[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




 
        SBA'S OFFICE OF INTERNATIONAL TRADE: GOOD FOR BUSINESS?

=======================================================================

                                HEARING

                               before the

             SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                            JANUARY 11, 2016

                               __________
                               

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            Small Business Committee Document Number 114-036
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAZQUEZ, New York, Ranking Member
                         YVETTE CLARK, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts
                           MARK TAKAI, Hawaii

                   Kevin Fitzpatrick, Staff Director
             Emily Murphy, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                  
                  
                  
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Carlos Curbelo..............................................     1
Hon. Grace Meng..................................................     2

                                WITNESS

Ms. Eileen Sanchez, Associate Administrator, Office of 
  International Trade, United States Small Business 
  Administration, Washington, DC.................................     3

                                APPENDIX

Prepared Statement:
    Ms. Eileen Sanchez, Associate Administrator, Office of 
      International Trade, United States Small Business 
      Administration, Washington, DC.............................    13
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.


        SBA'S OFFICE OF INTERNATIONAL TRADE: GOOD FOR BUSINESS?

                              ----------                              


                        MONDAY, JANUARY 11, 2016

                  House of Representatives,
               Committee on Small Business,
     Subcommittee on Agriculture, Energy and Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 4:02 p.m., in 
Room 2360, Rayburn House Office Building, Hon. Carlos Curbelo 
[chairman of the Subcommittee] presiding.
    Present: Representatives Curbelo, Luetkemeyer, Brat, and 
Meng.
    Chairman CURBELO. Good afternoon. I call this hearing to 
order.
    Thank you all for joining us today for this hearing on the 
Small Business Administration's Office of International Trade, 
OIT. I hope through this hearing this Committee can identify 
some potential methods to strengthen our work with the SBA to 
better support small businesses seeking export opportunities.
    This Subcommittee has stressed time and time again the 
small business benefits of foreign markets. Ninety-five percent 
of all consumers live outside the borders of the United States, 
and yet, only 1 percent of the United States small businesses 
actually export.
    Despite that low percentage, trade is still a vital way for 
small businesses to find new markets. In my home State of 
Florida, 96 percent of our exports were from small firms. Those 
same small firms generated roughly two-thirds of our State's 
export value. However, while this is a tremendous start, many 
small businesses still find exporting a costly, complicated, 
and confusing process.
    In 2010, this administration put forth the national export 
initiative, a strategy that prioritized small business exports. 
That same year, Congress directed the SBA to expand its role in 
export promotion. Specifically, the SBA was tasked with 
increasing coordination efforts between Federal agencies 
engaged in export promotion offering greater counseling and 
training to small businesses interested in expanding into 
foreign markets and broadening its export financing efforts. I 
understand the SBA has worked to strengthen these efforts 
through the colocation of staff at a network of U.S. export 
assistance centers, USEACs. And I am also aware that SBA 
operates through nonFederal partners like the Small Business 
Development Centers, SBDCs, resources that devote substantial 
time to the promotion of exports.
    Frankly, it sounds like these resources could be invaluable 
to small businesses engaging in international trade. However, 
the OIT has only dedicated 19 trade specialists to the various 
USEACs around the country, 11 short of the 30 required by the 
Small Business Jobs Act of 2010 and although the SBA has 
appointed district international trade officers to assist 
businesses seeking advice on exporting, the Government 
Accountability Office recently reported that those staff only 
spend about 15 percent of their time on export promotion.
    So here we are, 6 years after the Small Business Jobs Act, 
goals and objectives that have been pushed by the 
administration and statutorily mandated by the United States 
Congress are still incomplete. And I am concerned that the OIT 
may actually be serving a redundant purpose. If there are 
massive deficiencies in SBA's efforts to better coordinate 
Federal trade promotion resources, if the OIT is offering trade 
counseling and training that is also being provided by SBDCs, 
the Department of Commerce, and other State, Federal, and 
private entities, if OIT is failing to follow through on the 
very legislative mandates established to hire more staff for 
the purpose of heightening the presence and functioning of OIT, 
then maybe it is time we in Congress give serious 
reconsideration to the long-term validity of the office of 
international trade altogether.
    Today, we will hear from OIT's associate administrator, 
Eileen Sanchez, on how SBA plans to implement GAO's 
recommendations as well as how they plan to assist more small 
businesses yearning to join the global marketplace.
    Thank you, again, for joining us, and I now yield to my 
distinguished colleague from New York, the ranking member, for 
her opening remarks.
    Ms. MENG. Thank you, Mr. Chairman.
    Expanding trade opportunities is a big deal for companies 
of all sizes, but especially for small business. More than 
300,000 U.S. companies are exporters. Of this total, 97 percent 
are small and mid-sized companies. These smaller businesses 
exported more than $470 billion in 2013, over one-third of all 
U.S. exports. Those exports help support more than 11 million 
jobs across the country.
    In 2012, my home State of New York, ranked third in the 
value of exports by small businesses, with more than $79 
billion, or 5 percent, of all exports.
    With foreign trade on the rise and small business expansion 
into the global market increasing, the opportunities for small 
firms to grow and succeed are also increasing. Small firms that 
engage in global trade are 20 percent more productive, and 
produce 20 percent greater job growth when compared to 
nonexporting counterparts. They are also more resilient. Yet, 
for many of these companies, their success depends in part on 
their ability to access these international markets.
    Despite such impressive numbers, less than 4 percent of all 
American small businesses export. Small businesses face many 
challenges. It takes time to identify foreign markets, target 
new customers, and learn the nuances of the exporting process. 
In fact, nearly half of small exporters spend a few months a 
year and close to 10 percent of their annual operating budget 
preparing to export.
    Due to a lack of resources to develop a trade strategy, the 
majority of small exporters only enter one foreign market while 
more than half of large companies export to at least five 
foreign markets.
    In order to help bridge this divide, there are several 
tools and resources available to small exporters. The primary 
tool for small firms is the Small Business Administration's 
U.S. export assistance centers, which fill a void by providing 
access to technical trade specialists all over the country. By 
delivering foreign industry and market expertise as well as 
compliance assistance, small businesses are better able to 
navigate the complex terrain of the international marketplace.
    To address financing challenges for small exporters, the 
SBA and Export-Import Bank provide small business specific 
export financing products. In 2014, this program enlisted 513 
lenders to provide $1.3 billion in export financing to almost 
1,400 small exporters. However, there is still not enough 
financing, which is why I introduced the bill last year to 
increase Ex-Im Bank's small business financing goals, and I 
hope to hear how else financing can be improved.
    International trade is inherently complex due to economic 
trends, country-specific policies, and customs and intellectual 
property laws. But with the resources available through SBA 
initiatives, small firms wishing to reach more global customers 
and those already exporting can better prepare themselves for 
navigating the international market.
    It is critical that small businesses are able to 
participate in this marketplace. Doing so gives them access to 
more customers, which in turn fuels their growth and employment 
and that of the U.S. economy overall.
    I would like to thank our witness for making herself 
available to testify today.
    Thank you, Mr. Chairman, and I yield back.
    Chairman CURBELO. I thank the ranking member for her 
opening statement. If Committee members have an opening 
statement prepared, I ask if they be submitted for the record.
    I would like to take a quick moment to explain the timing 
lights. You will have 5 minutes to deliver your testimony. The 
light will start out as green. When you have one minute 
remaining, the light turn yellow. Finally, at the end of your 5 
minutes, it will turn red. I ask that you try to adhere to that 
time limit, but to the extent you need a little extra time, we 
will be happy to indulge you here.
    Our witness today is Ms. Eileen Sanchez, associate 
administrator for international trade at the Small Business 
Administration. I look forward to your testimony.
    You may begin.

