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Statement

of the

Honorable Patrick Murphy

Ranking Member

Subcommittee on Agriculture, Energy and Trade

“Small Business Trade Agenda: Status and Impact of International Agreements”

January 28, 2014

I’d like to thank the Acting Chair, Mr. Hanna, and extend my wishes for a happy birthday.  I appreciate the Honorable Assistant USTR for his presence here today.  I am looking forward to this hearing and making sense of what this Administration’s ambitious trade agenda means for small business. 

With three quarters of the world’s purchasing power located outside the United States, access to foreign markets is no longer optional, but essential for businesses of all sizes to grow and create jobs. Studies consistently demonstrate that, when given a fair chance, small businesses can benefit significantly from trade.  Indeed, 98 percent of U.S. firms that export have fewer than 500 employees. These companies are responsible for fully one-third of American made products that are sold abroad. 

When small and medium-sized firms are able to take the leap and begin selling their products abroad, there are important, tangible economic benefits here at home.  Businesses that export their products abroad create twice as many jobs as those that do not.  Workers at globally engaged firms make wages 15% higher than employees of companies that have not reached into foreign markets. 

In Florida, international trade has long been an important component of our local economy.   The Port of Palm Beach – just next door to Florida’s 18th District – generates over $261 million in economic activity for the greater region.  This includes 2,500 direct and indirect jobs related to the port and shipping industries and more than $12 million in local and state taxes.   Statewide, cargo activity associated with Florida’s seaports accounts for nearly 100,000 port-related jobs, supports more than 454,000 other jobs, while generating $24 billion in personal income and $66 billion in business activity.  

While small businesses are increasingly looking to foreign markets as a growth opportunity, there remain a number of hurdles.   The vast majority of small businesses that do export send their products to only one market – often our Canadian neighbors.  For small companies to fully reap the benefits of trade, it is important they diversify and tap into rapidly emerging economies in Latin America, Asia, and other parts of the globe. 

Small firms that have not yet begun exporting spend months preparing before they start and make significant expenditures – often more than 8% of their operating budget – laying the groundwork.   Without the scale and resources of their larger competitors, entrepreneurs often turn to government technical assistance and other guidance when determining how to best capitalize on trade opportunities.  In that regard, it is important this Committee fully understand how government managed programs are meeting small business owners’ needs.  Also, it is important to understand where government falls short or is counterproductive.

Whether it is access to capital, research on foreign markets, or similar services, these initiatives must be efficient and effective in helping entrepreneurs compete abroad.  With a range of export assistance initiatives scattered throughout different agencies -- including the SBA-- it is vital we ensure they are functioning in a complementary – and not duplicative – manner. 

Likewise, this Committee has an important role to play in examining how various free trade agreements impact small firms’ export efforts.  Too often, trade agreements have made small businesses’ needs an afterthought, rather than a central pillar of discussion.  While small firms stand to benefit from trade agreements that open new markets, an influx of new imports can serve to undermine local manufacturers and producers.  Likewise, foreign markets often present a maze of new regulations that are difficult to navigate for smaller companies.  It is critical that future trade agreements take into account these difficulties.  

In a global economy, companies can no longer afford to think only “locally.”  With job creation remaining the top priority for the American people, trade and exporting of U.S. goods remains a promising avenue for spurring growth and creating good paying jobs here, at home.  To achieve that goal, export assistance programs need to function smoothly and any future trade agreements must be cognizant of the unique challenges small firms face as they work to sell their products abroad.  It is my hope that today’s hearing can shed important light on these topics.

I yield back.

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