

    Last year, the North Carolina Export Department and the 
SUSTA took a trade mission to Shanghai for the SIAL (www.sial-
group.com) food show. SIAL is the global marketplace for those 
involved in the food industry. I went along, and it was then 
that I had the opportunity to visit the stores that carry Miss 
Jenny's Pickles. I must be honest; I was extremely amazed, 
humbled, and proud to be standing next to our pickles on the 
shelf in China. It was rewarding to know that I was 
representing the United States of America, which has world-
recognized food safety regulations, and a product ``Made in the 
USA'' with the American flag on the label, for which people in 
China are willing to pay a premium. This March, Mr. Shen is 
returning to the United States, and I will be visiting and 
hosting him and his team while they are here to build on our 
relationship and increase our exports to China.

    Last year I also participated in a trade mission to Canada, 
arranged by the same two organizations. It was there we hired a 
food broker in Canada. This year, with the help of NC Export 
Department & SUSTA, I will be attending food shows in Hong Kong 
and Germany to build our international brand as we look for 
more markets to do business in.

    During the early stages of working in the international 
marketplace, we attended a forum in Charlotte, NC, called Small 
Business Global Access hosted by U.S. Senator Kay Hagan along 
with Chairman and President of the Export-Import Bank Fred 
Hochberg. I was so impressed with Mr. Hochberg's remarks on Ex-
Im's efforts to help small businesses export that I ran out to 
his car after the forum and handed a jar of pickles to his 
driver. I said to the driver, ``Please make sure Mr. Hochberg 
tries our pickles because I want to export this year!'' Today, 
we partner with Ex-Im so that we can offer terms to our foreign 
buyers which increase our sales by having this option 
available. Without the Ex-Im Bank our small business would 
never have been able to offer terms outside the United States. 
The trade and export promotion programs funded by the 
International Affairs Budget are essential to expanding U.S. 
activity in new and emerging markets. They will play a vital 
role in our international sales going forward.

    Without my ``out of the jar'' thinking, and pure 
determination to export, I am not sure that our young company 
would have had such great export success. As a result, we are 
creating jobs, increasing revenue, and exporting our pickles 
around the world.

    Improve U.S. Trade Promotion Programs to Help Small 
Businesses Export

    International trade plays a central role in creating 
American jobs and boosting economic growth at home. More than 
38 million American jobs already depend on trade, and over 97% 
of the 275,000 U.S. companies that export are small and medium-
sized enterprises (SMEs). However, this figure represents just 
one of every 100 U.S. SMEs, underscoring how difficult it is 
for smaller firms to enter export markets.

    If more U.S. small businesses were able to seize export 
opportunities, the gains could be immense. I have seen 
firsthand the need for the government to improve U.S. export 
promotion programs. After our company was on 60 Minutes, we 
received hundreds of emails and phone calls from Americans that 
want to start their own company just like us and tap into the 
resources available. However, they don't know where to begin. 
People flew all the way from Seattle to Kernersville to meet 
with us and ask for help. I can't tell you the number of hours 
that we spend helping other companies. We need to put a central 
resource in place to help American entrepreneurs to succeed in 
the global marketplace.

    Small businesses need help in paving the way to new 
markets. We are left on our own to find the doors and knock on 
them. Many doors are not open to us. The services, expertise, 
and dedication of the state and federal export promotion 
programs are world class, but I know that many U.S. companies 
are not aware of the government services that are available to 
help them break into new markets. This isn't the fault of 
America's small business owners. The assistance offered by the 
state and federal government needs to be promoted more 
effectively. Small businesses need a roadmap for export 
success.

    There are many successful state programs that I believe 
should be replicated in other states and ideally on a federal 
level. In North Carolina, the Department of Agriculture is 
aggressively helping North Carolina companies export. These 
good people encourage companies like mine to consult with trade 
specialists, to learn more about trade through workshops and 
seminars, to participate in trade missions, and to meet with 
international buying delegations. Without their help, we would 
not have found many of the international opportunities we've 
identified.

    On the federal level, the Government Accountability Office 
(GAO) has determined that the 17 federal agencies with export 
promotion programs could be made more effective through better 
coordination, elimination of duplicative activities, and better 
allocation of resources. In particular, GAO found that 
strengthening the interagency Trade Promotion Coordinating 
Committee would improve the effectiveness of U.S. export 
promotion programs. GAO also found that effective export 
promotion programs can provide significant benefits to SMEs in 
the competitive global economy. I am a member of the White 
House Business Council and have the opportunity to participate 
in calls that discuss trade promotion programs among other 
small business issues.

    There are also private companies and organizations such as 
the SUSTA that engage in export promotion. Other export-minded 
organizations that I am a part of include the National 
Association for the Specialty Food Trade (NASFT), which is 
dedicated to helping specialty food companies thrive and 
promoting the specialty food industry on an international 
scale. We are also members of Pickle Packers International 
(PPI), which has served the pickled vegetable industry for over 
119 years by sponsoring research, representing industry before 
government agencies, producing educational materials, and 
providing networking opportunities to its members. Membership 
of PPI represents 87 percent of the cucumber tonnage grown for 
pickle-use in North America, valued at more than $1.5 billion. 
I also sit on the Board of Directors for the North Carolina 
Specialty Foods Association which has been a great help to our 
business.

