[DOCID: f:hr312.110]
From the House Reports Online via GPO Access
[wais.access.gpo.gov]
110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-312
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SBA TRADE PROGRAMS ACT OF 2007
_______
September 4, 2007.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Ms. Velazquez, from the Committee on Small Business, submitted the
following
R E P O R T
[To accompany H.R. 2992]
[Including cost estimate of the Congressional Budget Office]
The Committee on Small Business, to whom was referred the
bill (H.R. 2992) to amend the Small Business Act to improve
trade programs, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
I. Purpose of the Bill and Summary..................................5
II. Background and Need for Legislation..............................6
III. Hearings.........................................................7
IV. Committee Consideration..........................................8
V. Committee Votes..................................................8
VI. Section-by-Section Analysis of H.R. 2992.........................8
VII. Congressional Budget Office Cost Estimate.......................12
VIII.Committee Estimate of Costs.....................................14
IX. Oversight Findings..............................................14
X. Statement of Constitutional Authority...........................14
XI. Compliance With Public Law 104-4................................14
XII. Congressional Accountability Act................................14
XIII.Federal Advisory Committee Statement............................14
XIV. Statement of No Earmarks........................................15
XV. Performance Goals and Objectives................................15
XVI. Changes in Existing Law Made by the Bill, as Reported...........15
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``SBA Trade Programs
Act of 2007''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--SMALL BUSINESS TRADE POLICY
Sec. 101. Develop and implement small business trade policies.
Sec. 102. Establish an annual small business trade strategy.
Sec. 103. Track small business exports and trade resource utilization.
TITLE II--TRADE COMPLIANCE PROGRAMS
Sec. 201. Trade Remedy and Dispute Assistance Initiative.
Sec. 202. Patent Assistance and Intellectual Property Protections
Initiative.
TITLE III--TRADE ADJUSTMENT ASSISTANCE FOR SMALL BUSINESSES
Sec. 301. Trade Adjustment Assistance Financing Initiative.
Sec. 302. Technical resources for trade adjustment assistance.
TITLE IV--EXPORT ASSISTANCE
Sec. 401. Increase Small Business Administration participation at
Export Assistance Centers.
Sec. 402. Increase access to capital for small and medium-sized
exporters.
Sec. 403. Clerical amendment.
TITLE V--AUTHORIZATION OF APPROPRIATIONS
Sec. 501. Authorization of appropriations.
TITLE I--SMALL BUSINESS TRADE POLICY
SEC. 101. TRADE POLICY FOR SMALL BUSINESS.
Section 22 of the Small Business Act (15 U.S.C. 649) is amended by
adding at the end the following:
``(h) Role in Trade Policy.--
``(1) Recommendations.--The director of the Office shall
present recommendations regarding small business exporters to
trade negotiators.
``(2) Development of trade policies.--The director of the
Office shall assist in the development of trade policies that
increase opportunities for small businesses in domestic and
foreign markets, including the removal of trade barriers.
``(3) Implementation of trade policies.--The director of the
Office shall assist in the implementation of trade policies
through relationships developed with Federal trade
policymakers, particularly the United States Trade
Representative, and transnational organizations, such as the
Organization for Economic Co-operation and Development.
``(4) Small exporter promotion programs.--The director of the
Office shall establish programs that will boost the export
opportunities of entrepreneurs and encourage transnational
organizations, such as the Organization for Economic Co-
operation and Development, small exporter organizations, and
ministries of foreign governments to support and publicize
these programs.
``(5) Strategic alliances.--
``(A) Congressional notification.--The director of
the Office shall notify the Committee on Small Business
of the House of Representatives and the Committee on
Small Business and Entrepreneurship of the Senate of
pending strategic alliances.
``(B) Follow-up activities.--The director of the
Office shall ensure that planned and documented follow-
up activities for strategic alliances increase trade
opportunities for small businesses.
``(C) Strategic alliance defined.--In this paragraph,
the term `strategic alliance' means a working
relationship, entered into between the Small Business
Administration and foreign national ministries
representing small business concerns, for the purpose
of strengthening trade between United States small
businesses and foreign small businesses by establishing
overseas networks and buyers.''.
SEC. 102. ESTABLISH AN ANNUAL SMALL BUSINESS TRADE STRATEGY.
Section 22 of the Small Business Act (15 U.S.C. 649), as amended by
this Act, is further amended by adding at the end the following:
``(i) Annual Small Business Trade Strategy.--
``(1) In general.--The director of the Office shall develop
and maintain a small business trade strategy that is
contributed as part of the National Export Strategy developed
by the Department of Commerce that includes at least the
following components:
``(A) Strategies to increase small business export
opportunities. The strategies shall include a specific
strategy to increase small business export
opportunities to the Asia Pacific Region.
``(B) Recommendations to increase the competitiveness
of domestic small business industries in the global
economy.
``(C) Recommendations to protect small businesses
from unfair trade practices, including intellectual
property violations.
``(D) Strategies to expand small business
representation in United States trade policy formation
and implementation.
``(E) Coordination efforts with the Trade Promotion
Coordinating Committee of the Department of Commerce,
as well as with Federal agencies that also provide
trade financing to small businesses, such as the
Overseas Private Investment Corporation and the Export-
Import Bank.
``(2) Report.--At the beginning of each fiscal year, the
director shall submit to the Committee on Small Business of the
House of Representatives and the Committee on Small Business
and Entrepreneurship of the Senate a report on the small
business trade strategy required by paragraph (1). The report
shall cover, at a minimum, each of the components required by
paragraph (1) and shall include specific policies and
objectives and timelines to implement those policies and
objectives.''.
