[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




  ACROSS TOWN, ACROSS OCEANS: EXPANDING THE ROLE OF SMALL BUSINESS IN 
                            GLOBAL COMMERCE

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              MAY 20, 2015

                               __________

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 114-012
              Available via the GPO Website: www.fdsys.gov



                                 ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                        TOM RICE, South Carolina
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAZQUEZ, New York, Ranking Member
                         YVETTE CLARK, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts
                           MARK TAKAI, Hawaii

                   Kevin Fitzpatrick, Staff Director
            Stephen Dennis, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director




















                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Brian Bieron, Executive Director, eBay Global Public Policy 
  Lab, Washington, DC............................................     4
Mr. Dyke Messinger, President, Power Curbers, Inc., Salisbury, NC     6
Mr. Michael Stanek, Vice President & Chief Financial Officer, 
  Hunt Imaging, LLC, Berea, OH...................................     7
Mr. Timothy Brightbill, Partner, Wiley Rein, LLP, Washington, DC.     9

                                APPENDIX

Prepared Statements:
    Mr. Brian Bieron, Executive Director, eBay Global Public 
      Policy Lab, Washington, DC.................................    27
    Mr. Dyke Messinger, President, Power Curbers, Inc., 
      Salisbury, NC..............................................    50
    Mr. Michael Stanek, Vice President & Chief Financial Officer, 
      Hunt Imaging, LLC, Berea, OH...............................    56
    Mr. Timothy Brightbill, Partner, Wiley Rein, LLP, Washington, 
      DC.........................................................    67
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
  ACROSS TOWN, ACROSS OCEANS: EXPANDING THE ROLE OF SMALL BUSINESS IN 
                            GLOBAL COMMERCE

                              ----------                              


                        WEDNESDAY, MAY 20, 2015

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2360, Rayburn House Office Building. Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Luetkemeyer, Hanna, Rice, 
Radewagen, Knight, Curbelo, Hardy, Velazquez, Clarke, Hahn, 
Meng, Lawrence, Adams, Moulton, and Takai.
    Chairman CHABOT. The Committee will come to order.
    I want to thank everyone for joining us today for this 
timely and important discussion on trade. Very often, this 
Committee discusses ways to grow the economy, increase the 
number of jobs being created, and sell more goods stamped 
``Made in the USA.'' All of these goals would help the American 
workforce, and all of these goals are attainable with trade. 
Simply put, trade means opportunity for small business. After 
all, 96 percent of the world's consumers live outside the 
borders of the United States, yet of the 28 million small 
businesses in America, only 1 percent sell their goods 
internationally. If we tear down trade barriers, we can make it 
easier for small businesses to participate in the global 
marketplace and unleash our nation's most powerful economic 
force.
    One of the barriers facing small businesses looking to 
export is confusion about how to even do it and a maze of 
federal resources only sometimes add to the confusion. This 
Committee recognizes that challenge and is working on 
legislative solutions to better coordinate federal resources so 
they are more efficient, streamlined, and better able to help 
business navigate the export process.
    Beyond that, we need better trade agreements. Currently, we 
only have one free trade agreement with 20 countries, so that 
is trade agreements with about 10 percent of the countries 
around this globe; yet, nearly half of the goods exported from 
the United States went to those countries that we had trade 
agreements with last year. Better trade agreements mean small 
businesses will be able to access new international customers 
and offer their products more easily and at a lower cost than 
ever before. It means that more products will be built and 
sold. When that happens, jobs are created, wages are lifted, 
and more opportunity is available to all.
    That is really what is on the table with this debate--more 
opportunity for all Americans. We cannot get stronger trade 
agreements, like TPP and TTIP without trade promotion authority 
or TPA. Without TPA, American workers will be competing under 
the same unfair rules they do today. It will be the status quo. 
With TPA, we can create trade agreements that will level the 
playing field. We can remove barriers put up by foreign nations 
that make it more difficult for American businesses to sell 
their products. Put an American worker against anyone in the 
world and I will take that bet every day of the week and twice 
on Sunday, but we cannot get there without trade.
    Trade is also an opportunity to spread American values of 
economic freedom and individual liberty, freedoms we understand 
as second nature. Without TPA, and subsequently TPP, other 
nations will dictate the rules of the new economy; nations that 
do not respect the rule of law or the rights of the 
individuals. Trade is not a choice or a luxury in our modern 
world; it is a necessity. It is a cornerstone of a strong 21st 
century economy.
    Today we will hear from small businesses who are directly 
impacted by whether we move forward on TPA and important trade 
agreements or whether we bury our heads in the sand while China 
shapes the contours of the global marketplace.
    I want to thank again our witnesses for being here, and I 
now yield to the ranking member for her opening remarks.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Year after year, we are told that small businesses are the 
catalyst for U.S. economic growth, and rightly so as they 
create nearly two-thirds of net new jobs and are responsible 
for countless innovations. A critical subset of this group is 
small exporters. In fact, 300,000 small businesses are sending 
their products across the world, and three in five nonexporting 
firms are now interested in following suit.
    Firms that export grow faster, generate more jobs, and pay 
higher wages than other businesses. Clearly, in order for our 
economy to continue gaining steam, it will increasingly depend 
on global commerce to fuel expansion. Despite the advantages of 
trade, it remains exceedingly difficult for small businesses to 
enter foreign markets. By some estimates, just 5 percent of 
small firms in this country export their goods overseas. Even 
though small and medium-size businesses account for 97 percent 
of American exporting companies, their exports account for only 
one third of all U.S. goods shipped overseas.
    And there are various challenges. It takes time to identify 
foreign markets, to target new customers, and to learn the ins 
and outs of the exporting process. In fact, nearly half of 
small exporters spent a minimum of a few months a year, as well 
as an average of 8.4 percent of their annual operating revenue 
preparing to export.
    Small companies often have fewer resources to expand on 
developing a trade strategy or complying with complex 
regulations. As a result, they consistently enter fewer foreign 
markets than their larger counterparts, with nearly 60 percent 
only entering one, while more than half of large firm exports 
to five or four, or even more markets.
    These difficulties are something we must be mindful of as 
we consider legislation to fast-track approval of the 
Transpacific Partnership. Given that details of this agreement 
are difficult to come by, it is challenging to say if the 
agreement will help or hinder small businesses. In theory, 
balanced free trade agreements have the potential to be a 
significant driver of growth. By eliminating tariffs and other 
barriers to trade, they can help small firms expand sales 
globally and create jobs at home.
    In order for these benefits to be fully realized, however, 
we must hold our trading partners accountable for unfair trade 
practices and ensure that our small businesses receive the 
level playing field they were promised.
    Truth be told, small businesses often face challenges when 
it comes to competing with foreign imports produced in 
countries with lower label standards and nonexistent 
environmental protections. Time and again we are told about 
promising markets, but little discussion is given to the low 
priced goods that will still enter our domestic marketplace.
    Is this good for consumers? Maybe. Is it good for small 
businesses? Definitely not. This is something we must be 
mindful of as we consider legislation that will provide the 
president with trade promotion authority. This decision will 
occur against a complicated backdrop. International trade is 
more a conflict than ever before, dependent on dynamic global 
microeconomic trends, ever-changing trade policies, a variety 
of expert promotions and a mix of enforcement mechanisms. It is 
absolutely critical that small businesses are able to 
participate in this global marketplace, but achieving this goal 
should not require unfairly harming those entrepreneurs solely 
doing business here at home.
    I would like to thank our witnesses for their testimony and 
for being here today. I look forward to hearing your 
perspective on these very complex issues.
    Thank you.
    Chairman CHABOT. Thank you very much.
    And I would ask that Committee members, if they have an 
opening statement prepared, to submit them for the record, and 
I will just take a moment to explain our timing rules here. You 
get five minutes to testify. A yellow light will come on to let 
you know you have one minute to wrap up and a red light will 
come on and we would ask that you complete your testimony 
within that time if at all possible. We will give you a little 
of flexibility but not too much.
    And we will go ahead and introduce our witness panel here. 
Our first witness is Brian Bieron. He is the executive director 
for the Global Public Policy Lab at eBay, Inc. In this role, 
Mr. Bieron has covered public policy issues for eBay and PayPal 
in the European Union and Australia. Mr. Bieron has a bachelor 
of arts from St. Joseph University and a master's from George 
Washington University, and we welcome you here this morning.
    Our second witness will be Dyke Messinger, who is the 
president and CEO of Power Curbers, Inc., in Salisbury, North 
Carolina, where he has been president and CEO since 1981. Mr. 
Messinger received his undergraduate degree from the University 
of North Carolina Chapel Hill and his master of business 
administration from Tulane, and we welcome you here as well.
    Our third witness today is Michael E. Stanek, vice 
president and chief financial officer of Hunt Imaging LLC. Mr. 
Stanek serves on the Board of Trustees of the National Small 
Business Association and is testifying today on NSBA's behalf. 
He received his undergraduate degree from Cleveland State 
University, and we thank you for your testimony as well.
    And I will now yield to Ms. Velazquez to introduce our next 
witness.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    It is my pleasure to introduce Tim Brightbill. Mr. 
Brightbill is a partner in the international trade practice of 
Wiley Rein, where he represents guidance on all aspects of 
international trade law and policy, including trade remedies 
and export controls. As a former vice chair and current member 
of the Industry Trade Advisory Committee on Services and 
Finance Industries, he advises the U.S. government on free 
trade agreements and matters concerning the WTO. He is also an 
adjunct professor for the International Trade Law and 
Regulation at Georgetown University Law School. From 1994 to 
1995, he served as counsel to the House Committee on Small 
Business. Welcome back.
    Thank you.
    Chairman CHABOT. Thank you very much.
    And we will now go to our panel. Mr. Bieron, you are 
recognized for five minutes.

  STATEMENTS OF BRIAN BIERON, EXECUTIVE DIRECTOR,EBAY GLOBAL 
 PUBLIC POLICY LAB; DYKE MESSINGER, PRESIDENT, POWER CURBERS, 
INC.; MICHAEL STANEK, VICE PRESIDENT & CHIEF FINANCIAL OFFICER; 
          TIMOTHY BRIGHTBILL, PARTNER, WILEY REIN, LLP

                   STATEMENT OF BRIAN BIERON

    Mr. BIERON. Mr. Chairman, Ranking Member Velazquez, and 
members of the Committee, thank you for inviting eBay to 
testify on how U.S. small businesses are using technology to 
reach international markets. Our company is a truly global 
platform with nearly 60 percent of our revenue generated 
outside the United States. We enable over 150 million users in 
over 200 countries.
    For the first time in history, nearly every entrepreneur 
and small business can use technology to reap the benefits of 
trade on a global scale, an opportunity traditionally open only 
to the largest, multinational corporations. We are literally 
entering an age of micro multinationals. Some small businesses 
have always been engaged in trade, often as a supplier to a 
very giant company, but today technology is creating a new 
model of direct global commerce by small businesses. We call it 
the global empowerment network, and it is based on the powerful 
combination of the Internet global commerce platforms like 
eBay, technology-enabled payment services like PayPal, modern 
shipping services, and the knowledge of e-commerce exporting 
opportunities.
    Let me provide some numbers from the eBay Public Policy 
Lab's 2015 U.S. Small Business Global Growth Report, a copy of 
which I would ask to submit to the Committee record. As I 
mentioned, U.S. small businesses have always been exporters, 
but according to government data, it is just around 1 to 2 
percent of them. By contrast, on eBay, 95 percent of them 
export. The traditional small business exporters reach an 
average of two export markets a year. On eBay, over 190,000 
U.S. small business each exported to consumers on at least four 
continents last year alone. That is truly global sales.
    These staggeringly different results boil down to some 
pretty simple data on exporters' survivability. The World Bank 
has studied small business exporters in five upper-income 
European countries and found that 85 percent of small 
businesses that start exporting quit the effort by the end of 
the third year. That is just a 15 percent success rate.
    Exporting is hard. On eBay, the success rate for U.S. small 
businesses was 74 percent from 2010 to 2014. That is 85 percent 
failure versus 74 percent success. The Internet trade landscape 
is also more open to newcomers. It is more inclusive. For 
example, the largest 5 percent of U.S. exporters account for 82 
percent of U.S. trade, but on eBay, the largest 5 percent of 
exporters account for just 55 percent.
    I find this global trade data very exciting, but you all 
represent people, not numbers, and eBay is about empowering 
people. Let me tell you about two.
    Brian Robinson owns the Music Farm in Canton, Ohio. He and 
his 11 employees export more than 40 percent of the Music 
Farm's inventory. Great Sky Gifts is owned by a woman named 
Colleen Rast. She employs four people in Kalispell, Montana. 
From there they have exported to 99 countries. You know better 
than anyone in Congress that small businesses face huge 
challenges. They take risks, they work incredibly hard, and 
they face intense competition. It is the same when they trade 
globally.
    At eBay, we are working to help address some of those 
challenges and reduce barriers. Take language. Among other 
innovations, our investment in machine translation technology 
has lowered language as a barrier to U.S. exporters by 66 
percent since 2004.
    There are also things policymakers can do. EBay would 
propose three to you. First, raise the U.S. low value customs 
de minimis threshold, the level below which goods are exempted 
from import duties and paperwork and make raising other 
countries' de minimis thresholds a top trade negotiating 
priority. Raising the de minimis threshold is basically a one-
step free trade policy for small businesses.
    Second, modernize global postal systems across the world. 
Micro multinationals regularly utilize postal services because 
of their widespread networks. Those services are key to this 
global trade model.
    Finally, the U.S. Government has many excellent programs, 
as you have mentioned, Mr. Chairman, designed to help 
businesses export, but many of those programs were not 
developed with small e-commerce businesses in mind. I would 
urge the Committee to review existing government export 
promotion programs to be more supportive of these e-commerce 
micro multinationals.
    Small and mid-size businesses can contribute to their local 
economy and regularly service customers around the world. 
Globalization itself can be a better system. It can be more 
open and inclusive. I encourage you all to help achieve that 
future, and I look forward to answering any questions.
    Chairman CHABOT. Thank you very much.
    Mr. Messinger, you are recognized for five minutes.