    There are many seasoned exporters among America's small 
businesses, but there are many others that have never even 
considered exporting. I know that exporting can be challenging 
and overwhelming at times, especially for small businesses. 
Each country is different, and each culture is unique. 
Introducing U.S. products is always time consuming, 
challenging, and expensive. But in the end, it is all 
worthwhile.

    Trade Policies That Bring Growth and Prosperity

    As the president of a small company, I truly understand the 
importance of international trade and the impact it can have on 
small business. It's simple: we want to ship to more countries, 
grow our client base, and create more jobs. The more we 
diversify our client base, the more stable we will be.

    Standing in the way, however, is a complex array of foreign 
barriers to American exports. Those barriers are alive and 
well, and they pose a major competitive challenge to U.S. 
industry and agriculture and the millions of U.S. workers whose 
jobs depend on exports.

    From a business perspective, the foremost goal of U.S. 
trade policy should be to tear down those barriers so companies 
like mine can start exporting to new markets. Free trade 
agreements have helped us accomplish this in the past and will 
help our business grow in the future.

    American workers and businesses are facing one of the 
harshest economic storms we've seen in years. Over eight 
million Americans have lost their jobs since the recession 
began, and we need to put Americans back to work. Recognizing 
that 95% of the world's consumers live overseas, I applaud 
President Obama's goal to double U.S. exports. An efficient way 
to promote U.S. exports is for Congress to support trade 
policies that will generate billions of dollars in new American 
exports. These include:

     Restoring the president's traditional authority to 
negotiate trade agreements;
     Concluding a comprehensive, high-standard, and 
commercially meaningful Trans-Pacific Partnership trade 
agreement; and
     Launching negotiations for a comprehensive Trans-
Atlantic Trade and Investment Partnership that will eliminate 
tariffs and non-tariff barriers to trade, ensure compatible 
regulatory regimes, and liberalize investment, services, and 
procurement.

    Let me touch a bit further on a few of these priorities.

    Trade Promotion Authority

    First, the president needs the authority to negotiate trade 
agreements--Trade Promotion Authority (TPA). Congress has 
granted every president from Franklin D. Roosevelt to George W. 
Bush the authority to negotiate market-opening trade agreements 
in consultation with the Congress.

    The U.S. Constitution gives the Congress authority to 
regulate international commerce, but it gives the president 
authority to negotiate with foreign governments. TPA rests upon 
this constitutional partnership: It permits the executive 
branch to negotiate agreements in consultation with the 
Congress; when an agreement is reached, Congress may approve or 
reject it, but not amend it.

    TPA lapsed in 2007. That's unacceptable; every American 
president needs TPA, and every president should have it. 
Potential partners won't negotiate seriously if they know 
agreements could be picked apart by Congress. The Obama 
Administration and Congress should begin discussions on new 
negotiating authority as soon as possible.

    Trans-Pacific Partnership

    Once TPA is renewed, how should the President and Congress 
use it? Clearly, the United States needs to engage in the Asia-
Pacific region as never before. The region accounts for half of 
the world's population and boasts many of its fastest growing 
economies.

    The U.S. may be falling behind in the world's most dynamic 
region. Over the past decade, the growth in U.S. exports to 
Asia has lagged behind our overall export growth. As the think 
tank Third Way has pointed out, the U.S. share of the import 
market of 12 key Asia-Pacific economies actually fell by 43% 
between 2000 and 2010. In short, Asian nations are designing a 
new architecture for trade in the global economy's most dynamic 
region--threatening to draw ``a line down the middle of the 
Pacific.''

    This is the case for the Trans-Pacific Partnership (TPP), 
which is the one trade agreement under negotiation today in 
which the United States actually has a seat at the table. The 
TPP is our chance to ensure the United States is in the game in 
Asia. The American business community needs the TPP to succeed 
so we can be competitive in Asia-Pacific markets. With Canada 
and Mexico joining the negotiations in 2012, the TPP today 
embraces 11 countries.

    Trans-Atlantic Partnership

    As we consider new trade accords with our biggest 
commercial partners, Europe calls out for attention. Together, 
the United States and the European Union generate half of 
global GDP. More than $1.5 trillion in goods, services, and 
income receipts flow between the United States and the EU 
annually. U.S. firms have direct investments of nearly $2 
trillion in the EU--20 times what they have invested in China. 
These European investments generate some $3 trillion in annual 
revenues for American companies that have invested in the 
European Union to sell their wares to its more 500 million 
citizens. The numbers are similar for European firms' 
investments in the United States. Our economies are so closely 
integrated that about 40% of U.S.-EU trade is intra-firm.

    In his State of the Union address earlier this month, 
President Obama issued the long-awaited announcement that the 
United States and the European Union will negotiate a Trans-
Atlantic Trade and Investment Partnership. The U.S. business 
community strongly supports this initiative. For too long, the 
United States has ignored the untapped potential of its ties to 
the world's other economic colossus. For the sake of jobs and 
growth, it's time to turn that around.