SEC. 103. TRACK SMALL BUSINESS EXPORTS AND TRADE RESOURCE UTILIZATION.
Section 22 of the Small Business Act (15 U.S.C. 649), as amended by
this Act, is further amended by adding at the end the following:
``(j) Tracking System.--
``(1) In general.--The director of the Office shall develop a
system to track small business exports and the use by small
businesses of Federal trade promotion resources. The director
shall ensure that the system is consistent through each Federal
agency member of the Trade Promotion Coordinating Committee.
``(2) Design emphasis.--The director shall give particular
attention, in designing the system, to the tracking of data on
the trade of services by small exporters, in consultation with
the Department of Commerce.
``(3) Implementation.--The director shall work in
consultation with members of the Trade Promotion Coordinating
Committee to ensure that the system is implemented and that the
results of the system are reported annually in the National
Export Strategy conducted by the Trade Promotion Coordinating
Committee.''.
TITLE II--TRADE COMPLIANCE PROGRAMS
SEC. 201. TRADE REMEDY AND DISPUTE ASSISTANCE INITIATIVE.
Section 22 of the Small Business Act (15 U.S.C. 649), as amended by
this Act, is further amended by adding at the end the following:
``(k) Trade Remedy and Dispute Assistance Initiative.--The director
of the Office shall design, and the district offices of the
Administration shall implement, a program that provides technical
assistance, counseling services, and reference materials to assist
small businesses navigate the trade dispute and remedy processes. The
program shall include--
``(1) information on available resources, procedures, and
requirements for trade remedy investigations;
``(2) an approach for district office staff to provide one-
on-one assistance to small businesses involved in these
activities; and
``(3) an identification of legal resources and other tools to
ensure small businesses can navigate the trade dispute and
remedy processes affordably.''.
SEC. 202. PATENT ASSISTANCE AND INTELLECTUAL PROPERTY PROTECTIONS
INITIATIVE.
Section 22 of the Small Business Act (15 U.S.C. 649), as amended by
this Act, is further amended by adding at the end the following:
``(l) Patent Assistance and Intellectual Property Protections
Initiative.--In consultation with the United States Patent and
Trademark Office and the United States Copyright Office, the Office
shall design counseling services, including identifying legal resources
for small businesses to secure intellectual property protection in
foreign countries. To implement the program, the Office shall
collaborate with district office staff to provide on-on-one assistance
to small businesses involved in these activities.''.
TITLE III--TRADE ADJUSTMENT ASSISTANCE FOR SMALL BUSINESSES
SEC. 301. TRADE ADJUSTMENT ASSISTANCE FINANCING INITIATIVE.
Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is
amended--
(1) in paragraph (2)(D) by inserting after ``paragraph
(14)(A),'' the following: ``or to participate in a loan made
under paragraph (16),''; and
(2) in paragraph (16)--
(A) in subparagraph (D) by striking clauses (i) and
(ii) and inserting the following:
``(i) is impacted by--
``(I) increased competition with
foreign firms in the relevant market;
or
``(II) unfair trade practices,
particularly intellectual property
violations; and
``(ii) is injured by such impacts.''; and
(B) by adding at the end the following:
``(E) Outreach and marketing.--The Administration
shall increase outreach and marketing of international
trade loans to district offices and private lenders.''.
SEC. 302. TECHNICAL RESOURCES FOR TRADE ADJUSTMENT ASSISTANCE.
Section 22 of the Small Business Act (15 U.S.C. 649), as amended by
this Act, is further amended by adding at the end the following:
``(m) Technical Resources for Trade Adjustment Assistance.--
``(1) In general.--The director of the Office shall establish
a comprehensive set of services to assist small business
readjustment, including access to training, technology,
marketing assistance, and research and information on domestic
and global markets.
``(2) Implementation.--The Administrator shall, by
regulation, establish such requirements as may be necessary to
carry out paragraph (1).
``(3) Outreach.--The Office shall work with the district
offices and the outreach business assistance centers of the
Administration, including Small Business Development Centers,
Women's Business Centers, and SCORE, to offer the set of
services established under paragraph (1) to small businesses in
their local communities.''.
TITLE IV--EXPORT ASSISTANCE
SEC. 401. INCREASE SMALL BUSINESS ADMINISTRATION PARTICIPATION AT
EXPORT ASSISTANCE CENTERS.
Section 22 of the Small Business Act (15 U.S.C. 649), as amended by
this Act, is further amended by adding at the end the following:
``(n) Trade Finance Positions.--
``(1) Additional trade finance specialists.--
``(A) In general.--The Office, over the 1-year period
beginning on the date of the enactment of this
subsection, shall increase the number of trade finance
specialists at Export Assistance Centers by at least 6
and thereafter shall maintain the number of such trade
finance specialists at or above that number. Candidates
for the positions are required to have sufficient
qualifications and experiences.
``(B) Authorization of appropriations.--There are
authorized to be appropriated to carry out subparagraph
(A) such sums as may be necessary.
``(2) Filling vacant positions.--The Office, over the 3-month
period beginning on the date of the enactment of this
subsection, shall fill all trade finance positions that have
been vacant since 2003. Candidates for the positions are
required to have sufficient qualifications and experiences.
