    [House Hearing, 115 Congress]
    [From the U.S. Government Publishing Office]

      ACCOMPLISHMENTS AND CHALLENGES AT THE SBA'S OFFICE OF INTERNATIONAL
                                     TRADE

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

                                    HEARING

                                   before the

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD
                                  MAY 23, 2017

                                   __________

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 115-021
                  Available via the GPO Website: www.fdsys.gov

                                _________

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                       HOUSE COMMITTEE ON SMALL BUSINESS

                          STEVE CHABOT, Ohio, Chairman
                                STEVE KING, Iowa
                          BLAINE LUETKEMEYER, Missouri
                              DAVE BRAT, Virginia
                 AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                            STEVE KNIGHT, California
                            TRENT KELLY, Mississippi
                                 ROD BLUM, Iowa
                             JAMES COMER, Kentucky
                     JENNIFFER GONZALEZ-COLON, Puerto Rico
                              DON BACON, Nebraska
                        BRIAN FITZPATRICK, Pennsylvania
                             ROGER MARSHALL, Kansas
                               RON ESTES, Kansas
                   NYDIA VELAZQUEZ, New York, Ranking Member
                           DWIGHT EVANS, Pennsylvania
                           STEPHANIE MURPHY, Florida
                            AL LAWSON, JR., Florida
                             YVETTE CLARK, New York
                              JUDY CHU, California
                           ALMA ADAMS, North Carolina
                          ADRIANO ESPAILLAT, New York
                            BRAD SCHNEIDER, Illinois
                                     VACANT

                   Kevin Fitzpatrick, Majority Staff Director
          Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                         Adam Minehardt, Staff Director

                                C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Steve Chabot................................................     1
    Hon. Nydia Velazquez.............................................     3

                                    WITNESS

    Mr. Peter J. Cazamias, Associate Administrator, Office of
      International Trade, United States Small Business
      Administration, Washington, DC.................................     4

                                    APPENDIX

    Prepared Statement:
        Mr. Peter J. Cazamias, Associate Administrator, Office of
          International Trade, United States Small Business
          Administration, Washington, DC.............................    23
    Questions for the Record:
        None.
    Answers for the Record:
        None.
    Additional Material for the Record:
        SBA OIG Report...............................................    26

      ACCOMPLISHMENTS AND CHALLENGES AT THE SBA'S OFFICE OF INTERNATIONAL
                                     TRADE

                                  ----------

                             TUESDAY, MAY 23, 2017

                      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, King, Luetkemeyer,
    Radewagen, Knight, Kelly, Blum, Comer, Bacon, Fitzpatrick,
    Marshall, Estes, Velazquez, Evans, Murphy, Lawson, Clarke,
    Adams, Espaillat, and Schneider.
        Chairman CHABOT. The Committee will come to order.
        We want to thank everybody for being here today, and we
    would like to recognize somebody in our audience first, before
    we get to the business. I understand that we have a guest, Mr.
    Alex Bacon, from Omaha, who is the son of one of our newest and
    greatest members. Let us hear it for Alex. All right.
        Anybody else got any relatives here today that we want to
    embarrass?
        If not, we want to, again, thank everyone for being here to
    hear from the Small Business Administration's Office of
    International Trade, the OIT. Increasing small business exports
    has been a top priority for this Committee over the years, and
    I am pleased to be receiving an update from the OIT on their
    efforts to better coordinate Federal resources and help small
    businesses looking to export.
        There is no question that foreign markets hold incredible
    opportunities for America's small businesses. Ninety-five
    percent of all consumers live outside the borders of the United
    States, and yet, only 1 percent, approximately, of United
    States small businesses actually export--only about 300,000 of
    America's small businesses out of the 26 million business that
    we have in this country.
        Unfortunately, many small businesses consider exporting to
    be out of reach. Some small businesses believe it is too
    expensive or too complicated to find potential customers. Other
    small businesses that start exploring the idea of exporting
    often just give up because the process becomes too confusing
    and/or too complicated.
        I believe that these are the real barriers to trade. If we
    want to unleash America's most significant economic force, then
    we must make it easier for small businesses to participate in
    the global marketplace. It has become clear that we must compel
    the administration to continue its efforts to better coordinate
    Federal resources so they are more efficient, streamlined, and
    better prepared to help businesses navigate the export process.
        In recent years, my colleagues and I have taken steps to do
    just that. Congress moved to strengthen America's small
    business export activities by expanding the SBA's role in
    export promotion. OIT was directed to increase coordination
    efforts between Federal agencies engaged in export promotion,
    offer greater counseling and training to small businesses
    interested in expanding into foreign markets, and broaden its
    export finance counseling. Additionally, in 2015, Congress
    established the State Trade and Expansion Program, STEP.
    Replacing a 3-year pilot program, the STEP program awarded
    grants to States to strengthen their export agendas and assist
    small businesses looking to begin exporting or expand their
    existing export operations. Unfortunately, various Government
    Accountability Office and SBA Office of Inspector General
    Reports have identified a number of real shortcomings at OIT.
    Alarmingly, some recommendations made by GAO nearly 5 years ago
    still have not been addressed.
        The STEP Grant Program is of particular concern to this
    Committee. The OIT report released just this month found that
    the SBA was unable to provide consistent data regarding the
    program's awards and expenditures and that the SBA has not been
    updating its data accurately.
        Furthermore, the report indicates that grant recipients
    left over 25 percent of their awarded funds unused. This leads
    me to believe that there were probably opportunities for small
    business exporters that were completely missed. What good is
    allocating this grant money if it is not going to be
    administered properly, or worse, it goes completely unused?
        Finally, I would like to touch on another issue that has
    been raised in recent weeks, and that is the apparent lack of
    communication between the OIT and the Office of Advocacy. Last
    month, the United States and Argentina entered into a
    memorandum of understanding, MOU, on, and I quote, ``joint
    cooperation or regulatory coherence and meaningful engagement
    with private sector.''
        I understand that the OIT did not make the Office of
    Advocacy even aware of the agreement or ask for input on it
    until the agreement was nearly finalized. I am seriously
    concerned by this information. As I made clear, one of the
    things OIT is tasked with is coordinating Federal agencies'
    export promotion efforts. If they are unable to coordinate
    within their own agency, I am led to believe that the OIT may
    be incapable of following through on its fundamental
    responsibilities.
        So today, we will hear from OIT's associate administrator,
    Peter--is it Cazamias?
        Mr. CAZAMIAS. Cazamias.
        Chairman CHABOT. Cazamias. I am going to mispronounce that
    again a couple times.
        Mr. CAZAMIAS. That is quite all right.
        Chairman CHABOT. I apologize. You can call me anything you
    want to.
        Mr. CAZAMIAS. Story of my life.
        Chairman CHABOT. Chabot, Chabot, Cabbott, Shabot.
        On how the SBA plans to address the recommendations from
    the GAO and OIG, as well as how they plan to more efficiently
    and effectively assist America's small businesses hoping to
    join the global marketplace.
        And we again thank you for being here. And I would now like
    to yield to the ranking member, Ms. Velazquez, for her opening
    remarks.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman. And welcome, Mr.
    Cazamias.
        Year after year we are told that small businesses are the
    catalyst for the growth of the U.S. economy, and rightly so as
    they create nearly two-thirds of 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 for our economy to continue gaining
    steam, it will increasingly depend on global commerce to fuel
    expansion.
        Despite the advantages that come with trade, it remains
    exceedingly difficult for small businesses to enter foreign
    markets. Just 1 percent of small firms in this country are
    exporting their goods overseas, and even though small and
    medium-size businesses account for 97 percent of American
    exporting companies, their exports count for only a third of
    all U.S. goods shipped overseas.
        The challenges small firms face are multifaceted. It takes
    time to identify foreign markets, to target new customers, and
    to learn the ins and outs of the exporting process. Nearly 40
    percent of small businesses say they do not export because they
    simply do not know where to start. Over half of small business
    exporters spend a minimum of 3 months and nearly 10 percent of
    their annual operating revenue just preparing to export.
    Compounding this obstacle is that they often have fewer
    resources to spend 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 firms export to five or more markets.
        These difficulties are something we must be mindful of as
    the administration works to negotiate NAFTA. 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 labor and
    nonexistent environmental standards. Time and again we are told
    about new markets, but little discussion is given to the low-
    priced goods that will spill onto our domestic marketplace.
    Good for consumers? Maybe. Good for small businesses?
    Definitely no. Regardless of this larger debate, it is
    absolutely critical that small businesses are able to compete
    with their larger counterparts by participating in this global
    marketplace.
        I would like to thank our witness, and I look forward to
    hearing how SBA export promotions are serving our small
    businesses.
        Thank you, Mr. Chairman. I yield back.
        Chairman CHABOT. Thank you very much.
        If Committee members have opening statements prepared, we
    would ask they be submitted for the record.
        And I will take just a moment to explain our timing rules
    here, which is pretty simple. Five minutes. The yellow light
    will come on after you have gone 4 minutes and that will let
    you know you have got a minute to go, and then the red light
    will come on. Since we just have one witness here this morning,
    if you need a little bit more time, you know, we will
    understand that as long as it does not go on too long. And then
    we will all question you for 5 minutes.
        And I would now like to introduce our one witness here
    today, who is Peter Cazamias. He is the associate administrator
    for the Office of International Trade, OIT, at the Small
    Business Administration. Mr. Cazamias has extensive experience
    in international commerce having worked in the United Kingdom,
    Hong Kong, and India. Prior to serving at the SBA, he spent 7
    years in the energy industry with FMC Technologies in Houston,
    Texas. Mr. Cazamias also served as a Marine, graduating from
    Officer Candidate School in 1997 and went on to the Basic
    School and Naval Justice School. And we thank you for your
    service.
        Associate Administrator Cazamias, you are recognized for 5
    minutes.

