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



 
    SMALL BUSINESS TRADE AGENDA: STATUS AND IMPACT OF INTERNATIONAL 
                               AGREEMENTS

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

                                HEARING

                               before the

             SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                            JANUARY 28, 2014

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 113-052
              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 LUETKEMEYER, Missouri
                     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. Richard Hanna...............................................     1
Hon. Patrick Murphy..............................................     2

                                WITNESS

Mr. James Sanford, Assistant United States Trade Representative 
  for Small Business, Market Access and Industrial 
  Competitiveness, Office of the United States Trade 
  Representative, Washington, DC.................................     4

                                APPENDIX

Prepared Statements:
    Mr. James Sanford, Assistant United States Trade 
      Representative for Small Business, Market Access and 
      Industrial Competitiveness, Office of the United States 
      Trade Representative, Washington, DC.......................    20
Questions and Answers for the Record:
    Questions and Answers to Mr. Sanford from Representative 
      Tipton.....................................................    24
    Questions and Answers to Mr Sanford from Representative 
      Mulvaney...................................................    26
Additional Material for the Record:
    Statement for the Record of Terence P. Stewart, Managing 
      Partner, Law Offices of Stewart and Stewart................    29


    SMALL BUSINESS TRADE AGENDA: STATUS AND IMPACT OF INTERNATIONAL 
                               AGREEMENTS

                              ----------                              


                       TUESDAY, JANUARY 28, 2014

                  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. Richard Hanna 
[chairman of the subcommittee] presiding.
    Present: Representatives Hanna, Mulvaney, Luetkemeyer, 
Huelskamp, and Murphy.
    Chairman HANNA. Good morning, everyone. Mr. Murphy is on 
his way, but in the interest of time I think we will just 
proceed, at least with my opening statement and then the 
ranking member will have an opportunity when he gets here to 
read his own.
    Mr. Tipton is the normal chairman of this Committee. He has 
a family situation and is home in his district. I agreed to 
take his place, which I am pleased to do, but I know he wished 
he could be here. It is a subject that he is very familiar with 
and feels strongly about.
    I want to thank the assistant trade representative for 
taking the time to participate in today's hearing. Mr. Sanford, 
thanks for being here.
    This hearing comes at a point in time when we have a number 
of trade policy initiatives in the pipeline, including the 
possible renewal of the Trade Promotion Authority (TPA). In 
addition, later on today the president will deliver his State 
of the Union Address outlining his vision and priorities for 
the upcoming year. I know many businesses are interested to 
hear if the president will make trade a priority.
    Last year, our Committee held a hearing with a diverse 
panel of small businesses on their international trade policy 
priorities and how to best increase exports and create new jobs 
here in the United States. All of our witnesses stress the 
importance of international trade agreements to help grow their 
exporting capacity and better compete in the global market. 
They pointed to various multilateral and bilateral agreements 
as opportunities to open new markets for their products and 
services. These agreements will help remove complex trade 
barriers, protect their intellectual property, and streamline 
the trade process. As you know, the administration has 
estimated the Trans-Pacific Partnership (TPP) will help spur 
our exports, rapidly growing the Asian market, and create an 
estimate 3.5 million jobs right here in the United States.
    Our Committee understands the importance of these trade 
agreements and the opportunities they could provide for small 
firms. In 2012, my home state of New York exported over $81 
billion in goods which helps to support thousands of good-
paying jobs.
    This brings me to a couple of key points. First, when 
conducting trade negotiations, the USTR needs to work in close 
coordination with Congress and small business to ensure that 
the stakeholders are prepared to take advantage of such 
agreements. If the administration seeks to renew trade 
promotion authority, they need to build and gain the trust of 
Congress and the private sector to ensure that their issues and 
concerns are being addressed. And second, I encourage the USTR 
to work more closely with federal and state trade agencies to 
communicate those opportunities to domestic exporters and to 
help address their current export barriers. Increasing agency 
coordination will help support small business firms increase 
their exports to those countries and therefore create new jobs 
and hopefully good paying jobs.
    Today we will hear directly from the Office of the United 
States Trade Representative on the status of current 
negotiations and how they are working to help small firms 
export. And as I have said before, we need leadership from the 
administration to make these agreements a priority. We cannot 
sit on the sidelines while other countries negotiate trade 
agreements that put our businesses and our competitiveness at a 
disadvantage.
    Again, I want to thank our witness today for his 
participation. I now yield to Ranking Member Murphy for his 
opening remarks.
    Mr. MURPHY. I would like to thank the acting chair, Mr. 
Hanna, for your opening statement, and I want to wish you a 
Happy Birthday. We know you just celebrated that.
    I appreciate the honorable assistant USTR for his presence 
here today. I am looking forward to hearing and making sense of 
what this administration's ambitious trade agenda means for 
small businesses.
    With three-quarters of the world's purchasing power located 
outside the United States, access to foreign markets is no 
longer optional but essential for businesses of all sizes to 
grow and create jobs. Studies consistently demonstrate that 
when given a fair chance, small business can benefit 
significantly from trade. Indeed, 98 percent of U.S. firms that 
export have fewer than $500 employees. These companies are 
responsible for fully one-third of American-made products that 
are sold abroad. When small and medium sized firms are able to 
take the leap and begin selling their products abroad, there 
are important tangible economic benefits here at home. 
Businesses that export their products abroad create twice as 
many jobs as those that do not. Workers at globally engaged 
firms make wages 15 percent higher than employees of companies 
that have not reached into foreign markets.
    In Florida, international trade has long been an important 
component of our economy. The Port of Palm Beach, just next 
door to my district, Florida's 18th District, generates over 
$261 million in economic activity for the greater region. This 
includes 2,500 direct and indirect jobs related to the port and 
shipping industries and more than $12 million in local and 
state taxes. Statewide, cargo activity associated with Florida 
seaports accounts for nearly 100,000 port-related jobs, 
supports more than 454,000 other jobs, while generating $24 
billion in personal income and $66 billion in business 
activity.
    While small businesses are increasingly looking to foreign 
markets as a growth opportunity, there remain a number of 
hurdles. The vast majority of small businesses that do export 
send their products to only one market, often, our Canadian 
neighbors. For small companies to fully reap the benefits of 
trade, it is important they diversify and tap into rapidly 
emerging economies in Latin America, Asia, and other parts of 
the world. Small firms that have not yet begun exporting spend 
months preparing before they start and make significant 
expenditures, often more than 8 percent of their operating 
budget laying the groundwork. Without the scale and resources 
of their larger competitors, entrepreneurs often turn to 
government technical assistance and other guidance when 
determining how to best capitalize on trade opportunities.
    In that regard, it is important this Committee fully 
understand how government-managed programs are meeting small 
business owners' needs. Also, it is important to understand 
where government falls short or is counterproductive. Whether 
it is access to capital, research on foreign markets, or 
similar services, these initiatives must be efficient and 
effective in helping entrepreneurs compete abroad. With a range 
of export assistance initiatives scattered throughout different 
agencies, including the SBA, it is vital that we ensure they 
are functioning and complementary and not duplicative manner. 
Likewise, this Committee has an important role to play in 
examining how various free trade agreements impact small firms' 
export efforts. Too often, trade agreements have made small 
businesses' needs an afterthought rather than a central pillar 
of discussion. While small firms stand to benefit from trade 
agreements that open new markets, an influx of new imports can 
serve to undermine local manufacturers and producers. Likewise, 
foreign markets often present a maze of new regulations that 
are difficult to navigate for smaller companies. It is critical 
that future trade agreements take into account these 
difficulties.
    In a global economy, companies can no longer afford to 
think only locally. With job creation remaining the top 
priority for American people, trade and exporting of U.S. goods 
remains a promising avenue for spurring growth and creating 
good-paying jobs right here at home.
    To achieve that goal, export assistance programs need to 
function smoothly, and any future trade agreements are 
cognizant of the unique challenges small firms face as they 
work to sell their products abroad. It is my hope that today's 
hearing can shed important light on these topics.
    Thank you again for being here, and I yield the balance of 
my time.
    Chairman HANNA. Thank you.
    I want to take a moment and welcome some young people and 
their professors from Colgate University, one of our country's 
premier universities in my district. Thank you guys for being 
here.
    Our first and only witness today is Jim Sanford, Assistant 
U.S. Trade Representative for Small Business, Market Access, 
and Industrial Competitiveness. In his role, he manages U.S. 
trade policy activities relating to small exporters. Mr. 
Sanford has 17 years of experience working for the U.S. 
government on trade policy.
    Thank you, sir, for being here. We look forward to your 
testimony. You may begin.