``(3) Filling gaps in high-export-volume areas.--The director
of the Office shall--
``(A) not later than 1 year after the date of the
enactment of this subsection, carry out a national
study to compare the rate of exports from each State
and major metropolitan region to the availability of
Administration staff participating in Export Assistance
Centers in such State or region;
``(B) not later than 2 years after such date of
enactment, design a formula to eliminate gaps between
supply of, and demand for, such staff in areas with
high export volumes; and
``(C) request the additional staff that are required
to eliminate such gaps and place them in those
areas.''.
SEC. 402. INCREASE ACCESS TO CAPITAL FOR SMALL AND MEDIUM-SIZED
EXPORTERS.
Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is
amended--
(1) in paragraph (2)(D) by amending the heading to read as
follows: ``Participation under export working capital and
international trade programs''; and
(2) in paragraph (3)--
(A) in subparagraph (A) by striking ``subparagraph
(B)'' and inserting ``subparagraphs (B) and (C)'';
(B) by redesignating subparagraphs (B) and (C) as (C)
and (D), respectively;
(C) by inserting after subparagraph (A) the
following:
``(B) if the total amount outstanding and committed
(by participation or otherwise) solely for the purposes
provided in paragraphs (14)(A) and (16) to the borrower
from the business loan and investment fund established
by this Act would exceed $2,250,000 (or if the gross
loan amount would exceed $3,000,000), except as
provided in subparagraph (C);''; and
(D) in subparagraph (C) (as so redesignated) by
striking ``$1,750,000, of which not more than
$1,250,000'' and inserting ``$2,250,000, of which not
more than $1,600,000''.
SEC. 403. CLERICAL AMENDMENT.
Section 22(c)(5) of the Small Business Act (15 U.S.C. 649) is amended
by striking the period at the end and inserting a semicolon.
TITLE V--AUTHORIZATION OF APPROPRIATIONS
SEC. 501. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be necessary
to carry out this Act and the amendments made by this Act.
I. Purpose and Summary
As market barriers fall across the globe due to trade
liberalization, small businesses have benefited from the
increased availability of foreign goods and access to vast new
markets. However, these firms face significant challenges as a
result of globalization, including the need for greater levels
of financing for exports as well as resources to stay
competitive against foreign producers. Consequently, the Small
Business Administration (SBA) has largely focused on removing
obstacles to small firms' success in domestic markets. H.R.
2992, the SBA Trade Programs Act of 2007, amends key sections
of the Small Business Act to enhance the agency's institutional
focus on the global pressures and opportunities for small
businesses operating in a market without borders. The
legislation targets resources for the agency's export
assistance programs and establishes a new mandate to help small
businesses prepare for competition against increasing foreign
competitors in domestic and global markets.
H.R. 2992 modernizes the agency's trade programs through
four components. Title I provides for the agency's increasing
role integrating small business needs into international trade
commitments and national policies. It also mandates that the
agency develop and coordinate the implementation of a small-
business based trade strategy and a system to track these
firms' benefits from the use of Federal trade promotion
resources. Title II helps to ensure that small businesses can
participate in a level playing field in the globalized economy
by creating tools to prepare against unfair trade practices,
such as intellectual property violations. Trade remedy and
dispute assistance tools are created as well as technical
assistance for firms to safeguard their patents, trademarks and
copyrights in foreign countries. Title III establishes trade
adjustment assistance resources for small firms dislocated due
to global economic trends. A comprehensive set of services will
be developed by the agency's Office of International Trade,
including technical and financial resources to aid firms update
their enterprises and remain at the cutting edge of their
industries. Title IV was designed to facilitate export
transactions by small firms and to reduce the risk to private
banks for lending to small firms for overseas transactions.
Financing and technical assistance resources at the agency are
expanded for eligible small and medium sized exporters. The
legislation, overall, establishes a comprehensive set of
resources at the agency to help small firms overcome
significant trade barriers while new markets are opened.
Through the bill, it is expected that these firms will have
additional resources to access new markets and opportunities to
expand their enterprises.
II. Background and Need for Legislation
Although small businesses have demonstrated success and
interest in retaining a share of global markets, their
corporate counterparts continue to perform at a significant
advantage in the current integrated economic structure. This is
most clearly demonstrated by the fact that although small and
medium sized businesses represent nearly all U.S. exporters,
they only generate 30 percent of revenues from these
activities. It is likely that this imbalance will continue as
large firms have experienced faster growth rates in export-
based revenues, 72 percent, than smaller firms, 54 percent.
Therefore, these businesses face challenges growing in foreign
markets even as the economy becomes globalized.
Small firms have recognized the limits to their
competitiveness with larger firms in world markets and have
responded accordingly. Recent surveys have found a direct
relationship between the size of a firm and its rate of
``internationalization''--the larger the firm, the more likely
it is to trade in foreign markets. Small firms are consequently
losing critical opportunities and becoming less competitive as
a result, even though they would particularly benefit from
expansion into new markets, thereby increasing their consumer
demand, return on investment, and resources for constant
innovation.
There are several obstacles creating an unequal playing
field for small businesses as the economy becomes globalized.
These must be addressed to ensure all firms, especially those
with significant potential to benefit from international
engagement, can succeed in domestic and global markets.
Transaction costs
With fewer resources to expend on training and compiling
information on international agreements, foreign transactions
are more difficult for these firms. Due to their limited
production, small exporters have higher transaction costs and
therefore are constrained in the volume and risk that they can
undertake in international commercial opportunities.
