[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


          SBA MANAGEMENT REVIEW: OFFICE OF INTERNATIONAL TRADE

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION
                               __________

                              HEARING HELD
                           SEPTEMBER 20, 2022
                               __________

                  
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 117-067
             Available via the GPO Website: www.govinfo.gov
             
                          
                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
48-579                    WASHINGTON : 2023                
             
             

                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                         TROY CARTER, Louisiana
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                     CHRISSY HOULAHAN, Pennsylvania
                          ANDY KIM, New Jersey
                         ANGIE CRAIG, Minnesota
                        SCOTT PETERS, California
              BLAINE LUETKEMEYER, Missouri, Ranking Member
                         ROGER WILLIAMS, Texas
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                        CLAUDIA TENNEY, New York
                       ANDREW GARBARINO, New York
                         YOUNG KIM, California
                         BETH VAN DUYNE, Texas
                         BYRON DONALDS, Florida
                         MARIA SALAZAR, Florida
                      SCOTT FITZGERALD, Wisconsin
                          MIKE FLOOD, Nebraska

                 Melissa Jung, Majority Staff Director
            Ellen Harrington, Majority Deputy Staff Director
                     David Planning, Staff Director


                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Nydia Velazquez.............................................     1
Hon. Blaine Luetkemeyer..........................................     2

                                WITNESS

Mr. Gabriel Esparza, Associate Administrator, Office of 
  International Trade, U.S. Small Business Administration, 
  Washington, DC.................................................     5

                                APPENDIX

Prepared Statement:
    Mr. Gabriel Esparza, Associate Administrator, Office of 
      International Trade, U.S. Small Business Administration, 
      Washington, DC.............................................    35
Questions and Answers for the Record:
    Questions from Hon. Luetkemeyer to Mr. Esparza and Answers 
      from Mr. Esparza...........................................    39
Additional Material for the Record:
    Glenroy Statement............................................    43

 
          SBA MANAGEMENT REVIEW: OFFICE OF INTERNATIONAL TRADE

                              ----------                              


                      TUESDAY, SEPTEMBER 20, 2022

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:01 a.m., in Room 
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez 
[chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Davids, Phillips, 
Newman, Bourdeaux, Carter, Houlahan, Kim of New Jersey, Craig, 
Peters, Luetkemeyer, Williams, Stauber, Meuser, Tenney, 
Garbarino, Kim of California, Van Duyne, Fitzgerald, and Flood.
    Chairwoman VELAZQUEZ. Good morning. I call this hearing to 
order. Without objection, the Chair is authorized to declare a 
recess at any time.
    I would like to begin by noting some important 
requirements. Standing House and Committee rules will continue 
to apply during hybrid proceedings. All Members are reminded 
that they are expected to adhere to these rules.
    House regulations require Members to be visual through a 
video connection throughout the proceeding, so please keep your 
cameras on. Also, remember to remain muted until you are 
recognized to minimize background noise.
    In the event a Member encounters technical issues that 
prevent them from being recognized for their questioning, I 
will move to the next available Member of the same party, and I 
will recognize that Member at the next appropriate time slot, 
provided they have returned to the proceeding.
    For small businesses, exporting products abroad can jump-
start growth and unlock an enterprise's full potential. Nearly 
96 percent of consumers live outside of the United States. When 
small firms sell their products internationally, they can reach 
countless new customers, become more resilient, and boost their 
bottom line.
    The approximately 166,000 small businesses in the U.S. that 
export account for roughly $341 billion in sales. However, 
small export businesses represent only 3 percent of U.S. small 
employer firms. That is because exporting presents a range of 
unique risks and challenges for small businesses stemming from 
the complex nature of global trade.
    Small businesses looking to expand overseas often have 
difficulty obtaining the capital to fill foreign purchase 
orders, struggle to connect with foreign buyers, and lack the 
expertise to understand international rules and regulations.
    Recognizing these challenges, the Small Business 
Administration created the Office of International Trade in 
2010 to work with other federal agencies to encourage small 
business exports and provide expert assistance to small firms.
    While OIT engages in a variety of activities to promote 
exports, including managing three different loans specifically 
targeted to small businesses looking to export--the Export 
Express, Export Working Capital, and International Trade Loan 
Programs--the office's primary responsibility is administering 
the State Trade Expansion Program, otherwise known as STEP.
    STEP educates small firms on the nuances of the exporting 
process and provides technical assistance to support small 
businesses as they expand into international markets.
    The program awards loans to all states and territories for 
participation in trade missions, international marketing 
efforts, workshops, export trade show exhibits, and other 
promotional activities. These funds must be matched by the 
states at either 35 percent of the federal award for states 
with high export volumes or 25 percent for states without high 
export volumes.
    Since its inception, STEP has helped thousands of small 
businesses break into the international marketplace. In fiscal 
year 2021, the SBA supported $832 million in export sales from 
STEP and assisted over 3,400 small businesses. By expanding the 
number of small firms that export, we can grow both the small 
business and U.S. economy.
    That is why we must act to strengthen and improve the STEP 
program. Representative Evans, along with Representative Young 
Kim, recently introduced the STEP Improvement Act of 2022, 
which will reauthorize the program for 4 fiscal years.
    The bill also includes measures to streamline STEP's 
application process, increase grant spending flexibility, 
improve communication between the SBA and participating states, 
implement more robust reporting requirements, and allow small 
firms to participate in the program sooner in their business 
journey.
    Last Congress, the House passed a similar bill, but 
ultimately the Senate declined to take action. I hope that we 
can continue our bipartisan work to pass this bill through the 
House this Congress and work with our Senate counterparts to 
enact this important legislation into law.
    Today, I want to take a closer look at the operations of 
SBA's Office of International Trade and particularly STEP. I 
look forward to discussing the actions Congress can take to 
improve the program and address any challenges facing the 
office.
    I want to thank Associate Administrator Esparza for being 
here today, and I look forward to hearing your testimony.
    I now would like to yield to the Ranking Member, Mr. 
Luetkemeyer, for his opening statement.
    Mr. LUETKEMEYER. Thank you, Madam Chairwoman.
    And thank you, Associate Administrator Esparza, for taking 
time to testify today.
    I think it is important to hear directly from 
administration officials on the programs they manage and their 
work to support small business.
    Unfortunately, today marks 512 days since Secretary Yellen 
has missed the legal deadline to testify before the Small 
Business Committee. This is unacceptable.
    But, Mr. Esparza, we do appreciate you being here today and 
fulfilling your responsibility.
    Small businesses are the drivers of innovation, leaders in 
job creation, and beacons of American ingenuity across the 
globe. International trade policy impacts nearly every type of 
small business, whether it is agricultural products from 
Missouri or computer and electronic products from California. 
We have seen how entrepreneurs' ability to compete on the world 
stage can grow our economy, support our American workers, and 
build communities.
    To broaden markets and strengthen small businesses' 
competitive advantage, the Trump administration confronted 
unfair trade practices and negotiated historic trade deals, 
including the United States-Mexico-Canada Agreement, USMCA, and 
a written ``Phase One'' trade agreement With China.
    Under pro-growth and pro-business policies, small business 
optimism broke a 35-year-old record and we experienced a blue 
collar boom where wages grew faster for workers than for 
managers or supervisors prior to the COVID-19 pandemic.
    However, I am concerned that under the Biden administration 
China's economic aggression has gone unchecked, regulations and 
taxes have increased for American manufacturers, and backlogs 
at our ports have created supply chain disasters.
    We have seen small business optimism decline, inflation 
reach 40-year highs, and two consecutive quarters of negative 
economic growth, which translates to a recession, despite the 
left's effort to spin something to the contrary.
    The Consumer Price Index, CPI, rose 8.3 percent in August 
as compared to 1 year earlier. Additionally, the Producer Price 
Index, or wholesale inflation, registered an annual increase of 
8.7 percent. Inflation remains the top concern for small 
business owners, yet the Biden administration fails to provide 
solutions.
    On the very same day that the Bureau of Labor Statistics 
reported that CPI remains at a 40-year high, President Biden 
celebrated on the White House lawn a bill that the CBO found 
will not reduce inflation and in fact could slightly increase 
inflation in 2023.
    A recent survey of small business owners found that 90 
percent of small business owners report that broader economic 
trends, such as inflation, persistent supply chain issues, and 
workforce challenges, are having a negative impact on their 
business.
    These economic headwinds impact every aspect of a small 
business owner's operation. They struggle to pay exorbitant 
high utility bills, place ``help wanted'' signs on their doors 
in the search for skilled labor, and encounter backlogs waiting 
for delayed parts and goods.
    Further, small businesses looking to enter international 
trade markets face a variety of trade barriers that limit their 
ability to compete, including lack of resources, inadequate 
access to financing, anti-competitive technical standards, and 
complex export controls. These barriers are likely why small 
businesses represent only 26 percent of total American export 
value.
    The Small Business Administration is tasked with advocating 
for small businesses in trade negotiations and promoting small 
business exports. Today we will review the SBA's Office of 
International Trade, OIT, export promotion activities, 
including management and training programs, loan programs, and 
State Trade Expansion Program grants.
    As the Ranking Member of this Committee, I appreciate the 
work of OIT to help Main Street navigate the obstacles involved 
with engaging in international trade and their advancement of 
small business interests at home and abroad. To increase their 
exports and expand into new markets, small businesses can 
access counseling and training from the SBA's resource 
partners, field offices, and United States Export Assistance 
Centers.
    To access additional capital, small businesses can utilize 
any of the small business traditional loan programs. In 
addition, SBA's three export loan programs--the Export Express 
Loan Program, the Export Working Capital Program, and the 
International Trade Loan Program--are facilitated by private 
sector lenders and guaranteed by the SBA to assist small 
businesses in building export operations, financing 
transactions, or expanding production capacity.
    The State Trade Expansion Program, or STEP, is also a 
valuable tool for small businesses. STEP grants are awarded to 
State trade agencies, which are then awarded to eligible small 
businesses for specific export activities. The grant funding 
can be used for participation in foreign trade missions and 
trade show exhibitions, design and marketing media and 
websites, and procurement of consulting services.
    Missouri, my State, has participated in the STEP program 
since its inception and over $2.5 million total has been 
disbursed to hundreds of Missouri businesses. This program has 
made a real impact on small business owners who have used the 
program to internationalize their websites and create 
relationships on foreign market sales trips.
    In Missouri, Tram (ph) Systems, a veteran-owned small 
business, used the STEP program to participate in a trade show 
in Singapore, which resulted in product distribution to 10 
countries in Southeast Asia and a new purchase order of 
$27,000.
    Mr. Esparza, it sounds like, from your response there, it 
looks like you recognize this entity.
    Stauder Consulting, Inc., based in St. Peters, Missouri, 
again in my district, previously felt the company's size and 
limited resources made it too difficult to market 
internationally.
    However, after receiving financial assistance and 
connections from STEP grants, the company now reports: A small 
business with limited business development funds, the MO-STEP 
Program, which is for Missouri, the Missouri version of it, has 
assisted our efforts to market and sell our products and 
services internationally. In the past 5 years, we have 
transitioned from zero percent international sales to 75 
percent international sales. This program has made a 
significant impact on our small business and our ability to 
project our capabilities and products around the world.
    This Committee has held multiple hearings on this important 
program. In this past July, the Subcommittee on Economic 
Growth, Tax, and Capital Access heard from beneficiaries of the 
program.
    Prior to becoming a Member of Congress, Ranking Member 
Meuser, who is with us this morning, was a small business 
owner, and during the hearing he shared how his small business 
utilizes STEP grants to reach new markets and grow their 
operations.
    Tomorrow, this Committee will mark up the bipartisan STEP 
Improvement Act of 2022. This legislation will improve 
coordination, increase accountability, and ensure small 
businesses can continue to benefit from this valuable program. 
I applaud Representatives Evans, Newman, Kim, and Flood for 
their work on this legislation.
    In a growing global economy, we can all agree small 
businesses deserve ample opportunities to engage in 
international trade. To support entrepreneurs, we must stand up 
to China and advocate for American innovation, reduce 
regulatory burdens that hold small businesses back, restore our 
supply chains for the movement of goods, keep taxes low for our 
nation's job creators, and stop reckless spending on the backs 
of Main Street USA.
    I look forward to discussing the Office of International 
Trade's initiatives, and I remind the administration that 
reckless spending and increasing taxes and regulations fail to 
support small businesses in their efforts to expand and export.
    And with that, Madam Chair, I yield back.
    Chairwoman VELAZQUEZ. Thank you. The Ranking Member yields 
back.
    I would like to take a moment to explain how this hearing 
will proceed. The witness will have 5 minutes to provide a 
statement and each Committee Member will have 5 minutes for 
questions. Please ensure that your mic is on when you begin 
speaking and that you return to mute when you finish.
    With that, I would like to introduce our witness, Mr. 
Gabriel Esparza, the Associate Administrator for the Office of 
International Trade at SBA.
    Mr. Esparza is a seasoned executive with over 25 years of 
experience leading businesses from large corporations to 
startups. Prior to joining the SBA, he was an investor, 
adviser, and operator in a variety of entrepreneurial ventures.
    Earlier in his career, Mr. Esparza spent 13 years at 
American Express, including as Vice President of global 
business development for the commercial payments business.
    From 2009 to 2018, Mr. Esparza also served on the Board of 
Civil Service Commissioners for the City of Los Angeles.
    He holds a Master of Business Administration from Harvard 
Business School and a Bachelor of Arts in international studies 
from Stanford University.
    Welcome, Mr. Esparza. I will now recognize you for 5 
minutes.