                  STATEMENT OF DYKE MESSINGER

    Mr. MESSINGER. Thank you, Mr. Chairman, Congresswoman 
Velazquez, and my congressman, Congresswoman Adams. Good to see 
you.
    Thank you for the opportunity to testify today as the 
president of Power Curbers, Inc., a 62-year-old company that 
was founded in Salisbury, North Carolina. I am also appearing 
today on behalf of the National Association of Manufacturers, 
the largest industrial trade association in the United States, 
with over 14,000 members.
    Power Curbers was founded by two businessmen with a design 
for the world's first automatic curb machine. This engineering 
breakthrough helped streamline the process of laying out 
highways, medians, and other road infrastructure projects. 
While we still produce machines using the same curbing 
technology, we have grown into one of the leading paving 
machinery manufacturers for both agriculture and infrastructure 
projects.
    Power Curbers' success in the United States has been fueled 
in substantial part by our ability to sell overseas. Since the 
early 1960s, we have been exporting our equipment and have 
exported now to over 90 countries throughout the world. By 
exporting, we are simultaneously helping create safer, more 
efficient infrastructure overseas and supporting good paying 
manufacturing jobs in North Carolina and Iowa.
    International sales and exports comprise 40 percent of our 
total revenue and are critical to our continued innovation and 
growth. More broadly, exports support 154,000 jobs in North 
Carolina, and 81,000 jobs in Iowa, more than 20 percent of each 
state's manufacturing employment. For example, on our order 
board today, we have machines of approximate value of $350,000 
to $400,000 destined for Chile, Panama, Saudi Arabia, Japan, 
the Philippines, India, Uzbekistan, and Canada. More 
importantly, during the financial crisis, it was our 
international business that kept us going. Our international 
business was 70-80 percent of machine sales those five years.
    We do not just talk international business, we live it at 
Power Curbers. At our regular meetings with employees, we have 
a large world map of the world in our break room. Our employees 
know where every machine ships and we bring back pictures and 
job stories to share our success overseas. This ties them to 
the work done with our machinery that is far beyond our borders 
so they know their jobs are dependent on our international 
business success.
    Additionally, we have significant competition in our 
industry, and that makes us all better companies. But our 
company and our American competitors face real tariff 
competition, which is highlighted in my official testimony. To 
continue to thrive, manufacturers like Power Curbers need to 
see open markets and a more level playing field.
    I would like to focus on a few key trade issues on which 
Power Curbers and the NAM are focused to grow competitiveness 
and success of our manufacturers overseas. As was just stated, 
the U.S. has the most open market of any major economy with the 
lowest tariffs of any country in the G20. Indeed, more than 
two-thirds of all manufactured imports entered the U.S. duty-
free in 2013, yet manufacturers in the U.S. face steeper trade 
barriers abroad than virtually any major country, including 
Mexico, China, and Europe, largely because those countries have 
entered into more market access agreements than the United 
States. Out of 138 countries measured by the World Economic 
Forum, the United States faces higher tariffs than all but 
eight countries. All but eight countries. That is ridiculous.
    Why are European Union tariffs so much lower than ours? 
Because they have entered into free trade agreements all over 
the world. Congress can and must do more to expand U.S. 
manufactured goods exports and open new markets if we are going 
to grow manufacturing and the jobs it supports in the United 
States.
    Passage of TPA, which lapsed in 2007, is critical to 
restore U.S. leadership on trade and help ensure the 
negotiation of strong market-opening agreements that foster new 
opportunities and a more level playing field for our nation's 
manufacturers. The United States is now sitting on the 
sidelines as other countries move forward and more aggressively 
open markets, promote exports for their business at the expense 
of ours.
    By standing still, the U.S. is falling behind in the global 
economy. It is time to reverse that trend and move to enact and 
implement legislation and programs that will boost America's 
global competitiveness.
    Thank you very much.
    Chairman CHABOT. Thank you.
    Mr. Stanek, you are recognized for five minutes.

                  STATEMENT OF MICHAEL STANEK

    Mr. STANEK. Good morning, Chairman Chabot, Ranking Member 
Velazquez, and Committee members. Thank you for the opportunity 
to testify before you on this timely and important topic.
    Hunt Imaging is a manufacturer of dry and liquid 
electrostatic toners and developers used primarily in high 
speed computer printers. I am proud to be representing not only 
Hunt Imaging but also the National Small Business Association 
and its international arm, the Small Business Exporters' 
Association.
    Hunt was a spinoff from a Fortune 200 company 19 years ago 
and has operated as an independent company since. In addition 
to our headquarters in Berea, Ohio, we currently operate a 
branch in Belgium but are in the process of closing that 
facility due to a sustained downturn in European sales. As a 
company whose history emanates from a multinational 
organization, we were fortunate to have had a strong background 
in exporting, a background the vast majority of our small 
business brethren do not share.
    Even with our prior experience, however, we have learned 
that the opportunities to expand our international presence 
have declined since we became a standalone entity. Finding 
effective distribution partners is an essential component of 
small business entry into the export arena. In general, small 
businesses are challenged in having limited resources upon 
which to draw when entering international markets, and frankly, 
quite often have a fear factor in attempting to take that step.
    Possibly the biggest challenge for a small business, and 
certainly ours, is finding international opportunities to 
pursue. When we were part of a large corporation, we had a 
worldwide network of colleagues who could not only pinpoint 
opportunities for us, but also pursue them on our behalf. As a 
small, private organization, we are challenged to uncover 
potential sales opportunities and have struggled with 
identifying domestic resources to assist in that process.
    One suggestion to help small businesses in participating in 
the 95 percent of the worldwide purchasing market that exists 
outside the U.S. is to offer a one stop shop. Ideally, within 
the Department of Commerce, and more specifically within the 
International Trade Administration, they would have a 
centralized staff dedicated to assisting small businesses in 
all aspects of exporting. A beginning to end focus for each 
company could tremendously ease the complications that seem to 
be inherent in this process.
    Free trade agreements are likewise extremely important as 
they lower foreign barriers and produce a more level playing 
field. Lowering the hassle factor of exporting greatly 
increases the attractiveness to small companies. Given the 
importance of small business to both the European and Asia-
Pacific economies, it is vital that the TTIP and TPP 
negotiations address the specific needs of small business and 
all aspects of their agreements, and we support the passage of 
TPA to allow this to happen.
    If we desire American small business to export more, it is 
also important to reduce variable costs like tariffs. Many 
companies impose tariffs on U.S. exports that are substantially 
more than our own, and a web of nontariff barriers overseas 
often shuts out U.S. goods and services. These nontariff 
barriers can include items such as foreign patent and trademark 
costs, paperwork requirements, and performance bonds and 
licenses.
    Interpreting and comprehending regulations has also proven 
to be a challenge that exhausts a small firm's resources and 
drains our wallets when we have to turn to outside 
professionals. NSBA supports the creation of a centralized 
website that is monitored and collects up-to-date information 
on regulations and policies for the most commonly traded goods 
and services.
    Having a strong commitment to intellectual property rights 
is vital to protect our innovative products and service. The 
creation of simplified methods for filing and renewing 
trademarks and copyrights will provide more timely enforcement 
of these rights, which are the result of the innovations of our 
small businesses.
    On a broader scale, we also 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. The 
U.S. financial sector seems to be less engaged in World Trade 
than are the financial sectors in Europe.
    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-
sized companies. Just over 1 percent of these businesses 
currently export, and many believe it is too burdensome or 
risky or just do not know where to start. Federal agencies can 
play an important role in helping to reduce exporting barriers 
for small businesses and help these entrepreneurs tap into new 
markets and grow.
    Thank you for hearing my testimony, and I look forward to 
responding to any questions you may have.
    Chairman CHABOT. Thank you very much.
    Mr. Brightbill, you are recognized for five minutes.