    STATEMENT OF PETER CAZAMIAS, ASSOCIATE ADMINISTRATOR, OFFICE OF
           INTERNATIONAL TRADE, UNITED STATES SMALL BUSINESS
                             ADMINISTRATION

        Mr. CAZAMIAS. Thank you, Chairman Chabot, Ranking Member
    Velazquez, and esteemed members of the Subcommittee. I want to
    thank you for having me here to give my speech and to hear your
    important views.
        Three weeks ago, about 3 weeks ago, I was honored to accept
    Administrator McMahon's appointment and begin my service as
    associate administrator for International Trade at the Small
    Business Administration, and today, I am honored to be able to
    meet with you and to listen to your important views on small
    business and trade.
        Since starting at the SBA, I have been familiarizing myself
    with the role of the Office of International Trade and its
    function in helping small business grow and thrive through
    exports and involvement in global commerce.
        Administrator McMahon believes that exporting is an
    essential component of small business growth because, as
    mentioned, 95 percent of the world's consumers and over three-
    quarters of all existing purchasing power exists outside the
    U.S. border.
        Just a few weeks ago, I accompanied Administrator McMahon
    to the United Nations where she signed a proclamation naming
    June 27th as Micro, Small, and Medium-Size Enterprise
    International Day, and in so doing, she helped bring about
    international recognition to the vital role of small businesses
    in producing innovation, creativity, and job growth.
        Today, among over our 28 million small businesses also as
    mentioned, a very small percentage can claim the title of
    exporter. The Office of International Trade is charged by
    statute to improve upon the 1 percent number cited. Its stated
    mission involves, one, increasing the number of U.S. small
    businesses that export; and two, increasing the dollar volume
    of U.S. small business exports.
        The SBA, under the leadership of Administrator McMahon,
    will address this dual mission by focusing on three critical
    needs small businesses have when attempting to export.
        First is the need for information. The SBA Office of
    International Trade recognizes that guidance and support for
    small businesses is crucial to achieving a foothold in the
    international marketplace. As such, OIT has a network of 21
    export finance managers based in U.S. Export Assistance Centers
    who provide counseling on international payment risks and U.S.
    Government export financing options.
        Two is the need for capital. Small businesses cannot trade
    and export to these new markets unless they have access to
    capital. Specifically, trade finance. Small businesses are
    hardest hit by trade finance gaps and compliance challenges. In
    the United States, over one-third of all small businesses find
    financing harder to obtain for foreign sales than for domestic
    sales. Given this challenge, the SBA works with lenders to
    provide tailored trade finance loan guarantees so that small
    businesses can finance their foreign sales and growth where the
    private sector is unable or unwilling to act because of real or
    perceived risks.
        Three is the need among small businesses for overseas
    promotional products and market access. OIT emphasizes the
    importance of small business export promotion by strengthening
    its partnership with the State and territory governments
    through the State Trade Expansion Program, known as STEP, and
    through its chairmanship of the Trade Promotion Coordinating
    Committee's Small Business Working Group. This is a group of
    interagency representatives dedicated to the mission of
    increasing the number of small business exporters. And OIT also
    ensures that the interests of small business are adequately
    represented in bilateral and multilateral trade negotiations,
    always pressing for transparency, flexibility, and coherence in
    trade agreements so that foreign trade regulations do not
    unnecessarily burden U.S. small business exporters.
        I am able to attest to the dynamic power of exporting and
    international trade and the effect it has on small businesses
    and local communities. I hail from the South Texas border city
    of Laredo. Located on the north bank of the Rio Grande,
    Laredo's economy is virtually entirely based on international
    trade and it serves as one of the largest land ports in the
    United States.
        After graduating from Yale University, I served as an
    intern for the U.S. Commercial Service in Mexico City, where
    the negotiation of NAFTA was at the time a pressing issue. As a
    law student at the University of Texas, I studied and examined
    NAFTA's dispute resolution mechanisms. And more recently in my
    professional life, I drove the Asia-Pacific financial
    operations as the regional CFO for Insituform Technologies, a
    U.S.-based pipeline company. I then lived in Delhi, India, and
    led the operational turnaround of Insituform's flagship Asian
    operating company.
        I mention these background facts only to convey to you that
    I possess a longstanding interest in and familiarity with
    international trade and international business, and I intend to
    bring my practical, real-world business experience to bear in
    this role to help U.S. small businesses grow and prosper.
        To conclude, I wish to say that under the able leadership
    of Administrator McMahon, I will be committed to ensuring that
    our small business exporters find all the support they need to
    be able to expand into international markets. I furthermore
    will endeavor to effectively and efficiently administer the
    Office of International Trade. My goal is to enable OIT to
    expand the footprint of small businesses in the overseas
    marketplace, thereby spurring innovation and employment growth
    here at home.
        And with that, I wish to thank you for the opportunity to
    speak, and I look forward to answering your questions.
        Chairman CHABOT. Thank you very much. And I will recognize
    myself for 5 minutes to begin the questioning.
        Mr. Cazamias, as you mentioned, you have been in position
    all of 3 weeks now, so we obviously do not hold you responsible
    for anything that happened prior to you being there, unless, of
    course, you screwed something up in the 3 weeks you have been
    there. But as I mentioned in my opening statement, I do have
    real concerns regarding the OIT's lack of coordination with the
    Office of Advocacy.
        As the associate administrator for the Office of
    International Trade, will you commit to us to notifying the
    Office of Advocacy of any future MOUs or other agreements
    relating to international regulatory cooperation and small
    businesses? Will you defer to the Office of Advocacy on those
    matters?
        Mr. CAZAMIAS. Chairman Chabot, thank you for the question.
    I say without qualification, yes, I will absolutely in my role
    endeavor to keep the Office of Advocacy engaged and check with
    them every time we are having an MOU on the horizon.
        Chairman CHABOT. Thank you. That was the right answer. We
    appreciate it.
        A recent OIG report raises concerns about the Office of
    International Trade's oversight practices. Evidence suggested
    that four of the grants reviewed by OIG never received the
    required approvals from the associate administrator of OIT. How
    will OIT work to ensure that the STEP grant funds receive the
    proper approval going forward?
        Mr. CAZAMIAS. Thank you, Chairman Chabot. This is one of
    the issues that I have inherited. And we are taking a
    systematic approach to documentation oversight procedures. We
    have contracted already, the office has contracted a
    consultant, a Six Sigma lean operations consultant, to take a
    look at all of our processes, mapping the entire process out
    and identifying areas that are critical to quality, finding
    where there are gaps, reducing redundancies, and we hope that
    at the end of this process we are going to have a process that
    actually is more comprehensive and effective in being able to
    address some of the issues that have existed in the past.
        Chairman CHABOT. Thank you.
        The OIG reviewed the SBA's STEP Grant Program to determine
    how funds were used. According to the OIG, the SBA was unable
    to provide consistent data for fiscal years 2011 through 2015.
    In fact, every office they met with provided different totals
    for each year. What steps will the OIT take to ensure more
    accurate and greater consistency in its financial reporting?
        Mr. CAZAMIAS. Thank you, Chairman Chabot. This, as I
    understand, is part of the old reporting structure before
    fiscal year 2014 where discrepancies between various elements
    of the SBA were found. My understanding is that there is a new
    reporting structure in place. This, coupled with the approach
    we are now taking at mapping out processes and revamping our
    entire operational process for financial reporting and for
    documentation of milestone achievements, should produce the
    desired results.
        Chairman CHABOT. All right. Thank you.
        Congress authorized the STEP Grant Program to promote
    exports and expand trade opportunities at the State level. The
    OIG found that in more than half of the grants they reviewed