  STATEMENT OF MR. GABRIEL ESPARZA, ASSOCIATE ADMINISTRATOR, 
      OFFICE OF INTERNATIONAL TRADE, U.S. SMALL BUSINESS 
                 ADMINISTRATION, WASHINGTON, DC

    Mr. ESPARZA. Thank you. Chairwoman Velazquez, Ranking 
Member Luetkemeyer, and distinguished Members of the Committee, 
thank you for honoring me with an invitation to come before you 
today to discuss the work of the Office of International Trade 
at the U.S. Small Business Administration.
    For America's small businesses, exporting is an engine for 
growth that allows our firms to reach new customers in an 
increasingly interconnected global marketplace. Data shows that 
small businesses that export are more resilient, expand faster, 
and create higher paying jobs for Americans.
    Raising awareness of the availability of trade assistance 
through the SBA requires shifting our frame of reference for 
what an export looks like today. The advent of digital tools, 
e-commerce engines, and maturing payment networks has reduced 
barriers to entry for small businesses to export both products 
and services.
    At the SBA, Administrator Guzman has prioritized leveraging 
these digital technologies to create a whole new generation of 
exporters. During the pandemic, e-commerce increased in the 
United States and small businesses adopted digital strategies 
to survive and grow their revenues, often finding customers all 
over the world.
    We are driving transformational change so that the SBA can 
help these ``accidental exporters'' become ``intentional 
exporters'' by expanding and growing their businesses to new 
markets.
    I am proud to bring my lived experience working around the 
globe to SBA's mission to help small businesses grow 
internationally. Prior to joining the administration, I helped 
lead a startup small business that built a modern 9-1-1 
technology platform. Our company launched in the United States 
and expanded around the world.
    Prior to that, I spent 13 years at American Express working 
with small businesses and eventually leading global business 
development for the commercial payments division.
    Over the course of my 26-year career, I have lived, 
studied, and worked around the globe, now almost 70 countries 
in total, while at the same time being deeply intertwined in 
the small business arena.
    In that connection, I have seen the power of American 
entrepreneurship on a global scale, and I work each day at SBA 
to ensure that our small businesses can find new customers to 
grow and compete internationally.
    One of our office's primary responsibilities is providing 
education and training to small businesses that are interested 
in exporting. We help businesses prepare for navigating the 
complexities of international sales, including customs, trade 
credit insurance, and foreign exchange. Our efforts are 
supported by a range of partners throughout the SBA, across the 
federal government, and with certain public-private 
partnerships.
    After a business has established a solid idea, product, or 
service, often including a track record of successful domestic 
sales, they need access to capital to fund and grow their 
overseas expansion. SBA's lending portfolio provides guarantees 
on loans and credit lines originated through the private 
banking industry.
    The Office of International Trade is authorized to provide 
higher guarantees on these facilities due to the unique 
circumstances faced by exporters, namely increased buyer risk, 
country risk, and currency risk.
    The SBA's Office of International Trade also focuses on 
providing grants to small businesses in the form of export 
expense reimbursement through the State Trade Expansion 
Program, or STEP.
    This year, we are proud to be celebrating the tenth 
anniversary of STEP, which over the last decade has awarded 
over $200 million to all 50 States and six territories. The 
STEP program has supported 12,000 small businesses and 
generated approximately $5.5 billion in export sales.
    Demand for STEP resources from the States is strong. This 
year, STEP applications were the highest ever, both in terms of 
States and territories applying as well as the total dollars 
requested. In 2022, we will have a record 48 States and 4 
territories participating in the program.
    Our partnership with the States, as well as with external 
advocacy groups like the State International Development 
Organizations, or SIDO, is critical to the efficiency, 
relevancy, and impact of the program.
    The last piece of the puzzle for most small businesses as 
they seek international opportunities is access to foreign 
markets. SBA is deeply involved in the interagency trade 
apparatus of the federal government. It is there that we 
advocate for small businesses for all matters related to trade 
policy and trade agreements, bringing to life the real lived 
experience of small business owners that we meet every day.
    SBA is committed to ensuring that the core offerings of our 
international trade office--education, capital, and market 
access--are available to the growing universe of small business 
exporters.
    Across the agency, Administrator Guzman has tasked us with 
developing more customer-centric approaches to our work that 
meets our small business customers where they are. That is why 
the SBA is focused on increasing awareness for trade by 
connecting to broader audiences of small businesses who are 
currently exporting or could potentially be exporting.
    I am humbled by the opportunity to serve at the SBA, and I 
am excited about the future of our nation's small businesses to 
export American-made products to customers throughout the 
world.
    I appreciate the invitation to appear before you today, and 
I look forward to your questions. Thank you.
    Chairwoman VELAZQUEZ. Thank you, Mr. Esparza.
    I will begin by recognizing myself for 5 minutes.
    You just stated STEP could be a great tool for small 
businesses, but the issue is 96 percent of customers live 
outside the United States. Only 3 percent of small businesses 
are exporting.
    So as an Associate Administrator for OIT, do you have a 
plan to market STEP to increase participation in exporting?
    Mr. ESPARZA. Thank you, Chairwoman Velazquez.
    Yes, of course. And, in fact, you hit on the correct word: 
market, marketing awareness. We need to get the word out that 
this program is effective. It has proven to be a generator of 
export sales, a sustainer of jobs, allowing companies to expand 
into new markets. We simply need to get the word out more.
    So our office has reorganized around having a stronger 
marketing function. We have tasked the entirety of the staff to 
make sure that they have a growth mindset and a marketing 
mindset. And we will continue to work in our office, including 
across the ecosystem of partners that we have in federal 
government and in the private sector, to make sure we continue 
that effort.
    Chairwoman VELAZQUEZ. I am glad that you mentioned resource 
partners. What about district offices?
    Mr. ESPARZA. Absolutely. So the 68 district offices, Madam 
Chairwoman, that the SBA manages are part of that ecosystem. 
The 200-plus field staff of the U.S. Commercial Service in the 
United States are women's business offices, veterans business 
office, the Small Business Development Centers.
    The ecosystem is large. If people want to talk about 
exporting, small businesses, they should not suffer for lack of 
resources. It is simply us being able to get the word out.
    Chairwoman VELAZQUEZ. Are you incorporating workshops in 
some of our congressional districts, for example?
    Mr. ESPARZA. Absolutely, Madam Chairwoman. In addition to 
the one-on-one and in-person sessions, we are now, of course, 
leveraging technology to do much broader seminars and webinars.
    I speak very consistently out on the road at conferences in 
a variety of venues in which I too can get the word out. And so 
marketing is fundamental to all that we are doing today.
    Chairwoman VELAZQUEZ. Can I ask you what will be the impact 
of H.R. 8844 when we pass it?
    Mr. ESPARZA. Thank you, Madam Chairwoman.
    If and when we pass this bill, which we wholeheartedly 
support, the opportunity for small businesses to continue to 
export, to continue to add to new markets will be an important 
driver of the U.S. economy.
    In addition to existing firms, we also have a very specific 
focus on new-to-exporting firms as well as companies that come 
from historically underserved communities. And so our reach is 
far and broad, and we continue that effort today.
    Chairwoman VELAZQUEZ. In a recent hearing the Committee 
heard from states and small businesses that participate in 
STEP. Overwhelmingly, their testimony was positive, but we 
heard concerns about the administrative aspects of managing the 
grant.
    What steps did you take to improve the grant application 
process for the 2022 grant cycle?
    Mr. ESPARZA. Chairwoman Velazquez, we are--I am very aware 
of this feedback, and I have spent time talking with State 
directors, talking with managers of the grant programs. And I 
acknowledge that there are aspects of the program that States 
want to have become more efficient.
    Of course, along with this Committee, what I try to do is 
make sure that we have the right balance between protecting 
taxpayer dollars and managing this program, and understanding 
at the same time we ask very specific questions and have 
requirements of the States in terms of their application 
process as well as their quarterly reporting.
    And so wherever we have an opportunity to improve the 
efficiency of this program and the reporting requirements that 
we ask of States, we will absolutely do that.
    Chairwoman VELAZQUEZ. Thank you.
    Ensuring equitable knowledge of and access to SBA programs 
and services has been a top priority for this Committee. 
However, we have learned throughout the pandemic access to 
funding and program support are not always equal.
    How does SBA work to ensure that traditionally underserved 
communities have access to STEP funds?
    Mr. ESPARZA. Thank you, Madam Chairwoman.
    This is important. Administrator Guzman has asked us across 
the SBA not only to have a customer-centric lens in all that we 
do, but to make sure that we have an equity lens with all that 
we do as well so that historically underserved communities, 
women small business owners, veteran small business owners, 
rural small business owners all have an equal shot at the 
programs that we do.
    Some of them, as you know, are built into statute such that 
the STEP program, for example, has to be distributed evenly to 
all States, it can't be focused only on the highest exporting 
States.
    And so both with what we work with in terms of the rules of 
our programs as well as our interest in marketing to all 
communities, we make every effort to ensure that underserved 
communities are included there as well.
    Chairwoman VELAZQUEZ. Thank you, Mr. Esparza.
    Now I yield to the Ranking Member, Mr. Luetkemeyer, for 5 
minutes.
    Mr. LUETKEMEYER. Thank you, Madam Chair.
    Many in the American public feel that there is no identity 
to what is driving the Biden administration's trade policy 
agenda.
    Are small businesses, the American worker, and private 
sector growth key considerations when negotiating and examining 
trade agreements?
    Mr. ESPARZA. Thank you, Ranking Member.
    We at the Office of International Trade work very closely 
with the U.S. Trade Rep's office, the Commercial Service, the 
entire trade apparatus of the federal government.
    We believe--and I believe individually--that it is our 
responsibility to advocate for small businesses in all that we 
do and at every seat at the table that we have. I try to bring 
those communications that I have with small businesses that I 
meet around the country, bring those real life experiences and 
stories to this trade apparatus when we talk.
    Mr. LUETKEMEYER. I appreciate your comment that you want to 
be an advocate for small business. I think that is your job, 
quite frankly, and I appreciate that comment.
    Do you talk to the administration at all with regards to 
the effect of the policies of this administration with regards 
to inflation, taxes, rules and regulations of small businesses 
that you are trying to help export their products? Do you talk 
to anybody in the administration about that?