 STATEMENT OF JIM SANFORD, ASSISTANT U.S. TRADE REPRESENTATIVE 
       FOR SMALL BUSINESS, MARKET ACCESS, AND INDUSTRIAL 
      COMPETITIVENESS, OFFICE OF THE UNITED STATES TRADE 
                         REPRESENTATIVE

    Mr. SANFORD. Thank you. Representative Hanna, Ranking 
Member Murphy and members of the Subcommittee, thank you for 
convening this hearing and for the opportunity to testify on 
the work of the Office of U.S. Trade Representative to expand 
exports for U.S. small businesses.
    Under President Obama's leadership, USTR is working closely 
with our interagency partners to help American businesses of 
all sizes seize export opportunities and acquire the resources 
necessary to succeed in the global marketplace. USTR is 
pursuing a robust trade agenda that supports small businesses 
and broader economic growth by tearing down barriers and 
creating overseas opportunities for U.S. farmers, ranchers, 
manufacturers, and services providers of all sizes. We are 
working to level the playing field so that our workers and 
businesses can compete and prosper in the global economy, and 
we are also vigorously enforcing our trade rights and insisting 
that countries fulfill their commitments.
    First, the United States currently has in place free trade 
agreements with 20 countries. These trade deals have broken 
down barriers and pried open markets for U.S. products from 
agriculture to manufacturing to services.
    Secondly, USTR is pursuing new trade agreements that, when 
combined with existing FTAs, will represent two-thirds of 
global trade. In the Asia-Pacific region, USTR is negotiating 
the Trans-Pacific Partnership (TPP) with 11 other countries--
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New 
Zealand, Peru, Singapore, and Vietnam. The TPP will cut tariffs 
and break down non-tariff barriers, resulting in significant 
economic benefits for the United States. In fact, the Peterson 
Institute projects that the TPP will generate an additional 
$123 billion in U.S. exports. The TPP will provide new market 
access, streamline customs procedures, increase regulatory 
transparency, and strengthen intellectual property rights 
protections. These outcomes will be of particular benefit to 
small businesses.
    USTR is also negotiating the Transatlantic Trade and 
Investment Partnership (T-TIP). This is an agreement with the 
European Union. T-TIP will be a high standard, comprehensive 
trade agreement aimed at strengthening a partnership that 
already supports $1 trillion in two-way annual trade, $4 
trillion in investment, and 13 million jobs on both sides of 
the Atlantic.
    In the WTO, we are working to expand U.S. export 
opportunities around the globe. The recently concluded WTO 
Trade Facilitation Agreement, once implemented, will reduce red 
tape and bureaucratic delay for goods shipped around the world. 
Again, U.S. small businesses will be among the biggest 
beneficiaries of this deal. USTR is also leading efforts in 
Geneva to advance negotiations to substantially liberalize 
trade in information technology products, services, and 
environmental goods. These plurilateral agreements, once 
implemented and completed, will help level the playing field 
and significantly expand opportunities for American technology 
and services firms of all sizes.
    Of course, to actively and effectively pursue these 
initiatives, the Administration will need trade promotion 
authority. We welcome the introduction of the bipartisan 
Congressional Trade Priorities Act of 2014 as an important step 
towards Congress updating its important role in trade 
negotiations. We look forward to working with Democrats and 
Republicans in Congress throughout the legislative process to 
pass TPA legislation with as broad bipartisan support as 
possible.
    Third, USTR is pursuing important initiatives in regional 
fora to address challenges that face small business exporters. 
In the Asia-Pacific Economic Cooperation or APEC forum, for 
example, the United States and other members are advancing 
initiatives to assist U.S. companies to participate in global 
supply chains, address localization barriers, and promote 
greater regulatory coherence. In the Western Hemisphere, USTR 
is collaborating with other agencies, including Departments of 
Commerce and, State, and the Small Business Administration to 
connect more small businesses to regional partners and to 
foster entrepreneurship.
    Fourth, USTR is also vigorously enforcing our trade 
agreements. The Interagency Trade Enforcement Center (ITEC) 
significantly enhances the Administration's capabilities to 
aggressively challenge unfair trade practices around the world.
    And finally, we are working to communicate more effectively 
how our trade policy initiatives can benefit U.S. small 
businesses. Ambassador Froman and the entire USTR team continue 
outreach to small businesses around the country to highlight 
export opportunities that we have created and to learn more 
about the new trade challenges and how we may help. USTR is 
committed to partnership with other federal agencies to help 
small businesses compete and succeed in the global economy.
    Thank you for this opportunity to testify about USTR's 
efforts.
    Chairman HANNA. Both Mr. Mulvaney and Mr. Luetkemeyer and 
Mr. Huelskamp, I know that at least two of them have 
engagements, and I am grateful that they are here. So in the 
interest of time I am going to ask Mr. Mulvaney to ask whatever 
question he may have first.
    Mr. MULVANEY. Thank you, Mr. Chairman. I appreciate that 
accommodation.
    Thank you, Mr. Sanford. Let us skip over TPA and talk about 
the Trans-Pacific Partnership for a little bit. And I am 
satisfied that generally speaking it is going to benefit small 
businesses, not only in my district but across the nation. I 
generally favor most of the concepts that are contained in the 
Trans-Pacific Partnership, but I want to talk specifically 
about Vietnam. Because when you go down the list of countries 
that are in this discussion, I do not know much about Brunei, I 
fully admit that, but I know a little bit about Vietnam, and it 
seems like this is probably the most closed economy in the T-
TIP, and perhaps that we have discussed having a large trade 
agreement with in a long time.
    Tell me how you intend to deal with, number one, currency 
manipulation in Vietnam in relationship to the Trans-Pacific 
Partnership, and number two, with the large number of state-
owned enterprises in this communist nation.
    Mr. SANFORD. Thank you, Congressman.
    This TPP is obviously a major priority for Ambassador 
Froman and USTR right now. We are working very hard to conclude 
that negotiation. Currency is an important issue. We appreciate 
the interest the Congress and many stakeholders have in this 
particular issue. This is an issue that we continue to consult 
with Congress about how we possibly address this within the 
context of TPP.
    Mr. MULVANEY. Give me some ideas. One of the questions I 
get back home from the folks who are going to now be competing 
for business in Vietnam, which they like, and they will be 
competing with firms from Vietnam, which they believe will make 
them better, but they keep asking me, Mr. Mulvaney, how are you 
all going to deal with the fact that these currencies do not 
freely trade? How do you all propose to address that?
    Mr. SANFORD. Let me say, this is an issue that the Treasury 
is the lead on, so I defer to Treasury. They are part of this 
discussion that we are having about how we may try to address 
this. But unlike USTR where we are developing the trade policy, 
when it comes to currency manipulation and currencies issues--
--
    Mr. MULVANEY. Is there any language in the drafts that you 
have seen that specifically address this currency manipulation 
in the Trans-Pacific Partnership?
    Mr. SANFORD. Not with which I am familiar, but that is not 
something I am working on to be candid with you.
    Mr. MULVANEY. Okay. Secondly, the number of state-owned 
enterprises, again, many of my businesses are happy to compete 
with other folk who are trying to make a profit. It sort of 
changes the analysis when you are starting to compete with a 
company that is owned by the government and is not driven by 
that same profit motive. What protections, if any, are you all 
providing for in the Trans-Pacific Partnership to deal with 
state-owned enterprises generally, or specifically, in Vietnam?
    Mr. SANFORD. Well, Congressman, as you probably know, there 
is an ongoing discussion or negotiation on provisions that 
would apply to state-owned enterprises, disciplines that would 
in effect constrain the activities of these state-owned 
enterprises. That is ongoing negotiation. But this is clearly a 
priority for us in the context of TPP with countries like 
Vietnam, and frankly it will be a priority for us even in 
negotiations with T-TIP because our interest is in ensuring 
that throughin negotiations we do in the future vis-a-vis third 
countries have these disciplines that we are building up.
    Mr. MULVANEY. Would you agree with me generally, Mr. 
Sanford, that competing with another profit-based business is 
different than competing with a state-owned enterprise?
    Mr. SANFORD. I would agree, and that is why we are putting 
a premium on developing some strong provisions in TTP that 
could help discipline the activities----
    Mr. MULVANEY. I am going to ask you a brief question about 
a local issue which is textiles in Vietnam. I do not know if 
you are familiar with it. If you are not, please just tell me. 
But we are dealing with a situation here where Vietnam wants to 
institute a new rule called the Single Transformation rule, 
which essentially says that they can bring something in from 
China, possibly heavily subsidized, make a very small change to 
it, and then export it into the United States under the terms 
of the Trans-Pacific Partnership. Are you concerned about that 
backdoor to cheap Chinese imports, subsidized imports? And if 
so, what are you doing about it?
    Mr. SANFORD. Obviously, textiles is a particularly 
sensitive negotiation that we are having with Vietnam in terms 
of the market access. I am not intimately involved with the 
textiles negotiations. I have a colleague who is the chief 
textile negotiator.
    Mr. MULVANEY. Then let me cut you off, Mr. Sanford, and I 
appreciate that. If you do not know, you do not know. I accept 
that answer.
    Let me deal with something maybe you do know more about, 
which is one of the largest complaints I get from small 
businesses back home when they deal with exporting is something 
you mentioned in your written testimony, which is the 
difficulty of dealing with non-tariff barriers. Their stuff 
gets stuck at the border, and you speak a couple different 
places in your testimony about what you are doing to help sort 
of level the playing field, increase transparency. Can you take 
the last minute of your time, please, and tell us a little bit 
more about what you are doing to help small businesses in that 
realm?
    Mr. SANFORD. Yeah, I think this is something we are trying 
to tackle in a number of different forums, whether it is TPP. 
In APEC we have done some work in terms of trying to come up 
with uniform documentation, for instance. The WTO Trade 
Facilitation Agreement, which was just done to provide more 
transparency in terms of documentation requirements, sets 
certain timeframes in which materials need to be--your exports 
need to be released. So I think what I would say is this is a 
topic that we recognize as particularly disadvantageous for 
small businesses, and whatever policy vehicles we may be able 
to address this in, whether it is a formal negotiation like the 
WTO Trade Facilitation Agreement or TPP, we are pursuing it 
there, but also in contexts like APEC.
    Mr. MULVANEY. At the risk of overstaying my time, I would 
simply encourage you on behalf of many members who have spoken 
to me, make sure that those efforts are real and they have 
teeth. I recognize the fact we pay lip service to it, and I 
