About

A WORLD OF OPPORTUNITY:
PROMOTING EXPORT SUCCESS FOR
SMALL AND MEDIUM-SIZED BUSINESSES

HEARING
BEFORE THE
SUBCOMMITTEE ON COMPETITIVENESS,
INNOVATION, AND EXPORT PROMOTION
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
OCTOBER 6, 2009
Printed for the use of the Committee on Commerce, Science, and Transportation

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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

SUBCOMMITTEE ON COMPETITIVENESS, INNOVATION, AND EXPORT
PROMOTION

TUESDAY, OCTOBER 6, 2009
U.S. SENATE,
SUBCOMMITTEE ON COMPETITIVENESS, INNOVATION, AND
EXPORT PROMOTION,
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION,
Washington, DC.

The Subcommittee met, pursuant to notice, at 2:30 p.m. in room
SR–253, Russell Senate Office Building, Hon. Amy Klobuchar,
Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator KLOBUCHAR. I’d like to call the Subcommittee to order.
I want to thank everyone for attending this important Subcommittee
meeting today.
And before we get started, I wanted to welcome my new Ranking
Member on this Subcommittee, George LeMieux from Florida. And
I look forward to working with him on a wide range of issues, including
the important topic of export promotion, as well as tourism,
which we cover in this Subcommittee, which I somehow think is
really important to Florida. Is that right?
Senator LEMIEUX. Yes, it is.
[Laughter.]
Senator KLOBUCHAR. So, I’m going to introduce each panelist
after the opening remarks. I would like to thank the staff of the
Subcommittee and the Commerce Committee that worked on this.
If you notice, they have these little buttons on, that they got from
Minnesota when they visited a tourism hearing in Duluth, that
say, ‘‘You betcha.’’ So, there we are.
And I would also note that I scheduled this hearing to be sandwiched
between the Vikings’ victory over Green Bay, that I—right,
Mr. Wollin?—I was there last night.
Mr. WOLLIN. Yes.
Senator KLOBUCHAR. Yes. And then the Twins-Tiger game this
afternoon, which is a huge tiebreaker, which starts at 4 o’clock. So,
it’s very good timing.
Now, I’m going to introduce each panel member, after Senator
LeMieux and I speak, and I wanted to, though, first extend my
warmest welcome to Mr. Wollin—Tom Wollin—from Mattracks,
Inc. I actually learned about his company because I made a pledge
that I would visit every county in my State every year. That would
be 87. I wouldn’t suggest doing that, necessarily. But, because of
that I was able to visit his great company in Karlstad, Minnesota,
population 900, and it’s called ‘‘The Moose Capital of the North.’’
It produces—Mattracks produces removable rubber track systems
for four-wheel-drive vehicles, and these track conversion systems
help turn a regular four-wheel-drive vehicle into something like a
tank, allowing the truck or car to go anywhere and do anything.
And I had an amazing tour, which—they took me up a hill and
down, and I thought I was never going to return from that county
on that day.
And Tom will tell his story, but I think it’s worth pointing out
that, when Tom got to Mattracks in 2000, only 15 percent of
Mattracks sales were outside the U.S. and Canada. Today, under
his leadership and with assistance from the Commerce Department,
international business comprises more than 50 percent of
Mattracks’ sales, and now Mattracks sells its track-conversion systems
to Russia, Chile, Kazakhstan, and Turkey, and around 50
other countries on seven continents. As I like to say, Tom helped
Mattracks go from Karlstad to Kazakhstan. There you are. It was
kind of good. That didn’t quite work with the words.
And so, I look forward to hearing Tom’s testimony, as well.
Now, we have an important national interest in promoting exports
by our small businesses. Access to new markets can make the
difference between expansion and stagnation of a new and developing
business. And at a time when our economy is experiencing
problems, it’s more important than ever to make sure that businesses
know about all potential opportunities available to them.
Today we’ll examine the success that a number of small businesses
have had entering export markets throughout the world.
We’ll also highlight how small businesses benefit from efforts by
U.S. Government agencies to promote American products and business
abroad. And finally, we’ll look at what works and what doesn’t
work in export promotion, and how we can make the Federal Government’s
efforts more effective for small business.
Currently, the U.S. derives the smallest percentage of our GDP
from exports, compared to other major countries. America has always
been the world’s customer, buying our way to huge trade deficits.
But, it’s clear that exports will increasingly be important to
our economy as people in China, India, and other developing countries
gain purchasing power and they become our potential customers.
In fact, more than 95 percent of the world’s customers are located
outside the United States, so it only makes sense to reach
out. More exports will mean more business, more jobs, and more
growth for the American economy.
Exports are also important for small business for several reasons.
First and most obviously, exports allow a company to increase its
sale and growth business. Second, a diversified base of customers
helps a business weather the economic ups and downs. Also, businesses
that export grow 1.3 percent faster, and they’re nearly 8.5
percent more likely to stay in business than companies that don’t
export. In addition, the annual job growth rate of exporting companies
has traditionally been 2 to 4 percentage points higher than
their nonexporting counterparts. And these jobs pay 13 to 18 percent
more, on average, than nonexport-related employment.
So, there is a world of opportunity out there, and it’s worth it for
our businesses to go out and seize these opportunities. But, fewer
than 1 percent of all American businesses export overseas. Fewer
than 1 percent. And of those that do, nearly 60 percent sell their
products only to one foreign country, typically Canada or Mexico.
Of those firms that don’t export overseas, 30 percent have indicated
that they would consider exporting if they had more information
about how to do it. So, that’s 30 percent of our businesses that
would like to export, but need more information, and need a guide
of how to do this.
For these American businesses, the world looks like one of those
ancient maps that contains only the outlines of the continents and
a few coastline features, but the rest of it is blank space and a few
vast unknown, unexplored territories. They know something’s
there, but they don’t really now how they can find it.
Fortunately, as we hope to hear today, there is help available.
There are a number of Federal agencies, such as the Commerce Department
and the Export-Import Bank, that assist U.S. companies
in promoting their products abroad. They have expertise and experience
to help small businesses navigate their way into these export
markets, sometimes even matching up companies and markets
like a trade-related Match.com.
In effect, their job is to—that was pretty good.
[Laughter.]
Senator KLOBUCHAR. Maybe you guys could use that as a marketing
thing, ‘‘trade-match.com.’’
In effect, their job is to fill in the blank spaces on the map, to
help American businesses recognize the export markets, to help
them understand the lay of the land, and to guide them as they
search out the best opportunities. But, the overwhelming majority
of small businesses, even those that want to export, don’t know
about the export-promotion services offered by our Federal agencies,
and they don’t know where to begin in order to make best use
of those services. These agencies need to do a better job of informing
small businesses about export opportunities and letting them
know about the valuable assistance that’s available to them.
Many other countries take export promotion more seriously than
we do. Countries like Spain, the United Kingdom, Italy, France,
Korea, Canada, and Japan all spend more on export promotion
than we do in the United States. But, this isn’t just about money.
We need to find out what really works, and what doesn’t, in export
promotion. We need to find out whether all of these Federal agencies
are working together effectively, or whether they’re unnecessarily
duplicating services, maybe even working at cross purposes.
And we need to see how well they’re coordinating their activities
with the export promotion efforts of our 50 states.
Given the importance of exports to our national economy, both
today and in the future, we need to make sure we’re doing all we
can to promote American businesses in foreign markets, especially
small businesses. There are literally tens of thousands of American
businesses that have the potential to export, and would like to export,
but they don’t know how to do it. Today I hope we can begin