Consequently, they consistently enter fewer foreign markets
than large firms. In 2002, 62 percent of these firms posted
sales to only one foreign market, while more than half of large
firms exported to five or more markets. A limitation for small
businesses integration into world markets is their lack of
adequate connections abroad and resources to develop buyers for
goods. In fact, larger firms are twice as likely as small firms
to have affiliates abroad to process exports into foreign
markets. Consequently, these firms have fewer opportunities to
identify and market their goods to foreign consumers.
Regulatory obstacles
Small businesses also struggle with the numerous customs
requirements, which limit their access to foreign markets. A
study this year by the Organization of Economic Cooperation and
Development indicated that regulatory complexity across markets
impedes free trade and investment. This is especially true for
small businesses that must expend a disproportionate amount of
their resources processing local, federal, and international
regulations compared to their corporate counterparts. The
disproportionate burden of complex regulations impedes small
firms from taking full advantage of the system of free trade.
Import effects
Small firms are also impacted by the elimination of market
barriers, such as tariffs, due to trade commitments that allow
foreign producers to gain increased access to domestic
consumers. With higher per-unit expenses, they face steep
competition from low-cost producers. As imported products have
grown exponentially in the United States, many of these firms
and the industries they dominate have disappeared from local
and national economies.
To ensure small firms can thrive in a globalized
marketplace, the legislation readies the SBA to meet the needs
of those entrepreneurs that are adjusting to rapidly changing
economic conditions. The SBA Trade Programs Act of 2007
establishes a comprehensive set of resources and tools at the
agency so that domestic assistance programs also reflect the
international-oriented demands of small businesses.
III. Hearings
On June 13, 2007, the Committee on Small Business held a
hearing on the impacts of US trade policies upon small
businesses. Witnesses representing manufacturing, service, and
agricultural sectors discussed foreign and domestic market
access issues facing small firms as a result of trade
liberalization. The hearing also highlighted the implications
of inadequate representation for this sector in the negotiation
and implementation of international commitments. On July 5,
2007, a hearing was held to examine the current legislation,
which was designed to address these issues. The testimony
underscored the need for enhanced export assistance and the
creation of trade compliance resources at the agency, which
were included in the legislation. The purpose of the hearings
was to examine and design small business-based trade policies
that support these firms' competitiveness in the globalized
economy while improving the nation's trade balance.
IV. Committee Consideration
The Committee on Small Business, a quorum being present,
met in open session on July 19, 2007 to consider H.R. 2992.
V. Committee Votes
The Committee on Small Business ordered H.R. 2992 reported
to the House, as amended by an amendment in the nature of
substitute, by a voice vote at 10:18 a.m.
VI. Section-by-Section Analysis of H.R. 2992
Section 1. Short title; table of contents
This section includes a short title and the table of
contents.
TITLE I
Section 101. Trade policy for small business
This section formalizes SBA's role assisting in the
development and implementation of trade policy. Commensurate
with international policy, the agency's mandate is expanded to
represent small business needs in relationships between the
Office of International Trade (OIT) and federal trade policy
makers, particularly the U.S. Trade Representative (USTR) and
transnational organizations, such as the Organization for
Economic Cooperation and Development. It is also the task of
the OIT Director to establish programs that will boost
entrepreneurs' exports and direct small exporter organizations
and Ministries of foreign governments to enact these
initiatives. Strategic Alliances, which the agency has
increasingly established with Ministries of foreign governments
representing small businesses, have also been formalized
through the bill. These agreements, their purpose, and
expectations are defined by the legislation to ensure they
benefit small U.S. businesses.
In its implementation of the requirement, the Committee
intends that the agency will establish recommendations on trade
policies in order to expand opportunities for small businesses
rather than establishing a separate trade policy. Further, the
agency is expected to increase its responsibility to represent
these firms in the decision-making and implementation process
for trade policies. This is consistent with the existing
framework in which the USTR serves to coordinate and negotiate
trade policy for all U.S. industries, including small
businesses.
SBA is expected to serve a similar role in policy making as
many other federal agencies, including the U.S. Departments of
Commerce and Agriculture. The agency should increase its
efforts to reflect small business needs in the globalizing
economy particularly due to the industry's lack of
representation through a formal negotiator at the USTR. As
additional international agreements are implemented, the SBA is
responsible for filling gaps in the representation of small
businesses in order for these firms to benefit from the system
of free trade.
Section 102. Establish an annual small business trade strategy
The agency's OIT is mandated to develop an annual small
business trade strategy in coordination with and to inform the
nation's plans for global economic integration. The strategy
will be in the form of a report and include at least the
following components: strategies to increase exports, including
priority markets and industries; plans to increase the
competitiveness of domestic small business industries in the
global economy; plans to protect small businesses from unfair
trade practices, including intellectual property violations and
import dumping; strategies to expand small business
representation in US trade policy formation and implementation;
and coordination efforts with other trade-related Federal
agencies, such as the Overseas Private Investment Corporation
and the U.S. Export-Import Bank. To increase its effectiveness,
the report must include specific policies and a timeline for
the implementation of its objectives.
In compliance with international obligations restricting
export subsidies, a component within the agency's mandated
small business trade strategy was modified to focus upon the
removal of trade barriers rather than providing assistance to
firms contingent upon overseas sales. SBA's limited role in
determining unfair trade practices is reflected by restricting
the actions that the agency can take against import dumping.