    the participants did not spend the majority of the funds. How
    will the OIT establish and document its oversight procedures so
    that STEP program managers can monitor the grant recipients'
    progress more closely and help them meet their goals?
        Mr. CAZAMIAS. Thank you. This is an issue that is currently
    under investigation. I want the Committee to know that we are
    looking at all possibilities to understanding where the process
    may have failed in the past, whether it is an administrative
    issue--in year zero the applicants may have had certain needs,
    in year one they have changed. If this is the case and the
    reason for the gap, then we need to look at potentially
    creating new variation orders, change orders, and the like.
    However, maybe it is a problem of incentives. If that is the
    case, then the oversight process that is coming out of this new
    look at our procedures may very well answer the issue.
        The point is, I think that we are undertaking a
    comprehensive look at all of our processes, and we think that
    this is one of the things we are going to have in mind to be
    able to produce a more consistent result without those kind of
    gaps.
        Chairman CHABOT. Thank you. I think I have time to squeeze
    in one last question here.
        The Committee has heard concerns with the OIT's grant
    management and administration practices. There are a variety of
    Federal agencies that manage much more complex grants. I am
    wondering, has anyone from the SBA consulted with other Federal
    agencies to identify more efficient ways to administer the STEP
    program?
        Mr. CAZAMIAS. Thank you, Chairman Chabot. This is a
    question I will take under advisement and I will provide an
    answer to your office as soon as I have one.
        Chairman CHABOT. All right. Thank you very much. My time
    has expired.
        The ranking member is recognized for 5 minutes.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        Exporting is a key component of small business growth. Yet,
    only 1 percent of small businesses are currently exporting
    overseas. I have been here for 25 years. This is the list of
    all trade agreements that we have been able to get signed by
    the United States from Chile, Colombia, Jordan, Korea, NAFTA,
    CAFTA, Panama, Singapore, Peru, Trade Promotion Agreement, and
    every time that we have held hearings on trade agreements we
    always raise the issue about the potential, the economic
    potential of small exporters. And time and again we hear 1
    percent. One percent of small exporters are doing business
    overseas with one customer.
        So my question to you is while free trade agreements have
    opened up new markets and have always been sold to us and to
    the American people as benefitting small businesses, it is
    clear that large corporations are the primary beneficiaries. It
    was 1 percent 25 years ago when we were discussing trade
    agreements, and today it is only 1 percent. So what changes to
    free trade agreements will have the biggest impact on small
    firms?
        Mr. CAZAMIAS. Thank you, Ranking Member Velazquez, for the
    question.
        Ms. VELAZQUEZ. And I hope that you are all evaluating and
    discussing what changes, because the president is committed to
    renegotiate NAFTA. So there you have it.
        Mr. CAZAMIAS. Yes, Ranking Member Velazquez. Well, I will
    take the information you provided very seriously. What I can
    say is that it is clear that we are taking a look at all of our
    free trade agreements. I just came back last week from a Trade
    Deficit Panel where we were meeting with business owners from
    all over the United States--Colorado, North Carolina, and
    Maine--and we were looking at the legacy of our free trade
    agreements. And that legacy seems to be massive deficits. And
    the implication or the ramification of those massive deficits
    has been high unemployment and shuttered industries.
        Ms. VELAZQUEZ. I know all that. I want to know that now we
    are going to renegotiate the administration trade agreement.
    The chairman and I, we sit with a----
        Mr. CAZAMIAS. Eye to eye?
        Ms. VELAZQUEZ. What is the name? Right, the HAGON
    Commission and we are going to be providing our input. So it
    will be helpful if you explain to us, what are the
    recommendations since you are traveling and listening to small
    exporters throughout the nation so that we could make those
    recommendations.
        Let us go to the STEP program. It was authorized in 2010,
    right?
        Mr. CAZAMIAS. That is my understanding.
        Ms. VELAZQUEZ. So the STEP program was authorized. There
    are matching funds that are provided to the states. How are you
    measuring whether this program is actually generating benefits
    to small firms? What metrics are you using to measure the
    program's success?
        Mr. CAZAMIAS. Thank you for the question, Ranking Member
    Velazquez.
        Only 3 weeks into the position, this is one of the issues I
    have to get my hands around. I do know that we use an ROI
    metric that involves the dollars of exports that were generated
    as a result of our programs touching the businesses versus the
    cost to administer, but I will get a more precise and more
    robust answer for you as soon as I can.
        Ms. VELAZQUEZ. And can you tell the committee, and if we do
    not have time, would you please send to the committee what
    specific activities are authorized under this program?
    Otherwise, I will conclude that this is simply subsidizing
    state expenses. So those metrics are important and what type of
    activities are authorized to use the funds for.
        Mr. CAZAMIAS. OIT will provide that information summarily.
    Thank you.
        Chairman CHABOT. Thank you very much. The gentlelady's time
    has expired.
        The gentleman from Missouri, Mr. Luetkemeyer, who is the
    vice chairman of this Committee, is recognized for 5 minutes.
        Mr. LUETKEMEYER. Thank you, Mr. Chairman. And thank Mr.
    Cazamias for being here today.
        Just to follow up on a couple things here. I think the
    chairman made comment in his earlier remarks that GAO indicated
    that the past administration over 5 years had not done anything
    to fulfill some of their recommendations and so also in here
    there is some collaboration and coordination things that have
    not been done. And so the bar is pretty low for you from a
    standpoint that we wonder why we do not have an economy that is
    growing and we have something like this, SBA, which is supposed
    to stimulate growth and here we have twiddled our thumbs for 5
    years.
        Which brings me to the point, GAO also found that only 15
    percent of some individuals' time was being spent on the export
    promotion responsibilities. Can you tell me that these
    individuals who are spending 15 percent of the time doing their
    job, are they working on other jobs or are they watching movies
    on their screens or whatever else they are doing? Or what are
    we doing here?
        Mr. CAZAMIAS. Congressman, I take the message very clearly,
    and I will commit to examining this issue.
        Mr. LUETKEMEYER. Okay. Just kind of curious. We do have
    examples of some of the employees being caught, you know,
    playing games and watching videos and things on their tube, and
    so when GAO says this, is it something like that or do they
    actually just have overlapping duties that they are actually
    doing other things instead of doing their job? I mean, there
    are other things they could be doing productively, I assume.
        From your experience, with regards to exporting, what would
    you see as the barriers for small businesses to export that you
    can help them overcome with your new job?
        Mr. CAZAMIAS. Thank you for the question, Congressman
    Luetkemeyer. I think the three issues, the three areas where we
    are able to provide the most effective assistance is in
    information, especially for new exporters, so that we can give
    them an idea of how to go about internationalizing their
    business, as well as in capital, because the Office of
    International Trade does act in areas where there is a
    perceived or actual risk that the private sector does not wish
    to act in providing trade finance. So I think in providing that
    kind of liquidity is an area where we are able to assist. And
    then thirdly, in market access, in coordinating dual trade
    missions with businesses and connecting them with overseas
    markets is something we are committed to doing.
        Mr. LUETKEMEYER. One of the things that Congress is looking
    at as well as the President has suggested is a border
    adjustment tax or some sort of leveling of the playing field
    fee whenever products come into the country. Have you seen the
    problem on exports going out where our companies have been hurt
    by the ability to compete because of the border adjustment tax
    of other countries? And have you discussed it with small folk
    yet with regards to them having a fee perhaps imposed on some
    of their inputs that they turn around and have to export? I
    mean, it is kind of a complicated situation, but I am just
    curious if you have looked at it at all or if you have any
    comments.
        Mr. CAZAMIAS. Congressman Luetkemeyer, I just got back last
    week from a Trade Deficit Panel at the Department of Commerce,