think that is a good first step. But if we are not actively 
enforcing the rules on non-tariff barriers, our small 
businesses will continue to struggle. One of the reasons they 
do not export to many countries or many businesses within a 
specific country is it is just too hard to do.
    Mr. SANFORD. Yes. I was focusing more on the customs angle, 
but I think the bigger issue is the non-tariff barriers and 
that is something, especially when you look at something like 
the regulatory requirements that countries may have, we 
recognize this as a fundamental challenge for small businesses 
where they may lack the in-house resources to fully understand 
what is required in terms of complying with the foreign 
regulations, let alone getting the product tested. If they do 
not have guaranteed future exports, there is some cost up front 
that can deter them from making those kinds of sales. So I just 
want to emphasize that this is a particular priority for us. We 
understand that these are challenges for all firms, but things 
like the customs challenges or a lot of these non-tariff 
barriers, we recognize these are particularly 
disproportionately impacting small businesses, and whatever we 
can do is most helpful for them.
    Mr. MULVANEY. Thank you, Mr. Sanford.
    Mr. Chairman, thank you again. I apologize for going over 
time.
    Chairman HANNA. No, you are fine.
    Mr. Luetkemeyer.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman, for your 
indulgence.
    Mr. Sanford, following up on Mr. Mulvaney's questions, to 
me one of the concerns I have is the enforcement. I mean, we 
can do great things with the--and I will get into some 
questions in a minute with regards to some of the treaties that 
we negotiate--but at the end of the day, if we do not enforce 
the provisions of that to protect our people, our companies, 
especially small businesses who do not have the resources to go 
out there and take some of the things that are hurting our 
small businesses, like dumping, for instance, or the currency 
manipulation, what are you doing specifically to enforce some 
of the contracts, some of the treaties that are out here to be 
able to allow the contracts that go on between the small 
businesses and their suppliers or their purchasers to make sure 
that there is an even playing field, they do not become taken 
advantage of, and that the treaty is worthwhile?
    Mr. SANFORD. Congressman, I fully agree. This has certainly 
been a priority for us to focus more resources on enforcement 
activities. And I think in the last four years or so there has 
certainly been an uptick in terms of enforcement activities at 
USTR.
    One thing I would particularly point to, because again, we 
recognize many small businesses lack the resources to put 
together the information that is required to bring a case, for 
instance, is the ITEC or the Interagency Trade Enforcement 
Center that was established a couple of years ago, it is housed 
at USTR. It is largely staffed by interagency detailees, and we 
are continuing to expand its resources. The staffing and 
resources that they have are particularly helpful in putting 
together cases. And I think this is a resource that can be 
tapped more for small businesses that are not able to sort of 
formulate the cases themselves.
    Mr. LUETKEMEYER. Okay. How many cases have you brought?
    Mr. SANFORD. Off the top of my head I cannot----
    Mr. LUETKEMEYER. One? Ten?
    Mr. SANFORD. No. USTR brings a number of cases. I do not 
know what the count may be.
    Mr. LUETKEMEYER. We are getting a lot of generalities here 
this morning, Mr. Sanford. I would like some specifics. I 
really am concerned about this enforcement part because I 
think--I have got a company that I am very familiar with and we 
have a dumping problem and we cannot get it solved. And so 
there has to be an enforcement mechanism here to be able to 
allow fair trade that has been negotiated through this treaty, 
and yet it is not happening. And so what are we doing?
    Mr. SANFORD. Let me make an distinction.
    Mr. LUETKEMEYER. Give me an example of a case that you have 
taken to whatever court or whatever mitigation group there is?
    Mr. SANFORD. I am happy to follow up with you, Congressman, 
with more details. One thing I would make a distinction is I 
think you are talking about dumping cases and I have been 
talking about disputes under say WTO provisions that----
    Mr. LUETKEMEYER. Well, we will take intellectual property 
then. That is another area that is a grave, grave concern. I 
mean, the Chinese are going all over the place with this and 
there are a lot of other countries that are getting involved in 
it as well. I mean, we get information in this Committee about 
the number of attacks on the computer systems of the various 
companies, and now the large companies, their credit card 
divisions are being broken into.
    So IPR is an extremely important thing. What are we doing 
to protect--to pushback on some of the countries that are doing 
these things?
    Mr. SANFORD. Well, we have the special 301 provision that 
is a trade tool that is available to us.
    Mr. LUETKEMEYER. Are you executing it? Are you following up 
on it?
    Mr. SANFORD. Yes. Right now there is a process going 
forward looking at Ukraine. And there are very strong concerns 
about their lack of intellectual property protections.
    Mr. LUETKEMEYER. Are you pursuing a case against them or 
are we----
    Mr. SANFORD. Well, yeah, I mean, there is a possibility of 
taking some trade actions. I do not want to get into the 
details because decisions have not been made, but yes.
    Mr. LUETKEMEYER. Are we taking action against anybody? Do 
you have any actions pending?
    Mr. SANFORD. Congressman, I am not the expert on IPR. I am 
more than happy to take questions you may have and follow up.
    Mr. LUETKEMEYER. Can you point to any enforcement action, 
sir, under anything that you are aware of? Are we taking any 
enforcement action?
    Mr. SANFORD. Congressman, we have a number of disputes in 
the WTO. They are ongoing right now, in IP and outside of IP.
    Mr. LUETKEMEYER. Okay. One more quick question.
    One of the things that if the president does not have trade 
promotion authority, sometimes I am wondering are we playing on 
the same field when we negotiate contracts, negotiate treaties 
with other countries because if he does not have authority and 
the other country knows he does not, are they taking advantage 
of that from a standpoint that they have got our country over a 
barrel from a negotiating standpoint?
    Mr. SANFORD. Well, we certainly can continue to negotiate. 
We will need the TPA to do the deal at the end of the day. I 
think that having TPA does strengthen our hand as trade 
negotiators so that there is less risk that our trade partners 
are withholding the final movements they can make subject to us 
being able to demonstrate we can complete a deal.
    Mr. LUETKEMEYER. One more quick question. Well, my time is 
already expired here. I appreciate the indulgence of the 
chairman.
    You have a number of priorities with regards to things that 
you try and push with regards to small business. Where does ag 
figure in that list of priorities?
    Mr. SANFORD. That is part of what we are trying to do.
    Mr. LUETKEMEYER. Is it number one? Number five? Number 10? 
Where on the list would ag fall within your list of priorities?
    Mr. SANFORD. I am not making a differentiation on that. One 
of the things we are trying to do is that we are ensuring that 
small business interests, whether it is in manufacturing, 
services, or agriculture is being reflected in our trade policy 
activities. And as has been pointed out by the acting chair or 
ranking member, you know, 98 percent of our exporters right now 
are small businesses. So much of what we are focused on is of 
great benefit to small businesses. We are looking at how we can 
ensure that we are doing even a better job at that.
    Mr. LUETKEMEYER. Thank you, Mr. Chair.
    Chairman HANNA. Mr. Murphy.
    Mr. MURPHY. Thank you. Again, thank you for your time.
    I just want to talk just for a minute about some of the 
barriers to entry for these small businesses, because after the 
recent trade deals it seems pretty obvious that the big 
corporations have the infrastructure, that they can easily take 
advantage of some of the free trade agreements. But sadly, it 
seems that it is our government that has actually become a 
burden for a lot of the small businesses. And I do not want to 
argue against the valid role that our government should play in 
supporting and guiding and even cheerleading for American 
companies. But what happens when this sort of patchwork of 
export programs and agencies becomes too burdensome for the 
small businesses and what are your suggestions and ideas for 
how we could perhaps streamline that going forward?
    Mr. SANFORD. Well, I think, obviously, we do not have an 
export promotion program at USTR. I think our interest is in 
ensuring that we are linking the trade policy work we are doing 
with the other federal agencies that have export financing or 
trade promotion programs, and then doing a better job linking, 
as you noted, at the state level or local level to various 
programs they may have.
    Mr. MURPHY. So does that happen before the trade agreement 
is finalized? Does it happen during negotiations? After an 
agreement has been approved? Are you looking back on some of 
our previous deals saying, ``Oh, here is how we can improve,'' 
and perhaps what are some of those things you have learned?
    Mr. SANFORD. Yeah. I mean, it is an ongoing process with 
consultations with various advisory committees that we have, 
both from industry as well as state and local representatives.
    Mr. MURPHY. Do you have a monthly meeting where you get all 
the agencies together or every six months?
    Mr. SANFORD. Well, we have an active interagency trade 
policy staff committee that is our full interagency. There is 
also an interagency that is led by Commerce--the Trade 
Promotion Coordinating Committee, which is more on the 
promotion side rather than the policy side for part of that as 
well. And they interface with the states and some of their 
organizations.
    So I think there are two steps. One is during our 
formulation of our negotiating priorities and our negotiation, 
we need that active engagement and input from the various 
stakeholders we have. And then further down the road in terms 
of the outreach to make stakeholders aware of the opportunities 
that these agreements provide, that is another area where we 
really need to be able to tap into the state and local.
    Mr. MURPHY. Most committees talk about burdensome 
regulations and I agree with that in most cases, but one of the 
things that I really noticed in my one year here is that a lot 
of the agencies are not even communicating; that they do not 
talk. So I think we would all be open, Republican or Democrat, 
to hearing any suggestions you have if we could facilitate 
those meetings, or any ideas you have to improve 
communications. I think that would really help a lot of the 
small businesses.
    Mr. SANFORD. Yeah. Let me point back to the Trade Promotion 
Coordinating Committee, which has been an interagency process 
that was established some years ago and then has had a greater 
role in recent years after the National Export Initiative was 
launched four or five years ago. And I want to stress that is 
an active interagency process where you have OPEC and Ex-Im 
Bank and SBA, so you have got various finance elements. You 
have also got the Department of Commerce and its export 
promotion activities, both domestically and overseas. And there 
has been a lot of effort to better coordinate those activities. 
And then I would say from a USTR standpoint, figure out how we 
can, you know, if these FTAs are providing the new 
opportunities, we would like to see the finance agencies and 
the promotion agencies essentially promoting those new 
opportunities as part of this process.
    Mr. MURPHY. I want to talk just briefly about that Colombia 