    Conclusion

    In closing, I challenge each of you to expand upon and 
better promote the trade resources that are available to small 
businesses. Investing in the export potential of America's 
small and medium-sized businesses could bring dramatic gains 
and stimulate the economy. If America fails to look abroad, our 
workers and businesses will miss out on huge opportunities.

    Thank you for the privilege and opportunity to appear 
before you today. I greatly appreciate the opportunity to 
testify today on behalf the U.S. Chamber of Commerce and Miss 
Jenny's Pickles. Thank you very much.
[GRAPHIC] [TIFF OMITTED] T9821.030

    Chairman Tipton, Ranking Member Murphy, Members of the 
subcommittee, thank you for the opportunity to submit testimony 
on strategies to improve small business participation in 
international trade. I have prepared a written statement for 
the record and will give you a summary of my remarks.

    Over 90 percent of the world market exists outside the 
boards of the United States. Nonetheless, only one percent of 
small businesses export their goods and services. The single 
biggest reason small businesses don't export is their simple 
lack of knowledge of the opportunities that exist and their 
simple readiness to navigate the process. This loss opportunity 
severely inhibits, or at least limits, both their individual 
growth and overall national economic growth.

    The mission of Small Business Development Centers is 
simple--to help small businesses grow and compete. In that 
effort, SBDCs retain specialized professional business 
consultants who are driven to help their small business 
customers research and develop specific strategies to expand 
markets and grow revenues. Through the growth of revenues 
businesses are able to hire more workers and contribute to the 
expansion of our economy. In the Florida SBDC Network we brand 
these specialize consultants as our Growth Acceleration 
Professionals, or GAP experts.

    With a national network of nearly 1,000 centers, America's 
Small Business Development Centers offer a wide variety of 
programs and services to assist and encourage small businesses 
in their efforts to access international market opportunities. 
By accessing these specialized growth and international market 
consultants, we strive to identify those firms that are or are 
close to being ``export ready'' and assist them with developing 
the tools and strategies they need to succeed beyond our 
domestic boarders. What we consistently find is that small 
businesses, including our smallest small businesses with fewer 
than 20 employees, are at a competitive disadvantage to their 
large business counterparts in their readiness to export due in 
large part to the daunting complexity of trade regulations and 
the potential uncertainty of international business 
transactions.

    Export Readiness

    At SBDCs around the country small businesses receive honest 
and accurate assessment on the state of their firm and their 
state of readiness to participate in the global marketplace. 
Unlike other programs or resources, our network of SBDC 
specialists assists small business owners in reaching, 
developing and, most importantly, executing international trade 
strategies. Through one-on-one consulting, training, customized 
research, and access to a network of trade professionals and 
partners, the SBDC provides its customers with the tools and 
strategies to successfully and profitably navigate the 
expanding world of international trade. Meeting with small 
businesses, SBDC consultants help determine the exportability 
of their products or services, identify appropriate markets and 
buyers, develop market entry strategies, establish shipping and 
distribution networks, determine appropriate payment methods 
and identify export financing and insurance needs.

    Trade Research

    Another key disparity between large and small business is 
access and affordability to business data. To aid in the 
process of getting a small business export ready our SBDC 
export specialist provide strategic international market 
research to help its small business customers make informed 
decisions on the best international market opportunities for 
their product or service. Our SBDCs have access to a wealth of 
information on export markets, ranging from general country 
information to specialized information on markets for specific 
industries and products in countries worldwide. In some cases, 
our SBDCs can also conduct primary research for small business 
clients needing specific information unavailable through 
secondary sources. Examples of research SBDCs provide include:

         General information on doing business in 
        different countries
         Demographic, economic, political and cultural 
        information on different countries
         Information on specific industries/products in 
        export markets, including:
          - market size, characteristics and trends
          - competitive environment
          - trade barriers and regulatory environment
          - pricing infrastructure
          - sales & distribution channels
          - key contacts (manufacturers, distributors, end-
        users, trade associations and journals, government 
        offices, etc.)
          - trade shows
         Detailed statistical information on U.S. 
        exports by state, product and country

    Compliance Assistance Programs

    Another major hurdle small businesses face is the various 
export control regulations that govern international trade. Our 
SBDCs export specialists offer Export Compliance Assistance 
Programs. Through these programs, they educate small businesses 
on export regulations and practices that can be implemented to 
ensure compliance.

    In recent years, the federal government has significantly 
tightened export regulations in response to growing threats to 
national security. Government export enforcement officials are 
actively pursuing companies whose export operations are not 
compliant with U.S. regulations. Lack of export regulatory 
awareness on the part of an exporter can lead to audits and a 
whole host of penalties, including fines, revocation of export 
privileges and debarment from contracting that could threaten 
the very going concern of small business firm.

    Many small businesses mistakenly believe that they are not 
affected by export regulations because they produce products or 
sell only to ``friendly'' countries. Whether they know it or 
not, all exporters operate under U.S. export control laws, 
which are broad and far-reaching. Even with the help of a 
freight forwarder, small businesses can unknowingly violate 
these laws. The exporter is ultimately responsible to have a 
thorough understanding of export regulations and to establish 
operating procedures aimed at preventing violations.