    and just as you alluded to, the datapoints, which are very few
    still, are mixed. It does seem that the idea of a border
    adjustment tax has been received with mixed feelings on the
    part of small businesses. In some cases, they support it even
    though it will make their products more expensive. In other
    cases, they believe that it is going to make their products
    more competitive with imports.
        So I think we are at the beginning of the process in terms
    of a listening tour and data gathering, and I hope to be able
    to synthesize that information and be able to provide a more
    robust answer at some point throughout my tenure.
        Mr. LUETKEMEYER. Okay. One last question here. With regards
    to trade agreements, you know, you were a director at the
    United Nations here recently. Are you, whenever they have trade
    negotiations, or the SBA director herself, at the table
    whenever these negotiations take place so that you can
    represent small businesses and their problems or concerns with
    these agreements?
        Mr. CAZAMIAS. The Office of International Trade does have
    trade specialists who do perform the commander's guidance. So
    we have specialists who actually do this.
        Mr. LUETKEMEYER. Okay. So there is somebody representing
    the small business folks' interests whenever a trade agreement
    is negotiated?
        Mr. CAZAMIAS. That is exactly true.
        Mr. LUETKEMEYER. Okay. And I assume that, you know, the
    agreements that we have have been in place for many, many
    years, and a lot of them probably just need to go back and
    retweak them and make sure that--are you a part of those
    negotiations or have you pointed those out to the President or
    the administration or the trade authorities?
        Mr. CAZAMIAS. Yes, Congressman. We are starting out with a
    commercial dialogue with a number of nations as we are taking a
    look at these trade agreements anew.
        Mr. LUETKEMEYER. Okay. Very good. Thank you, Mr. Chairman.
        Chairman CHABOT. The gentleman's time is expired.
        The gentleman from Pennsylvania, Mr. Evans, who is the
    ranking member of the Subcommittee on Economic Growth, Tax, and
    Capital Access, is recognized for 5 minutes.
        Mr. EVANS. Thank you, Mr. Chairman.
        According to statistics from the U.S. Census, exports from
    the Commonwealth of Pennsylvania declined by 7.3 percent from
    2015 to 2016. There are a number of possible reasons for this
    decline but I am interested in supporting efforts of more small
    businesses to educate themselves and the possibility to seek
    customers outside the U.S. And to that end, most accounts of
    the Office of International Trade does a good job of helping
    businesses is my understanding.
        But I am concerned about the level of coordination between
    the U.S., Export-Import Bank, the Commerce Department, and
    other similar Federal agencies which assist. Could you please
    describe how you communicate with these other agencies being
    that you are only 3 weeks there, but in terms of your vision of
    coordinating with those other agencies?
        Mr. CAZAMIAS. Thank you for the question, Congressman
    Evans.
        Yes, as you mentioned, it is only 3 weeks, but to my
    understanding, we are involved with the TPCC, which is a group
    of interagency--different agencies that provide a common
    framework for all the tools the Federal Government has at its
    disposal to help small businesses export, and this is one of
    the main ways that we coordinate with other agencies through
    chairing the small working group at the TPCC.
        Mr. EVANS. So in terms of your own vision of it, I mean, I
    understand, what are your thoughts on it?
        Mr. CAZAMIAS. Well, my thoughts are that it is going to be
    very important that we run the Office of International Trade
    effectively and efficiently, and if that means that there are
    ways to streamline by coordinating with other agencies, that is
    something that we are all going to be for. It is much better to
    work in concert with other agencies than in a silo.
        Mr. EVANS. The internet and platforms such as eBay have
    broken down barriers for small firms. What can the Federal
    Government learn from these entries such as eBay has tried to
    convince more small firms to consider exporting?
        Mr. CAZAMIAS. We think the internet is a fabulous tool for
    innovation and growth, and so I can commit to you that it will
    be one of the very many different areas we look at to try and
    imitate in terms of innovation.
        Mr. EVANS. Do you have any specific ideas at this point? I
    know----
        Mr. CAZAMIAS. I am sorry, Congressman. Only 3 weeks into
    the job I cannot say I have any fully formed ideas yet on this
    issue.
        Mr. EVANS. Okay, no problem.
        I yield back the balance of my time.
        Chairman CHABOT. Thank you. The gentleman yields back.
        The gentleman from Nebraska, the father of Alex Bacon, is
    recognized for 5 minutes.
        Mr. BECAN. Thank you very much. I really appreciate your
    transparency and jumping in the job like you have, and we wish
    you well.
        Mr. CAZAMIAS. Thank you, Congressman.
        Mr. BECAN. I wanted to make sure I understood the
    differences of what some of the other agencies are doing out
    there. I know the Import-Export Bank, for example, supports a
    lot of our small businesses in our district. Could you help
    distinguish how you all differ with them and how you support
    small business and exports?
        Mr. CAZAMIAS. Well, I think there are two areas where I
    could speak to that. One is in terms of the trade finance that
    we offer, but, more importantly, I think one of the greatest
    differentiators of the small business administration is that it
    is specifically focused on small businesses. It is our reason
    for being. And this is something that is important to keep in
    mind because by focusing on small businesses, it does help
    avoid the bang-for-the-buck approach that ends up creating an
    overconcentration of focus and resources on the larger
    entities.
        Mr. BECAN. Okay. Thank you. And one thing that intrigues me
    is the matchmaker program and how you match the small
    businesses up with folks who help them reach access in other
    countries. Can you talk a little bit more about how that
    program is working? I think it has not been in existence for a
    long time. How many of these forms have you had and how is it
    working?
        Mr. CAZAMIAS. Congressman, I do not have that information
    at my disposal at this moment, but I will get it for you and we
    will send it over to your office.
        Mr. BECAN. Okay. Thank you.
        Mr. Chairman, I yield back.
        Chairman CHABOT. The gentleman yields back. Thank you.
        The gentlelady from Florida, Ms. Murphy, who is the ranking
    member of the Subcommittee on Contracting and Workforce, is
    recognized for 5 minutes.
        Ms. MURPHY. Thank you for being here today. I appreciate
    your testimony.
        As you mentioned in your testimony, access to capital
    remains a significant barrier for small firms to access foreign
    markets. According to a recent survey by the National Small
    Business Association, only 40 percent of small businesses were
    even aware of the SBA export lending programs.
        So two questions for you. One, do you think that the
    existing export loan programs are enough to meet the financing
    needs? And then secondly, what SBA plans do you have to better
    educate small businesses about the availability of the export
    loan programs?
        Mr. CAZAMIAS. Thank you for the question, Congresswoman.
        This is definitely one of the largest challenges I have
    inherited is understanding how to broaden our reach so that
    more small businesses are aware of the levers at their disposal
    at the Small Business Association. What I can say is that even
    now, the Small Business Association is--Small Business
    Administration is undertaking dialogues with local small
    businesses in Illinois, where there is a listening tour going
    on with the National Association of Manufacturers to understand
    exactly where our best practices have lied, what has been
    helpful, what has not been helpful. This is intended to not
    only improve the quality of our outreach, but also the breadth
    of it. So we are undertaking efforts to do exactly this.
        Ms. MURPHY. Why just in Illinois?
        Mr. CAZAMIAS. Oh, this is the beginning. This is one of our
    first stops. This is going to continue throughout a number of
    different States. I know Texas is next and there will be many
    others on the way.
        Ms. MURPHY. Great. Do you know if Florida will be on your
    list?
        Mr. CAZAMIAS. I intend to put it on the list.
        Ms. MURPHY. Great. Thanks.
        Moving on to a different topic, you know, the theft of
    intellectual property has become a real major problem in global
    business environment, particularly for small firms, and this is
    because they often lack the knowledge and the resources needed
    to adequately protect their IP abroad. The U.S. Patent and
    Trademark Office found that only 15 percent of small firms
    conducting businesses overseas know that they need to file for
    IP protection abroad. And this is really concerning. What does
    SBA plan to do to help small business owners guard themselves
    against theft of their IP in overseas markets?