Free Trade Agreement. We were told that this was going to 
improve labor practices, labor rights in Colombia, but from 
what I can tell that has not happened to the extent that we 
were told. What is different about this deal? What are we going 
to do to improve it so we can actually enforce it? Is it an 
enforcement issue? Is it because the labor provisions were 
written too weakly or there are exploitable loopholes? Was it 
sequestration that underfunded some of the agencies that could 
not actually go after them? What can we learn and what can we 
improve in TPP so labor practices are improved everywhere; that 
it is not a race to the bottom?
    Mr. SANFORD. Well, certainly the labor provisions in any of 
our FTAs is a priority for us. I mean, Colombia is a relatively 
very recent FTA and folks are still working on the 
implementation of these, ensuring the provisions are being 
applied. I am not familiar with what the issues may be there, 
if things are being investigated or not. But happy to follow up 
if you have specific questions on that.
    Mr. MURPHY. Switching over to Ag. It is a very important 
part of my district, and really, our country. And while I will 
continue to review TPA, I am interested in whether some of the 
agricultural provisions have been improved since 2002, and what 
are the key differences that would mean for some of the Florida 
farmers? We have a lot of specialty crops, especially citrus.
    Mr. SANFORD. Are you speaking in terms of our active 
negotiations?
    Mr. MURPHY. What has improved since the 2002 Trade 
Promotion Authority?
    Mr. SANFORD. Well, I mean, obviously this is a particular 
export priority for us, this whole area of agriculture. We are 
working hard to eliminate duties on all agricultural items in 
our trade deals. That is certainly what we are doing at TPP and 
we will be working to do in T-TIP, for instance. What I would 
stress is that there is even more attention being paid to sort 
of the non-tariff barriers, the SPS barriers that present some 
bigger challenges. As you know, even when we can eliminate the 
duties, it does not necessarily mean our products have access 
to that market.
    So that is where I think we are trying to come up with ways 
that, for instance, if you look at T-TIP, which is earlier on 
in terms of the negotiation, one of our big challenges there 
was needing to find science-based decision-making; that as you 
probably know, we have major products that have been banned 
from that market. So this is not simply an issue of eliminating 
the duties but figuring out ways to discipline the SPS 
provisions, ensuring there is transparency in the development 
of these, that we have input into them, that they are science-
based. That is a major focus of us right now.
    Mr. MURPHY. A lot of my farmers are worried about some of 
their seasonal crops and the perishability of goods like 
tomatoes, and other specialty crops. Has perishability been 
brought up and how has this improved for American farmers?
    Mr. SANFORD. Not specifically because I do not work on the 
agricultural items, but I think this is something, perhaps the 
WTO Trade Facilitation Agreement can help as well speeding up 
customs clearance and things like this.
    Mr. MURPHY. How can TPP open up some Asian markets for 
citrus specifically?
    Mr. SANFORD. Well, the WTOTF was just done, so that is not 
even implemented at this point. But no, I do not. Sorry.
    Mr. MURPHY. We constantly talk about infrastructure, and I 
think we all agree we need to improve it. And one of the 
obstacles for our exports is our aging infrastructure. We talk 
continually about how we need to better use our harbor 
maintenance trust fund to maintain our ports and our highway 
trust fund will soon be unable to meet the demand for road 
maintenance. Can you talk briefly about the impact of 
infrastructure and the importance of maintaining it and 
improving it as far as that relates specifically to trade?
    Mr. SANFORD. Yeah, I think having a strong infrastructure 
is fundamental to being competitive when it comes to exports. 
So I think this is something that is important for us if we are 
looking to be expanding our exports, that our ports have the 
facilities to export; that we have the transportation systems 
in place to be able to transport product from field or factory 
to port; that we have the infrastructure that allows products 
to clear customs quickly so things do not get stuck on the 
dock. I think that this is a consideration when foreign firms 
are looking to build plants here in terms of judgment of how 
competitive the place is. Do you have the adequate 
infrastructure to support the export of products in the United 
States? So I think this is tied up in our ability to fully take 
advantage of the new trade opportunities that our trade 
agreements yield.
    Mr. MURPHY. All right. Thank you.
    Chairman HANNA. Mr. Huelskamp.
    Mr. HUELSKAMP. Thank you, Mr. Chairman. I appreciate the 
opportunity to visit. I am from Western Kansas where 
agriculture is a main export industry, and I want to follow up 
on a few questions from my colleagues about your list of 
priorities as the office of USTR. How do you put together a 
list of priorities? I mean, these are multi-faceted agreements 
that deal with a wide range of exports and sometimes certain 
industries feel like they may or may not be at the top of the 
list of your priorities. So can you describe that 
prioritization process and then where agriculture might fit in 
that list?
    Mr. SANFORD. Sure. I mean, I think if you step back, when 
we are formulating an approach we are going to take in a trade 
agreement, we have an extensive consultation with the public. 
You know, put out a Federal Register. Get a sense of what the 
challenge is, what issues our stakeholders feel we should 
address. We have congressional mandated advisory committee 
systems that we consult with or advisors in terms of 
priorities. There is an interagency process, of course, and 
very importantly consulting with Congress in terms of 
priorities and views and things that you would like to see 
addressed in this. And then obviously, I have got my political 
leadership who have guidance they want to provide in this 
process as well. So it is an active and ongoing consultation 
process with a variety of different stakeholders of which 
Congress is a very important part.
    Mr. HUELSKAMP. But when we look back over actual historical 
statements from your political leadership and those in the 
party, there is a real concern that perhaps agriculture is not 
a main or a top priority. You know, if you are going to pick 
and choose, let us deal with barriers to other districts that 
might have more political access. I am just trying to have you 
describe exactly where is the biggest potential for export 
growth? And where do you expect that this would have the 
biggest bang for the buck in terms of the agreements you are 
proposing that we move forward on?
    Mr. SANFORD. Well, I think we are not looking at singling 
out specific areas.
    Mr. HUELSKAMP. When you negotiate these agreements, that is 
exactly what you do. These are not free trade agreements in 
which there are no barriers.
    Mr. SANFORD. Right.
    Mr. HUELSKAMP. There are thousands of pages of restrictions 
and lowering of restrictions. There are winners and losers in 
each of these agreements. My question is how do you decide and 
where does our culture fit in that? Because if you look at the 
export growth, we can talk about a lot of industries but it is 
an absolute fact that the export growth that is happening, our 
surplus is because of agriculture. That is the number one 
arena, and I see it as the number one potential. So what you 
see as the potential, obviously maybe that is a political 
calculation. I am just curious. How do you prioritize? And you 
are asking us, Congress, you want this input. I am asking what 
is your thought process and where does agriculture fit in that 
prioritization process.
    Mr. SANFORD. You are absolutely right. I mean, we are a 
powerhouse. The United States is a powerhouse when it comes to 
exports of agricultural products. We have a comparative 
advantage and we negotiate these comprehensive agreements.
    So I think to touch on something I was touching on earlier, 
you know, we are getting to the point where we have eliminated 
or continue to eliminate many of these duties and the problems 
we are facing are really on the regulatory side in many cases. 
It is the SPS barriers that we are trying to tackle. So the big 
challenge we have there is how do we come up with new 
provisions that can constrain the mischief that some of our 
trading partners may come up with that are keeping our products 
out of the market.
    Mr. HUELSKAMP. I agree. Let me give some specific examples. 
We had issues with Japan for a number of years.
    Mr. SANFORD. Sure.
    Mr. HUELSKAMP. And finally we reached an agreement I think 
successfully, but I am worried about South Korea restricting 
imports of our beef, current restrictions on meat going into 
Russia. Can you describe a little bit more of what is going on 
in those arenas? And certainly there are non-tariff barriers 
and they are not based on scientific standards, world 
standards, but they continue to fester out there and restrict 
the ability of American farmers and ranchers to get into places 
that want to buy our stuff. So what are we doing about these 
two particular countries and how does that play into these 
agreements in the future?
    Mr. SANFORD. Yeah. I am not intimately familiar. I do not 
work on agriculture, but obviously now we have Russia in the 
WTO and they are subject to those new disciplines. It is early 
on in that process. I know we had some challenges in getting 
some, I think, beef and some other poultry with Russia in 
recent years. I believe some of that may have gotten cleaned up 
as far as their accession process, but in fact, if there are 
unjustified measures they are taking then it is maybe something 
we need to take a look at in terms of the WTO commitments that 
they have made. Likewise, we now have in place an FTA with 
Korea, and if, in fact, experts need to take a look at these 
actions or these measures they have taken, but are they 
consistent with the WTO? Are they consistent with the FTA 
commitments? That is something, you know, we have a tool, and 
it may be something we need to look at.
    Mr. HUELSKAMP. I agree. We do have a tool--frustration from 
folks that actually raise our ag exports as how long it takes. 
We are expected to open our markets up to their stuff and then 
we spend years trying to sell what is the safest product in the 
world, and everybody knows the games that are being played 
there. And my concern is as we move forward because again, that 
is where the potential is.
    And what I have not heard from you though is the answer to 
that first question. So what is the number one priority? When 
you look at these, and again, you are going in a room, you are 
negotiating hundreds and hundreds of different industries, and 
if you give for one industry, you take from another perhaps. I 
mean, that is the agreement. So I am just trying to figure what 
the thought process is as we move forward and say, hey, I want 
this authority, and I understand that. I am a supporter of 
that. But I do not understand how you prioritize and decide, 
for instance in my case agriculture, but in other cases how you 
prioritize those negotiations.
    Mr. SANFORD. Well, I guess we have objectives we are trying 
to achieve. They are quite broad. As part of a negotiation, 
obviously there are challenges and choices and compromises one 
must make as you are going forward. But up front we formulate 
what our negotiating objectives are and, in fact, that is 
something we do communicate with the Hill. So there is not some 
sense of a master list that says ag is here and IPR is here. I 
think to your point, I am trying to be responsive, is that 
during the negotiation, obviously it is going to depend on the 