                STATEMENT OF TIMOTHY BRIGHTBILL

    Mr. BRIGHTBILL. Chairman Chabot, Ranking Member Velazquez, 
and members of the Committee, thank you for the opportunity to 
testify before you today on the important issue of expanding 
the role of small business and global commerce, and it is good 
to be back at the House Small Business Committee today.
    I have practiced international trade law for 20 years, and 
I have always focused on helping American companies, 
industries, and workers. I work with members of a wide variety 
of industries, from solar panels, to steel, to hand tools, to 
school notebooks. I also work with many U.S. companies who 
provide services here and abroad. My job is to help these 
companies grow, prevent unfair trade practices from harming 
them, and to help eliminate trade barriers overseas.
    As this Committee knows, small businesses face enormous 
challenges in the area of international trade. According to the 
president's 2015 trade agenda, and as Chairman Chabot said 
earlier, there are 28 million businesses in the United States, 
but only 1 percent of them export their merchandise to other 
countries. And of those small businesses that do export, most 
export to only one country--Canada or Mexico. This demonstrates 
how small businesses often struggle to overcome steep tariffs, 
trade barriers, paperwork, fees, and other significant 
obstacles.
    Now, the U.S. Government has taken steps towards removing 
these barriers but there is much more to be done. I would like 
to list just a few areas of priority for Congress and the 
administration that are particularly relevant to small 
businesses.
    First, on the Transpacific Partnership. The U.S. Government 
does have a potentially important opportunity to create jobs, 
expand trade, and manufacturing, and improve the global rules 
of international trade with the TPP free trade negotiations. If 
approved, TPP would be the largest U.S. free trade agreement 
involving 12 countries and more than 40 percent of global 
trade. And that agreement should help U.S. small businesses 
export, not just by eliminating jobs but by streamlining 
customs procedures, eliminating trade barriers, and developing 
more transparent regulatory procedures.
    There are other benefits, such as the eliminating of 
barriers to ecommerce and express delivery services, and also 
new disciplines on state-owned enterprises. When U.S. small 
businesses export, they should not have to compete with foreign 
governments. And while China is a notable example of the 
problem, SOEs play substantial roles in the economies of TPP 
countries like Malaysia and Vietnam, as well as Russia, Brazil, 
India, and many others.
    At the same time, TPP poses potential threats to small 
businesses. First, the opening of the U.S. market to additional 
foreign competition could harm some smaller businesses and 
could head to some jobs being lost to lower wage positions in 
other TPP countries.
    Second, small business goals and objectives are less likely 
to be fully represented in these negotiations, and in fact, 
while the TPP contains a chapter on small and medium 
enterprises, the details of the agreement are not well known.
    Before it considers TPP, Congress must first take up trade 
promotion authority. The Senate is considering TPA legislation 
and amendments this week, and the House will do so shortly. And 
as this debate has progressed, the number one theme that we 
have heard over and over again is one of enforcement. Congress 
should not approve new trade agreements until it has better 
ways of enforcing our existing agreements, and there is an 
opportunity here.
    I think the best way to build support for TPA, among 
Republicans and Democrats, is to improve trade enforcement for 
all types of businesses, including small businesses. First, 
Congress should approve much-needed trade enforcement measures 
as part of TPA. U.S. industry has proposed a set of five trade 
law changes that it views as essential for domestic companies 
and their workers. These provisions were included in the 
Customs and Trade Bill that passed the Senate Finance Committee 
on a bipartisan basis. They should be included in TPA as well.
    Second, Congress should improve the ENFORCE Act legislation 
to guard against foreign companies who engage in trade fraud 
and evasion. Senator Wyden has championed this legislation for 
years, and again, it was included in the Customs and Trade Bill 
that passed the Senate Finance Committee on a bipartisan basis.
    Third, Congress should address the important issue of 
currency manipulation, and in particular, it should approve 
legislation directing the Commerce Department to investigate 
currency manipulation as an illegal subsidy.
    I am happy to address specific aspects of TPP, or the Trade 
and Services Agreement, or the Trans-Atlantic Trade and 
Investment Partnership, and there has been a very good ITC 
study done on that recently. But regardless of the agreement, 
the same challenges remain. Encouraging exports by U.S. small 
businesses is imperative to allowing American industry to 
expand and American workers to prosper.
    Thank you for addressing these issues today. I am happy to 
answer any questions.
    Chairman CHABOT. Thank you very much.
    And I want to especially thank all four of the panel 
members for keeping within our time limits almost to the word, 
so well done. And the testimony was good, too.
    And I will begin with recognizing myself for five minutes, 
and Mr. Bieron, I will begin with you, if I could.
    We are certainly aware that the statistics are there is 
only about 1 to 2 percent of small businesses that actually 
trade internationally, yet eBay has been able to have, because 
of your platform, a 95 percent of those, and you mentioned four 
continents. Those are incredibly, I think, positive numbers. I 
would just like to hear if you wanted to expand upon that a 
bit, what successes they have had, why you think there is such 
a discrepancy between the overall small business community and 
those who operate through eBay.
    Mr. BIERON. Thank you, Mr. Chairman.
    Sure. One of our studies did, did, in fact, try to look at 
what are the kinds of barriers that are so much lower when a 
business is operating online than not. And to give some 
perspective, I think what we are talking about at eBay is the 
fact that you now have a completely different business model 
for very small businesses to try to go and engage in global 
markets. And it is literally a paradigm shift. And my 
colleagues at the table here, I mean, outstanding and inspiring 
export stories, but from businesses that I think are exporting 
in the way businesses have exported for years, at eBay, the 
idea that these microbusinesses are targeting specific 
countries, are investing, for example, in the kinds of 
expertise it takes to engage in Germany, or sell to France, or 
sell to Brazil, it is not like that on the Internet with really 
small businesses; instead, the platform itself that allows a 
small business to have their product be seen. So it is 
essentially global advertising. Or it replaces the need to have 
trust in an individual business with trust in the platform. Or, 
for example, on eBay, the feedback system that allows a 
consumer anywhere in the world to have trust in individual 
small business, maybe a five-person business, as I said, in 
Montana or in Ohio. These are transformative changes, and what 
it means is that it is almost harder, I would say, not to 
export than it is to export. We do have some small businesses 
that are operating in the U.S. and all around the world who 
literally choose not to export because they believe, for 
example, that maybe the complexities are too much. They do not 
want to deal with currency. They do not want to deal with some 
things. But instead, most choose to sell to whom they can sell, 
and that ends up being global trade.
    And so that does not mean that it is simple. Like I said, 
language is a huge challenge, and literally moving stuff across 
borders still is hard. So whether it is the shipping itself--I 
mentioned postal systems--or the complexity of customs duties, 
you know, when you are a five-person business and you are 
having to deal with customs and duties for 50 countries, that 
is harder than it ought to be.
    Chairman CHABOT. Thank you very much. I appreciate it.
    And Mr. Messinger, I will turn to you next if I can.
    You had mentioned, among other things, that you are in 
favor of TPA, and Mr. Brightbill mentioned some of the concerns 
about jobs and things like that and also mentioned that the 
Senate, we think, is going to be taking it up this week, I 
believe, and the House, probably sometime in the near future. 
And I happen to be a supporter and hope it passes. But I know 
some of my colleagues who are opposed to it are concerned about 
jobs being lost and companies taking their business overseas 
and setting shop up over there instead of in the U.S. And my 
belief is basically we create far more jobs than we lose. That 
is one of the reasons I am in favor of it. But could you 
comment on TPA and what it would mean to your business in 
particular and what you think it would do relative to the 
hiring of more employees, or do you think you would end up 
letting employees go? What do you anticipate in your business?
    Mr. MESSINGER. Well, as it was said, TPP, which is kind of 
the hottest topic under TPA, is the most far-reaching agreement 
that we have ever encountered, and because Asia is such a 
rapidly-growing part of the world, it is going to mean huge 
advantages to us because we have Chinese competitors. They are 
exporting today to those countries, and it is going to mean 
through that reduction in tariff, it is going to mean--we are 
very aggressive in the international market--job growth for us. 
But more importantly, if you look at the statistics for 
manufacturing jobs in this country, they have grown every year 
outside of the financial crisis, of course, but every year 
consistently since NAFTA. So manufacturing jobs are going to 
continue to grow, and I would predict rapidly with the approval 
of TPP.
    Chairman CHABOT. Okay. Thank you.
    My time is expired. The ranking member is recognized for 
five minutes.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Mr. Brightbill, do you believe that the TPP will 
realistically expand the number of foreign markets that 
American small businesses enter? Or will the nontariff and 
logistical barriers remain too much for them to overcome? We 
know that, for the most part, our small businesses trade with 
Mexico and Canada. But will we achieve more than that? And if 
not, why?
    Mr. BRIGHTBILL. Ms. Velazquez, it is very difficult to 
know. We know what some of the positives potentially are out 
there. Certainly having common tariffs or reduced tariffs could 
be a positive thing. You would have less of a spaghetti bowl of 
trade agreements that companies have to deal with. If you have 
harmonized standards, harmonized reduction of technical 
barriers to trade, harmonized assessment of products, that 
could be a positive. If you have harmonized customs procedures, 
again, as has been pointed out, getting goods through customs, 
the delays in the paperwork and the fees are often 
extraordinary. My concern is you have to have a way to enforce 
all of those things that are written on paper, and it is not 
clear to me that all the enforcement tools are there or readily 
accessible to small business.
    Ms. VELAZQUEZ. So let us talk about the Korea-U.S. Free 
Trade Agreement. It was sold to us as being able to support 
70,000 jobs and increase U.S. exports by $11 billion. However, 
since that agreement took effect in 2012, exports to Korea have 
increased by less than $1 billion. Meanwhile, Korean imports to 
the U.S. have surged more than $12 billion, resulting in a net 
loss of 75,000 jobs--U.S. jobs. So why is that?
    Mr. BRIGHTBILL. Again, I think----
    Ms. VELAZQUEZ. Is it lack of enforcement?
    Mr. BRIGHTBILL. I think lack of enforcement, and there are 
powerful incentives in these other countries, even after a free 
trade agreement is reached, to keep their trade barriers up and 
to keep their markets closed. We hear this around the country 
so that is the challenge that we face in negotiating a good 
agreement and one that gives us ways to enforce it after the 
ink is dry.
    Ms. VELAZQUEZ. So my question is, do you expect that we are 
similarly being sold a false bill of goods regarding the TPP?
    Mr. BRIGHTBILL. That is a good question. I do not know the 
answer to that. I think it is a large agreement. It involves 
many countries. In some, I think there is potential for 
improvement. In others, I think it will be very difficult to 
get rid of those barriers even over time.
    Ms. VELAZQUEZ. I agree with you. The lack of enforcement 
obviously is going to produce the results that we have seen 
with the U.S.-Korean agreement.
    I have another question, and this has been central to the 
whole debate, and that is, how does currency manipulation 
affect small businesses?
    Mr. BRIGHTBILL. Yes. Well, currency manipulation is a form 
of a subsidy. The Peterson Institute of International 
Economics, very well respected by Congress, and the 
administration called currency manipulation ``the biggest 
subsidy of them all.'' And the estimates over time as to, for 
example, how much China's currency is undervalued, have ranged 
anywhere from 10 percent to 40 percent or more. So what we are 
seeking and what industry has sought in the legislation that is 
moving forward on the Senate side, is to say that the Commerce 
Department should look at currency manipulation as a subsidy, 
and if it finds it to be a subsidy, you impose a duty, like any 
other subsidy--a grant or a loan or a loan guarantee--to offset 
that unfair trade practice.
    Ms. VELAZQUEZ. Mr. Brightbill, for the record, should 
Congress require that free trade agreements, including the TPP, 
incorporate enforceable rules regarding currency manipulation?
    Mr. BRIGHTBILL. Yes, I think they should.
    Ms. VELAZQUEZ. Thank you.
    Mr. Bieron, as an intermediary operating in the U.S., eBay 
is not held liable for the unlawful actions of its users. Is 
this the case in foreign countries?
    Mr. BIERON. Internet liability law is different in 
different countries. We believe that it is clear, and I would 
like to be clear, that when eBay has knowledge of improper 
actions by our users anywhere, then there is liability. It is a 
case of the importance of when our users, unknowingly to us, 
are engaging in some kind of malfeasance--but it is different 
in different countries. We believe that actually U.S. law and 
Internet intermediary liability is the most pro-growth and is 
something that we think can be promoted through trade 
agreements.
    Chairman CHABOT. The gentlelady's time is expired but if 
she would like to follow up----
    Ms. VELAZQUEZ. How has that affected eBay's decision to 
enter countries that do not have such protections?
    Mr. BIERON. There is no question that we are able to 
operate more effectively in countries that have adequate 
Internet intermediary liability laws. It is just that they can 
be slightly different in different markets. We believe that 
promoting the standards and the balance that is in the DMCA and 
section 230 of the Communication Decency Act, the two 
cornerstone U.S. policies, these are important for our 
negotiators to achieve.
    Ms. VELAZQUEZ. Yes or no answer--do you feel that this 
issue should be dealt with in this pending free trade 
agreement?
    Mr. BIERON. Yes. We think it is an important priority.
    Chairman CHABOT. The gentlelady's time has expired.
    The gentleman from Missouri, the vice chairman of this 
Committee, Mr. Luetkemeyer is recognized for five minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman. And thank the 
members or the witnesses for being here today.
    I would like to follow up a little bit more on the currency 
manipulation question. The other three members or the witnesses 
of the panel, they did not get to answer the question, so Mr. 
Stanek, would you support something, a provision in the TPP on 
currency manipulation, or do you believe it is not something 
that needs to be addressed in the agreement?
    Mr. STANEK. Thank you, sir. It is not an issue that we have 
come up against directly, so I do not necessarily have a direct 
opinion on that.
    Mr. LUETKEMEYER. Mr. Messinger?
    Mr. MESSINGER. I would agree with that. I am not current on 
currency manipulation issues. It would be difficult for me.
    Mr. LUETKEMEYER. Mr. Bieron?
    Mr. BIERON. Small business trade over our platform is 
impacted by currency. Whether or not there should be a specific 
provision in the TPA on manipulation, I am really not 
comfortable making advice on that.
    Mr. LUETKEMEYER. It is interesting because I was talking to 
the president of one of the larger banks in the country, in 
fact, one that clears a lot of international transactions, and 
I asked him this question because I was leaning towards making 
sure there was something in the TPA and TPP to protect against 
currency manipulation. He said, ``You know what? It goes on all 
the time. We do it ourselves.'' So how are you going to keep 
currency manipulation from the Chinese and whoever against our 
own currency manipulation? I think it is a valid point and it 
points out the fact that this goes back and forth. I am not 
sure how you enforce that. Again, it gets back to Mr. 
Brightbill's point. So I appreciate the comments.
    With regards to intellectual property, to me, this is a 
really important thing, especially for all the small businesses 
because that is where a lot of innovation is driven from, the 
small business people. They come up with the ideas and they are 