STATEMENT OF EILEEN SANCHEZ, ASSOCIATE ADMINISTRATOR, OFFICE OF 
       INTERNATIONAL TRADE, UNITED STATES SMALL BUSINESS 
                 ADMINISTRATION, WASHINGTON, DC

    Ms. SANCHEZ. Thank you, Chairman Curbelo, Ranking Member 
Meng, and distinguished members of the Subcommittee.
    Thank you for the opportunity to testify about the U.S. 
Small Business Administration's international trade programs 
and initiatives.
    Sounds like we are saying a lot of the same things. Small 
businesses are increasing, looking abroad for their next 
customer. International sales contribute to a strong middle 
class by fueling economic opportunity and creating jobs in 
communities across the United States. At the same time, foreign 
consumers that buy made-in-America products, gain access to 
some of the world's highest quality products and services. 
Today, 96 percent of all consumers and over two-thirds of the 
world's purchasing power resides outside of the United States. 
Small businesses that can tap into this market have the 
potential for vast expansion and growth.
    In SBA's Office of International Trade, we remain focused 
on our core mission of increasing the ability of small 
businesses to compete in international markets through our 
finance programs and through export development opportunities. 
I would like to share with you some of the important 
achievements we have made thus far.
    On my personal visits to small business exporters, they 
routinely express to me their need for access to finance. I am 
proud to say that in fiscal year 2015, in spite of an overall 
dip in total U.S. exports, we remain focused and participated 
with 514 lenders to guarantee a record $1.45 billion in SBA 
loans to 1,513 small business exporters.
    We have also ramped up our approach to targeting new export 
lenders so that they can more efficiently and effectively 
support small business exporters in their communities, and so 
that more liquidity can flow to the market.
    In fiscal year 2015, we also trained more than 4,300 
bankers. We hosted several lender roundtables throughout the 
country; we provided webinars, and we carried out other 
outreach and training events. For example, we provided a 
webinar for members of the National Credit Union 
Administration. In fiscal year 2016, we intend to amplify these 
types of outreach. On the export development side, SBA 
collaborated with partners across the country to improve access 
and delivery of programs to small business exporters, and we 
will continue to ramp this up in 2016.
    One of the programs that we continue to be very excited 
about is the State Trade and Export Promotion program, also 
known as the STEP program. As you know, STEP awards Federal 
dollars to our States and territories to fund their eligible 
small business market development activities. These activities 
can include trade missions, foreign market sales trips, 
international marketing, and training.
    In our fiscal year 2015, we upgraded processes and 
implemented efficiencies as part of our STEP program 
improvement initiative. So far, the program has supported small 
business export development in 85 foreign markets as well as 
export activities attended by 32,000 small businesses 
channeling over 1.1 billion in export sales for a return on 
taxpayer investment of over 19 to 1. In fiscal year 2015, SBA 
awarded $17.4 million in STEP grants to 40 States.
    Today, based on funding provided for STEP in the recent 
2016 Consolidated Appropriations Act, SBA will announce a 
competitive process for additional STEP awards totaling $18 
million this year.
    On the trade negotiations front, another key barrier that 
we hear, as you said, Ms. Meng, is market access. And many 
untapped opportunities exist outside the United States but 
small businesses just don't have the resources and the 
personnel to leverage them. This is why, likely unknowingly, 
small businesses must rely heavily on negotiated free trade 
agreements to truly access new markets and grow. And that is 
why trade agreements have the potential to significantly 
benefit small businesses,
    So in addition to the office's core functions, for the 
first time ever, our office is engaged in creating market 
access opportunities for small businesses in key markets 
through trade negotiations. Last year, the SBA, along with USGR 
and other members of the Federal agencies, represented small 
business interests in ongoing U.S.-EU transatlantic trade 
investment partnership negotiation and in intercessional 
meetings, and we will continue to do this in 2016.
    With regards to the recently concluded Trans-Pacific 
Partnership agreement, the TPP, the SBA is excited that the 
agreement includes the first ever small-medium enterprise 
chapter, as we believe many other provisions in the agreement 
will help small business exporters. We also believe TPP and its 
commitments will help to improve the environment for doing 
business overseas and help more small business exports make 
their made-in-America goods and services to Asia Pacific Rim 
customers.
    From the internal management perspective, we have 
prioritized program changes into more practical frameworks. We 
have also hired new enthusiastic, high-caliber, and innovative 
expertise in the field and at headquarters. We are now at 21.
    In conclusion, it is clear that in the 21st century, SBA's 
Office of International Trade must be as global, innovative, 
and entrepreneurial as the small businesses we serve. We are 