context, and there may be some compromises that one needs to 
make.
    Mr. HUELSKAMP. I think, Mr. Chairman, if we might have time 
at the end I would like to ask a couple more follow-up 
questions.
    I would like to see that list of objectives, and I have not 
heard those here. I think Mr. Luetkemeyer asked a number of 
questions trying to get a sense of what the goals were, where 
the greatest potential was. The president announces he is going 
to double exports, but of course, every president says that. 
They all say that. This is what you are all going to agree on 
that, but again, there is a lot of hard work there. I have not 
seen the objectives. I mean, do you have a list of those? Have 
those been formulated by the administration? And where are 
those at?
    Mr. SANFORD. Well, I guess what I am thinking of is when 
we, for instance, that we launched negotiations to T-TIP, we 
sent a letter to the Hill which laid out what our negotiating 
objectives were comprehensively, and so that is what I am 
thinking of. And that came through.
    Mr. HUELSKAMP. How did agriculture fit in that? Was 
agriculture mentioned at all in the objectives?
    Mr. SANFORD. Of course it was. I do not have the language 
in front of me, but our objectives would be to eliminate duties 
on agricultural products and address all of these SPS problems 
we may be facing.
    Mr. HUELSKAMP. These have been facing for decades with the 
EU.
    Mr. SANFORD. Sure.
    Mr. HUELSKAMP. And they continue to grow every day and they 
are nonscientific. I mean, we had this battle with Japan and 
beef, and we are still, I think, and we have another issue 
coming with Brazil.
    Mr. SANFORD. Right.
    Mr. HUELSKAMP. When the department announced on December 
23rd we are going to start importing beef from areas of Brazil 
that have foot-and-mouth disease, very little discussion on 
that. And so folks in agriculture are wondering where they fit 
in the prioritization scheme because, again, there are winners 
and losers, and I am a big supporter of open and free trade. 
But again, there are losers. I mean, you heard from some of my 
colleagues, and they want assurances of how you determine who 
the winners and losers are on these agreements.
    Mr. SANFORD. Right. I totally agree. We have, you 
mentioned, the challenges in Europe. This has been going on for 
some time. I am well aware of that. That is why I think T-TIP 
provides this new opportunity. If we are able to come up with 
some new provisions, new disciplines that we can extract and 
impose on the Europeans, then it helps provide more access for 
U.S. agricultural products and do away with some of the 
barriers you are facing right now. It would be more leverage 
than we have right now.
    Mr. HUELSKAMP. Okay. Thank you, Mr. Chairman. I yield back.
    Chairman HANNA. Do you get the message?
    Mr. SANFORD. Got the message. Yes. I appreciate that.
    Chairman HANNA. There are deep concerns in agriculture. A 
number of the questions, which I will not repeat, are 
associated with that.
    In my own district, we hear daily about the TPP. It would 
be easy to be dismissive and say it is misinformation or 
wrongheaded, but in the absence of real information about it, 
we do not really do that. The Trans-Pacific Partnership 
Agreement estimates 3.5 million new jobs. However, as I just 
said, so many of my constituents believe just the opposite. 
They look at other agreements and they have their opinions 
about them. Part of the job of the administration is going to 
be to sell this. Right? I mean, that is kind of why it is done 
the way it is done because if you open it up to the light of 
day on a regular basis you would probably get nowhere but take 
a long time to do it.
    So if you agree with that, how do you unwind all that? What 
is your plan to sell this plan, not just to Congress, but to 
small business unions and the American public? That is an 
enormous part of this problem.
    Mr. SANFORD. Right. No, I think there is an enormous 
education process that is necessary in terms of outreach, and I 
think that is something that we will need to leverage all 
resources to communicate that. As you know, it is an active 
negotiation. You cannot negotiate this in public, so there are 
always things that people do not know. But there are enormous 
benefits to this agreement, and we need to continue consulting 
with Congress as I think Ambassador Froman has been stepping up 
and doing more of that, but to work with the stakeholders more 
broadly. It has been a while since we had a big trade agreement 
completed, and these agreements tend to go on for a while. I 
think part of this is people are not quite sure when this is 
going to end and when they are going to see some concrete 
benefits from this. But one of the things we need to do is 
working with the Hill more, work with our interagency process, 
work with the stakeholders, and get the proponents or the 
beneficiaries of these agreements to be more vocal and to sort 
of get their views out there as well, so it is not simply those 
that may be critical of the agreement.
    Chairman HANNA. You have seen some of the information out 
there that we get that we cannot find a basis in reality but 
people--and I would suggest to you that this is building 
momentum. You probably sense that yourself. Is that right?
    Mr. SANFORD. Yeah. I think it varies from negotiation to 
negotiation. I think there has been much more focus on TPP 
because that has been outstanding for some time, but we have 
seen this in the past in WTO in Seattle if you go back that 
far. So, yes.
    Chairman HANNA. You made mention earlier about labor 
conditions in Colombia. This might be somewhat of a practical 
and a little bit of a philosophical question, too. How 
realistic is it for us to expect countries to honor our view of 
what that means? And how realistic is it for us to actually set 
out to enforce our notion of what right and wrong is in these 
countries? Is it a practical expectation? I mean, whether you 
approve of it or not, is it a reasonable thing to attempt to do 
in these kinds of negotiations or you just set out guidelines 
and hope for the best?
    Mr. SANFORD. Well, I think it is back to what our 
negotiating objectives are. And so we are going to continue 
pursuing environmental and labor provisions in the agreements 
that we negotiate. Where we end up on that is a matter of 
negotiation with our trade partners, but that is our objective 
going in and we have certain expectations on being able to 
deliver on that.
    Chairman HANNA. How much do they conflict with one another? 
I mean, let us be honest. We know that 95 percent of the 
world's population, et cetera, you know, China's middle class 
is growing. At some point they are going to demand a lot more 
of what we do. Of course, they are the world's largest 
polluter. They have a reputation, as Mr. Mulvaney indicated, 
this kind of backdoor deals and defiance of intellectual 
property rules. How do you balance those social issues in the 
environment which is also important? How do you go about doing 
that in a world where I guess our main goal is to sell goods 
and services? How do you manage that leverage?
    Mr. SANFORD. Well, you mentioned China, for instance. China 
may have an interest in joining TPP at some point, so if they 
were to join TPP, they would be buying into provisions that 
have been negotiated beforehand. That would provide a fair 
amount of leverage in getting what we want from them. It would 
help level the playing field.
    Chairman HANNA. So you do think you have some opportunities 
to make some differences on issues that might be more nuanced 
or at least you have less direct labor or less direct leverage 
because it is not necessarily dollars and sense we are talking 
about but only indirectly that?
    Mr. SANFORD. Yes, I think so, and I think the kinds of 
agreements we are conducting or negotiating, it is not static. 
We talked about SOEs earlier. Well, that is not something we 
talked about developing disciplines in the past on. So there is 
continuing to be more effort on some of these newer issues, I 
guess. In environment we are doing more. And I think the other 
thing is that simply rather than just these bilateral deals, 
when people are looking at potentially joining larger deals, 
like joining TPP or something, then there potentially is more 
leverage to have them sign on to provisions they would not have 
been willing to do bilaterally with us.
    Chairman HANNA. Sure.
    One last question. In your experience, and this Committee 
is all about small business and the opportunities that you are 
going to present with these agreements and that lie therein, 
what are the three barriers for small business exporters that 
you see that you can work out and address through the USTR?
    Mr. SANFORD. Well, I think it is sort of probably themes. 
One of the biggest sets of issues that we hear from 
stakeholders is sort of non-tariff issues, many of which are 
regulatory. Not understanding what the foreign regulations are, 
not understanding necessarily how they can demonstrate their 
products comply with those regulations, not having the in-house 
resources to figure these issues out, and therefore, perhaps 
passing up sales that they would otherwise have. Just not 
willing to pursue that. That in general is a very large topic 
and that is something that we are trying to address in our 
trade negotiations.
    Another big issue is simply the SMEs. Small businesses 
often simply do not know how to take advantage of the 
opportunities that our agreements provide.
    Chairman HANNA. Do you have a plan for that?
    Mr. SANFORD. Well, this gets back a bit to the discussions 
we were having about the TPCC and the interagency process. I 
mean, I think there is more scope for directing a lot of the 
finance programs and the export promotion programs, direct SMEs 
to take advantage of these countries in which we have FTAs 
with, for instance. The FTAs provide opportunities that are 
particularly beneficial to small businesses, and I think many 
small businesses are not making differentiation between 
countries in which we have FTAs and we do not. And there may be 
very big differences in terms of their ability to sell in those 
markets. And again, I think that is how having a better 
interface between the policy outcomes and the promotion works; 
they are working in concert.
    Chairman HANNA. When do you think we will see this 
agreement?
    Mr. SANFORD. The TPP?
    Chairman HANNA. Yes.
    Mr. SANFORD. Well, we are certainly trying to get it done 
in the very near term this year, but I guess what I would 
stress is that substance is going to drive the timetable rather 
than otherwise. And so it is more important that we get the 
agreement right, get the provisions we are pressing for, but we 
are very hopeful to get this done early this year.
    Chairman HANNA. Thank you. It is interesting how at a 
meeting like this you can carry on for four or five minutes and 
you use nothing but acronyms.
    Thank you, sir, for being here.
    As we start to consider various trade legislation and 
agreements, it is important that the administration keeps our 
Committee updated on the status and impact of small businesses. 
Will the USTR and the administration commit to periodically 
updating our Committee and how businesses are advancing in 
trade negotiations? I am assuming that is a yes answer?
    Mr. SANFORD. Happy to do that. Yes.
    Chairman HANNA. We appreciate that.
    Again, I look forward to working with you and my colleagues 
in Washington of identifying new solutions to assist small 
exporters. As we have said before, more exports should equal 
more and better jobs for this country. That is all our goals.
    I ask unanimous consent that members have five legislative 
days to submit statements and supporting materials for the 
record. Hearing no objection, so ordered.
    This hearing is now adjourned. And thank you very much, 
sir.
    Mr. SANFORD. Thank you.
    [Whereupon, at 11:01 a.m., the Subcommittee was adjourned.]