    Mr. ESPARZA. Thank you, Ranking Member.
    I talk with not only my boss, Administrator Guzman, but, 
again, the U.S. Trade Rep's office and Commercial Service, the 
State Department, others in the federal trade apparatus. And I 
am always advocating for small businesses, whatever their 
experience is, whatever their circumstances.
    Mr. LUETKEMEYER. Well, I appreciate that, because I asked 
that same question of your director, Administrator Guzman, and 
she is not talking to the administration, which is mind-blowing 
from the standpoint that 99 percent of the businesses in this 
country are small businesses, businesses she has a direct 
impact overseeing and helping.
    And yet we are not communicating the problems of small 
businesses to the administration with regards to their 
policies, whether they work or don't work. I mean, even if they 
are working, they should be getting some feedback, positive 
feedback. Unfortunately, most of it is negative.
    But if you are not discussing that, I think it is very 
difficult to help small businesses through all this.
    When you advocate for small businesses in the trade arena, 
what does your office do to hold China accountable for their 
predatory digital trade policies, IP theft, currency 
manipulation, and violation of WTO rules?
    Mr. ESPARZA. Thank you, Ranking Member.
    As I mentioned earlier, my advocacy for small businesses, 
our office's advocacy, includes those small businesses that are 
trading with China or would like to trade with China.
    I am aware of circumstances and feedback from small 
business in which tariffs in both directions can be positive 
and at the same time can add friction to the system and be 
challenging to small businesses.
    So these are real experiences of small businesses that, 
again, in my capacity in conversations with the trade apparatus 
across the federal government, including the U.S. Trade Rep's 
office, we share these experiences so that we can advocate for 
small businesses wherever possible.
    Chairwoman LUETKEMEYER. You know, tax policy is a real 
driver. The old adage ``follow the money'' is true with all the 
things that are business-oriented.
    As we saw with the Tax Cuts and Jobs Act of 2017, the 
inversion that was going on with big companies moving their 
headquarters overseas as a result of tax policy changed 
whenever we changed our tax policy here. And since then, there 
hasn't been one single entity, not one, that has changed and 
has inverted their home office to a foreign country. In fact, 
many of them have brought them home.
    What do you see from the standpoint of tax policy that is 
harmful to small businesses' ability to transact trades with 
foreign countries?
    Mr. ESPARZA. Thank you, Ranking Member.
    Tax policy is not part of the conversations that I have 
personally had with small businesses. I hear from small 
businesses their questions around: How do I find a buyer 
overseas? How do I have access to capital? How can I take 
advantage of your programs and services?
    So while I am listening to them about their experiences and 
their challenges, that is not one that I have specifically had 
a conversation about.
    Mr. LUETKEMEYER. That is curious, because I think, I would 
believe that going into another country, for instance Canada, I 
mean, they tax the dickens out of American companies up there. 
I mean, if you make money up there, you are taxed on it.
    I would think that that would be something that if I am a 
small business owner, I want to know what the tax laws are so 
if I sell something and I make a hundred dollars' worth of 
profit how much of that do I actually get to keep and come home 
with. That surprises me.
    One quick follow-up. I saw an article this morning in The 
Wall Street Journal how many people were coming back to work. 
Is everybody back to work in your department now, or do you 
still got some folks back home?
    Mr. ESPARZA. We are back to work.
    Chairwoman LUETKEMEYER. 100 percent?
    Mr. ESPARZA. And I, Ranking Member, I probably split my 
time half the time in the office, half the time out on the road 
talking to small businesses. When I am in the office, I am glad 
to see the team, inspire them, lead them. At the same time, I 
do think it is important to be out on the road talking to small 
businesses.
    Mr. LUETKEMEYER. Well, I am not criticizing you being on 
the road. What I am saying is we have too many people working 
from home. We need to come back to work. And I assume that is 
what you are doing. Most of your--all your people are back to 
work.
    Mr. ESPARZA. We are back in the office.
    Mr. LUETKEMEYER. Perfect. Thank you very much.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    And now I recognize the gentlelady from Pennsylvania, Ms. 
Houlahan, for 5 minutes.
    Ms. HOULAHAN. Thank you.
    Associate Administrator Esparza, we hold in common that we 
both went to Stanford. It looks as though you are a little bit 
younger than me, though, so we must have missed each other.
    Very much appreciate the opportunity to have you appear 
before the Committee. One of the things that makes me most 
proud about serving on the Small Business Committee is that I 
have quite a lot of experience in scaling small businesses to 
larger businesses. And a couple of them have actually gone on 
to be global in their scope and their span, one of them sold 
into 110 different countries from startup.
    Those were both started as two organizations in the 
Pennsylvania area. And I am very, very glad to see that funding 
is coming to Pennsylvania as part of the 2022 State Trade 
Expansion Program awards.
    This funding will support Pennsylvania's Global Access 
Program, which is designed to enhance the capability of small 
and midsize Pennsylvania companies to increase export sales 
through innovative uses, such as website enhancements, 
translator and interpreter fees, foreign market sales trips, 
and other sorts of things that I know that I experienced as 
being powerful tools to be able to grow your top line and 
bottom line and scale globally.
    Considering the importance of this program, I really would 
like to understand how States like Pennsylvania can further 
maximize the amount of funding they receive in future years. 
Specifically, are there ways that States can better utilize 
their funding in order to obtain the maximum amount allowed in 
the next grant cycle?
    One of the reasons why I am asking this question is that in 
doing our research our team discovered that no States were 
awarded the maximum amount of $2 million for 2022. How can we 
be that State that gets the $2 million?
    Mr. ESPARZA. Thank you, Congresswoman.
    For $20 million in available funding this year, we had $39 
million in requests from the States, almost two to one. And so 
almost by definition we did not have enough money to satisfy 
every State's request.
    But I can tell you that, in terms of maximizing the 
opportunity for Pennsylvania or any other State, a good place 
to start is utilizing all the funds available in a given year. 
We want to demonstrate to you all that every State is 
maximizing the utility of the program by utilizing all the 
funds.
    Of course, we have several categories in which those funds 
can be used. Principally, most small businesses look for 
expense reimbursement through the STEP program for trade shows 
and trade missions, but there are nine expense categories, and 
they continue to expand. We recently included now reimbursement 
for trade credit insurance.
    So we are starting to get very specific about all the 
aspects of exporting, and we hope to continue to work with your 
State and others to be able to maximize the program.
    Ms. HOULAHAN. That is really interesting. And basically it 
is a problem of supply and demand. There is a significant 
amount of demand and not enough supply. Thank you for that 
answer.
    Businesses in my community and nationwide are continuing to 
be adversely impacted by increased costs due to Section 301 
tariffs. For instance, my office has been in close 
communication with a company in my community called Lasko 
Products, which is an international home comfort product and 
fan manufacturer that is headquartered in my community. It has 
filed numerous requests for exemptions from 301 tariffs, noting 
that the harmful impacts that they are having on their business 
are difficult.
    Given the role that your office does play in supporting 
businesses that are engaged in exporting, I am sure that you 
understand how challenging the 301 tariffs have been in the 
wake of the pandemic.
    So this year is the 4-year statutory review mark for all 
four lists of 301 tariffs on Chinese products. And recognizing 
that the United States Trade Representative oversees an 
enforcement of the Section 301 tariff regime, but also noting 
your expertise with their impacts on small businesses, can you 
please explain to what extent you do engage with the USTR on 
Section 301 tariffs?
    Mr. ESPARZA. Thank you, Congresswoman.
    So we are aware of the Section 301 process and the review 
that is going on right now. We are also aware that several 
companies have asked for exceptions from those tariffs.
    Again, as I have said earlier, wherever we find real life 
stories of small businesses that we meet every day across the 
country, including the ones that you mentioned from 
Pennsylvania, we share those stories, we share those examples 
with the U.S. Trade Rep's office, and we continue to advocate 
for them going forward.
    More than anything, we keep abreast of these processes, the 
review process, and we help in our capacity as educators and 
communicators with small businesses about those processes. And 
we hope to be able to continue to do so.
    Ms. HOULAHAN. So with the last seconds, that was actually 
the final question, which is, how can small businesses like the 
ones in my community better work with you all, kind of raise 
their hands and say they would like to be exemplars or examples 
of kind of what is going on and how we need to help these 
organizations?
    What can your office do to seek these businesses out? And 
can I direct this business to you more specifically?
    Mr. ESPARZA. Yes, please, Congresswoman. On our website, we 
have a trade tools portion of our website. We have a hotline. 
We can take inbound calls. Communication and education relative 
to not only tariffs but all aspects of the exporting journey is 
something that we work on very hard, and I am happy to work 
with your office for that particular business.
    Ms. HOULAHAN. [Presiding.] Thank you. I appreciate it. And 
I yield back my time.
    But I am now also serving as the acting Chair. And so the 
Chair will now recognize Representative Roger Williams, who is 
the Vice Ranking Member of the Committee, for his 5 minutes.
    Mr. WILLIAMS. Thank you, Madam Chair.
    And as a small business owner--thanks for being here. As a 
small business owner for 50 years--I am a car dealer, I have 
been in business 51 years--I can tell you that President 
Biden's SBA is totally out of touch with Main Street America. 
And I am glad to see that you are a businessperson, because, 
frankly, I didn't know they had any businesspeople over there. 
So I am glad that you have that experience.
    When I talk to business owners back in Texas, they are 
concerned about the inability to find qualified workers, 
excessive government regulations, increasing compliance costs, 
and the constant threat of tax increases coming from 
Washington.
    And just real quick, do you think we should be raising 
taxes on small business, on Main Street America? That is a 
short answer, I mean, yes or no?
    Mr. ESPARZA. Thank you, Congressman Williams.
    I think tax fairness is an important aspect of what we 
should be doing, and every American and every American small 
business should pay its fair share of taxes.
    Mr. WILLIAMS. See, I think we should cut taxes across the 
board.
    However, all businesses in my district are more concerned 
about the--are most concerned about the out-of-control 
inflation, which all of us are, which has soared to 13 percent 
under the Biden administration and has caused prices across the 
grid to skyrocket.
    Small business owners are having to drastically alter their 
operation to compensate for additional costs, forcing owners to 
decide whether to reduce future capital investments, hold off 