the process of giving them those tools. A world of opportunity is
waiting for them.
So, I thank our witnesses. Mr. LeMieux and Mr. Johanns—Senator
Johanns has also joined us—they will speak, and then we’ll introduce
the witnesses.
STATEMENT OF HON. GEORGE S. LEMIEUX,
U.S. SENATOR FROM FLORIDA
Senator LEMIEUX. Thank you, Madam Chair. I look forward to
serving on this Committee under your leadership. I know that
we’re going to talk about important issues, but also enjoy ourselves
while doing it. And I appreciate the folks that are here today to
talk to us on the panel.
As Americans, we can take pride in knowing that we are the
world’s largest exporter and that we have the most productive work
force, but certainly we can do more. Our role as a global leader is
not guaranteed, which is why finding ways to maintain our status
as one of the most productive economies in the world should be one
of our primary focuses.
The Federal Government can play a pivotal role in supporting
the private sector’s efforts to reach customers in markets abroad.
And this is not a partisan issue. It’s an issue that both Democrats
and Republicans can agree upon. This means supporting Americans
through coherent, cost-effective, and performance-based initiatives.
Today we’re going to hear from a number of witnesses with an
interest in global trade. One includes the President of a Florida
restaurant equipment supplier who has expressed his desire for
support to broaden his business overseas market share. And I believe
his situation will be one that you find typical. He’s having
good success doing what he’s doing, but he needs more information
from its—his government, and more ways to help in his endeavors
overseas.
Americans are looking for ways to grow their businesses and to
find new customers, especially given the state of today’s economy.
This program exists but many Americans simply do not know
where to go to find the information they need. We should take
every opportunity to support America’s exporters, because they sustain
such a large portion of our economy; not just large multinational
corporations, but also the local businesses which serve as
pillars of our communities.
Florida has the fourth largest gross domestic product in America,
and the highest trade surplus of the 50 states. To put it bluntly,
trade matters in Florida. We are the gateway to Latin America,
and we are a recognizable trade destination around the world. Florida’s
share of small and medium businesses is nearly three times
the national percentage, and more than 95 percent of our exporters
are small or medium-sized businesses with 500 or fewer employees,
which make up a part of the 1.9 million small businesses in the
Sunshine State. More than 43,000 Florida companies export their
goods and services, and they employ nearly 600,000 Floridians.
And in 2008, exports in Florida reached a record $54.3 billion,
and—export market is really one of the true pillars of our Florida
economy, and therefore Floridians have a tremendous stake in the
global market. So, we’re going to talk today about providing better
information and better communication with our businesses so that
they can export more.
But, another way that we can immediately increase our number
of exports would be to swiftly adopt the pending trade agreements
with Colombia, Panama, and the Republic of Korea. According to
the Latin American Trade Coalition, in 2008 more than 6,000 small
and medium-sized American businesses exported to Colombia. As
the gateway to Latin America, that is a wonderful potential trading
opportunity for Floridians and Americans alike. If Congress were
to pass the Colombia Trade Agreement, more than 80 percent of
U.S. consumers’ and manufacturing products, and most U.S. farm
goods, would enter Colombia duty-free. More exports, more jobs for
Americans. The Colombia agreement, along with the Panama and
the Republic of Korea agreements have been pending for too long.
And I would urge the President and the Congress to take up their
prompt consideration.
I look forward to discussing these issues today, and other traderelated
issues, with our witnesses, and I thank you for joining us.
I look forward to your testimony and look forward to, and welcome—
my friend from Florida—Mr. Pierce, look forward to hearing
from him.
Thank you, Madam Chair.
Senator KLOBUCHAR. Well, thank you very much.
Senator Johanns?
STATEMENT OF HON. MIKE JOHANNS,
U.S. SENATOR FROM NEBRASKA
Senator JOHANNS. Thank you very much. I will speak very briefly,
because, actually, Senator LeMieux just talked about what I
wanted to talk about in my opening statement.
As a former Governor who did trade missions—and oftentimes
we would fill those trade missions with small companies who were
looking for the opportunity to expand international sales—and as
a former Secretary of Agriculture who was responsible for agricultural
trade in the last Administration, I can tell you there are some
things that work; they’re tried and true. One is face-to-face opportunities.
If you can get the Governor to go into a area and you can
open up doors and you can have business roundtables and all of
those opportunities, it almost always results in expanded trade opportunities.
But, the second piece of this is, you have to have the trade agreements
in place to allow the trade to occur. I must admit, I am absolutely
mystified as to why these three pending trade agreements
have not come to the Senate and the House for debate and for a
vote.
Second, I am absolutely mystified as to why the President of the
United States wasn’t here, the first day, to ask for trade promotion
authority. And here’s the significance of that issue. I participated
in the Doha Round while I was the Secretary of Agriculture. There
is a point in time through negotiation when all the cards are laid
on the table, when the other side has said, ‘‘Look, here’s what we
can do, Mr. Secretary,’’ and we have said, ‘‘Here’s what we can do,’’
and then you shake hands and you have a trade agreement that
eventually is embodied in writing.
Now, no country is going to get to that point—having played all
of their cards, laid out everything—if they know that they are now
headed toward a confirmation process for that trade agreement
that would involve every member of the House of Representatives
who wants to amend it or change it or tweak it or whatever, and
every member of the U.S. Senate. So, consequently, because of the
fact that this President hasn’t asked for trade promotion authority,
quite honestly, there isn’t any possibility whatsoever that there’ll
be another bilateral trade agreement.
Now, the difficulty for me, or for any of the Senators on this
panel, is this. Somebody else is going to sell their ag products to
these other countries. It is just simply going to happen. If we don’t
want to do business with Colombia under the trade agreement,
some other country will. There are trade opportunities out there
that we aren’t even negotiating today, because they aren’t going to
go anywhere if the President doesn’t have trade promotion authority.
So, I’m anxious to hear about all the programs. I’ve used those
programs. I have found, in my personal experience, the Federal
Government to be a great partner when I was a Governor. We
would always rely on our embassies, and our ag attaches, and all
of the resources that were available, and we would help small companies.
But, I hope we don’t forget the bigger picture here. We can’t
vote on a trade agreement until it’s submitted. And I don’t get why
these aren’t being submitted. They’re either going to get a ‘‘yes’’
vote or they’re going to get a ‘‘no’’ vote, but we should have the
right to cast that vote.
The second thing is, I must admit, I don’t get it. I don’t understand
why this Administration isn’t asking for trade promotion authority.
And if they’re looking for a Republican to get behind that,
to get it done, I volunteer. I will do everything I can to give the
President that authority, because I think it’s enormously important.
So, with that, I feel very, very strongly about this. Every weekend
that I go back home and talk to our pork producers or our cattle
ranchers who are desperate to sell their products into the international
marketplace, and are really, really having a hard time of
it, I have to tell you I am at a loss to explain to them why we
haven’t leveled the playing field, lowered the trade barriers, and
opened up these markets to, not only our small businesses, but to
our ag economy.
Thank you.
Senator KLOBUCHAR. Thank you very much, Senator Johanns.
Senator Begich, from Alaska?
STATEMENT OF HON. MARK BEGICH,
U.S. SENATOR FROM ALASKA
Senator BEGICH. Thank you very much, Madam Chair.
I’m looking forward to your testimony. I thank you all for being
here. I’m interested in trying to see, from a very optimistic viewpoint,
what we can do to help our small businesses and mediumsized
businesses to increase their capacity to do business overseas.

