by Gary Clyde Hufbauer, Peterson Institute for International Economics
Testimony submitted to the House Committee on Small Business hearing "Ready to Export: Small Business Policy Recommendations for USTR"
June 26, 2013
View full document [pdf]
Chairman Graves and members of the committee, thank you for inviting me to testify. My name is Gary Hufbauer and I am a senior fellow at the Peterson Institute for International Economics, a nonprofit, nonpartisan policy research institute.
In thinking about the impact of free trade agreements (FTAs) on US small business firms, it is useful to distinguish between direct exports and indirect exports of these firms. Trade agreements improve both channels.
Direct Exports by Small Business
Over 300,000 American small business firms, defined as firms with fewer than 500 employees, directly export goods and services to foreign markets. These firms number 98 percent of all US firms that export; between 2002 and 2010 they contributed about a third of total US merchandise exports, and this share seems to be rising. Since small business firms account for almost half of US employment, their direct export share is somewhat less than their employment share. However, small businesses that export usually grow faster, increase employees, and pay higher salaries than those that just sell domestically. Canada is the top destination country for small business exporters, followed by China, the United Kingdom, Mexico, and Australia. It is not a coincidence that the United States has free trade agreements with three of these countries, and that the English language is spoken in three of them—features that make doing business abroad much easier.
Book: Economic Normalization with Cuba: A Roadmap for US Policymakers April 2014
Book: Understanding the Trans-Pacific Partnership January 2013
Policy Brief 12-21: How Can Trade Policy Help America Compete? October 2012
Book: The Long-Term International Economic Position of the United States April 2009
Op-ed: New Imbalances Will Threaten Global Recovery June 10, 2010
Op-ed: How Best to Boost US Exports February 3, 2010
Paper: Submission to the USTR in Support of a Trans-Pacific Partnership Agreement January 25, 2010
Working Paper 09-2: Policy Liberalization and US Merchandise Trade Growth, 1980–2006 May 2009
Policy Brief 09-2: Buy American: Bad for Jobs, Worse for Reputation February 2009
Paper: Report to the President-Elect and the 111th Congress on A New Trade Policy for the United States December 17, 2008
Op-ed: The Payoff from Globalization June 7, 2005
Book: American Trade Politics, 4th edition June 2005
Op-ed: Trade: An Opportunity About to Be Lost? May 20, 2011