hiring a new employee, or raising prices on their consumers 
just to keep the doors open. And you can't continue to just 
raise prices. It is not that easy. Small businesses have to eat 
most of that.
    So, Mr. Esparza, as you talk with small business owners 
like myself, what changes are they having to make to their 
businesses' operations in response to inflation? And what would 
be your advice to small businesses struggling with rising 
costs?
    Mr. ESPARZA. Congressman, thank you.
    Whether it is the current circumstances, whether it is the 
pandemic, whether it is a hurricane that is hurting Puerto Rico 
today, for example, American small businesses are resilient. 
And it is our domain in the Office of International Trade to 
make sure that they have the education, training, access to 
capital, access to markets.
    And so our office continues not only to be an advocate for 
these small businesses, to provide them with the products and 
services to help them in their exporting journey.
    Mr. WILLIAMS. But how about being an adviser? That was my 
question. I mean, what advice are you giving small business to 
deal with these rising costs?
    Mr. ESPARZA. What we tell them is that exporting can be an 
important part of the journey. International sales, as was 
mentioned earlier, 95 percent of the world's consumers live 
outside the United States.
    And so wherever we have an opportunity to talk with small 
businesses about the opportunities that exist overseas, we do 
that. And then we provide them with opportunities for access to 
capital and ensure that market access is an important part of 
that journey as well.
    Mr. WILLIAMS. We will move on, but if I was asking for 
advice, you haven't given me any.
    So, number two, many businesses are facing a new problem 
they have never had to deal with before, and that is supply 
chain. I am in the car business. I used to have this many cars. 
Now I got this many cars.
    And U.S. ports are struggling to unload deliveries, and 
inventories are sitting on container ships in the middle of the 
ocean. A recent Goldman Sachs survey found that 61 percent of 
small business owners reported supply chain issues that have 
been getting worse over the past 3 months, and I am surprised 
that it is not higher than that.
    And so it is the responsibility of your office to assist 
small businesses in navigating the obstacles involved with 
international trade and exporting.
    So, Mr. Esparza, what is your office doing to help small 
businesses navigate these supply chain disruptions?
    Mr. ESPARZA. Thank you, Congressman.
    I was actually out in Seattle just a couple of weeks ago. 
Port Commissioner Sam Cho there is somebody who has shared with 
me the dynamics related to that particular port, and other 
ports that I have come to understand their dynamics.
    I do understand that the supply chain challenges in our 
ports around the United States are easing to a certain degree. 
That is not to say that those challenges don't still exist, but 
they are easing. The cost of a crate, the cost of storage, the 
time in and out of containers is improving.
    But nevertheless, wherever we have an opportunity to 
discuss these issues with small businesses we provide them with 
tools and training and access to capital and market access so 
that we can continue to help them on their journey, whatever 
they happen to be shipping, whether it is product. Obviously, 
the advent of digital tools helps the service side of the 
economy. But we advocate wherever we can.
    Mr. WILLIAMS. Well, advocating, again, is one thing, but 
helping is different. So I will move on. I don't feel I got a 
good answer from you there. I think you dodged it.
    Excessive amounts of red tape and administrative burdens 
can make it extremely costly and overwhelming for smaller 
businesses attempting to break into the international trade 
market.
    While the STEP program was designed to increase the number 
of small exporters, I have heard that the STEP reporting 
requirements tend to be more detailed and more burdensome 
compared to other agencies' grant programs.
    This can be very discouraging, again, to smaller businesses 
who don't have the resources. They don't have the people and 
they may not have the money to fight bureaucratic red tape.
    So, quickly, do you have a suggestion on how Congress can 
ensure that the STEP program can be made more accessible for 
small businesses?
    Mr. ESPARZA. Thank you, Congressman.
    Well, obviously, more resources would be good for us to be 
able to invest in technology platforms to help with some of 
that reporting requirement.
    I give my predecessor good credit for having changed some 
of our reporting process such that we are not collecting 50 
Excel spreadsheets from the States, but we are leveraging 
technology to be able to do so.
    We will continue to invest in that technology and improve 
those processes so that we can make the reporting requirements 
as efficient and burdenless as possible.
    Mr. WILLIAMS. All right. I yield my time back.
    Ms. HOULAHAN. The gentleman's time has expired.
    I now recognize Representative Carolyn Bourdeaux from the 
State of Georgia for her 5 minutes.
    Ms. BOURDEAUX. Thank you so much.
    And thank you, Administrator Esparza, for joining us here 
today.
    The SBA's Office of International Trade can be an important 
tool for small businesses who are looking to reach markets 
beyond the U.S. borders.
    I was very pleased to see the State of Georgia receive a 
$181,000 State Trade Expansion Program grant earlier this month 
after the Committee heard from the Georgia Department of 
Economic Development in July about the importance of this 
program to supporting small businesses.
    One of the things this Committee has heard about repeatedly 
is the need to ensure that programs like STEP and other SBA 
programs are accessible to all small business owners, including 
those who may not speak English as their first language.
    And in my district, 30 percent of the people in the 
district were born outside of this country. We have an enormous 
and vibrant immigrant community, probably a dozen or so 
chambers of commerce that are targeted at different subgroups, 
such as the Korean chamber, the Vietnamese chamber, the 
Taiwanese chamber.
    And so one question is, what are you doing to reach out to 
people who may not speak English particularly fluently but have 
these great ties? They are small business owners, have great 
ties to the community they emigrated from.
    And I guess the second part of that is, what should I 
advise them about how to take better advantage of the STEP 
program?
    Mr. ESPARZA. Thank you, Congresswoman.
    Administrator Guzman has tasked all of us in the SBA to 
make sure that we have an equity lens in all that we do. And so 
communicating where customers are, where small businesses are 
in a way that is impactful and effective for them, including 
another language, is important.
    I, myself, as a Spanish speaker, have participated in 
webinars and seminars to help assist that particular community.
    Your mention of the Korean community is important. Again, 
just a few weeks ago we had a Korean diaspora event. We 
actually believe that diaspora communities, immigrant 
communities are of particular importance to all things export-
related, not just with our STEP program, in that diaspora 
communities are predisposed to export back to countries of 
origin because they speak the language. They know the culture. 
They know the systems. They know how to get things done.
    And so our efforts in that regard not only are about 
reaching out to small businesses in the methods in which they 
communicate, but also to specifically focus on diaspora 
communities as a part of our marketing and outreach efforts to 
promote exports across the spectrum.
    Ms. BOURDEAUX. Thank you so much.
    I just want to add in closing with this is that I know we 
have a lot of concerns--I hear this in the foreign affairs 
space--about China and how China has gone to many of these 
countries and is building infrastructure and setting up 
businesses. And we have this wonderful opportunity to leverage 
our immigrant communities as ways to expand our influence not 
only to do well economically but also to make sure that we have 
a presence and show that we are deeply engaged in these 
countries around the world.
    Thank you so much, and I yield back.
    Ms. HOULAHAN. The gentlewoman yields back.
    The gentleman from the great Commonwealth of Pennsylvania, 
Mr. Dan Meuser, the Ranking Member on the Subcommittee on 
Economic Growth, Tax, and Capital Access, is now recognized for 
5 minutes.
    Mr. MEUSER. And I thank the Chairwoman very much from the 
great Commonwealth of Pennsylvania.
    Mr. Esparza, thank you for being here with us. Appreciate 
it. Your business background is helpful, I think, in these 
discussions, and it is good to hear that STEP is at its highest 
ever.
    You spend a lot of time traveling and working with small 
businesses, obviously, as I do. What they are facing today is 
maybe the most burdens they have faced. From small business, 
you have heard a hundred times, as have I, if not a thousand: 
Why did I ever get into this, right, why did I ever start this 
business?
    Now, some of those that say that after 2 years go on to be 
great, sizable employers. Some go out of business. But let's 
face it. Between the gasoline prices, utility prices, general 
cost of supplies, workforce, crime, regulations that exist, 
things have gotten that much more difficult. Fortunately, we 
continue to have an entrepreneurial spirit in America.
    But you made a comment about taxes and paying their fair 
share. Just briefly, when you are dealing with exports, it is 
not about paying your fair share. It is about being the most 
competitive. Lower taxes are lower costs, so therefore that 
would increase and improve made in the USA, right?
    The more competitive we can be here versus other countries. 
I mean, we now have a 21 percent corporate tax rate that many 
on the other side complain about, yet that is middle of the 
pack, at best. I mean, it is not even that much lower than--in 
fact, it is on the high side for manufacturing countries, large 
companies. So you know this.
    And you also understand that small businesses pay a lot 
more than that. I mean, we did have the 20 percent deduction 
from 2017, but they are still paying in the 25, 26, 27 percent 
range.
    So that doesn't give us an advantage when it comes to 
exports, right? And if you don't give an advantage to exports, 
you are giving an advantage to imports, and that largely means 
goods from China, right?
    So let's just now talk about inflation, the number one 
issue that small businesses are facing. It reduces profits, 
obviously. Reduces ability to grow. They don't add employees 
and they don't really focus on growing their business. They 
work upon survival.
    It reduces tax revenue. So they are going to be seeing that 
this year. It makes capital access more difficult, because 
banks don't want to lend if you are not making any money.
    It increases interest rates, as we are seeing being spiked. 
We are going to see it go up perhaps another point tomorrow. So 
that decreases market value, more for larger companies, but 
certainly public companies, any company. It decreases your 
value.
    And therefore it strengthens the dollar, the interest 
rates. So, as you well know, strengthening the dollar means our 
exports are a lot less attractive all over the world, again, 
assisting imports.
    So all these factors coming together make your job a little 
bit harder and make the United States' economic strength 
weaker. So we need to reverse a lot of those things.
    So on to what you have authority on. The three-step plan, 
the STEP plan, it is a three-point plan, basically, you put 
together on it. And it looks good, and I am sure you have some 
goals set for it.
    What are the goals in the----
    Mr. ESPARZA. For STEP, Congressman?
    Mr. MEUSER. Yeah, for the new bill that we will be voting 
on and I look forward to supporting. What are the goals for it?
    Mr. ESPARZA. Thank you, Congressman.
    So STEP has--of course, at the very top line we want to 
simply increase U.S. exports, period. The way that STEP does 
that, of course, is driving export sales and sustaining or 