I know, from Alaska’s perspective, we do about $3.6 billion of exports:
minerals, forestry, energy. Fish is our biggest component,
$1.8 billion. Of our business, about 11 percent is small business or
medium-sized business, so we have seen great success in just pushing
and forging ahead. I’d like to remind folks that Alaska has half
the coal of the country. We produce and ship to South Korea, and
soon to be Chile, about a million tons a year, up to maybe 2 million
in the next several years. So, we are finding ways to do the business
overseas, because we, in our view, are an international State.
Our business is international. That’s how our economy grows, and
that’s how we expand it.
But, I am interested in seeing, as a small-business person for
over 25 years, and my wife’s a small-business person, what we can
do to increase that capacity. Lots of times what I find is, it’s just
knowing the simple process of doing it, and I’ll give you one simple
example. For business export, and as I recall importing those dollars,
people do duty-free business. It’s very difficult to find the
rules and regulations to do the business, so I’m anxious to hear
what things and what outreach you’re going to be doing to small
business and medium-sized business—not through the Federal
Registry, but I mean actually real outreach. And I know you have
done some stuff. As a former mayor, I worked with a lot of folks
on small business and medium-sized business development. But,
from our perspective, my perspective, from our State, it is important,
export as well as import business. But export business is important
because that is our driving force in some of our economies.
Again, the fishing industry is a great example of that.
So, I’m anxious—I’m not going to get into the larger trade issues,
that—we’ll have plenty of time, I think, in the Senate to debate
those. But, right now there are tools that I know you have that we
can be educated on to help our constituencies really plow through
the fields of foreign trade, as some of our businesses have done
very, very successfully.
I will say that the State of Alaska, right after World War II, established
a trade office in Japan, because we saw the opportunity
to do business. And we do it, and we do a lot with Japan, just as
we do with South Korea and many other Asian countries. We do
a lot of business now with Russia. In Alaska, we have the highest
amount of Russian students that come to any university in this
country, come to learn how to do business, and exchange. So, I’m
anxious to hear some of those tools, that you have that may be underutilized,
that we could help maybe promote to our small business
and medium-sized business.
So again, thank you for being here.
Madam Chair, thank you for holding this hearing to educate us,
and hopefully our constituency, in what we can utilize, and then
we might have some tougher questions in the later process.
Thank you very much.
Senator KLOBUCHAR. Well, thank you very much, Senator Begich.
Now we’re going to hear from our witnesses. I’ll introduce you all
together, and then you can each speak for 5 minutes, and then
we’ll do questions.
First, Rochelle Lipsitz is the Acting Assistant Secretary for Trade
Promotion, and Director General of the U.S. Commercial Service.

