News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
November 1, 2007    

CONTACT: Erin Donar,  (202) 225-4038

Committee Examines the Impact of Pending Trade Agreements on Small Firms

WASHINGTON – Today, Chairwoman Nydia M. Velázquez gave the following opening statement at a House Small Business Committee hearing to examine the upcoming trade agreements with Peru, Colombia, Panama, and South Korea:

“This hearing will provide an opportunity to evaluate the impact of the Peru, Colombia, Panama, and South Korea trade commitments on the small business sector.  It is a critical time to engage in this discussion as Congress is currently considering the ratification of these four treaties. Given the resources expended to promote cross-border commerce, it is important to determine whether these agreements should serve as models for future international commitments. 

“Today, we will focus on three issues affecting small firms and their contribution to the US economy in an integrated world. They are – the role these firms play in the development of trade agreements; international regulations impacting entrepreneurs; and federal infrastructure supporting small US businesses in a global economy.

“The beneficiaries of trade agreements are largely determined during the negotiation process.  Unfortunately, small businesses’ involvement in the development has been limited.  As I have voiced concerns before, the USTR continues to lack a formal delegate as well as staff representing the small business sector at the negotiation table.  This may explain why the pending agreements lack a small business focus.

“Given the opposition among some in the entrepreneurial community – particularly to provisions in the Korean agreement – their needs should have been more fully incorporated at the initial stage of the process.   If small businesses had a seat at the table, I believe the current agreements would have been stronger.

“The agreements also impact smaller firms through their modifications to non-tariff barriers.  I wholly support the inclusion of trade facilitation, particularly their harmonization of customs requirements.  This allows small businesses to more affordably access the newly opened markets.  The elimination of technical barriers, particularly those impacting the livestock industry, is critical for US producers to expand their customer base. 

“However, other regulatory barriers continue to hinder growth, including the maintenance of physical presence requirements, which benefit only those firms able to relocate abroad.  Further, the procurement process lacks protections for small firms.  For the agreements to help small businesses, regulations must not unfairly benefit their corporate competitors.

“While reducing regulation is critical for small businesses, they must also have access to export financing alternatives, technical assistance, and intellectual property protections.  Lending programs are crucial for firms exporting to Latin America, due to the higher risk nature of the transactions.  Similarly, since the Korean government significantly supports its businesses, we must take steps to ensure our firms remain competitive in domestic and global markets.

“Overall, these agreements can significantly enhance small businesses’ global market share by decreasing barriers to cross border commerce.  With increased small businesses involvement in the negotiation process, I believe many of the lingering concerns would have been addressed. 

“We can have trade agreements that open new markets and also benefit our nation’s small businesses.  It is my hope that future agreements will accomplish this and incorporate the interests of these smaller firms more broadly.”

View video highlights from today’s hearing. 

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