The plan should be designed and enacted by the beginning of
the fiscal year to be coordinated with budget decisions. This
will ensure that the agency effectively employs its resources
to meet the objectives of the trade strategy. The Committee
also expects the agency to consider and implement the trade
strategy in collaboration with appropriate state officials and
their trade promotion programs.
Section 103. Track small business exports and trade resource
utilization
A new mandate requires the agency to ensure federal trade
promotion resources benefit small businesses. The OIT Director
is responsible for creating a system to track small business
exports and use of federal trade promotion resources.
Methodological consistency across all agencies is required in
the survey; for example, by tracking the number of small and
medium sized business export sales transactions per year
facilitated through each federal entity of the Trade Promotion
Coordinating Committee (TPCC). Particular attention will be
given to designing a system that tracks data on the trade of
services by small exporters in consultation with the Department
of Commerce. The Director of OIT shall also work in
consultation with TPCC members to implement the system and
report the results annually in the National Export Strategy,
conducted by the TPCC.
The Committee expects the agency to immediately begin,
following the legislation's enactment, examining ways to
develop the system and coordinate its results with TPCC
members. For data that is not accessible, the agency must work
with the Department of Commerce to develop, compile, and
distribute relevant information regarding small business
exports.
TITLE II
Section 201. Trade remedy and dispute assistance initiative
SBA's OIT is responsible for providing technical assistance
to small businesses involved in trade remedy investigations or
prosecuting trade dispute cases. The Division is required to
design counseling services and reference materials to assist
small businesses navigate the trade dispute and remedy
processes. To implement the program, OIT staff will train
district staff to provide one-on-one assistance to small
businesses involved in these activities.
It is not the expectation of the Committee that the SBA
will supersede other federal agency's responsibilities to
enforce trade laws. Instead, the agency is required to fill
gaps in services which assist small business file trade
disputes and request trade remedy investigations. The Committee
recognizes that the President has given responsibility of
filing and prosecuting trade disputes to USTR, the Department
of Commerce is the lead agency for dealing with unfair trade
laws, dumping, and unfair foreign government subsidies. Yet,
the SBA is capable of providing appropriate tools which can
ensure small firms can prosecute their rights and protect their
assets against unfair trade practices.
Section 202. Patent assistance and IP protections initiative
In consultation with the U.S. Patent and Trademark Office,
the OIT will design counseling services, including identifying
legal resources, to small businesses taking legal action to
secure their patent rights in foreign countries. OIT staff and
district staff will collaborate on the implementation of this
program to serve small businesses involved in these activities.
A portion of the section's terminology has been modified to
clarify that the agency is required to assist small businesses
secure intellectual property protection available in foreign
markets. Through its network of service providers that small
businesses currently patronize, the Committee expects the
agency to effectively implement this provision by providing the
outreach and training to assist these firms. Further, given the
particular obstacles small businesses face identifying legal
resources in their pursuit of patent protections, the agency's
staff must have the expertise needed to effectively address
these firms' needs.
TITLE III
Section 301. Trade adjustment assistance financing initiative
Eligibility requirements for International Trade Loans are
expanded through this provision to include those firms impacted
by unfair trade practices. The 90-percent guarantee for the
Export Working Capital program shall apply to International
Trade Loans.
Updates to the provision's standards for financing
assistance ensure its compliance with the Antidumping Act and
the World Trade Organization's regulatory framework. Import
dumping as a specific category for lending assistance is
eliminated. This will ensure that the appropriate agencies
maintain the authority for determining injuries from this trade
practice. The specific financing assistance category for firms
impacted by currency devaluation practices is also removed to
ensure the bill conforms to the current countervailing duty law
which does not recognize this action as creating an unfair
subsidy. The committee, however, expects the agency to ensure
that all small businesses impacted by unfair trade practices
are eligible for trade adjustment financing assistance.
Section 302. Technical resources for trade adjustment assistance
SBA's OIT is required to design a comprehensive set of
services to assist small businesses readjust to global economic
conditions, including the creation of programs that provide
assistance to dislocated firms and employees: Management and
technical training; access to technology; marketing assistance;
as well as research on domestic and global markets. These
initiatives will be posted for public comment. These adjustment
tools are to be provided to small businesses through OIT's
collaboration with the agency's outreach business assistance
centers, including its Small Business Development Centers,
Women's Business enters, and SCORE program.
Although the Trade Adjustment Act is scheduled to be
reauthorized later this year, the Committee believes that all
eligible small businesses deserve access to these resources in
a timely manner. Further, this section guarantees that these
resources will be available to all eligible small businesses.
TITLE IV
Section 401. Increase access to capital for small and medium sized
exporters
Loan sizes are increased for small businesses' trade
related transactions. SBA participation in trade-related loans
through either the International Trade or Export Working
Capital programs or a combination of both is raised from $1.5
million to $2.25 million; gross amounts are increased from $2
million to $3 million.
Raising the loan limits will ensure that the SBA works in
collaboration with the U.S. Export-Import Bank in providing
adequate financing to small exporting firms. Given the Export-
Import Bank's erratic financing levels to small businesses,
despite its statutory mandate to provide 20% of lending
resources to these firms, the Committee expects the SBA to
ensure that entrepreneurs receive the level of funding
necessary to undertake profitable export transactions.