the entrepreneurs that come up and have an idea and they 
develop a business around it and off they go. Do you see 
protections being developed in the TPA that would be something 
you support or is it not an extensive enough bill or authority 
at this point? What is your thoughts so far?
    Mr. Bieron? And just go down the line.
    Mr. BIERON. We believe that intellectual property 
enforcement is very important. We think that the balance that 
exists in U.S. intellectual property law is very important to 
promote innovation. And lastly, we believe that we are more 
likely to get sound intellectual property law with our trade 
partners through trade agreements than not through trade 
agreements.
    Mr. LUETKEMEYER. Mr. Messinger?
    Mr. MESSINGER. I would completely agree with that. We are 
not going to have an opportunity to get to those subjects until 
we have a trade agreement with these folks.
    Mr. LUETKEMEYER. But you believe it needs to be a part of 
the agreement?
    Mr. MESSINGER. Absolutely.
    Mr. LUETKEMEYER. Mr. Stanek?
    Mr. STANEK. Yes, sir. We believe very strongly that the 
intellectual property rights need to be protected in the trade 
agreements. Our small business members have enough challenges 
sometimes protecting their intellectual property domestically. 
They do not need to have the same types of issues on an 
international basis.
    Mr. LUETKEMEYER. Mr. Brightbill?
    Mr. BRIGHTBILL. Congressman, thanks for the question. We 
agree, and my clients agree, that intellectual property 
protection is a serious problem around the world and needs to 
be addressed. I do think my understanding is it is an area of 
emphasis in the TPP agreement, which is important.
    Mr. LUETKEMEYER. How do you enforce that?
    Mr. BRIGHTBILL. Sorry?
    Mr. LUETKEMEYER. How do you enforce patent infringement, 
intellectual rights?
    Mr. BRIGHTBILL. Well, patent infringement, there are 
various options. You can bring cases in district court. You can 
also bring a case at the International Trade Commission here in 
the United States, a section 337 action where if a foreign 
country is violating a patent or intellectual property, they 
can impose a barrier at the border to stop those counterfeit 
goods from coming in.
    Mr. LUETKEMEYER. Kind of interesting whenever the Chinese 
are over here swapping, trying to steal all of our intellectual 
secrets from a lot of our big manufacturers and we are worried 
about this. It is kind of ironic.
    Mr. BRIGHTBILL. Well, and Congressman, you are right. On 
trade secrets, there is more that could be done in our trade 
agreements there as well.
    Mr. LUETKEMEYER. Huge, huge problem. And I think the 
chairman needs to be congratulated on this because we have had 
a hearing on this before, so I thank him for this emphasis.
    Mr. Bieron, you talked about raising a threshold for 
minimum taxes on exports. Can you elaborate just a little bit? 
I have got about 30 seconds left and I have got one more 
question to ask before we get done.
    Mr. BIERON. I believe right now the de minimis, for 
example, in the U.S., is $200. The customs reauthorization 
proposes taking that to 800. Sellers on eBay, when they export 
and their product gets returned to them, they oftentimes find 
themselves paying import duties on their own return. Moving 
that up to 800 would reduce that burden for them.
    Mr. LUETKEMEYER. Okay. Very good.
    Very quickly, Ex-Im is a really big talking point around 
here. I think it is an important part of any export discussion. 
Do you support reauthorization or not, Mr. Bieron?
    Mr. BIERON. Ex-Im Bank is not something that our sellers, I 
think, are involved with.
    Mr. LUETKEMEYER. Okay. Mr. Messinger?
    Mr. MESSINGER. Absolutely. It is critical to small 
manufacturers.
    Mr. LUETKEMEYER. Mr. Stanek?
    Mr. STANEK. We support not only reauthorization but an 
increase to a 25 percent threshold.
    These are my personal views only. I do support Ex-Im 
reauthorization, but there are some troubling things that have 
happened at Ex-Im and those need to be looked at as well. China 
has recently formed an Asia Development Bank, so I think we do 
need a counterweight. China should not be the world's 
financier.
    Mr. LUETKEMEYER. Thank you. And I thank the chairman. I 
think this is the second hearing we have had a group of small 
business people who have indicated unanimously either support 
for or a neutral position on Ex-Im. I think it is important to 
note that, Mr. Chairman, that Ex-Im is a really, really big 
part of supporting small business in this country, and with 
that, I yield back.
    Chairman CHABOT. Thank you. The gentleman's time is 
expired.
    The gentlelady from New York, Ms. Adams, who is the ranking 
member of the Investigations, Oversight, and Regulations 
Subcommittee is recognized for five minutes.
    Ms. ADAMS. Thank you, Mr. Chair, North Carolina. Thank you, 
Mr. Chair.
    Chairman CHABOT. I apologize. North Carolina.
    Ms. ADAMS. That is all right. That is all right.
    Chairman CHABOT. I was wondering why you were smiling.
    Ms. ADAMS. I grew up in that area a little bit.
    Chairman CHABOT. Sorry about that.
    Ms. ADAMS. But yes, I claim North Carolina as home.
    Let me thank the ranking member as well, Member Velazquez, 
and gentlemen, for your testimony.
    Mr. Messinger, thank you for being here. And thank you for 
representing some of the finest companies that we have in North 
Carolina, particularly in the 12th District, which I represent. 
And I am proud to highlight North Carolina's best.
    But as we look to improve federal international trade 
programs to meet the needs of small business exports, can you 
offer any advice as to what sort of financial and counseling 
resources would better enable small business to begin exporting 
and help existing small business exporters grow 
internationally?
    Mr. MESSINGER. Thank you.
    As you know, the Department of Commerce has an outstanding 
export promotion office. In our early years we used them 
extensively. In addition, states have really good export 
offices, North Carolina in particular. I think there are 
adequate tools available if manufacturers will seek them out to 
help them promote exports. And I would further say that Ex-Im 
Bank is a tool that from time to time we have found critical in 
competing with our German competitor. And so I think 
reauthorization of Ex-Im would go a long way towards helping us 
compete.
    Ms. ADAMS. All right. Thank you.
    An ongoing discussion we have here on the Hill is whether 
or not to reauthorize the Export-Import Bank. And while many 
other countries have similar government export financing 
institutions, many of my colleagues cannot agree on whether to 
reauthorize Export-Import, or under what condition to 
reauthorize it. So can you speak to the significance of having 
small businesses effectively compete within the international 
markets and the importance of federal guarantees in supporting 
our small businesses internationally?
    Mr. MESSINGER. Yeah. Further to Ex-Im, and I do not know 
the agency and its balance sheet financial statement, but as I 
understand it, they return a substantial amount of money to the 
U.S. Government through their loan guarantees. Ex-Im supports 
far, far more small businesses than they do larger 
manufacturers. I know that the total volume of Ex-Im guarantees 
cover larger manufacturers, but without Ex-Im reauthorization, 
a lot of smaller people like ourselves get cut off from 
opportunities overseas.
    Ms. ADAMS. Okay. My last question is for Mr. Messinger, for 
you as well as Mr. Stanek.
    As Congress analyzes the arguments for and against TPP, and 
in the very near future the Trans-Atlantic Trade and Investment 
Partnership, better known as TTIP, it might be useful to go 
beyond the broad point of the potential to increase market 
access for the U.S. exports and ask the question, ``market 
access for who?'' What are the potential share of trade 
benefits or challenges that could accrue to small and medium-
sized business, and also, what about minority-owned businesses 
as well?
    Mr. MESSINGER. Well, I think the opportunities for all 
businesses exist with these agreements. I happen to believe 
that with free trade, open trade, relations improve between 
countries. I think we have seen that time and again. So I am 
fully supportive of that.
    Ms. ADAMS. Mr. Stanek?
    Mr. STANEK. Ms. Congresswoman, I believe that the greatest 
benefit that we receive from the trade agreements is the 
simplification of the process. Right now it is very complicated 
for a small business to attempt--particularly one who has not 
been in the export business previously--to engage in that with 
the various rules and regulations that exist around the world. 
And being able to simplify that whole process will open up the 
doors for exportation for so many more companies.
    Ms. ADAMS. Thank you, sir.
    Mr. Chairman, I yield back.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    Since the chairman screwed up and identified the lady from 
North Carolina as being from New York, I probably should say 
that the next questioner is from New York and not New York, but 
I will not do that.
    The gentleman from New York, Mr. Hanna, who is the chairman 
of the Subcommittee on Contracting and Workforce is recognized 
for five minutes, and I apologize to the gentlelady.
    Mr. HANNA. Thank you, Mr. Chairman.
    I want to make a comment about the Import-Export Bank--I do 
support it. I know, for example, Boeing is talking about 
exporting some of their jobs for manufacturing, I believe, and 
what is true, and you said this yourself, Mr. Messinger, is 
that there are hundreds and hundreds of small companies that 
depend on these larger companies to pull all this together and 
export their products.
    Mr. Brightbill, the assumption of enforcement is flying 
around the room here today, that it is actually doable. For 
example, currency manipulation in China, the numbers, as you 
said, go from 10 percent to 20 percent to 30. Nobody really 
knows, and it is a fungible number anyway because it is 
something that can change in a heartbeat.
    Two things. What do you think the actual number, say, is 
from China in your opinion? And are the things that we assume 
are enforceable--we listen to Elizabeth Warren and it is fair 
that in my office we get a lot of very negative calls over this 
because people are afraid. They look at what Ms. Velazquez says 
and they agree with her. So, but it is also clear we cannot 
wall ourselves off to a world of opportunity. So if the key to 
all this is telling people you are going to enforce things and 
make something change that you do not like, is it doable? And 
what have we seen that would lead us to believe that? We have 
not seen much. So how do you enforce--I mean, it is just a word 
if there are no teeth. So go ahead.
    Mr. BRIGHTBILL. Congressman, I think those are very good 
points.
    On currency manipulation, I do still believe that China is 
undervaluing its currency to favor its exports, and the history 
of that over the last five to 10 years is overwhelming. I mean, 
there are estimates that millions of American jobs have been 
lost and that has increased the U.S. trade deficit by $200 
billion to $500 billion per year. So you ask how to enforce it, 
what lawmakers have proposed is that you treat currency 
manipulation as account available subsidy. You let the Commerce 
Department look at it like any other subsidy. So if there is a 
financial contribution, if there is a benefit to Chinese 
companies as a result, and if it is specific, or an export 
subsidy, then you impose a duty at the end. And I think that 
the IMF and the Commerce Department and other agencies are 
capable of figuring out the extent of currency manipulation.
    Mr. HANNA. Somehow is the core of this argument though that 
you cannot deal with any of this unless you have agreements, I 
mean, in the absence of agreements, we have what we have. So in 
the presence of agreements we have more opportunity. And let us 
face it. Our tariffs are low. The goal is to lower everyone 
else's so that we can have more free movement. But if currency 
manipulation continues at some level then without enforcement.
    And the other thing that bothers me about this is the path 
to enforcement is impossible almost. I mean, you take a small 
company, and Mr. Messinger, I have actually used your 
equipment, thousands of pieces. You make good stuff. How do you 
respond to that? I mean, what do you----
    Mr. MESSINGER. Well, first of all, some of the enforcement 
change would be changes to U.S. law. They would not necessarily 
be in the trade agreements. We are just taking advantage of 
this opportunity while we are passing TPA or TPP, make these 
small changes to U.S. law and regulations at the same time. So 
I think that is possible.
    Another issue that we talked about is state-owned 
enterprises and how you address that. My understanding is that 
the TPP does, for the first time, address the problem of state-
owned enterprises competing with U.S. companies around the 
world, and it would allow U.S. companies and the U.S. 
Government to get information. So if they see unfair 
competition in China or a third country, or even here in the 
United States, they can get information on that and they can 
raise it in dispute settlement in the trade agreement itself. 
So you have to make the dispute settlement process work in that 
trade agreement to be able to enforce it.
    Mr. HANNA. So you see that as a positive thing obviously 
because we do not have a good system now.
    Mr. MESSINGER. We do not have any system for addressing 
state-owned enterprises.
    Mr. HANNA. Right. I mean, and Boeing has Airbus subsidized 
company; right?
    Mr. MESSINGER. Exactly. Now, that we have tried to address 
at the World Trade Organization with mixed results.
    Mr. HANNA. Thank you for your time.
    Thank you, Chairman.
    Chairman CHABOT. Thank you.
    The gentleman yields back.
    And the chair would like to note the presence of some 
guests here this morning from American Samoa, some high school 
students, and I would like to defer to the gentlelady from 
Samoa, Ms. Radewagen, if she would like to say something.
    Ms. RADEWAGEN. Thank you, Mr. Chairman.
    Yes, I would like to welcome some of our future leaders of 
American Samoa. These students are here participating in the 
Close Up program.
    I have a couple questions for you, Mr. Messinger.
    Chairman CHABOT. If you do not mind, I have to go over to 
this side.
    Ms. RADEWAGEN. Okay.
    Chairman CHABOT. I will be back.
    Ms. RADEWAGEN. Thank you, Mr. Chairman. I yield back.
    Chairman CHABOT. Thank you very much. And we welcome our 
guests here this morning for being here. Thank you very much.
    And the gentlelady from California, Ms. Hahn, is recognized 
for five minutes.
    Ms. HAHN. Thank you, Mr. Chairman. A point of personal 
privilege, I would also like to welcome a guest. Trevana is 
here. A lot of us are wearing these blue ribbons. It is 
National Foster Care Week, and there are a lot of youth who 
have been in the foster care system who are shadowing a member 
of Congress today. So she is my shadow all day today.
    So thanks for holding this hearing. I think it is really 
appropriate as we are talking about TPA and TPP to listen to 
how it affects our small businesses. And Mr. Messinger, I was 
noting that in one of the papers up here, I think it was The 
Hill, talked about the American Association of Manufacturers is 
against TPP because they feel like it has lost manufacturing or 
it will lose manufacturing jobs. So I was just going to ask you 
what you think should specifically be in this deal that would 
protect small businesses, particularly those who are in the 
manufacturing area. What would you like to see specifically in 
these deals for manufacturers that would make it a good deal?
    Mr. MESSINGER. Well, first of all, I am not familiar with 
that association and their work. As I testified earlier, the 
history of trade agreements and job growth in the manufacturing 
sector is very clear. We have continued to grow manufacturing 
jobs. Even in Korea, manufacturing jobs were increased. Part of 
the issue in Korea is that the economy collapsed.
    Ms. HAHN. So what would you specifically like for us to pay 
attention to in these deals that would protect small 
businesses?
    Mr. MESSINGER. It is hard to say. I am not a legislator. I 
have not seen the details of a bill. The main interest that we 
have is tariff reduction. And as I testified, we are facing--we 
open our markets to everybody seemingly and yet we are closed 
in so many opportunities overseas. So that is the most 
important issue to us.
    Ms. HAHN. Okay, thank you.
    You know, I represent the Port of Los Angeles, the 
largest--along with Long Beach is the largest port complex in 
this country, and they are very good about having programs for 
small businesses. It is called Trade Connect, and they attempt 
to reach out to small businesses and educate, even handhold, 
talk about access to capital to allow small businesses to 
understand what it would mean to connect to the international 
trade industry. But Mr. Bieron, I was wondering, listening to 
you and talking about eBay and ecommerce, is that a model that 
we could or should update to educate small businesses in the 
intricacies of ecommerce? It is a good model but maybe it needs 
updating.
    Mr. BIERON. I think, yes. I think that it is a way to get 
far more small businesses exporting. I think that it is not as 
complicated as traditional exporting, which is why the numbers 
are so vastly different, but one of the five points that we 
talk about with the Global Empowerment Network is, in fact, 
knowledge of how e-commerce can lead to exporting. And so we do 
think that there is a role to get that word out.