In this role as head of the trade promotion unit in the Commerce
Department, Ms. Lipsitz oversees the commercial services trade
specialists in 107 U.S. cities and more than 80 countries around
the world.
Second, Alice Albright. She is the executive vice president and
chief operating officer of the Export-Import Bank of the United
States. Ms. Albright joined the Export-Import Bank this year, after
working for 24 years in international finance positions in both the
private and nonprofit sectors.
Liz Reilly is the Director of TradeRoots, the U.S. Chamber of
Commerce’s program that helps raise grassroots support and public
awareness about the importance of exports to local communities
and small business.
Tom Wollin, who I already introduced, heads up the international
and governmental sales at Mattracks, the company based
in Karlstad, Minnesota.
And then finally, we have Brad Pierce, who Senator LeMieux
mentioned is the President of a small family-owned business in Orlando,
Florida, called Restaurant Equipment World, a company
that has sold commercial restaurant supplies to all 50 states and
100 countries. Mr. Pierce is also testifying today on behalf of the
National Federation of Independent Businesses.
Thank you all for being here today, and welcome.
And we’ll begin with Ms. Lipsitz.
STATEMENT OF ROCHELLE A. LIPSITZ, ACTING ASSISTANT
SECRETARY FOR TRADE PROMOTION AND DIRECTOR
GENERAL, U.S. AND FOREIGN COMMERCIAL SERVICE,
INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT
OF COMMERCE
Ms. LIPSITZ. Thank you, Chairman Klobuchar, Ranking Member
LeMieux, and members of the Subcommittee. Thank you for the opportunity
to speak with you today about the role of export promotion
in our efforts to strengthen and support America’s economy.
I welcome the Subcommittee’s interest in this topic, and look forward
to outlining the Department of Commerce’s efforts to promote
U.S. exports.
Madam Chair, I know you have worked with the Commercial
Service in Minnesota and have seen firsthand how the department
works to reach out to U.S. small and medium-sized firms. As part
of the International Trade Administration, the U.S. and Foreign
Commercial Service helps American firms and workers navigate
the often complicated and unpredictable waters of foreign trade so
that U.S. firms’ sales abroad help to support jobs here in the
United States.
The Commercial Service operates a global network of trade professionals
in 109 U.S. locations and in 77 countries. Our staff
works with U.S. companies to provide numerous services, ranging
from counseling, advocacy support, and market research, to industry
expertise and identification of international buyers or partners.
We guide companies through every step of the export process, from
learning how to export, to logistics and shipping issues. The Commercial
Service’ vision is that every U.S. business sees the world
as its marketplace.