expanding jobs.
    Below that, we look at return on investment to the program 
of any particular expense category, the degree to which we are 
engaging not only existing exporters but new-to-exporting small 
businesses, as well as the degree to which we are engaging, as 
some of the previous people asked, around underserved 
communities.
    So all of those things are things that we track.
    Mr. MEUSER. Could you give us an example of a small 
business that has benefited well from the current STEP program 
and how that may be enhanced moving forward?
    Mr. ESPARZA. Sure, Congressman.
    Again, I am out every day talking to small businesses. Our 
exporter of the year was a small brewer up in the State of 
Montana. We happened to over-index in brewers for some reason, 
but we have got our exporter of the year there, and that is 
Glacier Hops Ranch up in Montana.
    They took advantage of the STEP program and were able to 
visit trade shows, visit other countries, translate websites 
into other languages, work with wholesalers around the world. 
And their sales are booming.
    This is very common that we see these types of examples 
across the country of folks who have taken advantage of STEP to 
be able to find new markets and offset some of the costs 
associated with exporting.
    Mr. MEUSER. All right. I appreciate it.
    Madam Chair, I yield back.
    Ms. HOULAHAN. The gentleman yields back.
    The gentleman from the great State of California, 
Representative Scott Peters, is now recognized for 5 minutes.
    Mr. PETERS. Thank you, Madam Chair.
    Mr. Esparza, thanks for being with us today.
    And to Administrator Guzman, thank you for providing 
$600,000 for California for the State Trade Expansion Program, 
or STEP.
    These additional resources will help businesses in San 
Diego to become better exporters and strengthen economic growth 
in our region. So we really very much appreciate that. I also 
appreciate the Administrator's visit to San Diego just 
recently.
    SBA offers three loan programs specifically targeted to 
small business exporters, the Export Express, Export Working 
Capital, and International Trade Loan Programs. Do you have a 
sense or can you give me a sense of how many small businesses 
currently utilize these programs?
    Mr. ESPARZA. Thank you, Congressman.
    And I actually was just out in San Diego last week as well 
at the America's Small Business Development Center's 
conference. So I love being out there.
    We do just north of 500 loans a year. What we focus on 
right now--and this is unique to exporters--is our working 
capital lines of credit happen to be a much more important 
product than our term loans.
    We support all three products, of course, but we put quite 
a bit of emphasis on our working capital lines of credit 
because, given the lengthier sales cycle, cash conversion 
cycle, and all the risks that we discussed earlier around 
country risk, currency risk, buyer risk, working capital is a 
much more important tool today.
    That portfolio is expanding. We are also in the process of 
updating some of the standard operating procedures such that we 
can continue to evolve not only the one that is unique to our 
office, but in the Office of Capital Access, my sister 
organization within the SBA, to make sure that their domestic 
tool is one that can accommodate small businesses that have a 
smaller nexus relative to exporting.
    Mr. PETERS. Mr. Esparza, I guess sort of what is the plan 
to increase the use of the program? And what actions 
particularly can this Committee take to ensure that these loan 
programs will meet the needs of America's small business 
exporters?
    Mr. ESPARZA. Thank you, Congressman, because we are very 
interested in evolving the program, evolving our products to 
make sure that they fit the needs of the marketplace.
    It has been over a decade since we raised the cap on the 
spending limit or spending authority of the program. Right now, 
it is capped at $5 million. I think it is time that we relook 
at that.
    We believe one of the biggest drivers of our ability to get 
these loans out in the marketplace is expanding the lender base 
as well. There have been a number of mergers and acquisitions 
in the banking community, particularly in smaller banks, which 
is the primary--90 percent of our loans go through community 
and regional banks.
    But to the degree that they have gone through a number of 
mergers, our ability to lend through and increase the lending 
authority through all sorts of trade finance specialty banks 
and so forth are ways that we can continue to do.
    This program should be much larger than it is today. I 
readily recognize that. And we hope to work with your office 
and this Committee to continue to evolve our products and 
services.
    Mr. PETERS. On that, do you have a feel for us of where the 
sweet spot on the cap might be if it is not $5 million?
    Mr. ESPARZA. Just by the metrics, I would suggest $7.5 
million would be sort of the next raise.
    The original increase in the cap was back in 2010 from $2.5 
million to $5 million. I would propose another $2.5 million 
raise to $7.5 million if we could. But I am happy to work with 
this Committee on the specifics of that.
    Mr. PETERS. Okay.
    STEP since its inception has provided grants to over 12,000 
small businesses?
    Mr. ESPARZA. That is correct.
    Mr. PETERS. $200 million in the United States. And I want 
to know--you are going to tell me you need more resources, but 
what does that look like to get more small businesses to STEP? 
What do we have to do?
    Mr. ESPARZA. Yeah. Thank you, Congressman.
    Mr. PETERS. And, alternatively, what kind of resources 
would you be looking for?
    Mr. ESPARZA. Thank you, Congressman.
    I think one of the challenges we have is the concentration 
of the STEP awards. We don't tell the States how they can 
distribute those awards. Sometimes they cap the amount that any 
given company can get. Sometimes they have fewer participants 
with a higher amount. Sometimes they have more participants 
with a smaller amount.
    Whatever they choose to do, of course, our interest is 
maximizing the number of small businesses that participate.
    Of course, given the demand that we just saw in the recent 
application cycle, $39 million for only $20 million of 
available funds, if we had what I understand to be potentially 
$30 million in the new authorization, that of course would 
continue to drive not only as many States and territories 
participating as possible, but spread that number of--that 
amount of money throughout as many small businesses 
participating.
    Mr. PETERS. Thank you so much.
    Madam Chair, my time has expired. I yield back.
    Ms. HOULAHAN. The gentleman yields back.
    The gentlewoman, Ms. Claudia Tenney from New York, is now 
recognized for 5 minutes.
    Ms. TENNEY. Thank you, Madam Chairwoman. It is the great 
State of New York, once known as the Empire State.
    So, yeah, we do have a border with the great Commonwealth 
of Pennsylvania. Sometimes we wish we had more of your policies 
than we do in New York. We kind of call that the Berlin Wall, 
because it is tough for our small business community to compete 
right across the border with Pennsylvania.
    I am also a small business owner and involved in 
manufacturing, and it has been a passion of mine ever since I 
first ran for office. And I appreciate what you do and having a 
business background.
    But my concern is that in upstate New York and central New 
York, this is where the Erie Canal was founded. This is the 
beginning of industrialization. This is where the government 
actually invested in a project that was criticized but turned 
out to be really changing for so much of upstate New York and 
the region and our whole country. We had titans like IBM, 
Kodak, Oneida Limited, Remington, all these along the beautiful 
canal which is all in my area.
    And we would love to see more investment. And over the 
decades, we were told: Oh, we are going to be making things 
again, we are going to be investing, and that this new 
globalization was going to bring us all these great 
opportunities.
    And what we have seen is this creative destruction has 
actually not really empowered our manufacturing but sent our 
jobs overseas. And so that is the complexity that we face.
    And as we opened up our American markets to cheaper foreign 
products, we didn't invest and we didn't continue to invest in 
manufacturing and do the work that we need to invest, create, 
and cultivate these foreign markets, and I think undervaluing 
our manufacturing policy.
    And our policymakers also need to look to the business 
community to lead us away and into creating and bringing these 
jobs back. It has left us with weak and fragile supply chains. 
We learned that during the pandemic. And now this is hurting a 
lot of our producers.
    And the shortsightedness I think of this. And a lot of--
look, it was both sides of the aisle. It wasn't just--it was 
both sides.
    And that is why I did a plan for community renewal. We went 
out and asked everyone in our region and across the country: 
What do we do? And that is why I introduced the bills like Make 
in America to Sell in America Act and also the American 
Innovation and Manufacturing Act.
    And that is because I think we need to move our trade 
policy beyond just to disburse grants, which I think is great, 
but also toward a more actual comprehensive national industrial 
policy.
    How do we increase the value of our markets, bring American 
products back and reshore them?
    And I guess that is what really drives me to my first 
question for you is, is there, with your work that you are 
doing, a plan with this administration to reindustrialize and 
bring us back to making things again, helping our supply 
chains? And is that something that you are focused on, either 
with the SBA representative or with your organization?
    And sorry for my long intro there, but I think it is really 
important that we talk about getting our supply chains back 
here, especially what we have learned during the pandemic and 
what we have learned with the American workers suffering and 
our small businesses suffering at the hands of predatory 
competition like, for example, from the People's Republic of 
China.
    Mr. ESPARZA. Thank you, Congresswoman.
    Manufacturing is critical to American small businesses and 
American small businesses exporters in particular. This is 
Manufacturing Month, October is Manufacturing Month, so we are 
engaged in a number of events in that celebration.
    I will also tell you that, in addition to being very aware 
of and in support of the Made in America efforts across the 
administration and the federal government, 80 percent of the 
loans and lines of credit that I was discussing earlier with 
the Congressman from California are lent to manufacturing and 
wholesale companies.
    So while I earlier mentioned that the economy is evolving 
and the service economy and the digital economy are growing, 
there is no doubt that the small businesses that we deal with 
on a day-to-day basis are still very much rooted in the 
manufacturing base.
    And so wherever we can continue to work to advocate for 
manufacturing Made in America, American jobs, and allowing 
those manufacturing companies to export their products 
overseas, we will continue to do that.
    Ms. TENNEY. Is there an overall plan, though, to try to 
bring this--is there something--is that a priority of the 
administration to not--obviously, we would love to see more 
manufacturing. We have a lot of people that would love to go to 
work, would be great at making things, building things, and I 
think we need to focus on that with more of a comprehensive 
plan, is what we have learned.
    I mean, we are desperate for employees. I know in this 
Committee that is all we talk about, is our businesses needing 
people to come to work who can make things, across all sectors, 
whether it is high tech, whether it is lesser tech 
manufacturing. And I think that is really important.
    We tend to focus on the high tech, good shiny stuff, but 
sometimes just making great things is really important. And I 
think it could really help our economy and our competitiveness.
    So I think I am out of time. But we do appreciate your 
efforts. But it is up to the Chairwoman if you want to answer 