    Ms. HAHN. And what exactly have you done to maybe get that 
word out to some of these Trade Connect programs that currently 
exist here?
    Mr. BIERON. For example, eBay has a relationship with the 
Department of Commerce, and in fact, about a month ago we had a 
group of sellers, small business sellers, here in town meeting 
with some pretty senior officials over at the Department of 
Commerce to talk about how the existing trade promotion export 
support programs can be updated to reflect ecommerce small 
businesses, so we are just beginning that process.
    Ms. HAHN. Great. Thank you very much.
    I yield back.
    Chairman CHABOT. The gentlelady yields back.
    The gentlelady from American Samoa, Ms. Radewagen, who is 
the chairman of the Subcommittee on Health and Technology is 
now recognized for five minutes.
    Ms. RADEWAGEN. Thank you, Mr. Chairman.
    Again, I want to welcome our students who traveled 10,000 
miles to be here with us today. We are all very proud of them.
    Mr. Messinger, I have a couple of questions for you. We 
hear one of the largest barriers for exporting is understanding 
and complying with foreign regulations. Can you explain how you 
keep up with all the changing foreign regulations, including 
technical barriers and changes in tariffs?
    Mr. MESSINGER. We cannot keep up with all of that. You 
know, we are a small company. We do what is right. We build 
machinery that is compliant with European standards, all 
international standards, and support it with outstanding 
service, and that is really all we can do.
    Ms. RADEWAGEN. Thank you.
    To better assist with export coordination, what tools 
should policymakers strengthen or reexamine for inefficiencies 
to help small businesses' efforts to start or increase trading 
opportunities? Mr. Messinger?
    Mr. MESSINGER. Well, as I said earlier, I think the 
Department of Commerce has outstanding resources. Many of the 
states have tremendous programs, and quite frankly, a lot of 
our international market intelligence just comes from the 
Internet. You just get on and start asking questions and 
looking around and it is amazing what you can find.
    Ms. RADEWAGEN. And lastly, this is your day today, Mr. 
Messinger, when you are looking to export to a new market, what 
is your biggest obstacle, either domestic or international?
    Mr. MESSINGER. Wow, that is a good question.
    For the most part if is the energy and the money that we 
might have available at any point in time to attack that 
market. We assess a market by its financial conditions. Do they 
have enough foreign exchange? Are they earning enough foreign 
exchange that the labor machine ratio favors machinery versus 
hand labor? If it does, then we are going to go out and see if 
we can scratch something in the dirt and make something happen. 
So it is probably not a limitation other than just the local 
economy.
    Ms. RADEWAGEN. Thank you, Mr. Chairman. I yield back.
    Chairman CHABOT. The gentlelady yields back. Thank you.
    And the gentleman from Nevada who is chairman of the 
Subcommittee on Investigations, Oversight, and Regulations is 
recognized for five minutes.
    Mr. HARDY. Thank you, Mr. Chairman.
    Most of you already spoke on currency manipulation and that 
you really do not have much familiarity, but Mr. Brightbill, 
the question I have for you is would currency manipulation be 
better off under the Treasury, handled under the Treasury 
rather than under the TPA? Just a question.
    Mr. BRIGHTBILL. Congressman, we are concerned that what the 
Treasury Department does currently is not enough. Every six 
months the Treasury Department is supposed to certify which 
countries are currency manipulators, and throughout the entire 
Obama administration it has refused to name China as a currency 
manipulator. So I do not think Treasury alone is the solution 
to this, which is why my clients support a procedure that would 
allow the Commerce Department to determine whether currency 
manipulation is a subsidy. In addition, there is also the TPA 
Amendment advanced by Senator Portman from Ohio that would have 
enforceable requirements for currency manipulation to be 
addressed in free trade agreements like TPP.
    Mr. HARDY. Thank you.
    This is kind of across the panel here. You have all had 
success in what you are doing trading overseas. What advice 
would you give small business to get them to maybe get more 
involved? What advice would you give them to help them have a 
little courage to step out there and start using the foreign 
markets? Does anybody care to start with that one?
    Mr. BIERON. I think the eBay marketplace is a little 
different. As we have heard from most small businesses, nearly 
all of our small businesses do export. Honestly, one of the 
things we have encouraged them to do is contact Capitol Hill 
about TPA because we believe new trade agreements are the only 
way we are going to get a focus on microbusinesses who export 
because this is a very new model for exporting by small 
businesses.
    Mr. MESSINGER. What I have found in talking with 
manufacturers that do not do a lot of exporting is that there 
is some times a fear of the unknown, yet there are 
opportunities for just about everyone overseas. Unless you have 
a desire to start really looking overseas, you certainly are 
not going to find it. But as I mentioned earlier, get on the 
Internet, pose some questions, look in your industry at what 
might be going on, and it is unbelievable what you can find.
    Mr. STANEK. Congressman, we have found our freight 
forwarded to be of immense help to us. The employees at the 
freight forwarder are able to help walk us through a lot of the 
regulations that we are personally challenged with, and I would 
recommend someone looking to get into the arena to speak with a 
good freight forwarder and help initiate that process.
    Mr. BRIGHTBILL. Congressman, I think I would focus on the 
trade barriers and some of the bigger problems. One of the 
biggest ones that we have not talked too much about is the lack 
of common standards and harmonization of standards. We are 
trying to negotiate a free trade agreement with the European 
Union right now but there has not been a lot of movement on the 
very different regulatory systems. I mean, if a product is safe 
and effective here, that should be suitable in the European 
Union as well and we just have not seen a lot of movement from 
the EU on that. So I think that is something that needs to be 
looked at as these trade agreements are negotiated.
    Mr. HARDY. Thank you. You just led into my next question, 
because I think some of those discussions--do you feel like you 
being involved in this trade TPA as businesses in the 
discussion of fair trade, balanced trade, do you feel like your 
voice is being heard? Because sometimes I feel like being new 
here, that we do not utilize the real experts, the real people 
who get harmed or benefit enough. Does everybody--go ahead.
    Mr. STANEK. I feel that we are being heard through our 
trade association. If not for the trade association, the 
National Small Business Association, I think individually we 
would have a difficult time being heard, but I believe our 
voice is heard via that route.
    Mr. HARDY. That is good to hear.
    Mr. BRIGHTBILL. Well, the NAM for sure. They are vocal on 
these issues.
    Mr. BIERON. I think we are trying to be heard but the small 
businesses using the Internet to sell globally is such a new 
phenomenon that I feel like the trade infrastructure of 
Washington and really other major capitals, they are not really 
aware of how much of the small business trade is actually going 
on, so that is a real challenge.
    Mr. HARDY. Thank you.
    Mr. BRIGHTBILL. I would just agree. I think small 
businesses face a real challenge. I mean, the pharmaceutical 
industry, big manufacturers can get their voices hard. It is 
much tougher for small businesses to get their priorities out 
there and incorporate it into these agreements.
    Mr. HARDY. Thank you.
    Can I ask one more question, Mr. Chairman?
    Are there any ideas of how we can do a better job of 
bringing small business into that discussion better?
    Mr. Brightbill?
    Mr. BRIGHTBILL. It is difficult. As you know, the text of 
the TPP, for example, has not been released yet. There are 
chapter summaries that are available to cleared advisors. I am 
a cleared advisor, so I can go to a room and read those 
summaries. But it is hard to know if you do not know what the 
provisions are or where they stand. So that is a real 
challenge. I can give that some more thought, and if I have 
some other answers I would be happy to respond in writing after 
the hearing.
    Chairman CHABOT. The gentleman's time is expired.
    The chair would just note for the record that one of the 
mechanisms for the small business community around the country 
to get to Congress what it is they think about TPP and other 
things is this committee and us holding hearings, and that is 
what we are doing today. And this panel has done a commendable 
job, and I think the attendance of the members here today has 
been good on both sides, too, so we are listening, and 
hopefully we will enter that into our ultimate decisions on how 
we vote on these things. So I would just note that for the 
record.
    And the gentleman from South Carolina, Mr. Rice, who is the 
chairman of the Subcommittee on Economic Growth, Tax, and 
Capital Access is recognized for five minutes.
    Mr. RICE. I want to ask each of you this. Where we do not 
have a trade agreement at all, would each of you agree that we 
face more barriers on exports than we place on imports?
    Mr. Brightbill?
    Mr. BRIGHTBILL. Where we do not have a trade agreement, you 
are saying are there more barriers on export than there are on 
imports? Certainly. We are the most open and transparent market 
in the world, and I agree with the statistics earlier as far as 
the immense challenges, ones that are in the laws as well as 
laws that we do not even know about in foreign countries. So I 
definitely agree.
    Mr. RICE. Mr. Stanek?
    Mr. STANEK. I would agree also. And all we are looking for 
is a balanced playing field.
    Mr. RICE. Mr. Messinger?
    Mr. MESSINGER. Absolutely. As my testimony indicated, we 
are given our market and we are not getting that much in return 
at times.
    Mr. RICE. Mr. Bieron?
    Mr. BIERON. I would agree and just note that the amount of 
exporting being done by small businesses is pretty remarkable 
given the current playing field.
    Mr. RICE. Probably a lot because, as you said earlier, it 
is flying under the radar screen and the government has not 
stuck their hands into it yet; right?
    So what you are saying is that we are less competitive in 
the world when we do not have trade agreements. Would you agree 
with that?
    I know that Volkswagen, in the past five years or so, was 
looking to locate a facility in South Carolina where I am from, 
was on the list, and they ended up going to Mexico because we 
did not have a trade agreement. Arcelor Mittal in my district, 
a steel company in Georgetown, South Carolina, just announced 
they are closing in four months. They will lose about 300 jobs. 
And they cited as the primary reason unfair trade from China on 
steel. So I do think trade agreements are really important. I 
do not think they are a panacea. I do not think they solve all 
the problems. I do not think you can. There are too many ways 
in my opinion.
    Mr. Brightbill, could you define for me, what is currency 
manipulation?
    Mr. BRIGHTBILL. Sure. Currency manipulation, and it is 
defined more clearly in other studies and things, but I think 
it is generally defined as prolonged intervention by a 
government that leads to maintaining currency levels or pushing 
them in a specific direction for an extended period of time.
    Mr. RICE. I would ask the rest of you guys, Mr. Stanek, 
what do you think is currency manipulation?
    Mr. STANEK. I would suggest that it is a country unfairly 
moving its currency to impact itself favorably at the expense 
of other countries.
    Mr. RICE. I would ask the rest of you all this question but 
it is really probably not in your area of expertise.
    Mr. Brightbill, how do you manipulate currency?
    Mr. BRIGHTBILL. There are many ways that currency can be 
manipulated. All I would say is that the evidence of what has 
happened with China over the years and other countries makes it 
clear that there is a problem here, that it has harmed U.S. 
businesses, and that we do need to take action to address it, 
and I think we should take action in trade agreements and also 
under U.S. law.
    Mr. RICE. And I am going to ask you just very obvious 
questions, but so if a country, let us say, manipulates its 
interest rates to artificially low levels, does that have an 
effect on the value of its currency?
    Mr. BRIGHTBILL. You could look at that under using Commerce 
Department subsidy rules and decide is that an unfair subsidy 
that distorts the playing field, or is that something else? So 
I think there are ways of creating----
    Mr. RICE. I mean, there could be cogent arguments that the 
United States is manipulating its currency; right?
    Mr. BRIGHTBILL. I think that----
    Mr. RICE. I am just asking if there is an argument.
    Mr. BRIGHTBILL. Sure. Arguments can be made against us 
around the world on any topic, but I think the evidence does 
not demonstrate that the United States is manipulating currency 
in the same way as China.
    Mr. RICE. And I understand that. I am not trying to be 
overly argumentative, but I think China might disagree with you 
on that.
    Now, with respect to prolonged deficit spending, does that 
have an effect on currency valuation?
    Mr. BRIGHTBILL. Well, I think you could evaluate all of 
these. I would say that companies like ArcelorMittal and others 
in the steel industry would argue that currency manipulation 
hurts their ability to export and to compete around the world. 
And I think they would like something----
    Mr. RICE. And I agree with you. The point I am trying to 
make is that there are myriad ways to, I mean, from tax policy 
to income tax policy to government regulation to things that 
you would not consider as currency manipulation, to manipulate 
currency. And I do not know. The trade agreement is just going 
to be a framework, and we have to do the best we can to set up 
enforceable mechanisms. But we, honestly, I do not believe, can 
sit here and foresee all the potential ways that a country 
could manipulate trade, and we have to do the best we can with 
our framework to make us more competitive, because everybody 
sitting here in this panel, and I think everybody sitting here 
on this panel agree that where we are without a trade agreement 
is a bad place. I mean, we all know we are making ourselves 
less competitive by not doing what we can to strike down these 
barriers to our exports.
    And my time is over. Thank you very much.
    Chairman CHABOT. The gentleman's time is expired.
    And the gentlelady, the ranking member is recognized. She 
wanted to ask a follow-up question.
    Ms. VELAZQUEZ. Thank you.
    Mr. Brightbill and Mr. Stanek, you mentioned before that we 
need to help, and Mr. Messenger, you also mentioned that at the 
beginning you got a lot of assistance from the Department of 
Commerce. And so some of those programs will help small 
businesses get the type of technical assistance that will help 
them take advantage of the overseas market. But when I meet 
with small business exporters, one area where it is challenging 
for them is to find affordable export financing. The Ex-Im Bank 
can fill the void that exists, but there is a debate going on 
here in terms of whether the Ex-Im Bank is providing the 
assistance that small businesses need. Here we are debating 
this massive free trade agreement that is supposed to open and 
provide more opportunities for small businesses, and yet when 
you look at the reauthorization language of the Ex-Im Bank, it 
does not increase the small business lending cap that was put 
in place years ago by 20 percent.
    So Mr. Brightbill, you said that there are some areas that 
need to be addressed within the Ex-Im Bank. Can you mention one 
or two?
    Mr. BRIGHTBILL. Sure, Congresswoman. Great question.
    Like I said, I do support reauthorization, but there have 
been abuses of the system. There have been some concerns about 
how loan recipients are selected. I can tell you some of my 
clients also have concerns when loans are made abroad to 
companies that then manufacture or mine raw materials, for 
example, that then end up in foreign steel that comes back at 
dumped and subsidized prices. So there are concerns about who 
Ex-Im lends to, the procedures for lending, and also, as you 
say, small business concerns as well, and those should be 
looked at carefully as part of this debate.
    Ms. VELAZQUEZ. Thank you.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    I would like to thank the witnesses for being here. Our 
panel, I think, has given us excellent testimony. Trade is 
clearly one of the more important issues that Congress is going 
to be facing in the upcoming weeks and months when one 
considers TPA, TPP, TTIP, and the Ex-Im Bank, and a range of 
other issues, and I think you made a great contribution, all of 
you, towards this Committee, and our colleagues understanding 
and grasping this issue, and hopefully doing the right thing.
    I ask unanimous consent that members have five legislative 
days to submit statements and supporting materials for the 
record. Without objection, so ordered. And if there is no 
further business to come before the Committee, we are 
adjourned. Thank you.
    [Whereupon, at 12:24 p.m., the Committee was adjourned.]
                            A P P E N D I X