The Commercial Service focuses its programs on three priorities:
increasing the number of U.S. firms that export; helping companies
expand into new markets; and helping exporters overcome hurdles
in foreign markets.
In Fiscal Year 2008, U.S. firms, assisted by the Commercial
Service, reported over 12,000 export successes. Eighty-two percent
of these successes were reported by small and medium-sized businesses.
U.S. companies’ access to Commercial Service’ global network
in a variety of ways: through our local U.S. Export Assistance
Centers, or USEACs, through our international offices based in
U.S. embassies and consulates abroad, and via our trade information
hotline, which is 1–800–USA–TRADE.
We are able to reach even more companies interested in exporting
through strategic partnerships which leverage private-sector organizations,
State and local governments, 20 Federal agencies, and
trade associations, to make sure their clients are aware of the
range of Federal export assistance programs.
Trade events organized by the Commercial Service, including
trade missions, international buyer shows, and trade fairs, are an
excellent way for companies to get international exposure and
make valuable contacts.
The Commercial Service also engages in advocacy and commercial
diplomacy on behalf of U.S. companies to help level the playing
field when they are bidding for procurements, and to resolve problems
ranging from regulatory trade barriers to unfair trade practices.
For example, the Commercial Service wrote a letter to the Chinese
government on behalf of Corgan Associates, Inc., a small firm
located in Dallas, Texas. The advocacy letter highlighted Corgan’s
ability to deliver an eco-friendly design for a green-build office complex
for the China Construction Bank. Corgan’s consortium won
the bid, and Corgan values their promotion of this project to 1.6
million U.S. dollars.
The Commercial Service also regularly works with its partners,
such as the Export-Import Bank, and the Small Business Administration
to provide trade finance assistance and expertise to small
and medium-sized firms. In addition, this morning Commerce Secretary
Locke announced the launch of the first phase of
CommerceConnect, a pilot program in Detroit. CommerceConnect
will provide a single point of contact where businesses can access
the full array of commerce and Federal Government assistance programs
available to them.
In 2 weeks, Secretary Locke will convene the Trade Promotion
Coordinating Committee. The TPCC provides a framework for the
Secretary of Commerce to work with the heads of 20 Federal agencies
to develop a governmentwide national export promotion strategy.
In these uncertain economic times, the Department of Commerce
stands ready to help U.S. companies at home and abroad. Our
work is more important than ever for U.S. economic prosperity and
for job creation. The Commercial Service is there to assist small
and medium-sized companies by helping them grow and the maintain
long-term competitiveness of the United States. Members of
the Committee, we look forward to working with you, and invite

you to be a partner in supporting our efforts here in Washington,
in your home states, and abroad.
Many thanks for your interest.
[The prepared statement of Ms. Lipsitz follows:]
PREPARED STATEMENT OF ROCHELLE A. LIPSITZ, ACTING ASSISTANT SECRETARY FOR
TRADE PROMOTION AND DIRECTOR GENERAL, U.S. AND FOREIGN COMMERCIAL
SERVICE, INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE
Introduction
Chairwoman Klobuchar, Ranking Member LeMieux, and members of the Subcommittee,
thank you for the opportunity to speak before you today about the role
of export promotion in our efforts to strengthen and support America’s economy.
I welcome the Subcommittee’s interest in this topic and look forward to outlining
the Department of Commerce’s efforts to promote U.S. exports. Madam Chair, I
know you have worked with the Commercial Service in Minnesota and have seen
first-hand how the Department works to reach out to U.S. small and medium sized
firms to help them export.
Within the Department of Commerce, it is the International Trade Administration’s
(ITA) mission to create prosperity by strengthening the international competitiveness
of U.S. industry, promoting trade and investment, and ensuring fair trade
and compliance with trade laws and agreements that enhance the ability of U.S.
firms and workers to compete and win in the global marketplace. This mission is
critical to enhancing America’s global competitiveness and expanding commercial
opportunities for American manufacturers, farmers, and service workers throughout
the world.
As part of ITA, the Commercial Service helps American firms and workers navigate
the often complicated and unpredictable waters of foreign trade so that U.S.
firms’ sales abroad help to support jobs here in the United States.
The Commercial Service’s vision is for every U.S. business to see the world as its
marketplace. Our primary mission is to promote U.S. exports, particularly by small
and medium-sized enterprises, and advance U.S. commercial interests abroad. We
strengthen American competitiveness, increase job creation and global prosperity,
and through trade we advance U.S. national security and build bridges to international
cooperation.
The Commercial Service operates a global network of trade professionals in U.S.
Export Assistance Centers (USEACs) in 109 U.S. locations and in U.S. Embassies
and Consulates in 77 countries. Commercial Service staff works with U.S. companies
to provide numerous services ranging from counseling, advocacy support, and
market research to industry expertise and identification of potential international
buyers or partners. We guide companies through every step of the export process,
from learning how to export to logistics and shipping issues.
The Commercial Service focuses its programs on three priorities: (1) increasing
the number of U.S. companies that export, (2) helping smaller companies expand
to new export markets, and (3) helping exporters overcome hurdles in foreign markets.
In particular, the Commercial Service focuses on assisting small and mediumsized
enterprises (SMEs) succeed in the international economy. Ninety-seven percent
of U.S. exporters are SMEs, and Commercial Service programs are designed
to help these companies export to the 95 percent of the world’s consumers that live
beyond our borders.
In Fiscal Year 2008, U.S. firms reported 12,659 export successes that were assisted
by the Commercial Service; 426 of these successes were from companies that
had never exported before, and 3,627 were from firms that had exported to a new
market. Eighty-two percent of these successes were reported by SMEs.
Role of Exports in the U.S. Economy
The U.S. economy is dependent on the global economy. In 2008, exports accounted
for 13 percent of Gross Domestic Product (GDP). To put this in historical context,
exports were 9.5 percent of U.S. GDP 5 years earlier (2003), and 5.3 percent 40
years ago (1968). Last year, the United States exported an astounding $1.84 trillion
worth of goods and services.
These export figures translate directly into the creation of jobs in the United
States. The latest available employment numbers (2006) indicate that roughly six
million U.S. jobs depend on manufactured exports.
Moreover, a significant number of major U.S. manufacturing industries are heavily
dependent on foreign sales. For example, in 2006, seven major manufacturing