that quickly.
    Ms. HOULAHAN. Sure. Why don't you go ahead and answer that 
real quick?
    Mr. ESPARZA. Thank you, Congresswoman.
    So post-pandemic there was a great deal of work done in the 
administration about supply chain resiliency and onshoring and 
making sure Made in America was an important part of the safety 
and security of our supply chains. And so that, of course, has 
an enormous impact on the manufacturing base, and we absolutely 
support that in the Office of International Trade.
    Ms. TENNEY. Thank you so much.
    I yield back.
    Ms. HOULAHAN. Of course. And my apologies to the gentlelady 
from the great State, the Empire State of New York. I was 
remiss in saying that.
    The Chair now recognizes the gentlewoman, Representative 
Van Duyne, Ranking Member, Subcommittee on Oversight, 
Investigations, and Regulations, for 5 minutes.
    Ms. VAN DUYNE. And you can introduce me as coming from the 
great State of Texas, because that is what we are known for.
    Ms. HOULAHAN. From the great State of Texas.
    Ms. VAN DUYNE. The great State of Texas, which also happens 
to be the largest exporter in the country for 20 years running, 
more exports than both California and New York combined, just 
to give some context.
    Over the August recess I traveled to South Korea, Cambodia, 
and Singapore on delegations to learn more about the role that 
the U.S. is playing in Southeast Asia and trade, as well as to 
find out what the perceptions of the U.S. engagement is over 
there and how that is affecting China's influence in the 
region.
    All three of those countries could not be more different, 
yet the message that they portrayed to us was the same: A 
strong U.S. is essential to balance the power that China is 
exerting, but the U.S. is absent. And China is happy, by the 
way, to fill that void.
    It is a changing time in that region. Trade is still 
occurring with or without us. Unfortunately, since the U.S. is 
not participating, we are left with China writing the rules and 
taking ownership in the region.
    They were very clear in their messages with every single 
branch of their government that the Indo-Pacific economic 
framework that has been put out by this administration is a 
fine conversation starter, but that it lacks any teeth or 
direction.
    And I agree with them that something is better than 
nothing, but the ground that we are giving up, it is dangerous, 
and it is allowing China far too many opportunities to 
strengthen its muscle, as reflected by the Solomon Islands 
suspending all visits by not only U.S., but also by British 
ships.
    As you know, Solomon Islands is very strategic. The U.S. 
lost blood and lives fighting for it. And now China is pretty 
much demanding that we can't even land.
    Do you believe that the U.S. is doing enough when it comes 
to trade?
    Mr. ESPARZA. Well, thank you, Congresswoman.
    Trade is fundamental to driving aspects of our economy, and 
particularly for small businesses. It is an opportunity, given 
how many consumers actually live outside the United States, to 
be able to focus on trade. That is the entirety of the focus of 
my office.
    And so we work every day to make sure education, training, 
technical assistance, access to capital, access to markets are 
in every conversation that we have with small businesses.
    Our ability to advocate for small businesses across the 
U.S. trade apparatus is important in making sure small 
businesses have a seat at the table in this economy, and we 
hope to continue to do that.
    Ms. VAN DUYNE. But do you think that we could be doing 
more?
    Mr. ESPARZA. I am very optimistic. I always think we can be 
doing more in every capacity. I would love to see more free 
trade agreements.
    Anywhere that there is friction in the system that causes 
challenges for small businesses to be able to sell their goods 
overseas, we want to make sure that we have as many robust 
relationships and partnerships around the world to be able to 
provide markets for American small businesses to sell their 
products, absolutely.
    Ms. VAN DUYNE. When you say we could be doing more, do you 
think that we could be doing more to combat China?
    Mr. ESPARZA. You know, Congresswoman, I think the China 
relationship is a complex one. Trade is only one component of 
that broader geopolitical relationship.
    And as I have said earlier, wherever we see examples of 
small businesses that have interactions with the Asian market 
broadly, China in particular, and whether it is based on 
tariffs that China imposes or tariffs that we have imposed, we 
simply want to be able to communicate what the impact of those 
dynamics are for a particular small business.
    I met a small business the other day who was importing kelp 
from China to make chemicals. It is a company in North 
Carolina. And the tariffs that we place on imports from China 
were challenging to her, and she has asked for an exception for 
some of those.
    At the same time, the tariffs that China put on us can be--
--
    Ms. VAN DUYNE. Yeah, but China is actually even shutting 
down the ability for U.S. companies specifically to be able to 
import or export. I mean, they are being very discriminatory 
against U.S. companies. I mean, they told us that directly.
    But do you believe that this administration has empowered 
U.S. Trade Rep Katherine Tai, or do you think she is being held 
back?
    Mr. ESPARZA. I don't know, Congresswoman, if I am in a 
position to say that.
    I will tell you that, again, wherever we advocate for small 
businesses and can find examples, we are surely in 
communication with the U.S. Trade Rep's office and have very 
consistent and open communication with her office about those 
small businesses that we find in the export universe.
    Ms. VAN DUYNE. Do you personally believe that she is being 
empowered?
    Mr. ESPARZA. She is a Member of the Cabinet, Congresswoman, 
and I believe she has every opportunity to do her job.
    Ms. VAN DUYNE. Okay. And what is your opinion of IPEF? Do 
you believe IPEF is good for small businesses? And do you 
believe that the Congress should weigh in?
    Mr. ESPARZA. I am sorry. What was that again?
    Ms. VAN DUYNE. For the Indo-Pacific Economic Framework, do 
you think Congress should weigh in, or do you think it is a 
fine framework?
    Ms. HOULAHAN. And very quickly because the gentlewoman's 
time has expired.
    Mr. ESPARZA. Yeah. Thank you, Congresswoman.
    As that framework continues to evolve, obviously at the 
point in which anything needs to be passed, this Congress will 
have a say in that.
    Ms. VAN DUYNE. Thank you very much.
    I yield back.
    Ms. HOULAHAN. The gentlewoman from the great State of Texas 
yields back.
    The Chair now recognizes Representative Mike Flood for 5 
minutes from the great State of Nebraska.
    Mr. FLOOD. Thank you, Madam Chair.
    Thank you for your testimony today.
    One of my goals here is to ensure that Nebraska's small 
businesses are as competitive as possible in today's globalized 
economy.
    I am interested, obviously, in e-commerce, which has made a 
lot of businesses, large and small, obvious exporters. We need 
to ensure that we are capitalizing on the doors opened by the 
internet so that our constituents can reap the rewards of the 
truly global economy.
    Associate Administrator Esparza, in your testimony you 
emphasize education is a core piece of the SBA's trade agenda. 
Can you speak to what kinds of education your Office of 
International Trade can provide?
    Mr. ESPARZA. Sure. Thank you, Congressman.
    Let me begin actually, if I may, by referring to your 
comment on e-commerce.
    One of the things that we found during the pandemic is 
that, for whatever reason, people who either were displaced 
from their jobs or chose to leave their jobs, find a new place 
to live, they didn't just sit still. These are people that 
started a side hustle, created a website, have some product, 
put up an e-commerce engine, as you referred to. And, lo and 
behold, they got an order from overseas.
    And so it might not have been on purpose. In fact, the 
Administrator calls these accidental exporters.
    Our intention in the Office of International Trade is to 
make sure that these accidental exporters become intentional 
exporters. And so part of that journey, as you referred to, is 
education, training, and technical assistance.
    And so either through our website, through our inbound 
hotline, but more importantly through outbound efforts, all of 
the Members of our staff are working very hard through 
webinars, training, one-on-one consultations to make sure that 
American small businesses have the education and training they 
need to be able to compete in the marketplace.
    Mr. FLOOD. Thank you.
    Following up on my colleague from Texas' question on China, 
China's government provides very aggressive subsidies and 
export assistance to aid their businesses.
    Can you speak to how China's aggressive and frequent 
government intervention affects American small businesses? 
Because they are out there really promoting their products. And 
where are we in comparison to that, and are they hurting us?
    Mr. ESPARZA. Thank you, Congressman.
    Any country that provides subsidies to its companies can 
potentially create an unfair marketplace. So this is, again, 
where our office, as we listen to small businesses around the 
country provide examples where this dynamic comes into play--I 
don't recall any off the top of my head--but as these examples 
of unfair trade practices, unfair competitive practices come 
into play, we make sure that we communicate those not only to 
you all in forums like this, but to the Trade Rep's office, the 
Commerce Department, throughout the trade apparatus of the 
government.
    Mr. FLOOD. I appreciate that answer.
    I am passionate about developing an economic environment 
where Nebraska businesses can take risks, and I think that is 
lacking sometimes. People don't understand that that is how we 
build wealth. Sometimes small businesses and startups fail, and 
that is part of our free market system.
    It is important that when our entrepreneurs come up with 
these ideas, good ideas and a good business plan, those 
entrepreneurs are given the opportunity to thrive.
    That is why I am co-leading H.R. 8844, along with my 
colleagues Congressman Dwight Evans, Congresswoman Marie 
Newman, and Congresswoman Young Kim. This H.R. 8844 would 
reauthorize the State Trade Expansion Program, or STEP, within 
the Small Business Administration.
    As you know, as you have testified, STEP provides funding 
to small businesses to help them develop their exports, and 
this program is very important.
    I note that the State of Nebraska funded 85 ESBC 
activities, and I am hopeful that as we go forward we can also 
see an increase in the number of fintech products that we are 
pushing.
    I looked through a lot of the different States, and I would 
like to see more fintech products being pushed around the 
globe. Can you speak to that briefly?
    Mr. ESPARZA. Sure. Thank you, Congressman. And thank you 
for the authorship of the bill.
    I also know Nebraska got 100 percent of what it has asked 
for in this STEP cycle, so I am glad Nebraska can use those 
funds to be as competitive as possible.
    Obviously, fintech is a growing part of the economy, not 
only for those products and services, but the payment networks 
that they ride on. And to the degree that we can continue to 
evolve our efforts to accommodate and celebrate that aspect of 
the developing economy, we will do so.
    In fact, the Administrator has established a Small Business 
Digital Alliance that very much focuses on the digital economy. 
There are payment networks as a part of that. And we will 
continue to work on fintech, sir.
    Mr. FLOOD. Thank you for your efforts. Thank you, sir.
    I yield back.
    Ms. HOULAHAN. The gentleman yields.
    The gentleman, Representative Dean Phillips from the great 
State of Minnesota, is now recognized for 5 minutes.
    Mr. PHILLIPS. Thank you, Madam Chair.
    And greetings, Mr. Esparza.
    As a former export manager for our business, I recognize 
how integral it is and also how challenging it is. This was 
about 25 years ago, before e-commerce, so we had to do it the 
old-fashion way. So I celebrate the STEP program in particular.
    In Minnesota, I know we are receiving $175,000 since 2017. 