                              TESTIMONY OF


                              Brian Bieron


              Executive Director, Global Public Policy Lab


                               eBay Inc.


                               BEFORE THE


                 United States House of Representatives


                      Committee on Small Business


  Across Town, Across Oceans: Expanding the Role of Small Business in 
                            Global Commerce


                               PRESENTED


                Rayburn House Office Building, Room 2360


                              May 20, 2015


                               11:00 a.m.

    Chairman Chabot, Ranking Member Velazquez, and members of 
the Committee, thank you for inviting eBay to testify on how 
small businesses are using technology to expand their economic 
opportunity by reaching international markets. Our company is a 
truly global business--with approximately 60% of our gross 
merchandise volume coming from activity outside the United 
States. We enable over 150 million users in over 200 countries 
to engage in technology-enabled commerce.

    eBay is a U.S.-based global technology company that enables 
hundreds of thousands of U.S. entrepreneurs, small businesses, 
as well as mid-size and large businesses, to reach customers 
around the world. Through our experience, we have found that 
technology is transforming trade by allowing Main Street 
businesses to directly take part in globalization, reaping the 
benefits of markets previously only open to the largest global 
companies.

    The prototypical model for trade by small businesses has 
involved plugging into the supply chain of a large multi-
national company. This model continues to be the dominant model 
for trade, but there is an emerging model for trade by small 
businesses that is incredibly exciting because of its socio-
economic impact.

    Our unique experience at eBay demonstrates how the Internet 
and mobile technology are now powering global trade by small 
and micro-businesses. These micro-multinationals include 
businesses like: The Music Farm in Canton, Ohio, which exports 
more than 40% of its inventory to customers overseas and has 11 
employees; and Great Sky Gifts in Kalispell, Montana, which 
exports to 99 countries with only four employees.

    My team has spent the last four years conducting research 
on the growth of global trade by micro-multinationals. Most 
recently, we completed the, ``2015 U.S. Small Business Global 
Growth Report''. I would like to offer to submit a copy of the 
report for the Committee record.

    Our report shows that the Internet and platforms like eBay 
are revolutionizing global trade by opening it up to even the 
smallest enterprises. In the US, the Small Business 
Administration has found that between 1% and 2% of small 
businesses export. By contrast, on eBay, 95% export. The 
traditional small business exporters reach on average two 
markets a year. On eBay, 190,000 US small businesses reached 4 
continents in 2014. Our data also shows that these micro-
multinationals survive at a higher rate, meaning they continue 
to export while traditional businesses stop exporting because 
of the tremendous barriers to trade that they face. And 
newcomers capture a larger overall market share than 
traditional small businesses, meaning the online marketplace is 
more inclusive for small businesses. The global trade regime is 
changing before our eyes.

    This new ``Inclusive Globalization'' depends on four 
components that make up what we call the Global Empowerment 
Network: 1) access to the Internet; 2) access to global 
services that exist on top of the Internet; 3) an efficient 
small package shipments logistics network; and 4) an 
educational system for businesses to learn about online 
opportunities.

    Unfortunately, these four tenants of the Global Empowerment 
Network are undermined by trade barriers. At eBay we have been 
working to tackle the barrier of language. As a result of our 
investment in machine translation technology, we have lowered 
language as a barrier to trade by 66% since 2004. But 
technology alone cannot solve all of the trade barriers that 
micro-multinationals face.

    I will offer three policy recommendations to improve the 
global ecosystem for micro-multinationals. First, raise the US 
low value customs ``de minimis'' threshold and de minimis 
thresholds around the world. The de minimis threshold is the 
level below which imports are exempt from duties and paperwork. 
Micro-multinationals trade in low-value shipments and raising 
the de minimis would allow products to reach global customers 
with less friction. The Customs Reauthorization Act here in the 
House would raise the US de minimis and I urge you to support 
that bill.

    Second, modernize the global postal service system. Micro-
multinationals regularly utilize postal services because of 
their wide-spread networks. Modernizing postal services to meet 
the needs of micro-multinationals engaging in package trade 
directly with consumers could greatly help to grease the wheels 
of modern small business trade.

    Finally, the US government has many excellent programs 
designed to help US businesses, but many of these programs were 
not developed with small, global eCommerce businesses in mind. 
I urge the Committee to review existing government programs to 
be more inclusive of micro-multinationals.

    Today we are witnessing the dawn of a new era of 
globalization. Small and mid-sized businesses contribute to 
their local economy and regularly serve customers around the 
world. This is good economics because it means more growth and 
wealth, and it is good for society because it means a more 
inclusive form of globalization. I urge the Committee to keep 
micro-multinationals on top of mind as it seeks to protect and 
promote cross-border trade opportunities for small businesses.

    Thank you again for the opportunity to address the 
Committee on this important and timely topic. I look forward to 
answering your questions.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Good morning. I would like to thank Chairman Chabot, 
Ranking Member Velazquez and the members of the Committee on 
Small Business for inviting me to testify today on issues 
related to challenges facing small-business exporters and the 
impact U.S. trade policy has on small businesses.

    My name is Michael Stanek and I am the Vice President and 
Chief Financial Officer of Hunt Imaging LLC, a manufacturer of 
dry and liquid electrostatic toners and developers used 
primarily in high speed computer printers. Hunt Imaging is 
headquartered in Berea, Ohio just outside of Cleveland in a 
100,000 square foot manufacturing facility we have occupied 
since 1974. We also have a 12,000 square foot facility outside 
of Antwerp, Belgium but are currently in the process of 
shutting down that operation as sales throughout Europe have 
declined to a level that make it financially unfeasible to 
maintain it as an ongoing entity.

    Although more than 99 percent of all businesses in the U.S. 
and European Union (EU) are classified as small and medium-
sized enterprises (SMEs), accounting for the vast majority of 
employment, and adding more than 14.3 million new jobs to the 
U.S. economy--we are still struggling to keep our European 
operations open due to both economies being mired in sluggish 
and uninspiring recoveries.

    I am proud to be here representing not only my company but 
also the National Small Business Association (NSBA)--the 
nation's first small-business advocacy organization for whom I 
serve on the Board of Trustees, and its international arm, the 
Small Business Exporters Association (SBEA). I also serve as 
the First Vice Chair of the Board of Directors at an NSBA 
affiliate, the Council of Smaller Enterprises (COSE) in 
Cleveland, Ohio, the nation's largest regional small business 
association.

    Hunt Imaging was founded in 1996 as a spinoff from a 
Fortune 200 company with more than 90 years of imaging 
chemicals experience. With both dry and liquid capabilities, 
Hunt is able to service a broad array of needs in the imaging 
industry. Our current focus is on the high speed computer 
printer market with a particular niche in magnetic image 
character recognition (MICR) toners. We supply some of the 
largest printer manufacturers on an Original Equipment 
Manufacturer (OEM) basis and compete in the aftermarket as well 
with a Hunt labeled product. We currently employ thirty-five 
hard-working individuals between our two facilities and will 
maintain a workforce of thirty-one after our downsizing is 
complete.

    Challenges to Exporting

    The fact that Hunt Imaging is a Fortune 200 spinoff is very 
germane to the foreign trade topic as the background and 
experience many of our employees gained from being part of a 
large company gave us an advantage over most other companies 
our size when it came to exporting. Not only did we inherit an 
ongoing operation in Europe that made us very unique for a 
company our size, but our original employees brought with them 
the knowledge of how to deal with freight forwarders, customs 
brokers, export/import documentation, and other items that are 
specific to the export arena.

    Without this innate knowledge, we would have been facing 
the same legal, administrative and regulatory barriers that so 
many of my colleagues face when they decide to enter into the 
global marketplace. The fact that nearly half of the exporters 
who responded to a 2013 NSBA and SBEA Exporting Survey citing 
they spend a few months or more preparing to export is a clear 
indicator of the complexity faced by new exporters and the need 
for improved, streamlined assistance. The average small-
business exporter reported spending approximately 8.4 percent 
of their annual operating revenue on preparing to export. To 
put that in context, the average S-Corporation reports spending 
11.1 percent of their annual operating revenue on salaries and 
wages, according to the most recent information available from 
the Internal Revenue Service.

    Clearly, for Hunt, having the foreign operation and an 
existing book of foreign customers when we spun off had us in 
the export business--with a clear advantage--from the very 
beginning of life as a stand-alone entity. We did not fully 
comprehend at the time how unique we were in comparison to the 
vast majority of companies our size which are at a loss when it 
comes to having that background, yet join us in the challenge 
of having limited resources upon which to draw when it comes to 
learning new practices and in keeping up with ever-changing 
rules and regulations. Developing foreign markets is a 
significant 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.

    Our history in exporting has been varied, with more recent 
sales being focused in the European footprint and Canada. We 
have also in the past year sold into Brazil but have done so 
via a customer in Miami, Florida who has handled the actual 
exportation. We have handled our recent Brazilian shipments in 
this fashion as the Miami company has a pre-existing 
relationship with the Brazilian customer and it also shields us 
from economic unrest in the Brazilian economy.

    Finding effective distribution partners has been essential 
for us in identifying new customers, in new countries and 
understanding the different regulatory requirements. Without 
them, we would have had to spend a considerable amount of time 
finding labeling, shipping, certification requirements and all 
of the other relevant rules that apply to doing business in 
Brazil. The time that we devote to an export transactions is 
time that we won't be devoting to some other, equally important 
business operation. One often has to wonder if it is even worth 
trying to expand into new markets. Other destinations to which 
we have exported directly, although not recently, have included 
the Philippines, Egypt, and Pakistan.

    Service to our customers in Europe has been handled through 
our Belgian facility, a luxury which we will lose shortly due 
to the aforementioned economic decline. We have historically 
produced all of our toner in our U.S. facility in Berea and 
would then export in bulk to our branch in Belgium where the 
toner would be packaged for sale to European customers. We are 
now in the process of changing the relationship with our 
largest European customer out of Germany and will both produce 
and package their product there in the U.S. and then export it 
directly to them.

    This change in shipping point has resulted in a number of 
challenges for us to face. We now have to look at numerous 
facets of our operation, from things as basic as now having to 
order, inventory and utilize Euro pallets for shipping to much 
larger challenges such as addressing the REACH (Registration, 
Evaluation, Authorization, and Restriction of Chemicals) issue 
and its attendant certifications. The REACH issue in particular 
has been challenging for a small business such as ours to, 
first, fully understand, and second, to meet the criteria.

    REACH is a regulation of the European Union (EU) which came 
into force in 2007 and addresses the production and use of 
chemical substances. The 849 pages of legislation have been 
described as the most complex legislation in the European 
Union's history and affects industries throughout the world.

    REACH requires all companies manufacturing or importing 
chemical substances into the EU to register those substances 
with the newly established European Chemicals Agency (ECHA) in 
Helsinki, Finland. In our case this registration is necessary 
for every raw material contained in our toner formula.

    We were previously REACH compliant through our Belgian 
branch but with our new direct sales approach from the U.S. we 
are looked at as a new company and required to make new 
registrations. While our customer in Germany is technically 
responsible for the registration as the importer of the product 
they have insisted that we handle the registrations. Many 
European companies will not consider purchasing from outside 
the EU unless the exporter assumes all REACH registration 
responsibilities.

    The required registration can be handled by establishing a 
relationship was an organization within the EU termed an ``Only 
Representative'' (OR), OR consultancy companies exist outside 
the EU but it is not possible to register a substance if the OR 
is not based in the EU unless it is subcontracted to an EU-
based registrant. The OR assumes responsibility and liability 
for fulfilling obligations of REACH for substances being 
brought into the EU by a non-EU manufacturer. However, the cost 
of engaging an OR can be in the tens of thousands of dollars, 
putting it well out of reach of a typical small-business 
exporter.