                            A P P E N D I X


                       Testimony of James Sanford


                  Assistant U.S. Trade Representative


    for Small Business, Market Access and Industrial Competitiveness


  Before the Small Business Subcommittee on Agriculture, Energy, and 
                                 Trade


                            January 28, 2014


    Chairman Hanna, Ranking Member Murphy, and Members of the 
Subcommittee, thank you for convening this hearing, and for the 
opportunity to testify on the work of the Office of the U.S. 
Trade Representative (USTR) to expand exports for U.S. small 
businesses.

    Under President Obama's leadership, USTR is working closely 
with our interagency partners to help American businesses of 
all sizes seize export opportunities and acquire the resources 
necessary to succeed in the global marketplace.

    America's small businesses are key engines of our nation's 
economic growth, job creation, and innovation. Our small 
businesses already play a major role in international trade--
accounting for nearly 98 percent of all U.S. exporters. Direct 
and indirect exports by U.S. small businesses support millions 
of American jobs and account for nearly 40 percent of the total 
value of U.S. exports of goods and services. Nearly 300,000 
U.S. small businesses exported in 2011--with exports of $440 
billion, an increase of 14 percent from 2010.

    While these trends are encouraging, we can help our small 
businesses do more. There is still significant potential for 
export growth. Only a small fraction of U.S. small businesses 
are currently exporting. In fact, the United States lags behind 
many economies in this regard. And, most small exporters sell 
their goods to only one foreign country and to only one 
customer in that country.

    To expand export opportunities for small businesses and 
make it easier for them to take advantage of these 
opportunities, USTR is pursuing a robust trade agenda that 
supports small businesses and broader economic growth by 
tearing down barriers and creating new overseas opportunities 
for U.S. farmers, ranchers, manufacturers, and service 
providers of all sizes. We are working to level the playing 
field so that our workers and businesses can compete and win in 
a global economy. And, we are also vigorously enforcing our 
trade rights and insisting that countries fulfill their 
commitments.

    First, the United States currently has in place free trade 
agreements (FTAs) with 20 other countries. These trade deals 
have broken down barriers and pried open markets for U.S. 
products from agriculture to manufacturing to services. This 
helps all our small businesses--including those that export 
directly, as well as those that add value throughout the supply 
chain--by eliminating tariffs, increasing transparency in 
customs procedures, creating more predictable regulatory and 
legal frameworks, and promoting stronger intellectual property 
rights protection and enforcement. In addition, we are using 
the bilateral committees established under these FTAs to engage 
on ways we can help small businesses to take advantage of the 
export opportunities they provide.

    Second, USTR is pursing new trade agreements that when 
combined with existing FTAs, will represent two-thirds of 
global trade. We are also working on key multilateral deals 
that will have important benefits for small services providers 
and clean technology companies.

     In the Asia-Pacific region, USTR is negotiating 
the Trans-Pacific Partnership (TPP) with eleven other countries 
(Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New 
Zealand, Peru, Singapore and Vietnam). The TPP will have 
significant economic benefits for the United States. It will 
cut tariffs and break down non-tariff barriers--resulting in an 
increase in U.S. exports. In fact, according to a study funded 
by the Peterson Institute, the TPP would generate an additional 
$123.5 billion in U.S. exports. These exports will support 
thousands of additional U.S. jobs. Just as importantly, the TPP 
will also open the region's services market to highly-
competitive American companies--supporting even more American 
jobs in sectors from express delivery and telecommunications to 
education and healthcare services. For small businesses, the 
TPP will provide new access to Asia-Pacific markets, streamline 
customs procedures, increase transparency and due process in 
the regulatory environment in the region, prevent barriers to 
the free flow of information and requirements to localize 
servers and other internet infrastructure, and ensure 
intellectual property rights protection and enforcement. These 
outcomes will be of particular benefit to small businesses. We 
hear from small businesses that they often lack the in-house 
resources to understand and comply with foreign regulatory or 
documentation requirements or to establish facilities in other 
countries.