sectors, led by computers and electronic products and primary metals, counted more
than one in four jobs as export-supported.
In the State of Minnesota more than 6,000 companies exported goods in 2006. Of
those, nearly 5,574 (88 percent) were SMEs with fewer than 500 employees. SMEs
generated over 20 percent of Minnesota’s total exports of merchandise in 2006. In
2008, Minnesota’s export shipments of goods totaled $19.2 billion, up 1.9 percent
from the 2007 total of $17.7 billion. Minnesota ranked 15th among the states in
terms of merchandise exports in 2008.
Recently the Commercial Service helped one of these firms, Waterous Company
of St. Paul, Minnesota, a manufacturer of fire suppression technology. We worked
on the company’s behalf to secure a level playing field for a government procurement
project in Macedonia. Waterous Company was part of a foreign-led consortium
that was awarded a contract in June 2009 to provide 25 fire trucks to the Macedonian
Government’s Protection and Rescue Directorate. The total value of the bid
was $25 million, and Waterous’ portion of the bid, sourced from Minnesota, was $7.5
million, with 100 percent U.S. export content. The Commercial Service successfully
coordinated U.S. Government advocacy on behalf of the consortium.
Service exports—including education, business services, information services, entertainment,
international tourism to the United States, and construction and engineering—
have also contributed to job creation. For example, recent estimates indicate
that international travelers to the United States support roughly 1.1 million
domestic jobs. Moreover, current figures show that the United States posted a
healthy trade surplus of $12.6 billion in the education sector. U.S. receipts from
international students studying in the United States reached $17.8 billion in 2008,
the highest amount yet recorded. Those U.S. exports come primarily from travel by
international students, who then pay tuition, fees, and living expenses to U.S. institutions.
Assisting Small and Medium-sized Companies Export
U.S. companies access the Commercial Service’s global network in a variety of
ways. Our 300 trade specialists located in USEACs throughout the country reach
out to local companies to help them realize their export potential by providing indepth,
value-added counseling. Companies contact our experts overseas for countryspecific
information and assistance in resolving commercial issues. Companies also
call our Trade Information Center (TIC; 1–800–USA–TRADE), which is staffed by
a team of trade experts that serve as a single point of contact to all potential exporters.
The TIC provides basic export counseling and information on all U.S. Government
export assistance programs. In Fiscal Year 2009, the TIC gave personal assistance
to more than 36,000 inquiries, 75 percent of which were from SMEs. In addition,
ITA manages Export.gov, the Federal website dedicated to providing comprehensive
information to U.S. firms as they enter or expand into global markets.
It brings together all the export promotion products and services of the Federal Government
in one needs-based, customer-friendly website. With Export.gov, small companies
can walk through each step of the export process in just a few clicks of a
mouse.
The Commercial Service makes a concerted effort to reach out to minority and
women-owned businesses, as well as businesses located in rural areas, to assist
them with exporting. For example, in 2008, Commercial Service-Santa Fe recruited
and coordinated the participation of Antelope Slot Canyon Tours by Chief Tsosie of
Page, Arizona, a Navajo-owned and operated business, in the 2008 ITB Travel and
Tourism Show in Berlin. Partly as a result of contacts made at trade shows, Chief
Tsosie has seen an increase from 3,000 to 25,000 visitors on his tours in the last
5 years. Commercial Service-Santa Fe also organized the first ever American Indian
Alaska Native Tourism Association-sponsored trade show booth at the ITB 2009
show.
Expanding our Reach with Strategic Partnerships
We are able to reach even more companies interested in exporting through strategic
partnerships, which leverages the customer base of private sector organizations
(such as express delivery companies), state and local governments, and trade
associations, to make sure their clients are aware of the range of Federal export assistance
programs.
In 2004, the Commercial Service established the Corporate Partnership Program,
leveraging a Public-Private Sector Partnership model to expand the U.S. exporter
base. Combining the export assistance services of the Commercial Service together
with export services companies, the Corporate Partnership Program enables increased
export opportunities through joint outreach and education to small-and medium-
sized U.S. businesses. The Commercial Service’s corporate partners have