    At SBDCs export compliance assistance is a free service 
offering:

         Counseling and technical assistance on the 
        full range of U.S. export regulations
         ECCN classification guidance
         Export license determination assistance
         Assistance in establishing an Export 
        Management System
         In-house training on the Export Administration 
        Regulations, documentation and procedures
         Targeted referrals to government authorities 
        responsible for export controls
         Low cost seminars on export compliance issues
         Onsite assistance available through the 
        network of offices

    SBDCs also regularly collaborate with the US Census 
Bureau's Foreign Trade Division to host seminars on the Foreign 
Trade Regulations (FTR) and the Automated Export System (AES). 
These seminars provide two days of training on changes to the 
FTR, common mistakes and how to avoid them, Export Controls and 
Enforcement and Commodity Classification. In addition, the 
seminars help familiarize small businesses with the Census 
bureau's extensive trade statistics system.

    By work with the Census Bureau and other agencies SBDCs 
help small businesses get their documentation done right the 
first time and develop the skills they need to handle exports 
on their own.

    Export Financing

    Helping small businesses attract and handle financing has 
always been a cornerstone strength of the SBDC network. 
Navigating what resources are most applicable can be confusing 
without the proper guidance. In international trade SBDCs work 
closely with SBA's Export Loan program, the Export-Import Bank 
and conventional financial institutions to help small 
businesses identify and apply for appropriate funding to 
support their international trade activities. Without these 
funds many small business would face uncertainty and 
potentially unnecessary risk and losses.

    Conclusion

    As you can see, international trade assistance is 
incredibly specialized and complex. SBDCs offer a wide range of 
international trade services, but these services are extremely 
resource intensive. SBDCs do an outstanding to assist small 
business whenever and wherever they have opportunity to do 
business. We help navigate the regulatory maze but efforts to 
streamline and coordinate export services are necessary and we 
welcome the committee's focus on unraveling some of this 
complication and bringing a small business focus to the 
national effort to increase trade to our country's trade 
partners.

    The complexity and the cross-agency jurisdictions are not 
the fault of the Obama Administration, the Bush Administration 
or Congress. Rather they are a product of years of changing 
economic realities and the many responses to those issues. 
However, it isn't just assistance and guidance that is 
necessary. We need Free Trade Agreements that are clear and 
focus on small business interests, and we need tariff and 
export controls that are uniform, clear and specific. We 
appreciate the efforts of the Trade Promotion Coordinating 
Committee, they are a great help in our efforts to educate 
small business on trade. Likewise, the US Trade Representative 
has been a solid advocate for small business concerns and a 
solid supporter of SBDC expansion worldwide. Those efforts are 
vital but to truly make our small businesses competitive in the 
global marketplace there is much more work to be done.

    Thank you.
    [GRAPHIC] [TIFF OMITTED] 
    
    Good morning. I would like to thank Chairman Tipton, 
Ranking Member Murphy and the members of the Small Business 
Subcommittee on Agriculture, Energy and Trade for inviting me 
to testify today. I am Raymond Arth, co-founder and President 
of Phoenix Products, Inc. a manufacturer located in Avon Lake, 
near Cleveland, Ohio. Our company produces faucets and also 
imports finished faucets, hand showers and other accessories 
that are sold under our company brand names. Our products are 
sold throughout the U.S. and Canada, from the Rio Grande to the 
Arctic Circle. In addition we have very modest export sales to 
Australia, Costa Rica, Guam and Panama with ambitions for 
robust exports in the near future.

    About Phoenix Products, Inc.

    Phoenix is a small company; we have thirty-one employees, 
several of whom work part-time. As demand requires, we 
supplement our factory staff with up to 10 temporary employees. 
Like many small manufacturing companies our labor force is 
primarily comprised of workers skilled in a specific trade--
meaning we have very limited in-house resources when it comes 
to pursuing new market opportunities such as exporting.

    To the best of my knowledge, Phoenix is the last, stand-
alone company that still manufactures low cost plastic faucets 
in the U.S. Since our founding in 1977 we have sold our 
products primarily to the Recreational Vehicle (RV) and 
Manufactured Housing (HUD Code) industries. For the first 25 
years or so we were able to withstand foreign competition and 
stemmed the tide of low cost imports into our market segments. 
Unfortunately, we have been forced to supplement our product 
line with Chinese-produced faucets in order to remain 
competitive in an industry which has continually been undercut 
over the last 10 years by Chinese and Taiwanese product price 
points that are impossible to match here in the U.S.

    I am pleased to report that today we still produce and sell 
more faucets in our factory than we import. But our customers 
are increasingly more interested in lower prices and the trend 
is toward the imported products. In 2008 sales of imported 
faucets represented only 15 percent of our total faucet sales. 
Today imports account for 30 percent of the faucet sales 
category with growth coming from both the low-cost and high-end 
designs.