    USTR is also working to help small businesses take 
advantage of the new opportunities that will be provided by the 
TPP, including by expanding web-based TPP information and 
resources for small businesses, and establishing a new 
mechanism to do this in the TPP.

     USTR is also negotiating the Transatlantic Trade 
and Investment Partnership (T-TIP) agreement with the EU. T-TIP 
will be high-standard, comprehensive trade and investment 
agreement aimed at strengthening a partnership that already 
supports $1 trillion in annual two-way trade, $4 trillion in 
investment, and 13 million jobs in both economies.

    We are working closely with stakeholders to identify EU 
trade barriers that may disproportionately impact American 
small businesses, so that we can address them in the T-TIP 
negotiations. To aid in this effort, the U.S.-International 
Trade Commission will be issuing a report to USTR on these 
barriers next month, drawing on input received from a public 
hearing and small business roundtables held around the United 
States.

    T-TIP provisions on small business will build on the 
existing U.S.-EU cooperation in this area. Since 2011, USTR has 
engaged in a series of U.S.-EU workshops organized to bring 
together small business stakeholders and government officials 
on both sides of the Atlantic to discuss common trade issues of 
specific interest to small businesses and identify areas for 
strengthening U.S.-EU cooperation. Through this effort, not 
only have we been able to better understand challenges small 
businesses face, we have also taken steps to enhance U.S.-EU 
cooperation on small business trade promotion activities.

     We are working in the WTO to expand U.S. export 
opportunities around the globe. The recently concluded WTO 
Trade Facilitation Agreement is the first major multilateral 
trade agreement in two decades. Once implemented, the agreement 
will reduce red tape and bureaucratic delay for goods shipped 
around the world. Small businesses will be among the biggest 
beneficiaries of this deal, since they encounter the greatest 
difficulties in navigating complex customs systems.

     USTR is leading efforts in Geneva to advance 
negotiations to substantially expand the scope of high-tech 
products subject to duty elimination under the Information 
Technology Agreement (ITA). And USTR is also leading 
negotiations in Geneva on a free trade agreement focused 
exclusively on services. The Trade in Services Agreement (TiSA) 
will encompass state-of-the-art trade rules aimed at promoting 
fair and open competition across a broad spectrum of service 
sectors. And we have just launched an initiative in Geneva 
seeking to liberalize trade in environmental goods. These 
plurilateral agreements, once completed, will help level the 
playing field and significantly expand export opportunities for 
American technology and services firms of all sizes.

    Of course, to actively and effectively pursue these 
initiatives, the Administration will need Trade Promotion 
Authority (TPA). We welcome the introduction of the Bipartisan 
Congressional Trade Priorities Act of 2014 as an important step 
towards Congress updating its important role in trade 
negotiations. We look forward to working with Democrats and 
Republicans in Congress throughout the legislative process to 
pass Trade Promotion Authority legislation with as broad 
bipartisan support as possible.

    The United States has the most open markets in the world, 
but our products and services still face barriers abroad. The 
high tariffs and barriers faced by our exporters are 
essentially high taxes that U.S. citizens pay to foreign 
governments. Such high taxes distort patterns of trade that 
benefit consumers and producers, which is why the United States 
does not charge them. We need every tool we have to knock down 
the barriers still maintained by other governments. If we do 
not engage, we will continue to bear the tax imposed by the 
higher barriers maintained against us by other countries.

    Third, USTR is pursuing important initiatives in regional 
fora to address challenges that face small business exporters. 
In the Asia-Pacific Economic Cooperation (APEC) forum, for 
example, the United States and other members are advancing 
initiatives to: assist U.S. companies, including small 
businesses, enter and participate in global supply chains; 
address local content requirements and other localization 
barriers to trade; and promote greater regulatory coherence to 
prevent regulatory divergences from turning into non-tariff 
barriers.

    In the Western Hemisphere, USTR is collaborating with other 
agencies, including the Departments of Commerce and State and 
the Small Business Administration, to connect more U.S. small 
businesses to regional partners and to foster entrepreneurship. 
The Small Business Network of the Americas is helping SBA-
supported U.S. Small Business Development Centers (SBDCs) and 
the companies they serve connect to counterparts in Central and 
Latin America in order to build further trade links and 
networks, including with major markets such as Canada, Mexico, 
and Brazil.

    Fourth, USTR is also vigorously enforcing our trade 
agreements. The Interagency Trade Enforcement Center (ITEC) 
significantly enhances the Administration's capabilities to 
challenge aggressively unfair trade practices around the world. 
Small businesses typically have fewer resources than larger 
companies to prepare information to enable us to coordinate 
potential enforcement actions. ITEC enhances the 
Administration's ability to investigate and pursue enforcement 
cases critical to U.S. companies, regardless of their size.

    Finally, we are working to communicate more effectively how 
our trade policy initiatives can benefit U.S. small businesses. 
Ambassador Froman and the USTR team continue outreach to small 
businesses across the country to highlight export opportunities 
we have created, and to learn more about new trade challenges 
and how we might help. In response, USTR is collaborating with 
other agencies to provide more on-line tools and information to 
make it easier for small businesses to do market research and 
identify tariff rates for specific products under existing U.S. 
FTAs.

    USTR is committed in partnership with other federal 
agencies to helping U.S. small businesses compete and succeed 
in the global economy. Thank you for this opportunity to 
testify about USTR's efforts to expand export opportunities for 
this critical segment of the U.S. economy.

    Small Business Trade Agenda: Status and Impact of International 
                               Agreements


                            January 28, 2014


                    Questions for the Record (QFRs)


    Rep. Tipton

          1. Regarding Trade Promotion Authority (TPA), can you 
        explain how USTR works with members of Congress to 
        ensure that our issues and concerns are being 
        addressed? How often do you reach out to Congress?
                  a. On the same subject of TPA, can you 
                explain how you work with small business to 
                gather their input on the trade agreements?

                  b. And what is the process for communicating 
                the trade text to interested businesses in my 
                district?

          We think it is critical that Congress, stakeholders, 
        advisers, and the public have a robust opportunity for 
        engagement to ensure that we're getting the best 
        input--and that we are also explaining what we are 
        doing, how we are doing it, and why we are doing it. 
        That is why during trade negotiations, we engage in 
        hundreds of Hill consultations with Congressional 
        Members and staff on all chapters of the agreement, 
        consistently requesting input on the direction, focus, 
        and content of ongoing negotiations. Any Member of 
        Congress can see text upon request, with USTR staff 
        available to provide explanations, answer questions, 
        and receive Congressional guidance.

          We are negotiating these agreements with an eye 
        toward helping small businesses benefit from new trade 
        and investment opportunities. That's why USTR, the 
        Small Business Administration, and the U.S. 
        International Trade Commission recently teamed up to 
        convene a nationwide series of roundtables with small 
        firms in over 20 cities from coast to coast this fall, 
        along with a hearing in Washington DC. USTR has also 
        worked with our colleagues at Department of Commerce 
        and the Small Business Administration to speak with the 
        U.S. Export Assistance Centers and Small Business 
        Administration Regional Offices regarding what they are 
        hearing from small businesses across the country.

          We also work closely with our Congressionally-
        mandated advisory committee system, including members 
        from businesses large and small, labor unions, 
        environmental groups, consumer groups, health groups, 
        state and local government, and academia to obtain 
        input on our trade agreements. Among the sixteen 
        Industry Advisory Committees (ITACs), the ITAC for 
        Small and Minority Business is one specifically 
        designed to provide policy and technical advice and 
        recommendations to the USTR and to the Secretary of 
        Commerce regarding trade barriers, negotiations of 
        trade agreements, and implementation of existing trade 
        agreements affecting small business.

          We also publish a notice in the Federal Register 
        seeking comments from the public, including small 
        businesses, and hold a public hearing before initiating 
        negotiations. During the negotiations of agreements 
        such as the Trans-Pacific Partnership Agreement, USTR 
        conducts stakeholder events at which interested members 
        of the public have the opportunity to present views to 
        negotiators and receive updates on the negotiations.

          2. One of the top trade barriers we hear from small 
        firms is the ability to understand changes in foreign 
        regulations--mainly non-tariff barriers. That's why I 
        introduced H.R. 1916, the Transparent Rules Allow 
        Direct Exporting (TRADE) for Small Business Act, which 
        would require the Department of Commerce to work with 
        USTR to clearly publish changes in foreign regulations 
        on export.gov or a substitute website. This will 
        provide a one-stop source for small firms to stay 
        current on changing foreign regulations. Would the 
        Administration support this initiative? And what are 
        you doing to currently help small firms in navigating 
        foreign barriers?

