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In the wake of President Trump’s letter to Congress on renegotiating the North American Free Trade Agreement (NAFTA), Democrats on a key panel today said more small businesses must be empowered to export their products abroad. As a staple of the American economy, small firms are leading innovators in countless economic sectors. With over ninety-five percent of worldwide consumers living outside the United States, the opportunity for small businesses to export their products has an enormous payoff.

“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 net new jobs and are responsible for countless innovations,” said Ranking Member Rep. Nydia M. Velázquez (D-NY). “A critical subset of this group is small exporters.”

Small business owners have been quick to see the value of exporting their goods outside the U.S. Currently, 300,000 small businesses do so, while 3 in 5 non-exporting small firms have expressed an interest. Firms with fewer than 500 employees make up nearly ninety-eight percent of all U.S. exporting firms. However, these participating small businesses only make up around thirty-three percent of the value of exports. 

Despite the rewards, the process of getting off the ground to start exporting is often met with obstacles. Limited in resources by nature, small firms are often forced to stretch the revenue and funds they have to meet complex and demanding trade rules and regulations. Time-wise, nearly half of small business exporters spend a few months, at minimum preparing to export. When it comes to costs, one-third spend over five percent of their annual operating revenue to start exporting. 

In his testimony, Mr. Peter Cazamias, Associate Administrator of the Small Business Administration’s (SBA) Office of International Trade and the lone witness for the hearing, called on the importance of access to trade finance. Mr. Cazamias highlighted three of SBA’s targeted export loan programs: Export Express, Export Working Capital, and the International Trade Loan. 

“These programs 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,” said Mr. Cazamias. “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.” 

Without a global network of connections, usually an asset to larger firms, small business can often be left in the dark. Larger firms tend to export to at least five foreign markers, while sixty percent of small business exporters only enter one. 

“In order for these benefits to be fully realized, 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,” said Rep. Velázquez. “These difficulties are something we must be mindful of as the Administration works to negotiate NAFTA.”

Throughout the hearing, Democrats encouraged policies that will allow small business to not only compete with larger firms when it comes to trade opportunities, but to fully benefit from exporting opportunities.  

“It is unacceptable that so many small businesses see the process of exporting as too daunting due to a lack of information or resources,” said Rep. Velázquez. “As Democrats, we are committed to programs that give small firms reliable, accessible and fair opportunities to export.”