    As an alternative to engaging an OR ourselves, we have been 
forced to take another, though no less time-consuming, 
approach. Each of the suppliers of our raw materials are large 
companies and all are also non-EU manufacturers. In response to 
the REACH regulation they have each found it necessary to 
individually contract with an OR in the EU. As the products 
which they are supplying to us are fully registered through 
their ORs we have been able to negotiate agreements with each 
of them that are allowing us to `piggyback' on their 
registration by extending their OR appointments to include the 
distribution of substances via Hunt Imaging to our customer. 
These negotiations and the subsequent paperwork to effect the 
relationships have consumed a significant amount of time and a 
fair amount of legal and consultancy expense.

    The REACH issue in Europe is only one of myriad challenges 
that need to be faced and addressed when a small business is 
looking to export. For a business without the internal 
resources to address these challenges it becomes a matter of 
finding outside assistance which in and of itself can become 
both time-consuming and cost-prohibitive.

    Possibly the biggest exporting challenge for a small 
business, and certainly ours, is finding international 
opportunities to pursue. When we were part of a large 
multinational corporation we had a worldwide network of 
colleagues who could not only pinpoint opportunities for us but 
also pursue them on our behalf. As a small stand-alone 
organization we are challenged to uncover potential sales 
opportunities and have struggled with identifying domestic 
resources to assist in that process.

    Participating in the trade show circuit, both as an 
exhibitor and as attendees, has proven to be of limited value 
to us. In addition to numerous domestic trade shows we also 
have been an exhibitor at Drupa, the largest printing 
exhibition in the world, held every four years in Dusseldorf, 
Germany. This show attracts nearly 2,000 exhibitors and 
300,000-400,000 visitors. Again, the results as far as new 
business have been disappointing. We've picked up a few small 
sales but never anything that has justified the cost of 
exhibiting nor any business that we can maintain once our doors 
are closed in Belgium.

    Once new customers are identified and a sales agreement is 
reached the next step is, of course, exporting the product to 
the customer. After 19 years as an independent organization our 
knowledge base from previously being part of a multinational 
corporation was waned. We now rely very heavily on our freight 
forwarder to advise us of rules and regulations and have, in 
fact, passed along power of attorney on export related issues 
to our freight forwarder.

    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.

    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. I have been pleased to see in the past few 
years, there has been a concerted effort by the administration, 
Congress and regulators to improve and enhance exporting 
opportunities for small businesses.

    What Can Be Done

    It should come as no surprise that the results from the 
NSBA/SBEA Exporting Survey shows that fifty-five percent of 
SME's export to less than five 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. Additionally, the survey highlights that 
forty-seven percent of small-business owners are the ones 
handling the bulk of their exporting activities; this is on top 
of running the day-to-day operations of the business, and 
oftentimes serving as the accountant, benefits coordinator, 
attorney and personnel administrator.

    One-Stop-Shop

    It is critical for policymakers to understand that, for a 
small business, more information isn't always a better 
information. With more than twenty federal departments and 
agencies playing some role in international trade, it is 
important that SMEs have a place to turn. Many of these 
agencies overlap and offer duplicative services. I would 
recommend the creation of a One-Stop Shop--ideally within the 
Department of Commerce and more specifically the International 
Trade Administration (ITA)--that would have 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 which serves as a major barrier 
to entry into global trade. 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.

    Trade Agreements

    Trade agreements are a vital part of the effort to increase 
country and customer range, as well as the value of small-
business exports. Free trade agreements are extremely important 
as they lower foreign barriers to our exports and produce a 
more level playing field. Lowering the ``hassle factor'' of 
exporting to specific countries helps to increase the 
attractiveness of those countries to smaller companies. And 
when trade agreements succeed in lowering exporting costs, they 
broaden the range of export profitability for American 
companies and American products.

    For successful negotiations, it is critical the president 
have the authority to negotiate trade agreements through Trade 
Promotion Authority (TPA). TPA, which expired in 2007, is 
crucial to the passage of trade deals through Congress because 
it allows the agreements to advance under ``fast track'' rules 
with no amendments. Without TPA, the U.S. is relegated to the 
sidelines as other nations negotiate trade agreements without 
us--putting American workers and companies--especially small 
ones--at a competitive disadvantage. New and expanded market 
access through trade agreements has been an important catalyst 
for increased small business exports. I am pleased to see that 
Congress has begun consideration on TPA, and am hopeful both 
chambers will have constructive debate and pass this important 
legislation as soon as possible.

    At Hunt, 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. It has been 
shown that following the implementation of the North American 
Free Trade Agreement (NAFTA), American SME exports to Canada 
and Mexico skyrocketed. Small businesses represent over 95 
percent of all U.S. exporters to the NAFTA market. This same 
type of success is achievable with other trade deals.

    Currently, the administration is negotiating two broad 
trade agreements: the Transatlantic Trade and Investment 
Partnership (T-TIP), with members of the EU and the Trans-
Pacific Partnership (TPP) with countries in the Asia-Pacific 
region. These two agreements would cover 60 percent of American 
exports and 84 percent of foreign direct investment, both 
expanding some existing trade agreements and creating 
opportunities for free trade with more countries.

    Given the importance of small businesses to both the 
European and Asia-Pacific economies, it is vital that these 
negotiators not only get the details right when crafting the 
SME-specific chapter, but also ensure that they address the 
specific needs of small business throughout the entire 
agreement.

    NSBA and SBEA are pleased that trade negotiators have 
finally realized the need for including a chapter dedicated to 
small exporter issues in these agreements. It is critical for 
their long-term usefulness, however, to establish a small-
business committee or advisory panel that would engage with the 
SME community and provide resources and information on 
understanding the full scope of these agreements and how they 
can benefit small businesses.

    TPP and T-TIP are excellent opportunities for these 
countries and the U.S. to coordinate approaches and facilitate 
cross-border trade and investment opportunities for American 
SMEs. By removing tariffs, making the regulatory process easier 
to understand, and ensuring companies have access to the 
information they need to start exporting, these agreements can 
make a real difference to the increased number of small firms 
who have expressed interest in exporting, per the NSBA/SBEA 
survey: from just 43 percent in 2010 to 63 percent in 2013.

    Ease Tariffs

    If we want American SMEs to export more, it is important to 
reduce variable costs like tariffs. Many countries impose 
tariffs on U.S. exports that are ten or twenty times as high as 
our own, and a web of non-tariff barriers overseas often shuts 
out U.S. goods and services. At Hunt we have found that our 
products can often times be classified numerous ways by a 
single country. Without combing through a maze of product 
descriptions and classifications we risk having our material 
placed in a much higher tariff class than necessary.

    Also, we need to pay close attention to fixed or 
``inflexible'' costs because those costs can impose 
disproportionate burdens on SMEs. When it costs $10,000 in 
legal fees to comply with at trading rule it is a nuisance for 
a large company, but it is a potential show-stopper for a small 
company.

    A lot of non-tariff barriers can generate such 
disproportionate costs. Non-tariff barriers include such items 
as foreign patent and trademark costs, ``physical presence'' 
requirements, paperwork requirements and performance bonds and 
licenses. Sometimes these disproportionate costs are subtle, 
such as when a country requires foreign companies to be 
structured in a certain way to do business there. But even 
small increases in a company or product's cost due to tariffs 
can mean the difference between making and losing a sale for 
SMEs. NSBA/SBEA supports the elimination of all tariffs across 
all industries and product lines. Though the tariffs between 
the U.S. and EU economies are already relatively low, 
eliminating them would boost bilateral trade by more than $120 
billion in five years, according to a report from the Centre 
for Economic Policy Research.

    Transparency of Rules and Regulations

    Interpreting and comprehending regulations has proven to be 
a challenge that exhausts a small firm's human resources and 
even drains our wallets when we have to turn to outside 
professionals. The easier it is to understand and comply with a 
country's rules without having to hire attorneys, the cheaper 
it is to get into that market. While we have relied very 
heavily on our freight forwarder to keep us informed of and in 
compliance with all necessary rules, it would be much more 
comforting for us to have a clear way to confirm our own 
compliance.

    New rules and regulations should only occur after notices 
have been posted online in an easily-accessible format for the 
public and American companies to provide comments on the impact 
the new rules would have on their business. Also, all issues 
raised by U.S. companies should receive written responses with 
justifications for all new rules. The creation of an SME 
committee that would analyze and examine the impact of new 
rules on smaller companies would also be beneficial.

    NSBA/SBEA also supports the creation of a centralized 
website that is monitored and collects up-to-date information 
on regulation policies and practices pertaining to requirements 
for shipping, labeling, testing, certifications, and customs 
clearance for the most commonly traded goods and services. It 
should be presented in a clear and easy-to-read format, to 
serve as a resource for businesses looking to navigate the 
process and enter a new market.

    Customs Simplification

    Reducing administrative burdens associated with customs 
procedures, raising the de Minimis threshold, eliminating 
unnecessary double customs controls and simplifying rules of 
origin could benefit small exporters--especially as a way of 
reducing red tape and delays at borders. Improving 
predictability, simplicity and uniformity in border procedures 
will make it easier for SMEs to participate in trade.

    The current de Minimis value for goods entering the U.S. is 
$200, while the current personal exemption for goods carried 
into the country is $800. Duties and taxes are assessed only if 
the value exceeds $800. If consumers ship their purchases back 
to the U.S. that same duty-free limit falls to $200. This 
difference arbitrarily penalizes companies--such as mine--that 
ship products necessary for the production and manufacturing of 
our goods in the U.S. Streamlining this customs process and 
matching the $800 exemption will help American businesses grow 
their export volume and enter new markets. NSBA/SBEA support 
the bipartisan efforts in Congress to increase this threshold, 
which will lower costs for American exporters.

    Strong Intellectual Property Protection

    Small businesses are the leaders in innovation and 
creativity that drive job creation and economic growth. Having 
a strong commitment to intellectual property rights (IPR) is 
vital in order to protect our innovative products and services, 
especially because small exporters are highly vulnerable to 
infringements of our IPR. U.S. small businesses are at a 
particular disadvantage, because they may lack the knowledge, 
expertise or resources necessary to prevent the theft of their 
ideas and products. In fact, research conducted by the United 
States Patent and Trademark Office found that only 15 percent 
of small businesses that conduct business overseas know that 
they need to file for IP protection abroad.

    Many small businesses also may not have personnel and 
operations overseas, so they lack the ``eyes and ears'' needed 
to be vigilant globally and the theft of their IP can often go 
undetected. In addition, small businesses generally do not have 
the level of access or the resources, such as specialized legal 
counsel, that may be available to larger companies. NSBA/SBEA 
endorses the creation of simplified methods for filing and 
renewing trademark and copyrights to decrease the amount of 
time and paperwork normally required which in turn will provide 
more timely enforcement of IPR.

    Expand and Improve Export Finance

    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.

    Hunt just negotiated a new line of credit with a regional 
bank that allows us to borrow up to 80 percent of outstanding 
accounts receivable. However, we were unsuccessful in 
attempting to address the issue of foreign accounts receivable 
and are unable to borrow any money against receivables that are 
to be collected from companies outside U.S. borders. This 
naturally makes it much more difficult for us to financially 
support new export opportunities that may arise.

    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 set up 
American exports, our banks must do more.

    While Hunt does not use the Export-Import Bank of the 
United States (Ex-Im), it is also an important part of the U.S. 
export strategy for so many small exporters. The Ex-Im Bank is 
self-supporting and actually has generated excess revenues of 
nearly $7 billion dollars since 1992. 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 have the certainty 
and predictability we need to level the playing field and 
compete in the international marketplace. Interestingly enough, 
NSBA's members find this program valuable enough that 
reauthorization of Ex-Im Bank was voted among our top 10 
priorities for the 114th Congress.

    These are just some of the recommendations that, if 
accomplished, could alleviate many of the barriers affecting 
SMEs and yield significant gains for us and the overall U.S. 
economy.

    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. SMEs 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. With 95 percent of the purchasing market 
outside of the U.S., small businesses understand the importance 
of opening new markets and competing in the global marketplace. 
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 markets 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 could be significantly increased.

    Again, I would like to thank Chairman Chabot and the 
members of the committee for the opportunity to speak today. I 
would be happy to answer any questions you may have.
                   House Committee on Small Business


 ``Across Town, Across Oceans: Expanding the Role of Small Business in 
                           Global Commerce''


                   Testimony of Timothy C. Brightbill


                 Partner, Wiley Rein LLP, Washington DC


          Adjunct Professor, Georgetown University Law Center


                              May 20, 2015


    Chairman Chabot, Ranking Member Velazquez, and Members of 
the Committee. I am Tim Brightbill, a partner at Wiley Rein LLP 
and adjunct professor at Georgetown University Law Center. 
Thank you for the opportunity to testify here today on the 
important issue of expanding the role of small business in 
global commerce. (These views are my own, not those of my firm 
or my clients.)

    I have practiced international trade law for 20 years, and 
my practice has always focused on helping American companies, 
American industries, and American workers. I work with members 
of a wide variety of industries--including manufacturers of 
everything from solar panels to steel to school notebooks to 
heavy forged hand tools. I also work with many companies that 
provide products and services both here and abroad. My job is 
to help these companies grow, to prevent unfair trade practices 
from harming these companies, and to help eliminate trade 
barriers overseas.