more engaged on the international front than ever before by 
supporting expert development efforts through the STEP program, 
through guaranteed expert lending, as well as our active 
involvement in trade negotiations. Together, these efforts 
increase the ability of small business exporters to compete in 
international markets and help create expert supported jobs in 
the United States.
    Again, I want to thank all of you for your bipartisan 
commitment to small businesses.
    Mr. Chairman, happy to take your questions.
    Chairman CURBELO. Thank you very much for your testimony, 
Ms. Sanchez. I now would like to recognize myself for 5 
minutes.
    And here is my first question: The Small Business Jobs Act 
of 2010 directed SBA to increase its OIT export finance staff 
from 18 to 30 by the end of September 2012; however, the GAO 
reported in January 2013 that SBA only filled two positions 
pointing to funding and recruiting challenges as an 
explanation. GAO recommended that SBA update its plan to hire 
additional OIT staff and include funding sources and 
timeframes. So it is now January 2016, and I am curious what is 
the current number of OIT field staff today?
    Ms. SANCHEZ. Thank you very much, and thank you for the 
question. We are eager to raise our staff numbers as well. We 
are currently at 21. We have added staff, additional staff, in 
Florida, in Texas, in St. Louis, and in Seattle. And we are 
reshifting and realigning our staff to meet the gaps. We have 
conducted a gap analysis, and we have also added a new 
position, also part of the Small Business Jobs Act, a regional 
export development officer to fill a gap in markets on the West 
Coast.
    Chairman CURBELO. So is there an updated plan for meeting 
the requirements of the SBA? You have mentioned the number 21. 
That seems to me it is only an increase of three from a few 
years ago. Do you have an updated plan? And if you don't, why 
don't you have an updated plan?
    Ms. SANCHEZ. We do have an updated plan, and it includes a 
gap analysis so that we understand where the gaps lie within 
our talent. If there is some of them that--if the market 
requires extra, for example, outreach help versus finance help, 
then we want to make sure that we make a judicious and good use 
of taxpayer dollars an ensure that we are putting people in the 
right places. And that is where we are right now.
    Chairman CURBELO. You do understand that since you haven't 
reached the 30 that you are required to reach, that raises many 
questions. And some people may say, well, perhaps there is not 
enough work for this agency to do. Perhaps this agency may not 
be necessary; it is redundant. Maybe this work is being done by 
other agencies.
    So it is my view, Ms. Sanchez, that we need a more 
convincing and a more definitive answer as to why it has taken 
so long, I mean, this is years, to increase the positions from 
18 to 30. It has been years, and it has been very difficult to 
achieve that. So I don't know if there is anything else you 
would like to add or if there is anything you can commitment to 
sharing with us with regards to your plans so that we can 
better understand why it is that this has been so challenging 
to the agency?
    Ms. SANCHEZ. Yes. Well, first, I have been with the agency 
for 14 months, and I can tell you that Administrator Contreras-
Sweet is committed to ensuring that we right size as soon as 
possible, and she continuously repeats that. And she wants to 
make sure that we are staffing up and supporting the market the 
way it needs to be supported.
    Chairman CURBELO. So do you think that the plan is 
something you would be able to share with this Committee----
    Ms. SANCHEZ. Sure, definitely.
    Chairman CURBELO.--so we can better understand what it is 
you are experiencing, and perhaps if you need additional 
resources or if there is anything we can do to be helpful?
    Ms. SANCHEZ. That would be great. Thank you.
    Chairman CURBELO. Okay. Another question. I have about a 
minute and a half left. How does the U.S. global business 
services effort enhance SBA coordination with commerce and Ex-
Im, if you can give me some concrete examples?
    Ms. SANCHEZ. Yes. Thank you very much. It is really 
important to take a business--and this is what SBA does very 
well, is take a business from its entire lifecycle and how it 
looks as it approaches finance and ensuring that we are 
structuring and looking at a business. And we counsel small 
businesses and want to make sure that they are getting the 
right services from other entities and agencies within the 
government as well, and that is what the U.S. global solution 
program does very well, and we market it everywhere we go.
    Chairman CURBELO. Okay. Thank you. I have some additional 
questions, but now I would like to recognize the ranking member 
for her questions.
    Ms. MENG. Ms. Sanchez, collaboration between government 
agencies, as you know, is the best way to assist small 
businesses nationwide. In 2013, the GAO found collaboration 
between the SBA and other agencies to be lacking particularly 
in efforts to expand exporting. What steps has your office 
taken to enhance cooperation with other agencies in meeting 
client demands for trade assistance?
    Ms. SANCHEZ. Thank you very much.
    Well, we are continuously meeting with other agencies 
ensuring that we are working with the Trade Promotion 
Coordinating Committee, seeing what exists out there. Again, 
one of the biggest barriers that small businesses tell us they 