        Mr. CAZAMIAS. Thank you for the question.
        I think I can say that we are going to take this issue very
    seriously and incorporate it as to one of the points that we
    use when we counsel small businesses in exporting.
        Ms. MURPHY. So you intend to integrate it into the baseline
    training?
        Mr. CAZAMIAS. That is going to be something we are
    definitely going to look at. The message has been received very
    well and it is going to be something that we are going to have
    to look at more seriously.
        Ms. MURPHY. Great, thank you. And I will yield back the
    remainder of my time.
        Chairman CHABOT. The gentlelady yields back.
        The gentleman from Kansas, Dr. Marshall, is recognized for
    5 minutes.
        Mr. MARSHALL. Thank you, Chairman.
        I guess, tell me some examples, who is doing a great job
    working with you? Can you give us some examples of some small
    companies that you really think are working well with your
    people?
        Mr. CAZAMIAS. Thank you for the question, Dr. Marshall.
        I think in the fullness of time I will be able to provide
    more examples when I have more information at my hand.
        Mr. MARSHALL. Okay. All right. I represent some small
    businesses that make precision agriculture products. And if I
    would go back and visit with them and say this is what your
    branch of government can help them with, what would you tell
    them? What would you want me to tell them that you are going to
    help them--and they do have some access to some markets in
    Europe now, but boy, they could sure use a boost.
        Mr. CAZAMIAS. Thank you for the question, Dr. Marshall.
        I think that one of the functions of the OIT is to try and
    open up foreign markets and make introductions between our
    domestic companies and foreign markets. So a number of the
    export centers will be able to counsel some of these small
    businesses and promote dual trade missions overseas or get
    involved in the matchmaking program or even through the STEP
    program to try and enhance that market access.
        Mr. MARSHALL. Okay. I guess my last question, what can we
    do to help you do your job better? What can we do in Congress
    to empower you?
        Mr. CAZAMIAS. Thank you for the question.
        I could not presume to give you advice only 3 weeks in, but
    what I can commit to is that my office will have a virtuous
    information loop with your offices so that when we can do
    something, provide some sort of information that will help us
    be successful and help you be more successful, we will
    certainly provide that information.
        Mr. MARSHALL. Thank you. And I yield back.
        Chairman CHABOT. The gentleman yields back.
        The gentleman from New York, Mr. Espaillat, is recognized
    for 5 minutes.
        Mr. ESPAILLAT. Thank you, Mr. Chairman, Ranking Member
    Velazquez, for this hearing. Thank you for your testimony.
        As the borders of the global market keep expanding, it is
    crucial that small business can benefit from this expansion and
    be competitive in a variety of arenas, especially in the topics
    related to export. The Small Business Administration Office of
    International Trade is an essential part of the development
    initiatives that will enhance and are strictly focused on
    improving the chances that small businesses will succeed in
    their economic ventures.
        The Hamilton Project specifically relating to this
    discussion in a paper titled, ``Minority and Women
    Entrepreneurs: Building Capital Networks and Skill,'' has
    signaled that research shows that minority and women-owned
    businesses rely significantly more on investments of personal
    or family wealth rather than on outside debt or equity. This
    clearly sets some minority and women-owned businesses at a
    disadvantage, especially when their families do not have the
    wealth to help them start out and maintain a business.
        My questions will focus on the constraints of the trade
    deals that many U.S. small businesses could choose to engage
    with; the countries, mainly NAFTA and CAFTADR. I know that
    there are significant hurdles placed by those trade deals on
    even big businesses--packaging, transportation, the hygienic
    level of the products that they may want to export,
    intellectual property. These are issues that are very
    cumbersome and often very difficult for even big businesses to
    engage with.
        Are there any particular plans to help, particularly
    minority, women-owned, and veteran businesses, veteran-owned
    businesses, to overcome these major hurdles that even large
    corporations often have, you know, some difficulties with?
    Otherwise, there is not going to be a real opportunity for
    small businesses to engage in trade outside of the United
    States. Do you have any roadmap as to how you are going to
    assist them?
        Mr. CAZAMIAS. Thank you for the question, Congressman.
        Yes, I think there is a dual answer to your question or a
    two-part answer. The first is that the Office of International
    Trade, Small Business Administration, does have programs that
    are dedicated to veteran, to women-owned businesses, and to
    minorities for counseling. But moreover, even at the Office of
    International Trade, we will be negotiating. We have
    individuals who will be negotiating trade deals with the idea
    of transparency in mind because we understand fully, and I
    understand fully having lived in India and having done business
    in India, the difficulty of compliance costs even on medium-
    size businesses. The difficulty of having to repatriate capital
    back to the United States or register your business overseas.
        So yes, I could not agree with you more. It has a
    disproportionate impact on small businesses and we will be
    negotiating those trade agreements with the interests of small
    business in mind.
        Mr. ESPAILLAT. Okay. My last question is, is there a
    particular reason for which there has not been consistent with
    regards to the grant awards and expenditures in the past years?
        Mr. CAZAMIAS. I understand the question and I thank you.
        One of the things that I have learned as I have inherited
    this is that there were old reporting procedures that led to
    discrepancies. We are now taking a systematic approach, a look
    at our processes. Again, identifying areas that are critical to
    quality, identifying areas where there are redundancies. And we
    are going to map out an entirely new process taking a process-
    based approach that we think will have a more robust and
    effective end towards this issue.
        Mr. ESPAILLAT. Thank you. I yield back my time.
        Chairman CHABOT. Thank you. The gentleman yields back.
        The gentleman from Kansas, Mr. Estes, is recognized for 5
    minutes.
        Mr. ESTES. Thank you, Mr. Chair.
        I guess I have more of a comment and maybe asking for a
    commitment for a longer term. In my district, we have a lot of
    involvement in trade. Most of that is with some of our larger
    manufacturing and aerospace companies, as well as a lot of the
    agriculture companies that are there. But we also have a lot of
    smaller businesses, particularly machine shops and other type
    product manufacturers in particular, and the message that I
    hear is the struggle to figure out what resources they have and
    how do they engage in that marketplace? And I know we were
    talking earlier about which one of us was newer on our roles,
    our respective roles, but I guess I would throw the challenge
    down to you and ask if you would strongly consider as you are
    developing your role how to support and work with those smaller
    businesses to help them get a better leg up and get as much of
    a percentage of the international marketplace as they do within
    the domestic market.
        Mr. CAZAMIAS. I commit to that without reservation,
    Congressman. That is, in fact, my mandate.
        Mr. ESTES. Thank you, Mr. Chair. I yield back my time.
        Chairman CHABOT. The gentleman yields back.
        The gentlelady from New York, Ms. Clarke, is recognized for
    5 minutes.
        Ms. CLARKE. I thank you, Mr. Chairman. And I thank our
    Ranking Member Velazquez.
        Foreign markets offer new opportunities for small
    businesses entrepreneurs to unleash their creative talents.
    Whether it is a craft product on Etsy or an industrial
    component for an automobile, each stand to benefit from the
    untapped potential of consumer markets abroad. However, the
    United States trade deficit is over $40 billion. This means
    that foreign actors hold a large amount of American currency
    and exercise influence over its value. This impacts everything
    from the price of fruit in the local grocery store to the cost
    of consumer electronics and basic clothing expenses at big box
    stores. When trade imbalances exist, consumers, often working
    families, are the most affected. These two factors--foreign
    consumer and foreign influence over the value of our currency--
    are why it is so important for the SBA to help facilitate small
    business exports.
        So my questions are in that vein. The new administration,
    and Donald Trump's budget, proposes cutting the SBA's budget by
    5 percent. Have you examined how such a decrease could impact
    OIT's ability to carry out its mission and promote America's