Section 402. Expand participation at U.S. Export Assistance Centers
(USEACs)
As domestic small businesses look for new markets and
industries face increased competition for foreign competitors,
the legislation expands technical assistance for overseas
transactions. This reverses the decline in the agency's
resources which have helped to maintain these firms'
competitiveness in global markets, particularly against foreign
companies receiving some form of national export subsidies. The
legislation provides for the re-establishment of six trade
finance specialists administered by the SBA previously serving
in the Department of Commerce's U.S. Export Assistance Centers
(USEAC). These staff will specifically assist small exporters
to address financing challenges the sector faces, including
identifying private lending resources and designing a financing
strategy for overseas transactions. The agency is required to
fulfill this requirement within the first year after the
enactment of the legislation.
The agency's dwindling technical assistance resources for
small businesses in high export volume areas have been
reinforced through the section. Trade finance specialist
positions that have been vacant for several years, including
staff designated for USEACs located in New Orleans and New York
City must be filled immediately. These regions have critical
connections to global markets and have been constrained in
exporting activities as a result of inadequate technical
assistance for small businesses.
Reducing gaps in the agency's supply of finance counseling
for overseas transactions will be facilitated by the additional
responsibility for the OIT Director to study, design, and
implement a formula for the maintenance of new trade finance
specialists. This will ensure that small businesses in regions
with significant international ports and small exporter
populations have access to financing and technical assistance
in order to affordably and conveniently export their goods.
Funds are authorized to fulfill this section, as needed.
The Committee expects that the agency requests adequate
funding as authorized in the legislation to hire and maintain
the trade finance specialists. Candidates for the trade finance
specialist positions must possess sufficient qualifications and
experiences. It is further expected that the agency permanently
reverses its decline of these resources and instead expand this
program.
VII. Congressional Budget Office Cost Estimate
July 26, 2007.
Hon. Nydia M. Velazquez,
Chairwoman, Committee on Small Business,
House of Representatives, Washington, DC.
Dear Madam Chairwoman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2992, the SBA
Trade Programs Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Peter R. Orszag,
Director.
Enclosure.
H.R. 2992--SBA Trade Programs Act of 2007
Summary: H.R. 2992 would require the Small Business
Administration's (SBA's) Office of International Trade (OIT) to
develop policies and programs to increase the capacity of small
businesses to engage in trade with foreign countries. The bill
also would authorize SBA to increase the number of trade
finance specialists working in SBA's export assistance centers.
Finally, the bill would make several changes to the 7(a) loan
program to ease the financial requirements for loan guarantees
to small businesses engaged in international trade. Assuming
appropriation of the necessary amounts, CBO estimates that
implementing H.R. 2992 would cost $2 million in 2008 and $19
million over the 2008-2012 period. Enacting H.R. 2992 would not
affect direct spending or revenues.
H.R. 2992 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no cost on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 2992 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
------------------------------------------------------------------------
By fiscal year, in millions of
dollars--
---------------------------------------
2008 2009 2010 2011 2012
------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Additional Staff:
Estimated Authorization 3 3 3 3 3
Level......................
Estimated Outlays........... 2 3 3 3 3
Tracking System:
Estimated Authorization 1 2 1 1 1
Level......................
Estimated Outlays........... * 2 1 1 1
Total:
Estimated Authorization 4 5 4 4 4
Level..................
Estimated Outlays....... 2 5 4 4 4
------------------------------------------------------------------------
Note: * = Less than $500,000
Basis of estimate: For this estimate, CBO assumes that H.R.
2992 will be enacted near the beginning of 2008, that
appropriations will be provided in each fiscal year, and that
spending will follow historical patterns. Based on information
from SBA, CBO estimates that implementing H.R. 2992 would cost
$2 million in 2008 and $19 million over the 2008-2012 period,
assuming appropriation of the necessary amounts.
Additional Staff
H.R. 2992 would direct SBA to fill certain positions, which
support trade financing for small businesses, that have been
vacant since 2003. Further, SBA would be required to increase
the number of trade finance specialists working at its export
assistance centers within a year of enactment of the bill.
Based on information from SBA, CBO estimates that ten
additional staff positions (four to fill vacancies plus six
authorized by the bill) would cost $1 million in 2008 and $9
million over the 2008-2012 period.
The bill would require SBA's Office of International Trade
to develop strategies and programs to aid small businesses that
are engaged in or affected by international trade. Based on
information from SBA, CBO expects that an additional seven
positions would be added to the OIT to develop programs that
provide technical assistance and counseling in areas such as
trade disputes and remedies as well as intellectual property
protection. CBO estimates that the additional OIT staff would
cost $1 million in 2008 and $5 million over the 2008-2012
period.
Tracking System
H.R. 2992 would require SBA to develop a system to track
the volume of exports produced by small businesses. Based on
information from SBA, CBO expects that the agency would test
the tracking system using a pilot program in the first year,
and move to full development of the system 2 years after
enactment of the bill CBO estimates that developing and
maintaining the system would cost less than $500,000 in 2008
and $5 million over the 2008-2012 period.
SBA Loans
Finally, the bill would make changes to the 7(a) loan
guarantee program, specifically, increasing the guarantee
amount and the maximum loan limit for loans that would be used
for international trade or foreign market development. Based on
information from SBA, CBO expects that these more advantageous
loan terms would not have a significant effect on the cost of
the program because of the small number of international trade
loans. Further, because the 7(a) program operates at a zero
subsidy (that is, the estimated cost of providing loan
guarantees is covered by fees charged to borrowers and
lenders), CBO estimates that implementing these changes would
have no significant effect on the budget.
Intergovernmental And Private-Sector Impact: H.R. 2992
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no cost on State, local, or
tribal
governments.