face is information, trying to understand who does what and 
where, who can they call? How can they get started? And so we 
are ensuring that we proactively addressing that, whether it is 
from providing lead behinds, cheat sheets, or whatever, however 
we need to tackle the market in addition to our field that is 
constantly out there aligning all of this.
    Ms. MENG. Another question on minority-owned businesses who 
are more likely to export compared to nonminority-owned firms 
of all sizes. They are also five times more likely to conduct 
business in a language other than English. Foreign language 
capability, diaspora, and family ties are big advantages, for 
example, for Asian and minority-owned U.S. firms seeking to 
sell their products and services overseas. How is the SBA 
assisting these minority-owned businesses, and can Congress be 
more helpful?
    Ms. SANCHEZ. Thank you very much. Yes, we are currently 
targeting various people on the field as well that have a 
background. For example, we have colleagues in Los Angeles that 
work tremendously with the Asian-American market and through 
financial institutions, ensuring that various community lenders 
that focus to certain minorities have the resources that they 
need to provide the right financial instruction and development 
for small businesses.
    Ms. MENG. Thank you. I yield back.
    Chairman CURBELO. Thank you, Ms. Meng.
    I now would like to recognize the distinguished vice 
chairman of the Small Business Committee, Mr. Luetkemeyer.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman.
    Ms. Sanchez, how are you this afternoon?
    Ms. SANCHEZ. Thank you very much. How are you?
    Mr. LUETKEMEYER. Well. I didn't get a bio of you in my 
paperwork here. Can you just roughly tell me what your 
background is?
    Ms. SANCHEZ. Sure, no problem.
    Well, I began my career doing foreign exchange trading, 
actually, photocopying FX deals, and then I was promoted to 
stapling, eventually. I then now worked my way up into a 
trading room where I did FX for intellectual property law firms 
filing patents and trademarks throughout the United States.
    Mr. LUETKEMEYER. You are an attorney, then?
    Ms. SANCHEZ. I am not an attorney.
    Mr. LUETKEMEYER. Not an attorney. Okay.
    Ms. SANCHEZ. And then I moved to another area of a bank 
where I helped build their front office operations, realigned 
their entire structures, opened foreign deposit books for 
clients. Eventually I built an export finance area for areas of 
the bank, and the bank asked me to do similar things for about 
nine other areas of the finance--of the banking institution.
    Mr. LUETKEMEYER. Very good. Question for you. The chairman 
alluded to this a minute ago. We have this Trade Promotion 
Coordinating Committee. I never heard of this group before. Can 
you tell me a little about that?
    Ms. SANCHEZ. Yes. The Trade Promotion Coordinating 
Committee is several agencies within the Federal Government 
that are in charge of trade promotion.
    Mr. LUETKEMEYER. You try and coordinate all the activities?
    Ms. SANCHEZ. They do, and there is----
    Mr. LUETKEMEYER. Is Ex-Im Bank part of that trade 
promotion?
    Ms. SANCHEZ. Yes, sir.
    Mr. LUETKEMEYER. Is it? I know that Ex-Im last year did 
3,400 direct loans to small businesses. Do you coordinate with 
them at all? Do you guys work together on financing part; they 
finance part? What goes on?
    Ms. SANCHEZ. Yes, sir. We are colocated with Ex-Im Bank and 
commercial service and several of our U.S. export assistance 
centers. So on a daily basis our team on the field works 
together to ensure that the small business is getting the 
structure that they need.
    Mr. LUETKEMEYER. When you say ``structure,'' you are saying 
the----
    Ms. SANCHEZ. Financial structure that they need.
    Mr. LUETKEMEYER. Right. I am a banker. I know what you are 
talking about. What you are saying is that SBA will take, 
perhaps, the less risky part and Ex-Im takes the more risky 
part? Is that what you are doing?
    Ms. SANCHEZ. Yes, in essence. So a credit deal--a credit 
guarantee underwrites the risk of a small business not paying 
the bank. There is also credit insurance which underwrites the 
risk of a foreign buyer not paying the small business. And so 
we work hand in hand with Ex-Im's credit insurance on that to 
ensure that small businesses are being paid.
    Mr. LUETKEMEYER. Roughly, how many deals did you do last 
year with Ex-Im?
    Ms. SANCHEZ. I will get back to you on that. Thank you.
    Mr. LUETKEMEYER. Okay. Just out of curiosity, you said your 
portfolio was, what, $1.2, $1.3 billion?
    Ms. SANCHEZ. $1.45 billion.
    Mr. LUETKEMEYER. That you did last year?
    Ms. SANCHEZ. Yes, sir.
    Mr. LUETKEMEYER. Okay. What is your past due on the 
balance? What is your total portfolio size?
    Ms. SANCHEZ. $1.45 billion, past due is at----
    Mr. LUETKEMEYER. And that is your total portfolio, or is 
that the number of loans you made last year?
    Ms. SANCHEZ. Total volume of loans.
    Mr. LUETKEMEYER. Okay. So that is not the number of loans 
you made last year?
    Ms. SANCHEZ. Not number of loans, no.
    Mr. LUETKEMEYER. All right. So your total portfolio is 
$1.45?
    Ms. SANCHEZ. Yes, sir.
    Mr. LUETKEMEYER. What is your past due?
    Ms. SANCHEZ. There are no past due in--the bank is the one 
that monitors the past due, so we don't have any deficiencies. 
The program is run at a zero subsidy.
    Mr. LUETKEMEYER. You don't go to the bank and get reports 