    exports? And if so, how?
        Mr. CAZAMIAS. Thank you for the question, Congresswoman.
        The mantra at the SBA is to run this office effectively and
    efficiently. So we will see this as a great opportunity to be
    able to do more with less.
        Ms. CLARKE. I have been hearing more with less for the past
    decade and I have yet to see it produced, especially when you
    look at 1 percent. So let us try to use creativity and
    innovation.
        Do you think that existing SBA export loan programs are
    enough to meet the financing needs of small businesses or do
    gaps still remain?
        Mr. CAZAMIAS. Thank you for the question, Congresswoman.
        This is an issue that I will definitely have to get my
    hands around to understand exactly where the distribution of
    demand is, exactly where our supply is hitting, and where there
    are gaps. This is one of the primary initiatives that I hope to
    be able to fulfill in the near term in my role.
        Ms. CLARKE. Very well. And Congress is currently discussing
    ways of reforming the taxation of earned income abroad. How
    would a change in the treatment of foreign income impact OIT's
    efforts, and what do you view as OIT's role in training small
    businesses about changes to the tax code if they are made in
    order to assure these entrepreneurs and assure this Congress
    that there will be no undue hardship as a result?
        Mr. CAZAMIAS. Thank you, Congressman.
        The Office of International Trade has in its purpose to try
    to internationalize small businesses and make them exporters.
    If tax policy is something that becomes a critical component of
    being able to help small businesses export, I can only assume
    that our trade finance experts will be able to provide the
    necessary counseling so that they can become exporters because
    that is our purpose.
        Ms. CLARKE. And is that something that you would personally
    be examining to make sure that there are not any unintended
    consequences?
        Mr. CAZAMIAS. I can personally commit to ensuring that
    whatever tax policy implications will come down the pike, we
    will incorporate that or examine it very carefully and
    incorporate it into our counseling sessions as needed.
        Ms. CLARKE. Very well. I yield back the balance of my time,
    Mr. Chairman.
        Chairman CHABOT. Thank you. The gentlelady yields back.
        The gentlelady from American Samoa, Mrs. Radewagen, who is
    the chairman of the Subcommittee on Health and Technology, is
    recognized for 5 minutes.
        Mrs. RADEWAGEN. Talofa lava. Thank you, Mr. Chairman, and
    thank you, Ranking Member Velazquez, for holding this hearing.
    Mr. Cazamias, thank you for testifying.
        Mr. CAZAMIAS. Thank you, Congresswoman.
        Mrs. RADEWAGEN. So Mr. Cazamias, what does the SBA estimate
    it spent on export promotion activities in fiscal year 2016?
    Does this include export financing, small business development
    centers export counseling, the export-related activities of the
    district offices, and STEP program? If not, how much did the
    SBA spend on the activities in fiscal year 2016?
        Mr. CAZAMIAS. Thank you, Congresswoman.
        My office does have the breakdown of those numbers and we
    will supply it to your office.
        Mrs. RADEWAGEN. Thank you very much.
        I yield back the balance of my time, Mr. Chairman.
        Chairman CHABOT. Thank you. The gentlelady yields back.
        The gentlelady from North Carolina, Ms. Adams, who is the
    ranking member of the Subcommittee on Investigations,
    Oversight, and Regulations, is recognized for 5 minutes.
        Ms. ADAMS. Thank you, Mr. Chairman. Thank you, Ranking
    Member Velazquez, for hosting the hearing today. And Mr.
    Cazamias--is that correct?
        Mr. CAZAMIAS. Yes, that is correct.
        Ms. ADAMS. Thank you very much for your testimony.
        You talked a little bit about the small women-owned
    businesses, and, of course, I had a question, but I wanted to
    just add to that. You talked about what you all were going to
    do or what you think you might do. I wanted to add rural
    businesses to that as a part of that. I have a special interest
    in women-owned businesses, and those are the socially and
    economically disadvantaged, and making sure that there is equal
    opportunity in terms of this process, particularly the STEP
    proposals as they come across your desk, the weight that you
    give them. But I probably do not need to ask that question. It
    sounded like you are going to be focusing at least to some
    degree on that.
        But let me ask about the discretion that is provided to you
    by the trade facilitation and Trade Enforcement Act in helping
    to assist these disadvantaged communities. Do you find that
    that is going to be helpful to you?
        Mr. CAZAMIAS. Thank you, Congresswoman.
        This is something, whether it is going to be helpful, I do
    not have the information at hand, but I am sure I can tell you,
    I can assure you that the importance of minority-owned
    businesses and women-owned businesses is very high on the
    priority list of this administration, of this Small Business
    Administration. Knowing the identity of our administrator,
    Administrator McMahon, you can understand that she also finds
    it of the utmost importance, and I know that we, even last
    year, were awarding exporter lender of the year to entities and
    banks that have shown outstanding performance in making SBA
    loans to minority-owned businesses. So it is something that is
    very high on the visibility and that we have a commitment to.
        Ms. ADAMS. Great. Thank you.
        You know, when we look at the businesses that are growing
    the fastest, they are women-owned businesses, and more
    specifically, African-American women-owned businesses.
        But let me ask another question. Do you have any data
    available about STEP proposals that have been approved from
    rural, women-owned, and socially economic disadvantaged
    businesses that you may have taken a look at?
        Mr. CAZAMIAS. I will have my office take a look at that and
    provide it to yours.
        Ms. ADAMS. Okay, great. And a follow-up to that, I was
    interested in the percentages, and I know you are just getting
    started, and certainly, I wish you well, but also, in terms of
    the percentages that are submitted by rural, women-owned, and
    socially economic disadvantaged businesses, I am just curious
    about the data that has been kept and what those percentages
    might be, as well as not only what the numbers are but what the
    approval rate of those have been.
        Mr. CAZAMIAS. Thank you, Congresswoman.
        Whatever information we have in terms of the breakdown, we
    are going to provide it to your office.
        Ms. ADAMS. Thank you very much.
        Mr. Chairman, I am going to yield back the rest of my time.
    Thank you.
        Chairman CHABOT. Thank you. The gentlelady yields back.
        And I know the chair is not supposed to comment on these
    kind of things, but that is one beautiful hat, I think.
        Ms. ADAMS. And I thank you very much for saying that. It is
    one of my 1,094 in my collection and I am wearing this as far
    as my birthday celebration for this week. But thank you very
    much.
        Chairman CHABOT. All right. Well, happy birthday. Yeah,
    excellent.
        The gentlelady's time is expired.
        The gentleman from Iowa, Mr. Blum, who is the chairman of
    the Subcommittee on Agriculture, Energy, and Trade, is
    recognized for 5 minutes.
        Mr. BLUM. Thank you very much, Mr. Chairman Chabot. And I
    concur with you on my colleague's hat. It is very beautiful. I
    was admiring that.
        And also, I was not aware, but that is a great statistic
    about female, minority-owned businesses growing amongst the
    fastest businesses. That is tremendous. Good to hear.
        Thanks for being with us today, Mr. Cazamias.
        Mr. CAZAMIAS. Yes, thank you.
        Mr. BLUM. Yes. Glad to hear you are from the private sector
    and you have had a tremendous amount of experience in
    international business as well, I have read.
        I would like to have your personal thoughts on TPP. With
    your international trade experience, you must have some
    thoughts on that agreement.
        Mr. CAZAMIAS. Well, Congressman, I think the current
    administration's new approach of looking at trade agreements on
    a one-to-one basis is really badly needed. Clearly, it is
    important that we start reevaluating what our trade posture is
    so that we do not run the kinds of deficits we have
    historically and give a better chance to our domestic producers
    in being able to compete.
        Mr. BLUM. So I take it that you did not like TPP because of
    the framework, because it was not bilateral or----
        Mr. CAZAMIAS. Well, I believe that a one-to-one, a one-to-
    one type of trade posture is going to be beneficial.
        Mr. BLUM. And what are your feelings on NAFTA?
        Mr. CAZAMIAS. Initially, of course, back in 1992, and I am
    from the, you know, border country, I was initially supportive
    of it. I saw the burgeoning growth that it had, the effect it
    had on my city. But after 25 years, we have a lot more
    datapoints. We have a lot more in the way of datapoints now,
    and I have, unfortunately, seen what the legacy of these trade
    deficits are, and they are shuttered industries and high