STEP has generated, I think, $30 for every dollar of 
investment, which is a return on investment that I wish every 
government program could claim. So I really do celebrate it.
    I know it is a competitive application process, and I was 
hoping you could speak about what factors go into that 
consideration as you take those applications into account.
    Mr. ESPARZA. Sure. Thank you, Congressman.
    The primary factors that we take into consideration, as is 
explicitly described in the notice of funds opportunity, is not 
only primarily what the State proposes to do with that money, 
but also the secondary component of past performance.
    So the past performance is important relative to return on 
investment, relative to the number of the mix of new-to-export 
businesses, as well as existing exporters that have been 
included.
    And then the third component there is the degree to which 
underserved communities--women small business owners, veteran 
small business owners, rural small business owners--have been 
addressed in the past.
    So it is both what is being proposed to do in the future as 
well as past performance.
    Mr. PHILLIPS. Okay. And what advice would you give to small 
businesses that wish to apply? How can they best present 
themselves?
    Mr. ESPARZA. Well, any small business, of course, that 
wants to participate in the program and take advantage of these 
reimbursement funds needs to approach the State apparatus that 
manages the funds on our behalf.
    So there are 50 different versions--or 48 and 4 territories 
that are doing it this year. Every State has its own 
application process for small businesses that want to 
participate.
    So I can't speak to the uniqueness of Minnesota in this 
case, Congressman. But what I would simply tell a small 
business--assuming they know about it; part of our challenge is 
making sure we get the word out--is to contact the local State 
director for our program. All of those names and contact 
information are on our website.
    Mr. PHILLIPS. Great. Thank you.
    And I also know SBA guarantees three export loan products, 
Export Express, Export Working Capital, and International 
Trade. Can you speak to us about how those loan guarantees 
enable those programs and the efficacy of each of them?
    Mr. ESPARZA. Thank you, Congressman.
    The Office of International Trade is actually empowered to 
have a higher guarantee on the loans. So the typical loan, the 
7(a) loans that I am sure you are all familiar with that the 
SBA broadly manages, have a 75 percent guarantee. The Office of 
International Trade is authorized to have up to a 90 percent 
guarantee.
    That is largely because exporting, by definition, is more 
risky. Our small businesses, not only are they small businesses 
and therefore risky to bankers, but because they are dealing 
with different types of risks overseas--buyer risk, country 
risk, currency risk--we are authorized as such to have a higher 
guarantee.
    So our products and services are meant to be able to 
support the growth and development of the export economy, and 
we look forward to continuing to do that.
    Mr. PHILLIPS. Great.
    And since I have a little bit of time left, I like bench 
marketing and identifying best practices, and I think it is 
important that we look around the world.
    Are there any other countries that are supporting small 
businesses and their export dreams and aspirations as well as 
we do or perhaps even better?
    Mr. ESPARZA. Well, I believe America is the shining star 
and the number one export economy, and we have our processes 
and programs running well.
    I will tell you that, as a part of a variety of our free 
trade agreements, I participate in a small business dialogue 
between the U.S., Mexico, and Canada. Similarly, I am 
participating in a small business dialogue next week in Europe 
with the European Union and later this year with the U.K. We 
have already had one with the U.K.
    So we engage in these small business dialogues with other 
governments not only relative to how our free trade agreements 
are functioning, but to continue to talk with our sister 
governments and friendly partners on how we can support small 
businesses in their trade and international sales activities 
and do so in a way that is beneficial for both countries and 
both markets.
    Mr. PHILLIPS. Okay. So if we are number one in supporting 
small businesses and their export aspirations, who would be 
number two?
    Mr. ESPARZA. That is hard for me to say, Congressman. We 
have so many--in fact, we have 20 free trade agreements around 
the world, and I would look to those important partners as 
examples of countries that are working with us in a productive 
way.
    Mr. PHILLIPS. I appreciate it. Thank you.
    And I yield back.
    Ms. HOULAHAN. The gentleman yields back.
    The Chair now recognizes the gentlelady, Representative 
Young Kim, Ranking Member of the Subcommittee on Innovation, 
Entrepreneurship, and Workforce Development, from the great 
State of California, for 5 minutes.
    Ms. YOUNG KIM. Thank you, Chairwoman.
    And, Mr. Esparza, thank you so much for being with us and 
answering our questions.
    My congressional district is home to probably the top two 
largest seaports in the Western Hemisphere. The Ports of L.A., 
Ports of Long Beach, together they make up the San Pedro Port 
Complex, and they are the fifth largest in the world.
    So I do represent a very important segment in the region 
that pertains to our industry in the trade area, so I have seen 
firsthand the persistent supply chain disruptions and how it 
could impact our ability to export and hinder our country's 
ability to expand our markets abroad.
    We have as a result a golden opportunity to counter China's 
growing influence in the Indo-Pacific region. And as you know, 
we do have the Biden administration that started the Indo-
Pacific Economic Framework.
    So I wanted to ask you what type of involvement the Office 
of International Trade has had in developing that IPEF and how 
is the administration planning to increase our country's small 
business exports using the IPEF model.
    Mr. ESPARZA. Thank you, Congresswoman.
    Let me begin by saying that much of my family lives in 
southern California in your district, and so I appreciate your 
representation.
    The Indo-Pacific Economic Framework is something that this 
administration, and particularly the U.S. Trade Rep's office, 
is driving. We work very hard to make sure the voice of the 
small business owner and American small business exporters are 
heard and represented in all of the agreements and policies 
that we have relative to trade, including the Indo-Pacific 
Economic Framework.
    And so our communication with the U.S. Trade Rep's office 
and with other actors across the trade apparatus of the 
government continues to be filled with that advocacy. And you 
have every commitment on my part to continue to advocate not 
only for small businesses in southern California, but across 
the American economy.
    Ms. YOUNG KIM. As you know, IPEF is not a traditional free 
trade agreement model. So do you think this is the right model 
to support our friends and allies in the Indo-Pacific as 
China's dominance and their goal to dominate the world economy 
is becoming more apparent?
    Mr. ESPARZA. It is the model that we have chosen to pursue 
at this point. I mentioned to your colleague before, we have 20 
free trade agreements. This is a different version of that. And 
we will support the administration's effort to further those 
interests in the Asian-Pacific region.
    Ms. YOUNG KIM. Sure.
    My view is that instead of having a framework that did not 
go through the proper consideration of Congress or the trade 
promotion authority process, I would like to ask the 
administration to engage Congress on meaningful trade 
agreements in the region.
    And I know this is a step, but I would like to see our U.S. 
getting back in the CPTPP, as I have also advocated for U.S. 
TPP. We will be missing out if we don't, because China is 
getting ready to get into CPTPP, and it could be exercising its 
influence and pressuring our allies. So I just wanted to 
mention that.
    And my colleague earlier talked about H.R. 8844, the STEP 
Improvement Act. I am very proud to be one of the original 
sponsors there because, among other things, it would improve 
the implementation of a standardized application process.
    So can you tell us or our Committee here how the standard 
process could make it easier for small businesses to apply for 
the STEP program?
    Mr. ESPARZA. Thank you, Congresswoman, and thank you for 
your sponsorship of the bill. I think it is an important part 
of continuing to support American exporters around the country.
    Of course, anywhere that we can improve processes and 
standardize processes we would hope to do so. We have 
absolutely contemplated whether or not we can work with the 
States to provide one standard application for small businesses 
to apply for STEP funds.
    The challenge is that not every State authorizes every 
expensable category. Some choose not to reimburse every 
category. And that would have an impact potentially on the 
application process.
    So we will continue to research this one. Again, I am in 
very close contact with SIDO, which is the advocacy 
organization that supports many of the States in this endeavor. 
Where we can collectively come up with opportunities to 
standardize and improve processes we will absolutely do so.
    Ms. YOUNG KIM. Thank you.
    I know my time is up, even though I wanted to ask another 
question. So I yield my time back.
    Ms. HOULAHAN. The gentlewoman yields back.
    The Chair now recognizes the gentleman from Wisconsin, the 
great State of Wisconsin, Representative Scott Fitzgerald, for 
5 minutes.
    Mr. FITZGERALD. Thank you, Madam Chair.
    Thank you for being here, sir. Appreciate it.
    I want to get kind of real specific now and probably 
something that we can do some follow-up on. You mentioned in 
your testimony that OIT is an advocate for small business for 
all matters related to trade policy and trade agreements.
    And kind of this, there is a situation, I think, that is 
starting to evolve, and it is some manufacturing that has 
happened in China is actually kind of making its way as a 
secondary product into a lot of American, for the most part, 
light manufacturing.
    So I have a small business in my district, Glenroy, Inc. It 
is located in Menomonee Falls, Wisconsin. Glenroy 
manufactures--it is that real thin, flexible packaging. It is 
tin foil that is part of pharmaceuticals when you may kind of 
get access to any over-the-counter pharmaceutical for the most 
part.
    And Glenroy was recently informed by the Department of 
Commerce that it is going to initiate an investigation into 
certain aluminum foil imports that may have inputs from China, 
even though they are produced in South Korea.
    So I would think that this--you know, this is a very 
specific, I think, example of something that we think is going 
on, a little bit more widespread than that.
    So my point is there have got to be certain trade policies 
by the Biden administration that could be negatively affecting 
some of these small businesses because of the level of 
investigation. And Glenroy is a company, it has only got 250 
employees.
    But my bigger question is kind of what has been the 
involvement and kind of the back channels on making sure that 
manufacturing going on in Asia, and specifically China, how is 
that being tracked or what is the administration looking at 
when--if they are going to launch these investigations, how 
widespread are these? And what do they look like, I guess?
    Mr. ESPARZA. Well, Congressman, respectfully, is your 
question that we should be limiting the amount of China inputs 
into manufacturing or allowing them?
    Mr. FITZGERALD. Well, if there is going to be--if they are 
actually going to launch investigations or put some of these 
smaller size companies, I think, kind of through the wringer on 
this stuff, what would be--kind of what is the position on 
that, or has there been a position developed on these 
manufacturing processes? Because it seems to be happening quite 
often.
    Mr. ESPARZA. Yeah. Thank you, Congressman.
    I am personally not aware of the degree to which we are 