from them to tell you what the past due ratio is of the loans 
that you are sitting there guaranteeing?
    Ms. SANCHEZ. I would have to get that information back to 
you, sir.
    Mr. LUETKEMEYER. Okay. One of the concerns that we have is 
the GAO report. You know, the Chairman talked a while ago about 
the number of people who were supposed to be doing this work of 
helping small businesses. You are authorized for 30, you had 
19, now you are up to 21. And the GAO report said that 
sometimes it is as little as 15 percent of their time was 
actually dedicated to working with small businesses on trade.
    So it begs the question, number one, are these people 
necessary? And if they are, are they doing their job? And who 
came up with the number of 30 to begin with? Was that you? Was 
that Congress?
    Ms. SANCHEZ. It was Congress.
    Mr. LUETKEMEYER. So Congress pulled a number out of the 
air, then, right?
    Ms. SANCHEZ. I defer to you on that, sir.
    Mr. LUETKEMEYER. I have no idea. I am asking you. You are 
the administrator. You should know the history of your agency, 
the history of this program. You don't know the history of your 
program?
    Ms. SANCHEZ. Sir, I believe that Congress was the one that 
came up with the number.
    Mr. LUETKEMEYER. Okay. You didn't work in conjunction with 
Congress to come up with the number, and say, we think 30 
people would be able to help us be able to do our job of 
helping small businesses access trade agreements----
    Ms. SANCHEZ. Well, sir, to answer your first question, you 
said district international trade officers only do--that--our 
districts only have--they have a representative that is called 
district international trade officers. They are the ones that 
do--15 percent of their time is allocated to trade efforts. We 
have U.S. expert assistance center people that actually 
dedicate their time 100 percent to trade.
    Mr. LUETKEMEYER. Which one is the 19?
    Ms. SANCHEZ. The 19 is the U.S. export assistance center 
people.
    Mr. LUETKEMEYER. Okay. Because GAO was concerned that there 
was a disproportionate amount of time spent by these people on 
other activities other than what they were supposed to.
    So I see my time is up. I will yield back to the Chairman. 
Thank you.
    Chairman CURBELO. I thank the gentleman for yielding back.
    And now I would like to recognize the gentleman from 
Virginia, Mr. Brat.
    Mr. BRAT. Thank you, Mr. Chairman.
    I just kind of have some general questions. I am kind of 
following the logic of what has just proceeded.
    I taught economics for the last 20 years at a small school 
down in Virginia. In general, I am a free trader. Small 
business, how can you not be, you know, empathetic toward 
helping the small guy. But since I have been up here, seeing 
how the politics works, I get skeptical about the size of the 
small business and the typical small business that we are 
helping.
    So the big folks up here, all that special interests and 
lobbyists, and they do well for themselves, Export-Import Bank 
is kind of our example. It depends on which side you are on. I 
am opposed. But when it comes to just trade in general, what is 
the best case you can make for me? So in economics, the price 
system is--the free market system or the price system, prices 
make the decisions for us, right? So we all want to buy cheap 
products, and the price system works. And any country that does 
not follow the price system with long run is no longer a 
nation. Right? So every nation in the history of nations is 
gone.
    We have followed the price system, and have done fairly 
well, but lately the government's growing and growing and 
growing. So give me the best case you can as to why we need the 
Small Business Administration to make loans and help these 
small guys make loans, give them credit, and to facilitate 
trade? Because I do want to level the playing field toward the 
small guy. But on the other hand, I am getting equally 
skeptical that the government is just picking winners at all 
levels. So give me the best case you can for why the Small 
Business Administration should be helping out the small guy so 
I can go back home and tell them what we are doing for them.
    Ms. SANCHEZ. Thank you very much. That is interesting.
    You know, the core mission of the U.S. Small Business 
Administration is to help small businesses succeed and 
especially the Office of International Trade in the 
international marketplace and be able to compete effectively. 
And, you know, we have identified--we know that the three 
biggest issues that they have is information, access to 
capital, and market access.
    Without somebody representing them and being the voice for 
them on trade negotiations and all trade matters, and knowing 
that 96 percent of all of their potential future sales and 
current sales, you know, need somebody to support them. That is 
a pretty hefty case there of the tremendous need that they have 
for somebody to voice for them and represent them in anything 
related to----
    Mr. BRAT. That is good. That is what I wanted to hear. Now, 
if I unpack it and dig down into the details, will I find out 
that the small businesses that are being helped are actually 
not the smallest ones, but they are the biggest ones in the 
small business category?
    Ms. SANCHEZ. You know, I would love to dig deeper with you, 
because we also do know that exports--that the opportunities 
are with new entrants in exports.
    Mr. BRAT. Yep.