    unemployment. So it is high time we take a new look at our
    trade agreements.
        Mr. BLUM. EXIM Bank, they provide financing for export
    activities in the private sector as well. Does the OIT, Office
    of International Trade, work in conjunction with the EXIM Bank?
    Do they provide loans maybe to smaller businesses that EXIM
    Bank would not look at? Because one of the things when we
    debated reauthorization of EXIM Bank was, well, the majority of
    the funding or the benefits go to five companies, five mega
    corporations, and that you do not focus enough on small
    businesses. So do you work with them? How is that relationship?
        Mr. CAZAMIAS. The level of coordination between the two
    entities is something I am going to have to get back to you on,
    Congressman, but I will say, it speaks to what I was saying
    earlier about the differentiating value of the Small Business
    Administration being able to focus on small businesses so that
    we do not take that ``bang for the buck'' approach.
        Mr. BLUM. Do we track the revenues, the export revenues of
    small businesses?
        Mr. CAZAMIAS. We track----
        Mr. BLUM. Do we have that number? Does the SBA have that
    number?
        Mr. CAZAMIAS. Yes. We track the export revenues that are a
    result of SBA counseling and SBA financing.
        Mr. BLUM. And what has that trend been? What are those
    numbers over the last 3 years?
        Mr. CAZAMIAS. Let me, before I take a guess, let me have my
    office provide those numbers so I can be specific. I do not
    wish to make a mistake in my testimony.
        Mr. BLUM. Because particularly in government, the Federal
    Government, we talk a lot, as opposed to the private sector, it
    seems like we are not so concerned about results sometimes. And
    I think we need to do a good job. I just would offer this
    advice to you of measuring things, and every time you testify
    here I am going to be asking you, you know, is that trend up?
    Is that trend in the right direction? Are our small businesses,
    in fact, exporting more to foreign countries than they were
    last year?
        Mr. CAZAMIAS. I sympathize with the sentiment, and I will
    be prepared.
        Mr. BLUM. What would you say are the main ways, the main
    methods that your office is going to help small businesses
    export?
        Mr. CAZAMIAS. I think there are, again, three ways that we
    are going to be able to help them export and that is, one,
    providing them the liquidity they need, especially for first-
    time exporters, but also for businesses who have been
    successful in exporting. We are going to be able to provide
    them international trade loans that are going to help them
    expand their PP&E.
        Secondly, in opening up the markets and making connections
    between our domestic businesses and foreign markets and foreign
    buyers of domestic products.
        Mr. BLUM. And I am a small business owner, and we are in
    the software business, and access to capital is important. I
    get that. But I think before the access to capital, you need
    the connections. You just mentioned that, connections. Can you
    talk to me in the 29 seconds we have left about how is your
    office going to help small businesses connect with foreign
    entities that need their products?
        Mr. CAZAMIAS. Certainly, we have been coordinating with the
    States through the STEP program to conduct dual trade missions,
    joint trade missions, and to be able to have that kind of State
    cooperation so we can have those people who are closer to the
    businesses and understand what their needs are, make those
    connections to foreign entities.
        Mr. BLUM. Always remember that that connection is the first
    step. Before we need access to capital, they need that
    connection. They need a buyer, international buyer that is
    interested in their product. So I would hope you emphasize
    that.
        Mr. CAZAMIAS. Well received.
        Mr. BLUM. My time is over and I yield back the time I do
    not have, Mr. Chairman.
        Chairman CHABOT. The gentleman's time is expired. That is
    right, the gentleman's time has expired.
        The gentleman from Florida, Mr. Lawson, who is the ranking
    member of the Subcommittee on Health and Technology, is
    recognized for 5 minutes.
        Mr. LAWSON. Thank you, Mr. Chairman. And I want to thank
    you for being with us today.
        When I read the staff report, I thought it was very
    fascinating and very revealing to look at the report that said
    only 1 percent of small business was conducted in trade; and
    secondly, when they said that over 95 percent of people outside
    of this country were consumers. And I know that you have had a
    great deal of international experience in this particular area.
        So my question was centered around will it be financially
    feasible for small businesses to look more towards
    international trade, even though I have heard a lot of
    questions here this morning from a lot of the members about
    what we need, access to capital and so forth? But in 2017, when
    you see only 1 percent of small business in America not
    engaging in international trade, how do you respond to that? Is
    it financially feasible? Is it just something that we should
    not be involved in? I am not really sure.
        Mr. CAZAMIAS. Congressman Lawson, that is a terrific
    question and it is one of the challenges that we have to meet
    up to to be able to expand the number of U.S. businesses and
    the percentage of U.S. businesses that are exporting
    internationally. I think it is worthy of investigation to
    determine whether it is a perception issue, whether there is
    simply not the lack of awareness that it is important to
    diversify your customer base, to create new lines of revenue
    and find these international customers, or whether there is the
    perception that it is just too difficult, but I do believe that
    with the various trade financing options that exist at the
    Small Business Administration, we make it financially feasible.
    So perhaps it is something that we are going to have to
    investigate to understand if there is a perception or a lack of
    awareness, and if so, we need to figure out how to improve our
    outreach.
        Mr. LAWSON. As a follow-up, did you say at one time you
    were in India?
        Mr. CAZAMIAS. I lived in India for an entire year.
        Mr. LAWSON. Okay. And I was trying to understand how the
    people in India are able to do international trade in America
    in a lot of different areas, and technology and so forth, but
    we are not able to do the same kind. And that is what really, I
    am so glad that you have that experience because I look forward
    to working with you. And you might want to elaborate on that.
        Mr. CAZAMIAS. Congressman, I think it is related to what I
    was saying before. It is encouraging to know that we are taking
    a new look at our trade posture and that we are starting to
    look at one-on-one agreements because I think that this change
    of trade posture is going to have a measurable effect on what
    those trade balances are. So I look forward, as you do, I am
    sure, to see how this evolves over the next few years.
        Mr. LAWSON. Okay. Mr. Chairman, with that I yield back.
        Chairman CHABOT. Thank you. The gentleman yields back.
        And the ranking member is recognized to ask a question.
        Ms. VELAZQUEZ. Just one question. So we know that there are
    six federal agencies that share responsibility in providing
    export assistance to small businesses including: SBA, Commerce,
    USDA, and the EXIM Bank. You talk about liquidity and access to
    capital, so I hope that you do a better job at getting EXIM
    Bank to continue to do the job that they have done. Since they
    cannot make loans larger than $10 million now, you have seen an
    increase in lending for small businesses for the first time
    exceeded 50 percent. It used to be 20 percent. So you are the
    chair of the TPCC?
        Mr. CAZAMIAS. That is correct, Ranking Member Velazquez.
        Ms. VELAZQUEZ. Okay. I hope that you will take upon
    yourself to clear issues over jurisdiction as it relates to all
    these six federal agencies.
        Mr. CAZAMIAS. I will absolutely take that under advisement,
    Congresswoman Velazquez.
        Ms. VELAZQUEZ. Thank you.
        Chairman CHABOT. The gentlelady yields back. The gentlelady
    yields back.
        And we want to thank the witness for his testimony here,
    and the chair would like to commend members on both sides for
    their participation today and the incisiveness and the brevity
    of some of the questions as well. We have fit a lot in, I
    think, in an hour and 8 minutes here. And so I think great
    attendance by both sides, and I think you did an admirable job
    for having been in the position no more than 3 weeks. Very
    impressive.
        Mr. CAZAMIAS. Thank you.
        Chairman CHABOT. And as you know, ensuring that America's
    small businesses have every opportunity to export is essential,
    and I hope that this hearing encourages the OIT to continue
    improving its outreach and training efforts and better
    coordinate Federal resources for small businesses all across
    this country.
        And I would ask unanimous consent that members have 5
    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 12:11 p.m., the Committee was adjourned.]