    Exporting Phoenix Products

    The long-term survival of our factory depends on developing 
foreign markets for the products we produce in the U.S. 
Undoubtedly, we can adjust our business model in other ways, 
but at the end of the day, as the share of imports grows and 
our domestic production shrinks we lose our economies of scale 
and the savings associated with high volume purchases. 
Eventually we could lose the critical mass that makes it 
possible to sustain our manufacturing capability. Equally 
important, we are overdue for a design face-lift that I cannot 
justify given the uncertain long-term viability of our 
manufacturing function. I have made plans for Phoenix to 
survive as a distributor of branded imports. But I am a 
manufacturer from a family of manufacturers. The Arth family 
has been pouring metal and/or building faucets in Cleveland 
since 1894. It is what we know and I would hate to see it end.

    Our original core market, the factory-built HUD Code home 
industry collapsed at the turn of the century and we made our 
first attempt to develop export sales to Mexico in partnership 
with another domestic supplier and a partner in Mexico. That 
effort failed and we shelved the project until after the Great 
Recession. For the last four years we have made a more 
concerted effort to sell our products to the social housing 
market in Mexico and as any exporter will tell you--starting 
out is something short of trial by fire.

    I am proud to be here representing not only my company, but 
also the Small Business Exporters Association (SBEA)--the 
largest and oldest nonprofit association in the country 
dedicated exclusively to small and mid-size exporters, and is 
the international trade arm of the National Small Business 
Association (NSBA). I was familiar with SBEA and asked for 
their advice on initiating an export sales effort. They 
suggested that I first consult the U.S. Export Assistance 
Center (USEAC) for assistance.

    In March 2009, I contacted the Cleveland USEAC office. It 
took two months before we managed to arrange a meeting with a 
Commercial Officer at our facility. We exchanged frequent 
emails and phone calls but did not accomplish much for over a 
year. In Sept. 2010 a new Commercial Officer named Jay Biggs 
was assigned to our case. I mention Mr. Biggs by name because 
he did a great job for us during him time in Cleveland and in 
my mind deserves commendation. He succeeded in getting useful 
information from the Commercial Specialist in the U.S. Embassy 
in Mexico City. He also suggested that I attend a trade 
conference sponsored by the Department of Commerce.

    The Trade Winds Forum on Mexico & the Americas was held in 
Mexico City in April 2011. It was an excellent program that 
included a number of very informative workshops and seminars. 
The networking events provided contacts that may prove valuable 
in the future. As part of the program, I also had four Gold Key 
appointments, one-on-one meetings with prospective foreign 
customers that had been arranged by the embassy staff. The 
Commerce Department's Gold Key program accomplishes many of the 
factors that SBEA believes are important--it cuts transaction 
and opportunity costs, it helps minimize fear factors and it 
aids in assessing upside potential. The companies appeared to 
be solid prospects and I left the conference encouraged that we 
could finally begin to establish a market in Mexico. 
Unfortunately, after the conference it was difficult to get 
ongoing support from the Commercial Services staff in Mexico 
City and in June, a couple of months after the conference, Mr. 
Biggs was transferred to Guangzhou--leaving us without our 
primary stateside resource.

    I should also mention that during the Trade Winds Forum, I 
met with the Senior Commercial Officers (SCO) from Argentina, 
Chile, Columbia, Costa Rica, Dominican Republic and Panama. 
Several of the SCOs were enthusiastic about our market 
opportunities in their countries. Due to our limited resources, 
however, I chose to focus our attention on the Mexican market 
so that we can offer complete service and support when the time 
comes. Perhaps we would be further along with sales in Columbia 
or elsewhere had I elected to pursue multiple markets at once.

    In order to pursue sales in Mexico, we asked Commercial 
Services for assistance in identifying a sales representative 
in that country, who we would pay for their services in selling 
our products on our behalf. In July 2012, over one year later, 
we did receive one referral but it was not a practical option, 
as the sales organization wanted significant up-front payments 
for investigation and development that we deemed impractical. 
So now we are working with U.S. industry contacts to identify 
prospective Mexican sales agents.

    Determined not to give up, eventually the Cleveland USEAC 
and U.S. Small Business Administration (SBA) arranged a meeting 
with the Export-Import Bank of the United States (Ex-Im Bank) 
that provided critical insight and information about 
establishing our terms of sale and how to ensure we get paid. 
They also connected us to Global Target, an educational program 
offered by the Global Business Center at the Monte Ahuja 
College of Business at Cleveland State University. This program 
broadened our knowledge and helped us identify further 
resources to assist us.

    The State of Ohio also provided assistance. The Ohio 
Department of Development has a robust International Trade 
Division. We have received a great deal of support from the 
International Trade Advancement Center (ITAC) especially with 
respect to NAFTA compliance, county of origin training and so 
forth.

    The bottom line is that--despite receiving some valuable 
assistance and training--two years after my initial trip to 
Mexico we are still trying to make that critical connection 
that will make the next steps possible.

    Challenges of Exporting for Small Businesses

    I have never been one to complain--I'm too busy running my 
business, but in looking to craft policy to bolster exporting 
from small- and mid-sized enterprises (SMEs), it is critical to 
understand the vast differences between large and small 
companies and the inherent competitive disadvantages small 
firms face when looking to go global.