    Ms. SANCHEZ. And I firmly believe that is where the 
opportunity exists as well.
    Mr. BRAT. That is good. And, then, I am just playing 
devil's advocate. But I am just interested, in free markets, 
the nice thing about a free market, it is neutral. Right? 
Everyone is absolutely equal when the price system is in charge 
and you don't have access, special access, to some trillions of 
dollars up here.
    So if I dig into the small business firms as well, would 
there be any particular concentration in just certain 
industries that are get overwhelming support and subsidies and 
counsel? Because everyone knows it is good, right? I mean, you 
are getting free services, and someone helping you to do your 
services and subsidizing capital and making your loans easier, 
that is a good thing. No one's against that.
    But if I dug down to get--would it be--is it just certain 
industries, or is it fair in terms of across the board?
    Ms. SANCHEZ. I would be actually very curious and 
interested to engage on a study like that as well with you.
    Mr. BRAT. Good.
    Mr. Chairman, I yield back. Thank you very much for----
    Chairman CURBELO. I thank the gentleman.
    I have a couple additional questions, Ms. Sanchez. SBDCs 
and the commercial service both provide export counseling to 
small businesses; however SBA and Commerce have yet to clearly 
designate the responsibilities of field staff in this regard. 
What effort has been made to improve collaboration and 
cooperation between SBC and commercial service export 
counselors, and what is being done to simplify the process when 
a small business should be referred to a different agency based 
on their export readiness?
    Ms. SANCHEZ. Thank you. With all honestly, I think there is 
a lot of work left to be done there still. And there is a lot 
that we can be doing to require more of SBDCs, potentially, 
hopefully, with your help and ensure that SBDCs are 
incorporating into all of the curriculum and what they do, 
international training.
    Even though some of them are certified, there is a lot of 
work left to be done to ensure that SBDCs are actively 
communicating in international trade and everything they do.
    Chairman CURBELO. So you recognize there is a lot of room 
for improvement in this area?
    Ms. SANCHEZ. Absolutely.
    Chairman CURBELO. Then let me ask you, because I think this 
is what it all boils down for me. It appears that much of what 
OIT does is actually duplicative of a number of other agencies. 
How does the administration--I want to give you the opportunity 
to make your case for OIT. Why it is unique? Why it is 
different? Why it justifies an investment from the American 
people?
    Because based on a lot of what we have learned here today 
thus far, I think it is pretty clear that there is a lot of 
overlap with different agencies, and there are at least 
questions with regards to OIT's mission and whether or not that 
mission is being fulfilled.
    I want to give you the opportunity to make the case for why 
OIT is necessary, despite the fact that other agencies are also 
operating in this area.
    Ms. SANCHEZ. Yes. Thank you.
    Once again, we know that the issues that small businesses 
are facing are related to information, to financing, and to 
market access. And one entity that ensures that on all 
horizontal levels across the Federal agency, what every Federal 
agency is doing is ensuring that they are including small 
business in the everyday of what they do.
    That is what the Office of International Trade has been 
actively ensuring and doing, at least since my arrival, is 
ensuring that every Federal agency, including this, and that is 
critical for small businesses. They need that voice for small 
business, and for somebody who is fighting for them on 
international markets and to ensure that they have the right 
market access.
    Chairman CURBELO. Well, I thank you. And I would just like 
you to take the message back, I think, obviously, everyone on 
this Committee wants the SBA to work, to be functional, to help 
small businesses. We really believe that we can do a lot to 
give small business owners access to new markets. Small 
businesses are very important for all of our communities, 
because they are the ones that employ the people that don't 
have access to the big firms, maybe the kid that dropped out of 
college or the new immigrant family that just arrived. These 
are the jobs that these types of individuals have access to.
    So we want to promote small business, but there are 
legitimate questions, I think many of them have been asked here 
today, with regards to OIT, with regards to whether or not it 
is absolutely necessary. And we are living at a time, of 
course, of limited resources for the government. You know that; 
we certainly know that.
    I think it is very important, it is critical, for SBA to 
demonstrate that this agency is necessary and that it is 
operating to assist our small businesses export products. That 
is your mission. So we need proof, essentially, that your 
mission is being fulfilled.
    Does anyone else seek recognition?
    Okay. I want to thank you, Ms. Sanchez, for your time, for 
coming to answer our questions and to share your testimony.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record. Without objection, so ordered.
    Chairman CURBELO. This hearing is now adjourned.
    Ms. SANCHEZ. Thank you very much.
    [Whereupon, at 4:39 p.m., the Subcommittee was adjourned.]
                   A P P E N D I X