worked with us on a variety of initiatives. Our partners have hosted export seminars,
helped produce and distribute the Export Finance Guide, and have sponsored
international trade missions and trade events.
Partnerships with state and local trade organizations are a key component of the
Commercial Service’s partnership strategy. We work with state and local partners
across the country to educate SMEs on the benefits of exporting and to provide them
with specific industry and market information. Forty of our USEACs across the
country are collocated with state or local partners to further strengthen our joint
efforts. This collaboration brings the best possible combination of resources to the
client, increasing successful exporting and resulting in local economic and job
growth.
Commercial Service staff in Minneapolis, working closely with the Alexandria
(MN) Economic Development Commission, reached out to Solar Skies Manufacturing
of Starbuck, MN, a manufacturer of solar collectors, to understand their
needs and provide any possible assistance. Commercial Service-Minnesota, working
closely with Commercial Service-Toronto, was able to introduce the firm to a Canadian
buyer, resulting in a sale. Follow-on assistance includes export financing counseling,
in close partnership with the Export-Import Bank (Ex-Im) and Small Business
Administration (SBA) colleagues.
The Commercial Service works closely with successful U.S. exporters through its
relationship with the District Export Councils (DECs). DEC members are local business
leaders, appointed to the DEC by the Secretary of Commerce, whose knowledge
of international business provides a source of professional advice for local firms.
There are 60 DECs located across the United States, each working closely with local
Commercial Service offices on issues important to the local exporting community.
Export University is a program carried out by the DECs in collaboration with the
Commercial Service to help American companies begin exporting and gain new
skills to expand their international sales.
The Commercial Service also works with key national and industry associations
linking our common strategic goals and activities. One of our major association partners
is the National Association of Manufacturers (NAM). Under a joint agreement
entered into in fall 2003, the Commercial Service provides a Commercial Officer as
a liaison to NAM to enhance NAM’s outreach to SME members. We have also finalized
an agreement with the United States Council for International Business for its
Carnet program and with the U.S. Chamber of Commerce for its TradeRoots program
for further outreach and education to their members. Our Trade Association
Liaison provides associations’ members with information and resources to begin exporting
and to navigate the intricate issues surrounding international trade, including
an introduction to our services.
Matchmaking and Counseling
When our trade specialists at local USEACs across the country counsel companies
about exporting, they often recommend that companies find an overseas agent or
distributor. Our overseas staff located in U.S. Embassies and Consulates throughout
the world can save a U.S. company valuable time and money by doing the legwork
in advance in a specific market to help the company find potential agents, distributors
or other strategic partners.
As part of our matchmaking service, we contact a number of pre-screened overseas
business partners and then identify the contacts that appear most capable of
becoming a viable representative for the U.S. company in that market. All of this
work is done before the company travels overseas to meet face-to-face with these
potential partners, saving the company time and resources.
For example, Pioneer Equipment Limited of Jacksonville, Florida is an exporter
of heavy equipment and cranes. In 2008, the Commercial Service arranged meetings
for Pioneer Equipment in Senegal with potential customers in the Senegalese construction
and transportation industries. As a result of these meetings, the company
sold equipment worth approximately $130,000 into Senegal.
Trade Events
Trade events are an excellent way for companies to get international exposure
and make valuable contacts. These events, which include trade missions, international
buyer shows, and trade fairs, assist U.S. companies in making contacts, developing
business relationships, and locating customers overseas.
Trade missions are an effective way for companies to gain access to foreign company
leaders and government officials who would not normally meet with individual
business visitors. In 2008, the Commercial Service supported trade missions to 27
overseas markets with a total of 420 U.S. companies participating, resulting in nearly
$350 million in export successes to date.

This past spring, the Commercial Service completed a successful trade mission to
Poland, called TradeWinds, that had both a Pan-European conference and a matchmaking
component. The program consisted of a full day business conference on the
European market, one-on-one counseling sessions with 28 Commercial Service Officers
stationed in Europe, and business-to-business meetings with potential partners
from Poland and other European markets. One-hundred thirty-four representatives
from 84 U.S. companies and 22 states participated in the event. Over 97 percent
of these participants were representatives of SMEs. One of the firms that participated
was Taking the Water, a woman-owned small business that manufactures
products for the health and wellness industry. Taking the Water had never exported,
and worked with Commercial Service-New Jersey prior to attending the
TradeWinds mission to conduct market research and learn about methods of distribution;
financing and pricing their product for export; methods of payment; shipping
and logistics; and tax/tariff structures. As a result of their participation in the
TradeWinds mission, the company met a number of potential distributors for its
products in Poland and has already made an initial sale.
We have a number of trade missions planned for coming year, including an Aerospace
Supplier Development Mission to India; an Aerospace Executive Service Trade
Mission to Singapore; a Bright Green Program at the United Nations Climate
Change Conference (COP15) in Copenhagen; and a solar and energy efficiency mission
to India. In December, Commercial Service-Minnesota is supporting Governor
Pawlenty’s trade mission to Brazil and Chile.
Our International Buyer Program (IBP) is a government-industry program designed
to increase U.S. export sales by promoting international attendance at major
U.S. industry trade shows. The IBP selects approximately 35 U.S. trade shows each
year where our staff provides practical, hands-on assistance to U.S. exhibitors including
export counseling, marketing analysis, and matchmaking services. Commercial
Service staff overseas promotes these trade shows and recruit foreign buyer delegations
to attend these shows.
The Trade Fair Certification program is a cooperative partnership arrangement
between private sector show organizers and the U.S. Government to increase U.S.
exports and to expand U.S. participation in overseas trade shows. The program provides
Department of Commerce endorsement, show-related services, oversight and
coordination of event services, promotional support, exhibitor marketing facilitation,
and in-country/show site assistance for private sector organizers to recruit and build
a U.S. Pavilion at selected foreign trade shows. These shows serve as a vital access
vehicle for U.S. firms to enter and expand foreign markets. The certified show/U.S.
pavilion ensures a high-quality, multi-faceted opportunity for American companies
to successfully market overseas. In 2009, the TFC Program certified 107 overseas
trade fairs.
Commercial Diplomacy and Advocacy
U.S. companies often need assistance to address specific trade-related issues. The
U.S. Government can weigh in on behalf of a U.S. company with the foreign government
to help the company resolve these issues. These problems range from regulatory
trade barriers to unfair trade practices. Our job, through commercial diplomacy,
is to work with the foreign government to find a solution so that the U.S.
company has the best possible chance to sell its products and services in that market.
This type of service is particularly important in emerging markets.
In the fall of 2008, a Missouri-based manufacturer, Liquid Soap Products, contacted
the Trade Information Center asking for assistance in obtaining the release
of a shipment of soaps and cleaning products from Portuguese Customs in Lisbon.
Customs refused to clear the shipment until the Portuguese health regulatory agency
certified the products’ safety. The trade specialist put the company in touch with
our commercial officer in Lisbon, who then contacted the regulatory agency. In January
2009, Portuguese Customs released the cargo and the sale was executed.
U.S. companies also look to Commercial Service to help them win bids on foreign
tenders. The Advocacy Center coordinates U.S. Government advocacy on behalf of
U.S. companies bidding for procurements. In 2008, U.S. Government advocacy supported
American companies successfully in 34 international procurements with U.S.
export content of $21.8 billion. The Advocacy Center is actively tracking over 400
cases.
For example, Corgan Associates, Inc. of Dallas, Texas, a small architectural design
firm, led a consortium of architectural and engineering consultants that was
recently awarded a contract for a new LEED-certified ‘‘green build’’ office complex
for the China Construction Bank in Wuhan, China. On a short timeline, the Commercial
Service provided an advocacy letter to Chinese government officials associated
with the contract award which highlighted Corgan’s ability to deliver a first-