    Large companies in the U.S. are, for all practical 
purposes, fully globalized. They have a good sense of where 
their export markets are and what is needed to sell in those 
markets. They know where to go to finance their foreign sales 
and have the resources to handle common types of foreign trade 
barriers to U.S. exports. The situation among small and mid-
sized companies in our country is dramatically different.

    The economic difficulties over the past few years, coupled 
with ongoing outsourcing, have put small businesses at a 
distinct disadvantage in the global economy. NSBA and SBEA have 
been urging for years--decades, even--that more must be done to 
emphasize the needs of small business within the scope of U.S. 
trade in order to enhance exporting opportunities for small 
U.S. companies.

    According to the SBEA's 2010 Small Business Exporting 
Survey, among those small-business respondents not currently 
exporting, the largest barrier is information. Thirty-eight 
percent of non-exporters said they don't know enough about 
exporting and aren't sure where to start. Twenty-eight percent 
cited concerns over getting paid from a foreign costumer. When 
asked whether they would be interested in exporting if some of 
these concerns were addressed, 43 percent said they would. 
Interestingly, those small businesses currently exporting named 
the same top two challenges, but in reverse order.

    For a new product or a new market, the learning curve can 
be pretty steep especially when most smaller companies, such as 
Phoenix Products, have only a few key people working on export 
transactions. According to the SBEA's Exporting Survey, an 
overwhelming majority, 96 percent, of small exporters handle 
exporting operations within the company--only four percent use 
an export management company. The time that we devote to an 
export transaction is time that we won't be devoting to some 
other, equally important business operation. You have to 
wonder--especially in my case, after two years of no results, 
is it even worth it?

    So while we have learned a great deal, I have yet to make 
our first sale in Mexico. Despite persisting steadily we remain 
frustrated by the lack of progress. I anticipate making the 
necessary connections this year, but I will be relying on 
contacts made through industry associates and not any of the 
governmental support organizations.

    So Phoenix Products is the poster child for ``Disappointed 
and Disillusioned Exporters.''

    What insights or suggestions can be derived from our 
experience?

    Improve Technical Assistance and Coordination

    Let me begin with the obvious: developing foreign markets 
is a challenge, especially for a small firm with limited human 
and financial resources. There are cultural factors to learn, 
language barriers, legal snares and obstacles, and the complex 
array of logistical and governmental issues surrounding cross-
border trade. We have had to learn a great deal about Mexican 
labor laws and their VAT, about NAFTA and international 
logistics. We are still trying to identify a sales 
representative or other partner in Mexico that will present and 
promote our products to our target customers.

    We could not have made any progress without expertise and 
training. The Cleveland USEAC was very helpful in linking us to 
educational resources, the Ex-Im Bank and the Trade Winds 
Forum.

    In our dealings with the Department of Commerce we have 
seen very uneven levels of responsiveness and support. The 
Cleveland USEAC was initially ineffectual, then actively 
promoting our efforts and now responsive to us when asked but 
unable to help us make that critical connection with a Mexican 
entity to promote our products.

    The Trade Winds Forum on Mexico & the Americas was a great 
success. It was under-priced; actually it turned out to be 
free. The fee was only $1,650 for the conference and four Gold 
Key meetings complete with a driver and translator. At that 
price it was a steal. But then, First Energy, our local 
electric utility, subsidized the full amount.

    My advice is do not give away valuable support services; 
charge a fair price at the front end so you can afford to 
provide sufficient support to move us along if there is an 
opportunity. I think it is a mistake at any time, but 
especially now, to charge too little as was the case with this 
conference. I wonder if part of my problem getting follow-up on 
support was an overload created by a program that was under-
priced. Developing export markets is expensive and the 
Department of Commerce might be able to offer better support if 
they set the bar higher at the front end and had fewer, but 
more committed clients.

    There are many resources available at the federal, state 
and local level but it is extremely hard to figure them all 
out. We have dealt with:

         The U.S. Commerce Department: USEAC and 
        Foreign Commercial Services
         SBA with respect to the Ex-Im Bank
         Ohio Department of Development--International 
        Trade Division
         The Northeast Ohio Trade & Economic Consortium 
        (NEOTEC) and its affiliate International Trade 
        Assistance Center (ITAC)
         Global Target Business Center at Cleveland 
        State University

    The good news is that these organizations seem to work 
together well. USEAC brought in the SBA and Ex-IM Bank on my 
behalf. They directed me to Trade Winds Forum on Mexico & the 
Americas. In the Global Target program all the named 
organizations were participants and collaborators. Equally 
important is that these public entities included and embraced 
private sector providers and advisors.

    Theoretically, most of the local organizations are 
overlapping with the Department of Commerce. But as a practical 
matter they have proven better able to provide more in depth 
service and support. Although I have not felt that I had too 
many choices for the same service, it is more a case of having 
various providers for different services. Knowing who to call 
for what is the trick.