                  A P P E N D I X

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        Chairman Chabot, Ranking Member Velazquez, and other
    distinguished members of this committee; thank you for inviting
    me here to speak with you today.

        Three weeks ago, I was honored to accept Administrator
    McMahon's appointment and begin my service as Associate
    Administrator for International Trade at the Small Business
    Administration (SBA). Today, I am honored to be able to meet
    with you and listen to your important views on small business
    and trade.

        Since starting at the SBA, I have been familiarizing myself
    with the role of the Office of International Trade (OIT), and
    its role in helping small businesses grow and thrive through
    exports and involvement in global commerce.

        Administrator McMahon believes that exporting is an
    essential component of small business growth, because 95% of
    the world's consumers and over three quarters of all existing
    purchasing power are located outside the United States.

        Just a few weeks ago, I accompanied Administrator McMahon
    to the United Nations, where she signed a proclamation naming
    June 27th as ``Micro, Small & Medium-sized Enterprises
    International Day,'' and in so doing, brought international
    recognition to the vital role small businesses play in
    promoting innovation, creativity and job growth.

        Yet today, among our over 28 million U.S. small businesses,
    less than 5% can claim the title of ``exporter.'' The Office of
    International Trade is charged, by statute, to improve upon
    this number. Its stated mission involves: (i) Increasing the
    number of U.S. small businesses that export, and (ii)
    Increasing the volume of exports by U.S. small businesses. The
    SBA, under the leadership of Administrator McMahon, will
    address this dual mission by focusing on three critical needs
    small business have when attempting to export:

              1. The need for information. The SBA OIT recognizes
            that guidance and support for small businesses is
            crucial to achieving a foothold in the international
            marketplace. As such, the Office of International Trade
            has a network of 21 Export Finance Managers, based in
            U.S. Export Assistance Centers, who provide counseling
            on international payment risks and U.S. government
            export financing options.

              2. The need for capital. Small businesses cannot
            trade and export to these new markets unless they have
            access to capital, specifically trade finance. Small
            businesses are hardest hit by trade finance gaps and
            compliance challenges. In the United States, over one-
            third of all small businesses find financing harder to
            obtain for foreign sales than for domestic sales. Given
            this challenge, SBA works with lenders to provide
            tailored trade finance loan guarantees so that small
            businesses can finance their foreign sales and growth.
            SBA's three targeted export loan guarantee programs--
            Export Express, Export Working Capital and the
            International Trade Loan--are designed to support small
            businesses throughout the exporter life cycle, from
            developing new markets, to financing export
            transactions, to expanding plant and equipment due to
            exporting success.

              3. The need among small businesses for overseas
            promotional services and market access. The SBA OIT
            emphasizes the importance of ``small business export
            promotion'' by strengthening its partnership with state
            and territory governments through the State Trade
            Expansion Program (STEP) and its involvement chairing
            the Trade Promotion Coordinating Committee's (TPCC)
            Small Business Working Group--a group of inter-agency
            representatives dedicated to the mission of increasing
            the number of small business exporters.

              And, because the Office of International Trade is
            also charged by statute with ensuring that the
            interests of small businesses are adequately
            represented in bilateral and multilateral trade
            negotiations, we actively participate in developing
            small business-beneficial trade commitments for
            transparency, flexibility, and evidence-based decision-
            making, so that foreign regulations do not
            unnecessarily burden U.S. small business exporters.

        Today, I am able to attest to the dynamic power exporting
    and international trade has on small businesses and local
    economies. I hail from the South Texas border city of Laredo.
    Located on the North bank of the Rio Grande, Laredo's economy
    is virtually entirely based on international trade and it
    serves as one of the largest land ports in the United States. I
    witnessed the burgeoning growth that international trade had on
    my native city.

        After graduating from Yale University, I served as an
    intern for the U.S. Commercial Service in Mexico City, where
    the negotiation of the North American Free Trade Agreement
    (NAFTA) was at the time a pressing issue. As a law student at
    the University of Texas, I studied and examined NAFTA's dispute
    resolution mechanisms. More recently in my professional life, I
    drove the Asia Pacific financial operations as a regional CFO
    for Insituform Technologies, an U.S.-based pipeline company. I
    then lived in Delhi, India and led a turnaround of Insituform's
    flagship Asian operating company. I mention these background
    facts only to convey to you, that I possess a long-standing
    interest in and familiarity with international trade and
    international business issues, and intend to bring the benefit
    of my experience to bear to help small businesses in our
    country grow and prosper.

        To conclude, I wish to say that under the able leadership
    of Administrator McMahon, I will be committed to ensuring that
    our small business exporters find all the support they need to
    expand into international markets. I furthermore will endeavor
    to effectively and efficiently administer the Office of
    International Trade. My goal is to enable the SBA to help
    expand the footprint of small businesses in the overseas
    marketplace, thereby spurring innovation and employment growth.

        With that I wish to thank you for the opportunity to speak
    with you today, and I look forward to answering your questions.

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