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Curbelo, Ranking Member Meng, and distinguished 
members of the Subcommittee, thank you for this opportunity to 
testify about SBA's international trade programs and 
initiatives.

    Small businesses are increasingly looking abroad for their 
next customer. Export sales contribute to a strong middle class 
by fueling economic opportunity and creating export-supported 
jobs in communities across the United States, while the foreign 
consumers that buy Made in America products gain access to some 
of the world's highest quality products and services. Today, 
95% of all consumers and over two-thirds of the world's 
purchasing power reside outside the United States. Small 
businesses that can tap into this global market have the 
potential for vast expansion and growth, with small and mid-
sized businesses now comprising 34% of total export sales. In 
SBA's Office of International Trade, we remain focused on our 
core mission of increasing the ability of small businesses to 
compete in international markets through access to finance and 
export development opportunities.

    I want to share the important achievements SBA's Office of 
International Trade has made to increase the number of small 
business exports.

    I am proud to say that in FY 2015 we guaranteed a record 
$1.45 billion in SBA loans to small business exporters--5.2% of 
all SBA guaranteed lending went to small business exporters. 
The Agency participated with 514 lenders to provide financing 
to 1,513 small business exporters, exceeding the goal we set of 
financing 1,480 small businesses. On my personal visits to 
small business exporters, their owners routinely express to me 
the importance of having access to financing.