          USTR is working with other agencies to help small 
        businesses take advantage of the opportunities that our 
        trade agreements provide, including by expanding web-
        based information and resources for small businesses. 
        For example, USTR, the Department of Commerce, and the 
        Small Business Administration launched the FTA Tariff 
        Tool. This free, online tool (http://export/FTA/
        ftatarifftool/index.asp) can help small businesses take 
        better advantage of the reduction and elimination of 
        tariffs under U.S. free trade agreements (FTAs). The 
        FTA Tariff Tool was expanded to include tariff 
        information on textiles and apparel products, as well 
        as rules of origin under U.S. FTAs, and will eventually 
        be expanded to include these provisions drawn from new 
        regional free trade agreements such as the TPP 
        agreement.

          U.S. businesses that would like to be notified of 
        changes to foreign technical regulations that can 
        affect their business and access to international 
        markets can register for Notify U.S., a free, web-based 
        email registration service provided by the National 
        Institute of Standards and Technology (NIST) of the 
        U.S. Department of Commerce (https://tsapps.nist.gov/
        notifyus/data/index/index.cfm).

          3. Last August the Government Accountability Office 
        (GAO) issued a report, requested by our Committee, 
        which showed the federal government needs to better 
        manage, collaborate and promote trade programs so that 
        export resources can be more efficient. Our Committee 
        has been focused on reducing duplication in government 
        agencies to help small firms understand where to access 
        the appropriate information. How are you working with 
        the trade agencies to reduce duplication, and to help 
        prepare small firms for new export opportunities?

          USTR is committed to working in partnership with 
        other federal agencies to help U.S. small businesses 
        compete and succeed in the global economy. In addition 
        to USTR's formal interagency trade policy process, we 
        work closely with interagency partners to promote small 
        business exports through the Trade Promotion 
        Coordinating Committee's (TPCC) Small Business Working 
        Group, members of which also include the Departments of 
        Commerce, State, and Agriculture, the Small Business 
        Administration (SBA), the U.S. Export-Import Bank, and 
        others across the Government. The TPCC Small Business 
        Working Group connects U.S. small businesses to trade 
        information and resources to help them begin or expand 
        their exports and take advantage of existing trade 
        agreements. Moreover, our newest FTAs, such as the 
        Transatlantic Trade and Investment Partnership (T-TIP) 
        and Trans-Pacific Partnership (TPP), will include 
        chapters specifically designed to promote information 
        sharing and cooperative activities to benefit small- 
        and medium-sized enterprises (SMEs). This will allow 
        U.S. SMEs to leverage the full benefits and 
        opportunities provided by the agreements.

          4. Another report issued by the Government 
        Accountability Office (GA), and appropriately titled, 
        ``Small Business Administration Needs to Improve 
        Collaboration to Implement Its Expanded Role,'' 
        explains the duplication and lack of coordination from 
        the SBA. In your opinion, what role should SBA play in 
        the overall trade promotion function?

          USTR is engaged with SBA on a range of activities to 
        communicate more effectively how our trade policy 
        initiatives can benefit U.S. small businesses. For 
        example, SBA has been a key partner in reaching out to 
        small businesses through roundtables around the United 
        States to obtain their input on Trans-Atlantic Trade 
        and Investment Partnership negotiations (T-TIP) and 
        trade barriers that may disproportionately impact small 
        businesses exporting to the European Union. SBA is also 
        a key partner, along with other agencies, to provide 
        more on-line tools and information to make it easier 
        for small businesses to do market research and identify 
        tariff rates for specific products under existing U.S. 
        FTAs.

    Rep. Mulvaney

          1. Some countries participating in the Trans-pacific 
        Partnership (TPP) Agreement have a vast number of SOEs 
        that have the financial backing and support of their 
        national government and may have goals other than 
        achieving a profit. Naturally, many small firms cannot 
        compete with a SOE over the long term. How is USTR 
        working to ensure that the small businesses in my 
        district will not face unfair competition against a 
        state owned enterprise? Please provide information 
        specific to the TPP negotiations and draft language, as 
        well as any other initiatives USTR is undertaking with 
        respect to SOEs generally.

          The goal of the TPP agreement is to level the playing 
        field for U.S. workers and companies, including small 
        businesses. That is why the TPP agreement includes new 
        disciplines to address unfair competition from State-
        owned enterprises (SOEs). These issues have become 
        increasingly serious concerns for U.S. industry and 
        workers. We are seeking for the first time ever to 
        establish clear rules through the TPP agreement that 
        ensure that SOEs that are engaged in commercial 
        activities that are competing with commercial firms are 
        not receiving unfair advantages from the governments 
        that own them. We are also working to increase 
        transparency, so we know the extent of government 
        participation in and support of SOEs. At the same time, 
        we are drafting the obligations in a way that does not 
        limit our own ability--or that of other TPP countries--
        to provide essential public services through SOEs.

          2. How is USTR addressing currency manipulation in 
        Vietnam in regard to the TPP?

          Currency is an issue we care a great deal about and 
        we understand Members of Congress in both the House and 
        Senate do as well. The Treasury Department has the 
        lead, but we are consulting with Congress and other TPP 
        partners on the best way to address the issue of 
        currency.

          3. Vietnam is insisting on a flexible rule of 
        origin--or ``single transformation''--for textiles in 
        TPP. This would allow Vietnam to continue to buy 
        Chinese government-subsidized components for its 
        apparel for duty free export to the U.S. The U.S. has 
        insisted on the yarn forward rule of origin, which has 
        governed the U.S.'s free trade agreements for the past 
        25 years.
          a. Is USTR concerned that adopting a flexible rule of 
        origin could allow China to use Vietnam as a 
        ``backdoor'' to sell its textile products to the U.S. 
        market? Why or why not?

          b. With respect to the U.S.'s proposed rule of 
        origin, which USTR has advised us will include a 
        ``short supply'' list, what is USTR doing to ensure 
        that that list of exceptions does not swallow the rule 
        and leave open an avenue for Chinese components?

          c. How does the USTR plan to address enforcement of 
        the textiles provisions of the TPP, both generally and 
        with respect to China specifically?

          Overall, our objectives for the TPP agreement on 
        textiles and apparel are to encourage and promote 
        regional production and trade for the textile sector, 
        to advance regional economic integration, and to obtain 
        significant market access opportunities for our 
        industries. We are also seeking special customs 
        enforcement procedures and commitments, as we have in 
        past agreements, so that we can ensure the integrity of 
        the agreement. We recognize that this requires a 
        careful balancing of interests in the sector.

          In the TPP agreement, we are seeking a high-standard 
        rule of origin, and the ``yarn-forward'' approach is at 
        the core of our proposal. In order to ensure the yarn-
        forward approach works effectively, we are considering 
        categories where limited exceptions would be 
        appropriate in cases of insufficient production of 
        inputs in the TPP countries. These products, found to 
        be in ``short supply'', have been vetted with our 
        domestic industry and our import community, as well as 
        those of our TPP partners, to assure that these rules 
        navigate a deliberate and careful space where they 
        provide opportunities for apparel production while 
        encouraging opportunities for yarn and textile 
        producers to export. In addition, we are seeking to 
        ensure that the benefits of the TPP agreement are 
        limited to the countries that will be party to the 
        agreement through carefully crafted rules of origin and 
        the inclusion of special customs procedures to ensure 
        the proper enforcement of those rules and other related 
        commitments.

          4. Most of our prior free trade agreements have 
        included extended duty phase-out periods of 10 years or 
        longer for sensitive textile products to ensure 
        appropriate transition times for U.S. textile producers 
        and workers. What is USTR's negotiating position with 
        respect to phase out periods for sensitive textiles in 
        the TPP and what is USTR doing to achieve these 
        extended phase out periods? If extended phase-outs are 
        not achieved, I have concerns about the impact that may 
        have on industry my district and state.

          We worked in close consultation with the U.S. 
        industry and other stakeholders as we developed our 
        proposal for tariff elimination for textiles and 
        apparel in the TPP agreement. Our approach to tariff 
        elimination in the TPP agreement provides meaningful 
        access to our TPP partners while providing sufficient 
        time for our domestic industry and existing global 
        partners to adapt. This proposal specifically addresses 
        transition periods and the need to appropriately 
        consider sensitive textile and apparel products. We 
        will continue to consult with interested stakeholders 
        on these issues, and will follow-up with you on matters 
        of concern.

    Our proposal in the TPP agreement also contains textile-
specific commitments to ensure strong and effective customs 
cooperation and enforcement, as well as a textile-specific 
safeguard mechanism that would allow parties to respond quickly 
to any damaging increases in imports under the TPP agreement by 
providing temporary tariff relief to domestic producers. Both 
of these provisions were developed in response to domestic 
textile industry concerns and have been an integral part of our 
recent free trade agreements.

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