class eco-friendly facility to their client. Corgan values their portion of this project
at $1.6 million, which represents significant revenue for a small firm and economic
security to their fifteen person team of specialists dedicated to this effort. They are
also optimistic that this win will aid them in the future, noting in a letter to the
Commercial Service that, ‘‘this project has catapulted our name into the market.’’
Export Financing
The Commercial Service regularly works with its colleagues and strategic partners
to provide trade finance assistance and expertise. In addition to our counseling
visits with SMEs, we work closely with our TPCC partners to conduct seminars and
webinars in this area to advise SMEs on export financing options. In response to
the recent need for additional trade financing information, the Commercial Service
has launched a new global Finance Team, to assist U.S. exporters with receiving
financing assistance and solutions in a rapidly changing commercial banking landscape.
In November, the team will hold a seminar in Miami, FL titled ‘‘Finding Financing
for Florida Exports.’’ This seminar is being organized by the team in close
collaboration with the Florida International Bankers’ Association, SBA, and Ex-Im.
If a U.S. company finds an interested foreign partner, our team of trade experts
will work with the U.S. exporter to identify financing options. The Federal Government
has a number of different tools to help U.S. companies complete a sale. The
most common are: working capital guarantees that provide transaction-specific loans
to U.S. exporters and are made by commercial lenders and backed by SBA or the
Ex-Im; credit insurance, which covers the risk of buyer nonpayment for commercial
risks (e.g., bankruptcy) and certain political risks; and buyer financing, which provides
term financing to credit worthy international buyers for purchases of U.S.
goods and services. Some of our Strategic Partners, including TD Bank and M&T
Bank, have hosted seminars for their clients on trade finance and Federal financing
programs. In addition, some partners, including M&T Bank and Comerica, have reprinted
and are distributing our Export Finance Guide, which provides a comprehensive
resource on export financing options, to their clients.
Upcoming Department of Commerce Initiatives
I am pleased to inform you of an initiative that will allow the Commercial Service
to better leverage the types of resources I have described. Earlier this year, Commerce
Secretary Locke announced a pilot program aimed at providing U.S. companies
with a single point of contact for U.S. Government business assistance. The
program, which has been called the ‘‘One-Stop Shop’’ will provide assistance to firms
to meet a wide range of needs. Whether a business needs help patenting a new technology
or improving their manufacturing processes or getting access to a new market,
they are going to have one place to go to access the full spectrum of both Commerce
Department programs, as well as other Federal programs available to our
businesses. The Department’s goal is to unveil this concept in Detroit in this week.
Later this year, Secretary Locke will also convene the Trade Promotion Coordinating
Committee (TPCC), which directs the Administration’s trade promotion efforts.
The TPCC is chaired by the Secretary of Commerce and its Secretariat is
housed in the Commercial Service. The TPCC members are the heads of 20 Federal
Government agencies, including SBA, Ex-Im, the Overseas Private Investment Corporation,
the U.S. Trade and Development Agency, the U.S. Department of Agriculture,
the U.S. Department of State, the U.S. Department of the Treasury, the
U.S. Department of Labor and the Office of Management and Budget. The TPCC
provides a framework for the Secretary of Commerce to work with the heads of the
other agencies to develop priorities for a government-wide agenda on trade promotion.
The TPCC also sponsors interagency training for trade professionals to promote
a better understanding of export promotion and trade finance programs across the
Federal Government. Small businesses often view the Federal Government as one
entity rather than a collection of programs or agencies, and staff learns about all
the resources that the Federal Government has to offer. During the training, American
companies present real world problems and challenge the participants to work
together to come up with solutions. To date, over 750 participants from 12 agencies
and eight states have completed the program.
Conclusion
In these uncertain economic times, the Department of Commerce stands ready to
help U.S. companies at home and abroad. ITA’s work is more important than ever
for U.S. economic prosperity and for job creation and the Commercial Service is
there to assist SMEs by helping them grow and maintain the long-term competitiveness
of the United States.

To view the full transcript of this hearing please visit:

http://www.gpo.gov/fdsys/pkg/CHRG-111shrg54916/pdf/CHRG-111shrg54916.pdf

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Author: greatwa on March 30, 2011
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