    We continue to target new lenders to support small business 
exporters in their communities so that more liquidity can flow 
to the market. Last year we trained more than 4,300 lenders, 
hosted the eighth Annual SBA Export Lenders Roundtable in 
Washington, D.C. and the second Annual West Coast SBA Export 
Lenders Roundtable in Los Angeles. We also provided a webinar 
for members of the National Credit Union Administration, as 
well other outreach and training events.

    Recognizing that U.S. small business exporters are key to 
the nation's economic future, SBA's Office of International 
Trade will continue to collaborate with partners across the 
country to improve access and delivery of programs to small 
business exporters. One of the programs we continue to be 
excited about is the State Trade and Export Promotion, or STEP 
program. The STEP program helps small businesses tap global 
markets through cooperative agreement awards with state 
governments. STEP awards federal dollars to states and 
territories to fund eligible small business market development 
activities, including participation in trade missions and 
foreign market sales trips, trade shows, international 
marketing efforts, and training. Since the establishment of the 
program, we have supported international market development 
efforts across the states, and they have reported, great 
success from the first two rounds of awards.

    In FY 2015, SBA awarded $17.4 million in STEP grants to 40 
states. Using the funding provided for STEP in the 2016 
Consolidated Appropriations Act, SBA will announce a 
competitive process for additional STEP awards totaling $18 
million this year. SBA is dedicated to running a competitive 
grant process ensuring these funds will support those projects 
with the greatest returns, while not duplicating the efforts of 
any other federal trade promotion activities.

    Many untapped opportunities exist outside the United 
States, but small firms often do not have the resources and 
personnel to leverage them, and rely heavily on negotiated free 
trade agreements to reduce tariff and non-tariff barriers for 
their products or services. That is why free trade agreements 
have the potential to significantly benefit small businesses. 
In addition to the office's core functions, we are also 
increasingly engaged in creating market access opportunities 
for small businesses is key markets through trade negotiations.

    Last year the SBA, along with USTR, represented small 
business interests in ongoing U.S.-EU Transatlantic Trade and 
Investment Partnership (T-TIP) negotiations and intercessional 
meetings, and will continue to do so in 2016. With regards to 
the recently concluded Trans-Pacific Partnership (TPP) 
Agreement, the SBA is excited that the agreement includes the 
first-ever small-medium enterprise chapter, as well as many 
other provisions that will help small business exporters. We 
believe TPP and its strong commitments will help to improve the 
environment for doing business overseas, and help more small 
businesses export Made In America goods and services to Asia 
Pacific customers, thereby fostering greater economic 
opportunity for U.S. companies and entrepreneurs.

    In the 21st century, SBA's Office of International Trade 
must be as global, innovative and entrepreneurial as the small 
businesses we serve. We are more engaged on the international 
front than ever before by supporting export development efforts 
through the STEP program and guaranteed export lending, as well 
as through our active involvement in trade negotiations. 
Together these efforts increase the ability of small business 
exporters to compete in international markets and help create 
export-supported jobs in the United States.

    Again, I want to thank all of you for your bipartisan 
commitment to small businesses.

    Mr. Chairman, I would be happy to take your questions.