    It is important to realize that most small exporting 
companies will not be interacting with agency officials in 
Washington; they will be dealing with lower-level government 
officials in federal offices across the country. These 
officials must be fully invested partners in the President's 
National Export Initiative: well-recruited, well-trained, and 
well-incentivized to think broadly about exporting and helping 
local exporters succeed. Accountability for successes and 
failures must reach down to the local level.

    With more than twenty federal departments and agencies 
playing some role in international trade, it is important that 
SME's have a place to turn. Many of these agencies overlap and 
offer duplicative services. I would recommend a One-Stop Shop--
ideally the Department of Commerce and more specifically the 
International Trade Administration (ITA)--create a centralized 
staff dedicated to field small business ``how to'' calls on 
exporting and to assist small businesses in transferring their 
exporting thoughts and ideas into reality. It would be 
beneficial to develop a ``beginning-to-end'' focus on each 
company--staying with a company from initial inquiry through 
the completion of the transaction and any necessary follow-up.

    Increased coordination between agencies will help more 
small businesses access the tools they need to export--enhanced 
export training and technical assistance are key. Especially 
for small companies that are new to exporting and those with 
specialty products for exotic markets, there are undeniable 
fear factors, knowing exactly where to go and who to call could 
alleviate some of this anxiety. Cross-agency outreach guides 
and learning materials on the intended foreign markets with 
virtual marketplace and virtual trade missions would make it 
easier and less expensive for small businesses to reach foreign 
partners.

    Interpreting and comprehending government regulations has 
proven to be another challenge that exhausts a small firm's 
human resources and even drains our wallets when we have to 
turn to outside professionals. It should come as no surprise 
that the results from the SBEA Exporting Survey shows that 
fifty-four percent of SME's export to less than 5 countries. 
Foreign laws and regulations can change daily, making it 
increasingly difficult for a small business to stay up-to-date 
on when and how to comply with these regulations, and it acts 
as a deterrent to explore new markets. Currently, I am having 
problems identifying the applicable plumbing standard 
accrediting bodies in Mexico for a product as simple as a 
kitchen faucet.

    SBEA and I encourage you, Mr. Chairman, to reintroduce your 
legislation from the 112th Congress, H.R. 5513, the Transparent 
Rules Allow Direct Exporting (TRADE) for Small Businesses and 
Jobs Act. As you know, the measure would direct the pertinent 
agencies to monitor and collect up-to-date information on 
tariff and non-tariff laws, regulations, and practices. It will 
then be presented in a clear and easy-to-read format, and will 
serve as a resource for businesses looking to enter a new 
market. I would recommend that this information is then 
published on one centralized website.

    Promote Free Trade Agreements

    Free trade agreements are extremely important as they lower 
foreign barriers to our exports and produce a more level 
playing field. It is critical the president has the authority 
to negotiate trade agreements through Trade Promotion Authority 
(TPA). TPA, which expired in 2007, is critical to the passage 
of trade deals through Congress because it allows the 
agreements to advance under ``fast track'' rules with no 
amendments. New and expanded market access through trade 
agreements has been an important catalyst for increased small 
business exports.

    At Phoenix we consider selling into Canada to be a routine 
matter, the paperwork is simple and the logistics network is 
just an extension of our normal domestic carriers. Canada is 
not a huge market for our products, but we have national 
distribution through Canadian and U.S. wholesalers.

    NAFTA is the critical factor that makes it possible for us 
to seriously pursue business in Mexico. We will face 
competition from Asian suppliers in Mexico but their products 
are subject to significant import duties. The fact that our 
products are duty free under NAFTA makes our products cost 
competitive and improves our prospect for success.

    Expand and Improve Export Finance

    The Ex-Im Bank is also an important part of our export 
strategy. To be competitive we need to offer credit terms to 
prospective customers. Until I met with the Ex-Im Bank I didn't 
know how we could prudently extend credit. With their support, 
I am confident we can offer competitive terms to qualified 
buyers and be assured of collection in the long-term.

    Phoenix Products has adequate financial resources to 
support our expected growth through export sales. But should we 
achieve success beyond our wildest dreams, the working capital 
loans available through the Ex-Im Bank could also proved to be 
an essential contributor to our success.

    The Ex-Im Bank is self-supporting and actually has 
generated excess revenues of nearly $2 billion dollars over the 
last 5 years. I cannot understand why the reauthorization of 
its lending authority has been so controversial. It is crucial 
the Bank maintain its congressionally approved lending 
authority allowing the Bank to operate without restrictions, so 
companies, such as Phoenix Products, have the certainty and 
predictability we need to level the playing field and compete 
in the international marketplace.

    Additionally, more focus needs to be on Ex-Im meeting and 
maintaining the 20 percent mandate of financing dollars going 
directly for small business. Congress should not allow the 
percentage to drop below 20 percent or re-definitions of Ex-Im 
``financing'' that are indirect (i.e. via suppliers). New 
formulas that turn the 20 percent into a goal rather than a 
mandate, or allow Ex-Im to avoid the mandate--as it has in the 
last couple of years--should not be an option.