    As this committee is aware, small businesses face enormous 
challenges in the area of international trade. According to the 
President's 2015 Trade Agenda, of the 28 million small 
businesses in the United States, only about 1 percent, or 
approximately 300,000 of these small businesses export their 
merchandise to other countries.\1\ Equally striking is the fact 
that of those small businesses that do export, more than half 
export to only one country--either Canada or Mexico. This 
demonstrates how small businesses often struggle to overcome 
steep tariffs, complicated paperwork, fees, and the often 
significant delays that they face in exporting to other 
countries. These trade barriers disproportionately affect small 
businesses that often cannot meet the high costs of compliance.
---------------------------------------------------------------------------
    \1\ Office of the U.S. Trade Representatives, The President's Trade 
Agenda: Made in America, at 19 (Mar. 2015).

    In the last several years, the U.S. government has taken 
several steps towards easing such barriers, but there is more 
to be done. Encouraging and facilitating exports by U.S. small 
businesses is imperative to allowing American industry to 
expand and American workers to prosper. I'd like to list just a 
few areas of priority for this Congress and Administration that 
---------------------------------------------------------------------------
are particularly relevant to small businesses:

    1) Trans-Pacific Partnership - The U.S. government has a 
potentially important opportunity to create jobs, expand trade 
and manufacturing, and improve the global rules of 
international trade in the Trans-Pacific Partnership free-trade 
negotiations. If approved, the TPP would be the largest U.S. 
free trade agreement, involving 12 countries and more than 40 
percent of global trade.\2\ The TPP specifically seeks to 
promote measures that improve U.S. small businesses' ability to 
export, such as streamlining customs procedures, eliminating 
tariff and non-tariff barriers, promoting digital and e-
commerce, and developing more transparent regulatory 
procedures. The TPP provisions are similar to the types of 
improvements included in the World Trade Organization's recent 
Agreement on Trade Facilitation. As discussed below, the TFA is 
intended to make the movement of goods between countries 
faster, less expensive, and more reliable, as in the TPP.
---------------------------------------------------------------------------
    \2\ Office of the United States Trade Representative, Overview of 
the Trans Pacific Partnership, https://ustr.gov/tpp/overview-of-the-
TPP.

    Two other features of the TPP that could benefit small 
businesses are the implementation of common tariffs (prior to 
tariff elimination) across countries and the chapter on express 
delivery services. A serious challenge to the effectiveness of 
international trade rules is what some have called the 
``spaghetti bowl'' of free trade agreements, each of which has 
its own rules. This creates uncertainty in the system when 
different tariffs are imposed on the same products by different 
countries. Some small businesses don't even bother to claim 
duty free treatment for their goods due to the complexity of 
the process. Standard tariffs across TPP countries should 
---------------------------------------------------------------------------
reduce this burden.

    The TPP will also, for the first time, impose disciplines 
and requirements on state-owned enterprises, which will greatly 
assist U.S. companies, both large and small, by reducing the 
need to compete with foreign-government backed entities. While 
China is a notable example of this problem, SOEs play 
substantial roles in the economies of TPP countries like 
Malaysia and Vietnam--as well as Russia, Brazil, India, and 
many others. When U.S. small businesses export, they should not 
have to compete with foreign governments, which is why these 
SOE provisions are potentially so important.

    Similarly, many small businesses use express delivery 
services for their exports, and the TPP includes provisions 
that should allow greater use of these services. The TPP 
specifically seeks to enhance such services through expedited 
procedures that help small businesses gain quick and efficient 
access to global markets and supply chains.

    But, before it can pass the TPP, Congress and the 
Administration must first pass Trade Promotion Authority, which 
defines U.S. negotiating objectives and priorities for trade 
agreement negotiations. As you know, the Senate is currently 
considering TPA legislation as well as potential amendments, 
and the House will also do so shortly. And as this debate has 
taken place in recent weeks, the theme we have heard over and 
over again is one of enforcement. Specifically, Congress should 
not approve new trade agreements until we have better ways of 
enforcing our existing agreements. Several TPA amendments would 
go a long way toward improving enforcement for all types of 
businesses, including small and medium sized enterprises.

    First, Congress should approve much-needed trade 
enforcement measures as part of TPA. U.S. industry has proposed 
a set of five trade law changes that it views as essential to 
strengthening the U.S. government's enforcement and 
administration of the U.S. trade laws, and to ensuring that 
U.S. trade laws remain an effective tool for domestic companies 
and their workers to respond to unfair trade practices. These 
provisions would:
           Enhance the Commerce Department's ability to 
        address non-cooperative foreign parties in trade remedy 
        cases;

           Clarify the injury standard in trade remedy 
        cases;

           Enhance the ability of the Commerce 
        Department to calculate a trade remedy when foreign 
        prices or costs are distorted; and

           Clarify the Commerce Department's authority 
        regarding the selection of which foreign companies to 
        investigate in a trade case.

    These changes would benefit all companies who bring trade 
cases against dumped and subsidized imports, including large 
and small business alike. They were included in the Customs and 
Trade bill passed by the Senate Finance Committee. They should 
be included in TPA as well.

    Second, Congress should approve the ENFORCE Act legislation 
to guard against foreign companies who use fraud and evasion to 
avoid paying trade case duties. Senator Wyden has championed 
this legislation for years, and again it was included in the 
Customs and Trade bill passed by the Senate Finance Committee. 
The ENFORCE Act is preferable to the PROTECT Act, which has 
also been proposed in the House.

    Although the TPA would prove beneficial to small businesses 
in many respects, there are potential drawbacks as well. First, 
the opening of the U.S. market to additional foreign 
competition could harm smaller businesses that are less able to 
compete than larger or multinational companies. This could also 
lead to jobs being lost to lower-wage positions in other TPP 
countries. However, the extent of such harm, if any, is not 
known, and some experts have stated that because many TPP 
countries are already free trade partners of the United States, 
the actual increase in competition may be limited.\3\
---------------------------------------------------------------------------
    \3\ See, e.g., David Autor, David Dorn & Gordon H. Hanson, Why 
Obama's key trade deal with Asia would actually be good for American 
workers, Wash Post (Mar. 12, 2015).

    Second, opponents of the TPP argue that the agreement, 
largely negotiated behind closed doors, reflects powerful 
corporate interests, rather than the interests of small 
businesses who are less able to influence U.S. trade policy. In 
fact, while the TPP will contain a separate chapter on small- 
and medium-enterprises, little is known about the contents of 
that chapter. The United States Trade Representative has 
indicated that the TPP will address informational challenges 
that small businesses have previously raised with regard to the 
difficulty of actually utilizing free trade agreements, but the 
specifics remain unknown.\4\ And while the Administration is 
seeking to include a provision for regular reviews of how the 
TPP is working for small businesses, it is not clear if and/or 
how the outcome of such reviews will be used to the benefit of 
these companies.\5\
---------------------------------------------------------------------------
    \4\ Office of the United States Trade Representative, Trans-Pacific 
Partnership: Summary of U.S. Objectives, https://ustr.gov/tpp/Summary-
of-US-objectives.

    \5\ See, id.

    Third, and perhaps most controversial,\6\ are the TPP's 
Investor-State Dispute Settlement provisions. Under these 
provisions, U.S. businesses could challenge foreign government 
policies or actions before independent arbitrators with the 
authority to order compensation to the companies, if so 
warranted. Critics of ISDSD argue that it could allow the 
rollback of U.S. health, safety, and environmental regulations. 
My personal view is that these concerns are overstated, and 
there are many ways that ISDS could be beneficial to small- and 
medium-sized enterprises who invest abroad. These arbitration 
proceedings are often a cost-effective way for companies to 
protect their investments abroad from hostile government 
actions.
---------------------------------------------------------------------------
    \6\ See, e.g., Elizabeth Warren, The Trans-Pacific Partnership 
clause everyone should oppose, N.Y. Times (Feb. 25, 2015).

    2) Transatlantic Trade and Investment Partnership (TTIP): 
The Transatlantic Trade and Investment Partnership is another 
trade agreement that has the potential to bring substantial 
benefits to U.S. small businesses. The United States and the 
European Union have one of the most complex trade and 
investment relationships, with U.S. goods and private services 
trade with Europe totaling more than $1 trillion in 2013.\7\ 
Nearly 95,000 U.S. small businesses export to the European 
Union, but the growth in such exports is hampered by the need 
to comply with European standards, technical regulations, and 
conformity assessments.\8\ Such requirements, coupled with high 
tariffs and shipping costs, are often prohibitive for small 
businesses. The TTIP negotiations seek to address these 
barriers by reducing or eliminating tariffs, promoting duty-
free treatment of digital products, promoting compatible 
regulatory requirements and assessments, and reducing border 
costs and delays. The TTIP negotiations are in their early 
stages, so it is still too soon to assess their potential.
---------------------------------------------------------------------------
    \7\ Office of the United States Trade Representative, European 
Union, https://ustr.gov/countries-regions/europe-middle-east/europe/
european-union.

    \8\ U.S. International Trade Commission, U.S. International Trade 
Commission Releases Report on How T-TIP Will Benefit Small Businesses 
(Mar. 28, 2014); U.S. International Trade Commission, Trade Barriers 
that U.S. Small and Medium-sized Enterprises Perceive as Affecting 
Exports to the European Union, Inv. No. 332-541, USITC Pub. 4455, at 2-
2-2-7 (Mar. 2014).

    3) Trade in Services Agreement: The Trade in Services 
Agreement, being negotiated among 24 countries, seeks to expand 
global trade opportunities for service industries like 
telecommunications, financial services, healthcare, and 
---------------------------------------------------------------------------
distribution and delivery services.

    Today, barriers to trade in services are often greater than 
those facing manufactured goods, so TISA could provide small 
businesses with greater and more affordable access to global 
markets. Because the United States already runs a large trade 
surplus on trade in services, TISA should further strengthen 
U.S. services firms that are looking to expand abroad.

    4) Currency Manipulation - Currency manipulation continues 
to be a serious problem that harms all U.S. exporting 
businesses, large and small. Currently manipulation has 
resulted in the loss of thousands, if not millions, of U.S. 
jobs by making imports of certain goods into the United States 
artificially cheap and by giving foreign-manufactured products 
an unfair advantage over U.S. products in export markets. The 
Petersen Institute for International Economics, one of the most 
respected think tanks in Washington, has previously called 
currency manipulation ``the biggest subsidy of them all,'' \9\ 
and despite recent International Monetary Fund statements,\10\ 
many estimates suggest that China's currency is still 
undervalued by 25% or more. In addition to the millions of lost 
American jobs, such currency actions by China and more than 20 
other countries are estimated to have increased the U.S. trade 
deficit by $200 billion to $500 billion per year.\11\ Yet, the 
Commerce Department has repeatedly refused to investigate 
whether currency manipulation is a countervailable subsidy 
under U.S. trade laws.
---------------------------------------------------------------------------
    \9\ See C. Fred Bergsten, Addressing Currency Manipulation Through 
Trade Agreements, Peterson Institute for International Economics (Jan. 
2014).
    \10\ See Bonnie Cao & Ye Xie, IMF Official Says Yuan Nearing Point 
Where No Longer Undervalued, Bloomberg Business (Apr. 17, 2015).
    \11\ C. Fred Bergsten & Joseph E. Gagnon, Currency Manipulation, 
the U.S. Economy, and the Global Economic Order, Peterson Institute of 
International Economics (Dec. 2012).

    U.S. free trade agreements currently do not address this 
serious issue, to the detriment of American companies and 
workers. Congress now has the opportunity to take two important 
steps towards stemming this ongoing problem. First, Congress 
should direct the Commerce Department to investigate currency 
manipulation as an illegal subsidy. Second, Congress could 
establish, as a negotiating objective, that the Administration 
seek enforceable rules against currency manipulation in all 
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future trade agreements, including the TPP.

    5) World Trade Organization's Agreement on Trade 
Facilitation - This agreement has not yet entered into force, 
but could benefit many U.S. small businesses by making the 
movement of goods between countries faster, less expensive, and 
more reliable. Exporting goods to some countries can be 
particularly difficult, with delays at the border, substantial 
paperwork, and steep fees. Under the TFA, WTO members must 
adopt procedures that (1) allow exporters to submit import 
documentation even before the arrival of their goods at the 
port; (2) allow for the release of merchandise even before the 
final customs duties and fees are determined; (3) allow for 
expedited procedures for operators with demonstrated records of 
customs compliance; (4) provide a mechanism for expedited 
release of merchandise; (5) implement procedures to reduce 
documentation requirements, and allow for the rapid release and 
clearance of goods, particularly perishable items; and (6) 
allow for the temporary admission of certain merchandise 
intended to be re-exported. Another benefit to small businesses 
under the TFA is access to expedited shipping channels, 
increasing access to global supply chains and allowing for more 
cost-efficient shipping and logistics. Such measures would 
allow U.S. small businesses increased opportunities and 
destinations for their products, and the U.S. should urge WTO 
members to ratify the agreement as quickly as possible.

    Thank you for addressing these important issues today, and 
I would be happy to answer any questions.

                                 [all]