Estimate prepared by: Federal Costs: Susan Willie; Impact
on state, local, and tribal governments: Elizabeth Cove; Impact
on the Private Sector: Jacob Kuipers.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.
VIII. Committee Estimate of Costs
Clause 3(d)(2) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
H.R. 2992. However, clause 3(d)(3)(B) of that rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act.
IX. Oversight Findings
In accordance with clause (2)(b)(1) of rule X of the Rules
of the House of Representatives, the oversight findings and
recommendations of the Committee on Small Business with respect
to the subject matter contained in H.R. 2992 are incorporated
into the descriptive portions of this report.
X. Statement of Constitutional Authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8, clause 18, of the
Constitution of the United States.
XI. Compliance With Public Law 104-4
H.R. 2992 contains no unfunded mandates.
XII. Congressional Accountability Act
H.R. 2992 does not relate to the terms and conditions of
employment or access to public services or accommodations with
the meaning of section 102(b)(3) of P.L. 104-1.
XIII. Federal Advisory Committee Statement
H.R. 2992 does not establish or authorize the establishment
of any new advisory committees.
XIV. Statement of No Earmarks
Pursuant to clause 9 of rule XXI, H.R. 2992 does not
contain any congressional earmarks, limited tax benefits, or
limited tariff benefits as defined in clause 9(d), 9(e), or
9(f) of rule XXI.
XV. Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 2992 includes a number of provisions designed to
update and to improve the Small Business Administration's
international trade programs.
XVI. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 7. (a) Loans to Small Business Concerns; Allowable
Purposes; Qualified Business; Restrictions and Limitations.--
The Administration is empowered to the extent and in such
amounts as provided in advance in appropriation Acts to make
loans for plant acquisition, construction, conversion, or
expansion, including the acquisition of land, material,
supplies, equipment, and working capital, and to make loans to
any qualified small business concern, including those owned by
qualified Indian tribes, for purposes of this Act. Such
financings may be made either directly or in cooperation with
banks or other financial institutions through agreements to
participate on an immediate or deferred (guaranteed) basis.
These powers shall be subject, however, to the following
restrictions, limitations, and provisions:
(1) * * *
(2) Level of participation in guaranteed loans.--
(A) * * *
* * * * * * *
(D) [Participation under export working
capital program] Participation under export
working capital and international trade
programs.--Notwithstanding subparagraph (A), in
an agreement to participate in a loan on a
deferred basis under the Export Working Capital
Program established pursuant to paragraph
(14)(A), or to participate in a loan made under
paragraph (16), such participation by the
Administration shall not exceed 90 percent.
(3) No loan shall be made under this subsection--
(A) if the total amount outstanding and
committed (by participation or otherwise) to
the borrower from the business loan and
investment fund established by this Act would
exceed $1,500,000 (or if the gross loan amount
would exceed $2,000,000), except as provided in
[subparagraph (B)] subparagraphs (B) and (C);
(B) if the total amount outstanding and
committed (by participation or otherwise)
solely for the purposes provided in paragraphs
(14)(A) and (16) to the borrower from the
business loan and investment fund established
by this Act would exceed $2,250,000 (or if the
gross loan amount would exceed $3,000,000),
except as provided in subparagraph (C);
[(B)] (C) if the total amount outstanding and
committed (on a deferred basis) solely for the
purposes provided in paragraph (16) to the
borrower from the business loan and investment
fund established by this Act would exceed
[$1,750,000, of which not more than $1,250,000]
$2,250,000, of which not more than $1,600,000
may be used for working capital, supplies, or
financings under section 7(a)(14) for export
purposes; and
[(C)] (D) if effected either directly or in
cooperation with banks or other lending
institutions through agreements to participate
on an immediate basis if the amount would
exceed $350,000.
* * * * * * *
(16) International trade.--
(A) * * *
* * * * * * *
(D) Adversely affected by international
trade.--For purposes of this paragraph, a small
business concern is adversely affected by
international trade if, as determined by the
Administrator, the small business concern--
[(i) is confronting increased
competition with foreign firms in the
relevant market; and
[(ii) is injured by such
competition.]
(i) is impacted by--
(I) increased competition
with foreign firms in the
relevant market; or
(II) unfair trade practices,
particularly intellectual
property violations; and
(ii) is injured by such impacts.
(E) Outreach and marketing.--The
Administration shall increase outreach and
marketing of international trade loans to
district offices and private lenders.
* * * * * * *
Sec. 22. (a) * * *
* * * * * * *
(c) The Office shall promote sales opportunities for small
business goods and services abroad. To accomplish this
objective the office shall--
(1) * * *
* * * * * * *
(5) make available to the small business community
information regarding conferences on exporting and
international trade sponsored by the public and private
sector[.];
* * * * * * *
(h) Role in Trade Policy.--
(1) Recommendations.--The director of the Office
shall present recommendations regarding small business
exporters to trade negotiators.
(2) Development of trade policies.--The director of
the Office shall assist in the development of trade
policies that increase opportunities for small
businesses in domestic and foreign markets, including
the removal of trade barriers.
(3) Implementation of trade policies.--The director
of the Office shall assist in the implementation of
trade policies through relationships developed with
Federal trade policymakers, particularly the United
States Trade Representative, and transnational
organizations, such as the Organization for Economic
Co-operation and Development.
(4) Small exporter promotion programs.--The director
of the Office shall establish programs that will boost
the export opportunities of entrepreneurs and encourage
transnational organizations, such as the Organization
for Economic Co-operation and Development, small
exporter organizations, and ministries of foreign
governments to support and publicize these programs.
