[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
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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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