Luetkemeyer: “SBA Management Review: Office of International Trade”
Washington, September 20, 2022
WASHINGTON, D.C. – Today, the House Committee on Small Business held a full hybrid hearing on “SBA Management Review: Office of International Trade.”
Ranking Member Blaine Luetkemeyer’s opening statement as prepared for delivery:
Thank you, Madam Chairwoman, and thank you Associate Administrator Esparza for taking the time to testify today.
It is important to hear directly from Administration Officials on the programs they manage and their work to support small businesses. Unfortunately, today marks 512 days since Secretary Yellen missed the legal deadline to testify before the Small Business Committee. This is unacceptable, but we appreciate you being here today.
Small businesses are the drivers of innovation, leaders in job creation, and beacons of American ingenuity across the globe. International trade policy impacts nearly every type of small business. Whether it is agricultural products from Missouri, or computer & electronic products from California, we have seen how entrepreneurs’ ability to compete on the world stage can grow our economy, support American workers, and build communities.
To broaden markets and strengthen small businesses’ competitive advantage, the Trump administration confronted unfair trade practices and negotiated historic trade deals, including the United States-Mexico-Canada Agreement (USMCA) and a written phase one trade agreement with China. Under pro-growth and pro-business policies, small business optimism broke a 35-year-old record and we experienced a “Blue-Collar Boom” where wages grew faster for workers than for managers or supervisors prior to the COVID-19 pandemic.
However, I am concerned that under the Biden administration, China’s economic aggression has gone unchecked, regulations and taxes have increased for Made-in-America manufacturers, and backlogs at our ports have created supply chain disasters. We have seen small business optimism decline, inflation reached 40-year highs, and two consecutive quarters of negative economic growth, which translates to a recession, despite the Left’s effort to spin.
The Consumer Price Index (CPI), rose 8.3 percent in August as compared to one year earlier. Additionally, the Producer Price Index, or wholesale inflation, registered an annual increase of 8.7 percent. Inflation remains the top concern for small business owners, yet the Biden administration fails to provide solutions. On the very same day that the Bureau of Labor Statistics reported that CPI remains at a 40-year high, President Biden celebrated on the White House lawn a bill that the CBO found will NOT reduce inflation, and in fact, could slightly INCREASE inflation in 2023.
A recent survey of small business owners found that 90 percent of small business owners report that broader economic trends, such as inflation, persistent supply chain issues, and workforce challenges, are having a negative impact on their business. These economic headwinds impact every aspect of a small business owner’s operation – they struggle to pay exorbitantly high utility bills, place “help wanted” signs on their doors in search for skilled labor, and encounter backlogs waiting for delayed parts and goods.
Further, small businesses looking to enter international trade markets face a variety of trade barriers that limit their ability to compete, including lack of resources, inadequate access to financing, anti-competitive technical standards, and complex export controls. These barriers are likely why small exporters represent only 26 percent of total American export value.
The Small Business Administration is tasked with advocating for small businesses in trade negotiations and promoting small business exports. Today, we will review the SBA’s Office of International Trade (OIT) export promotion activities, including management and training programs, loan programs, and State Trade Expansion Program grants. As Ranking Member of this Committee, I appreciate the work of OIT to help Main Street navigate the obstacles involved with engaging in international trade and their advancement of small business interests at home and abroad.
To increase their exports and expand into new markets, small businesses can access counseling and training from the SBA’s resource partners, field offices, and United States Export Assistance Centers. To access additional capital, small businesses can utilize any of the SBA’s traditional loan programs in addition to the SBA’s three export promotion loan programs. The Export Express Loan Program, the Export Working Capital Program, and the International Trade Loan Program are facilitated by private sector lenders and guaranteed by the SBA to assist small businesses in building export operations, financing transactions, or expanding production capacity.
The State Trade Expansion Program (STEP) is also a valuable tool for small businesses. STEP grants are awarded to state trade agencies, which are then awarded to eligible small businesses for specific export activities. The grant funding can be used for participation in foreign trade missions and trade show exhibitions, design of marketing media and websites, and procurement of consultancy services.
Missouri has participated in the STEP program since its inception and over $2.5 million total has been disbursed to hundreds of Missouri businesses. This program has made a real impact on small business owners who have used the program to internationalize their websites and create relationships on foreign market sales trips.
In Missouri, Triumph Systems, a Veteran-owned small business, used the STEP program to participate in a trade show in Singapore which resulted in product distribution to 10 countries in Southeast Asia and new purchase order for $27,000.
Stauder Consulting Incorporated, based in St. Peters, MO, previously felt the company’s size and limited resources made it too difficult to market internationally. However, after receiving financial assistance and connections from STEP grants, the company now reports: “As a small business with limited business development funds, the MO STEP-UP program has assisted our efforts to market and sell our products and services internationally. In the past five years we have transitioned from 0 percent international sales to about 75 percent international sales. This program has made a significant impact on our small business and our ability to project our capabilities and products around the world.”
This Committee has held multiple hearings on this important program, and this past July the Subcommittee on Economic Growth, Tax, and Capital Access heard from beneficiaries of the program. Prior to becoming a Member of Congress, Ranking Member Meuser was a small business owner and during the hearing he shared how his small business utilized the STEP grants to reach new markets and grow their operations.
Tomorrow, this Committee will markup the bipartisan STEP Improvement Act of 2022. This legislation will improve coordination, increase accountability, and ensure small businesses can continue to benefit from this valuable program. I applaud Representatives Evans, Newman, Kim, and Flood for their work on this legislation.
In a growing global economy, we can all agree small businesses deserve ample opportunities to engage in international trade. To support entrepreneurs, we must:
I look forward to discussing the Office of International Trade’s initiatives and I remind the Administration that reckless spending and increasing taxes and regulations FAIL to support small businesses in their efforts to expand and export.
I yield back.