investigating small businesses relative to China inputs. I am 
happy to follow up with your office on that particular example 
and what we might be able to uncover.
    And more importantly, where there are these types of 
processes I think it is our role to be able to provide 
information to small businesses so that they are aware of any 
of these dynamics and can be advised as to how to either avoid 
the investigations that you are talking about or to advocate 
for themselves to continue to manufacture as they wish.
    Mr. FITZGERALD. Yeah. And it kind of adds another wrinkle 
to the whole supply chain issue that we are faced with right 
now is that I think oftentimes it is kind of thought as--I go 
back to light manufacturing, because that is what my State is 
more directly involved in.
    But I think there are some challenges here that we could 
overcome if we would be a little bit more upfront and kind of 
work towards making sure that these smaller businesses 
understand what the guardrails are, what the parameters are, 
instead of finding themselves with somebody mailing them a 
letter or contacting them directly and saying: Well, we are 
going to start kind of digging through some of these things.
    So it is something I wanted to put on your radar this 
morning and certainly will be able to forward any of the 
materials on this corporation in Menomonee Falls, too.
    Mr. ESPARZA. I appreciate that.
    And, again, the SBA typically is not in the investigation 
mode relative to sources of manufacturing. But where that might 
occur from other pieces of the government, again, we want to 
make sure that we are informing small businesses for all the 
dynamics relative to exporting. And so this might be one that 
we add to our list of things to inform small businesses about.
    Mr. FITZGERALD. Very good. Thank you very much.
    I yield back, Madam Chair.
    Ms. HOULAHAN. The gentleman yields.
    The gentleman, Representative Pete Stauber from the great 
State of Minnesota, is now recognized for 5 minutes.
    Mr. STAUBER. Well, thank you very much, Madam Chair.
    According to an analysis of President Biden's first year in 
office, this administration has issued regulations that will 
cost $201 billion of additional regulations and add 131 million 
hours in annual paperwork. That is a brutal reality for our 
small businesses.
    Bureaucratic red tape, however, has always been a 
significant hurdle for small firms looking to enter 
international trade markets.
    Mr. Esparza, in your role at the SBA, you are supposed to 
be an advocate for small business interests. How are you 
working to unwind burdensome regulations that hold small 
businesses back from participating in these international 
markets?
    Mr. ESPARZA. Thank you, Congressman.
    I think whenever we are talking with small businesses and 
we hear from them what their challenges might be, I will tell 
you that the number one challenge I hear from small businesses 
is simply how to find a buyer. They are working overseas to 
explores new markets, and they simply ask us: How do I find a 
buyer? What can I do from a market research standpoint? What 
can I do to connect with resources to help us find a buyer? 
That is number one.
    The second challenge that we hear from them is around 
access to capital. They want to make sure that in order to grow 
and develop their businesses that they have access to capital. 
And so our relationship with the private banking industry and 
the guarantees that we put on loans and lines of credit is an 
important part of that journey.
    So I hope to continue to advocate our small businesses for 
whatever their dynamics are, but those are the two things that 
we hear most from small businesses, sir.
    Mr. STAUBER. I appreciate that.
    The number one priority I hear is the rules and regulations 
that are stifling their potential growth to move into the 
international markets if they so choose.
    In your testimony you referenced the Biden-Harris 
administration's commitment to equity. Can you explain how the 
Office of International Trade considers equity during the 
grant- and loan-making process?
    Mr. ESPARZA. Yes. So thank you, Congressman.
    First and foremost, it is the communication to the 
marketplace as to the availability and the process that 
administers in this case the STEP program, I assume you are 
talking about.
    I did also mention that one of the explicit categories of 
assessment that we have in analyzing any particular application 
is the degree to which a given applicant has reached out and 
addressed and had participation from underserved communities. 
That is both minority communities, women small businesses, 
veteran small businesses, and rural small businesses. That 
equity lens is explicit and a part of the notice of funds 
opportunity.
    It is also, as I mentioned earlier, an explicit----
    Mr. STAUBER. Let me, because my time is limited, I don't 
mean to interrupt you.
    Mr. ESPARZA. Right.
    Mr. STAUBER. But are you prioritizing rural Americans in 
middle America like the ones in Minnesota's Eighth 
Congressional District?
    Mr. ESPARZA. Yes, Congressman, in the sense that, while 
your colleague from Texas pointed out that Texas is the largest 
exporter in the United States, largest exporting State, the 
rules of the STEP program actually require that the 
concentration of our awards cannot be overindexed into those 
largest States. It is very explicit.
    And so by definition we are distributing a relatively 
higher portion of those funds to nontraditionally exporting 
States or more rural States. So that is absolutely something we 
do. And it is also explicitly in the assessment criteria----
    Mr. STAUBER. Well, Mr. Esparza, what percentage of those 
funds are going to rural America, do you think?
    Mr. ESPARZA. That is a good question. I am not sure I have 
that number off the top of my head, sir, but I am happy to look 
into that.
    Mr. STAUBER. Yeah, would you look into that and give it to 
the Chair or Ranking Member? That would be great.
    Mr. ESPARZA. Sure.
    Mr. STAUBER. Madam Chair, how much time do I have? I don't 
have a timer here.
    Ms. HOULAHAN. Thirty-five seconds.
    Mr. STAUBER. Thirty-five. Okay.
    Well, I just appreciate this opportunity to be with you 
all, and I appreciate the Chair and Ranking Member bringing 
this together.
    So one of the things that we do that I wanted to get into 
was energy costs and the devastation that it is costing our 
small businesses to produce their energy to make whatever they 
are making in the industry. So that is what I am hearing as 
well, the energy costs are through the roof.
    So, Madam Chair, I yield back.
    Ms. HOULAHAN. The gentleman yields back.
    The gentleman, Andrew Garbarino, Representative Andrew 
Garbarino from the great State, the Empire State of New York, 
is now recognized for 5 minutes.
    Mr. GARBARINO. Thank you, Chairwoman, and thank you to the 
Ranking Member, for hosting this hearing. I also want to thank 
our witness for being here today.
    I want to echo some of the comments that my colleague just 
made about things I have heard from small businesses in my 
district is the red tape in being able to become an exporter. 
So I think that is something we should try to work on to make 
it easier.
    But something else I have heard from offices or small 
businesses in my district is, if they export, what is being 
done to protect their intellectual property? They are 
concerned.
    I have several manufacturers, as well as companies that I 
have spoken to that also deal with a lot of different computer 
chips and other things. What is being done by the Office of 
International Trade to help protect that innovation here and 
intellectual property?
    Mr. ESPARZA. Thank you, Congressman.
    The answer is twofold.
    Number one is where we hear those stories of challenges 
around the world where intellectual property is at risk, we 
make sure we communicate those stories not only in forums like 
this, but to the rest of the trade apparatus across the federal 
government.
    Secondarily, the ability to apply for and pay for the legal 
services to help get patent protection and other intellectual 
capital protection around the world is something that the STEP 
funds can be used for.
    So the costs associated with intellectual property 
protection, applying for patent protection, applying for other 
sources of intellectual capital protection around the world, 
the costs associated with that are an approved reimbursable 
expense category under STEP.
    Mr. GARBARINO. What about enforcement? I mean, to get the 
protection is one thing. But are these small businesses--you 
know, they can't--they are not the Intels or the Microsofts of 
the world where they have a legal team after their IP has been 
stolen. So what can be done on the enforcement end?
    Mr. ESPARZA. Yeah. Thank you, Congressman.
    The enforcement end is not one that we directly have 
authority over. I will tell you that not only do we share the 
stories when we hear them, but we also generally tend to drive 
small businesses towards those markets in which we have free 
trade agreements.
    There are 20 free trade agreements that we have around the 
world, and we know that there are increased assurances and 
levels of patent protection and intellectual property 
protection in those markets. That is where we typically drive 
most of the small businesses that we work with.
    But wherever they are trading around the world, part of our 
education, consulting, and technical assistance does discuss 
and contemplate intellectual property and other patent 
protection measures that they can take. So that is an important 
part of the journey that we have with small businesses.
    Mr. GARBARINO. All right. And I appreciate that.
    And you talked about free trade agreements that we have 
across the world.
    What is the Office of International Trade, are they taking 
any action to support trade negotiations with the U.K. or Kenya 
and other partners worldwide to get more access, to have more 
countries where we can have these trade agreements?
    Mr. ESPARZA. Absolutely. We are a hundred percent at the 
table when it comes to any free trade agreements or any trade 
policy discussions. Our ability to advocate for small 
businesses and small business owners is critical as we help to 
literally line by line edit and work on provisions in various 
agreements and various policies that contemplate impacts on 
small businesses.
    So I believe we are well represented in those discussions, 
and you have my commitment that we will continue to advocate 
vigorously for small business exporters wherever they might be 
in the United States.
    Mr. GARBARINO. Can you give an example? Like you said we go 
line by line. Can you give an example of something that the 
office has had a hand in changing one of these agreements to 
specifically help small businesses?
    Mr. ESPARZA. Sure, Congressman.
    Two recently. The national export strategy is a policy that 
is put forth across, again, the trade apparatus of the 
government. And, secondarily, the national trade and tourism 
policy also contemplates many small business provisions. And we 
were right there at the table helping to edit those documents 
line by line.
    Mr. GARBARINO. I appreciate that answer.
    I had another question, but I am down to 10 seconds, so 
definitely not enough time.
    I thank the witness.
    And I yield back.
    Ms. HOULAHAN. The gentleman yields back.
    I want to thank Associate Administrator Esparza again for 
joining us today. Your testimony has shed light on the 
importance of STEP and the actions that Congress can take to 
help this program reach its full potential.
    Today we have discussed many ways that Congress can 
optimize STEP to help more small firms. The STEP Improvement 
Act of 2022 would institute many of these changes and take the 
critical step of reauthorizing the program.
    I look forward very much to supporting the bill when it 
comes before the Committee tomorrow.
    Without objection, Members have 5 legislative days to 
submit statements and supporting materials for the record.
    And if there is no further business to come before the 
Committee, without objection, we are adjourned.
    [Whereupon, at 11:30 a.m., the Committee was adjourned.]

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