(5) Strategic alliances.--
(A) Congressional notification.--The director
of the Office shall notify the Committee on
Small Business of the House of Representatives
and the Committee on Small Business and
Entrepreneurship of the Senate of pending
strategic alliances.
(B) Follow-up activities.--The director of
the Office shall ensure that planned and
documented follow-up activities for strategic
alliances increase trade opportunities for
small businesses.
(C) Strategic alliance defined.--In this
paragraph, the term ``strategic alliance''
means a working relationship, entered into
between the Small Business Administration and
foreign national ministries representing small
business concerns, for the purpose of
strengthening trade between United States small
businesses and foreign small businesses by
establishing overseas networks and buyers.
(i) Annual Small Business Trade Strategy.--
(1) In general.--The director of the Office shall
develop and maintain a small business trade strategy
that is contributed as part of the National Export
Strategy developed by the Department of Commerce that
includes at least the following components:
(A) Strategies to increase small business
export opportunities. The strategies shall
include a specific strategy to increase small
business export opportunities to the Asia
Pacific Region.
(B) Recommendations to increase the
competitiveness of domestic small business
industries in the global economy.
(C) Recommendations to protect small
businesses from unfair trade practices,
including intellectual property violations.
(D) Strategies to expand small business
representation in United States trade policy
formation and implementation.
(E) Coordination efforts with the Trade
Promotion Coordinating Committee of the
Department of Commerce, as well as with Federal
agencies that also provide trade financing to
small businesses, such as the Overseas Private
Investment Corporation and the Export-Import
Bank.
(2) Report.--At the beginning of each fiscal year,
the director shall submit to the Committee on Small
Business of the House of Representatives and the
Committee on Small Business and Entrepreneurship of the
Senate a report on the small business trade strategy
required by paragraph (1). The report shall cover, at a
minimum, each of the components required by paragraph
(1) and shall include specific policies and objectives
and timelines to implement those policies and
objectives.
(j) Tracking System.--
(1) In general.--The director of the Office shall
develop a system to track small business exports and
the use by small businesses of Federal trade promotion
resources. The director shall ensure that the system is
consistent through each Federal agency member of the
Trade Promotion Coordinating Committee.
(2) Design emphasis.--The director shall give
particular attention, in designing the system, to the
tracking of data on the trade of services by small
exporters, in consultation with the Department of
Commerce.
(3) Implementation.--The director shall work in
consultation with members of the Trade Promotion
Coordinating Committee to ensure that the system is
implemented and that the results of the system are
reported annually in the National Export Strategy
conducted by the Trade Promotion Coordinating
Committee.
(k) Trade Remedy and Dispute Assistance Initiative.--The
director of the Office shall design, and the district offices
of the Administration shall implement, a program that provides
technical assistance, counseling services, and reference
materials to assist small businesses navigate the trade dispute
and remedy processes. The program shall include--
(1) information on available resources, procedures,
and requirements for trade remedy investigations;
(2) an approach for district office staff to provide
one-on-one assistance to small businesses involved in
these activities; and
(3) an identification of legal resources and other
tools to ensure small businesses can navigate the trade
dispute and remedy processes affordably.
(l) Patent Assistance and Intellectual Property Protections
Initiative.--In consultation with the United States Patent and
Trademark Office and the United States Copyright Office, the
Office shall design counseling services, including identifying
legal resources for small businesses to secure intellectual
property protection in foreign countries. To implement the
program, the Office shall collaborate with district office
staff to provide one-on-one assistance to small businesses
involved in these activities.
(m) Technical Resources for Trade Adjustment Assistance.--
(1) In general.--The director of the Office shall
establish a comprehensive set of services to assist
small business readjustment, including access to
training, technology, marketing assistance, and
research and information on domestic and global
markets.
(2) Implementation.--The Administrator shall, by
regulation, establish such requirements as may be
necessary to carry out paragraph (1).
(3) Outreach.--The Office shall work with the
district offices and the outreach business assistance
centers of the Administration, including Small Business
Development Centers, Women's Business Centers, and
SCORE, to offer the set of services established under
paragraph (1) to small businesses in their local
communities.
(n) Trade Finance Positions.--
(1) Additional trade finance specialists.--
(A) In general.--The Office, over the 1-year
period beginning on the date of the enactment
of this subsection, shall increase the number
of trade finance specialists at Export
Assistance Centers by at least 6 and thereafter
shall maintain the number of such trade finance
specialists at or above that number. Candidates
for the positions are required to have
sufficient qualifications and experiences.
(B) Authorization of appropriations.--There
are authorized to be appropriated to carry out
subparagraph (A) such sums as may be necessary.
(2) Filling vacant positions.--The Office, over the
3-month period beginning on the date of the enactment
of this subsection, shall fill all trade finance
positions that have been vacant since 2003. Candidates
for the positions are required to have sufficient
qualifications and experiences.
(3) Filling gaps in high-export-volume areas.--The
director of the Office shall--
(A) not later than 1 year after the date of
the enactment of this subsection, carry out a
national study to compare the rate of exports
from each State and major metropolitan region
to the availability of Administration staff
participating in Export Assistance Centers in
such State or region;
(B) not later than 2 years after such date of
enactment, design a formula to eliminate gaps
between supply of, and demand for, such staff
in areas with high export volumes; and
(C) request the additional staff that are
required to eliminate such gaps and place them
in those areas.
* * * * * * *
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