    Stepping back a little, we need to realize that Ex-Im is 
the ``bank of last resort'' or even ``bank of only resort'' 
because relatively few U.S. commercial banks finance exports 
and most of those that do prefer to deal with larger companies.

    On a more broad scale, we need to get more community banks 
into export finance and educate them on available government 
lending programs so they can better advise their small business 
customers who are considering exporting. This can be achieved 
by streamlining paperwork, externalizing some of the banks' 
administrative costs for smaller export finance deals, 
providing export finance training, enhancing outreach to banks 
on the benefits of trade finance and improving bank recruitment 
practices.

    The U.S. financial sector is far less engaged in world 
trade than the financial sectors in Europe, Asia and other 
parts of the world, where banks themselves encourage business 
customers with promising products to export. To truly step up 
American exports, our banks must do more.

    Conclusion

    While there is no doubt that some of America's biggest 
companies can continue to increase their exports, the largest 
untapped resource for American exports is small and medium-size 
companies. SME's struggle with real and perceived challenges to 
exporting. Just over one percent, or 287,000, of the 
approximately 27.9 million small businesses in the U.S. 
currently export. Although the number of small exporters has 
been steadily growing their share of overall U.S. exports--34 
percent in 2010, up from 27 percent in 2002--exporting is still 
not as much a part of the business culture in the U.S. as it is 
worldwide.

    Many SME's think exporting is too burdensome or too risky, 
or they just do not know where to start. As highlighted 
throughout my testimony, some of the top barriers for small 
exporters are: (1) problems identifying foreign business 
opportunities and federal export assistance resources, (2) 
limited information on how to analyze foreign regulations and 
contact potential foreign customers, and (3) the need for 
external financing in order to undertake an export transaction. 
Federal and state agencies play an important role in helping to 
reduce these types of exporting barriers for small businesses. 
Lowering more of these barriers will help small exporters tap 
into new market and grow.

    Given the specter of a jobless economic recovery and 
lagging consumer spending, exporting holds many opportunities 
for small businesses during the domestic economic malaise, and 
supports long-term domestic growth and job development. Though 
small business exports represent less than five percent of the 
GDP, with aggressive support from the U.S. Government this 
contribution would be significantly increased.

    Let me conclude with several key points:
         Developing viable export markets for our 
        products improves our long-term ability to manufacture 
        products in Ohio.
         Free trade agreements, especially NAFTA and 
        others with Latin American countries, promote exports 
        and jobs here in the U.S. by increasing emerging 
        economies' ability to purchase U.S. goods and services.
         The Ex-Im Bank is a self-supporting entity 
        that promotes foreign trade through its credit and loan 
        guarantees and working capital support. It is crucial 
        the Bank maintain its congressionally approved lending 
        authority allowing the Bank to operate without 
        restrictions.
         Charge a fair price for the services provided 
        so there can be adequate resources to support your 
        customers.
         The USEAC has provided advice and connected us 
        to education and training. So far the Department of 
        Commerce has not been able to provide the level of 
        support we needed to establish a presence in Mexico. 
        They have taken us most of the way, we still need that 
        final connection to a Mexican based sales 
        representative or distributor to get it started.
         Increased coordination between agencies--
        including a One-Stop Shop--will help more small 
        businesses access the tools they need to export. 
        Enhanced export training and technical assistance are 
        key.

    Again, I would like to thank Chairman Tipton and the 
members of the Subcommittee for the opportunity to speak today. 
I would be happy to answer any questions you may have.
                 Statement of Congresswoman Grace Meng

    Over the last few decades, our world has become 
increasingly connected. Businesses that are unable to adapt to 
the new and future economy will find it difficult to keep up. 
Globalization has realigned the way in which our nation, and 
the world, does its business. The increased access to world 
markets has provided a great opportunity for businesses in our 
country, yet only 1 percent of small businesses currently 
export their products. I agree with the many Members and our 
witnesses who spoke before me, that we must improve, and break 
down, barriers to export for U.S. small businesses. We need to 
cut away the red tape, and educate our communities on the 
benefits to becoming involved in, or at least considering, the 
export of their goods.
    For companies with the resources to enter it, the 
international market has proved to be very beneficial. But that 
first step is the most difficult; and I believe there are ways 
for us in Congress to improve the ExportImport Bank and the 
Small Business Administration's ability to educate and reach 
out to small businesses. This type of proactive outreach will 
only serve to improve small businesses' opportunities in the 
global marketplace.
    When entering the world market, a small business owner must 
make that decision carefully; doing so may not be the right 
decision for every small business owner; and is not a decision 
that should be made haphazardly. But, if a small business 
decides exporting is in its best interest, we should make sure 
that the resources exist for them to succeed. The benefits of 
U.S. businesses that decide to export are clear--small 
businesses that exported averaged a 37 percent revenue growth 
from 2005 to 2009, compared to a 7 percent decline for small 
businesses that did not.
    As I've said many times before, small businesses are 
absolutely essential to the recovery of our economy and the 
strength of our nation's workforce. Let us ensure that 
America's small businesses have the resources they need to 
compete in a global environment, and that the federal 
government can be an ally in their success, not a hindrance.

                                 
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