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Small and Medium Sized Enterprises (SMEs)

Small businesses are the backbone of the U.S. economy, and the primary source of jobs for Americans. Small- and medium-sized enterprises (SMEs) also account for the largest group of U.S. exporters and are a major user of imported goods.

USTR Small Business Initiative

In October 2009, USTR launched a new trade policy initiative to enable SMEs to grow their businesses and generate jobs through international trade. An agency-wide working group is ensuring that policymaking and enforcement better serve small- and medium-sized enterprises. USTR has also requested an investigation by the International Trade Commission on the role of small- and medium-sized exporters, to inform trade policy efforts.

Online Tool Highlights Tariff Benefits of Free Trade Agreements for American Small Business

In April 2011, the Office of the U.S. Trade Representative, the Commerce Department’s International Trade Administration and the Small Business Administration unveiled the online Free Trade Agreement (FTA) Tariff Tool. It can be accessed here. Small exporters now have an online resource that streamlines tariff information for 85 percent of goods going to 20 foreign markets with which the U.S. has negotiated trade agreements. This information has never before been available free of charge online in one searchable database. This tool makes it easier for small businesses to grow and prosper through exports. The website also contains an instructional video, a quick start guide, and a user’s manual.

USTR Activities Supporting SME Exporters

In January 2010, Ambassador Kirk hosted a conference on “Jobs on Main Street, Customers Around the World: A Positive Trade Agenda for US Small- and Medium-Sized Enterprises.”Ambassador Kirk spoke at the conference about how USTR is working to help small- and medium-sized businesses expand their exports in the global marketplace through a robust trade policy agenda.

Understanding SME Exporters’ Concerns and Priorities

The U.S. International Trade Commission (ITC) is conducting a series of three USTR-requested investigations to better understand how many of America’s small- and medium-sized enterprises export goods and services now, their role in generating employment and economic activity in the U.S., their performance in trade compared to SMEs in other advanced economies, and the particular barriers in foreign markets to the expansion of their trade activity that USTR can address through trade policy.

USITC SME Reports:

Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports

Small and Medium-Sized Enterprises: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms

U.S. Exports from Small and Medium-Sized Enterprises: Characteristics and Performance

Based on information obtained in these reports and on our ongoing engagement with small businesses, USTR will seek to set priorities for new trade agreements and for the implementation of existing trade agreements that are more responsive to the needs of these businesses and their workers, so that export promotion programs at other agencies have a better chance to succeed.

Ongoing USTR Assistance to Increase Small Businesses Exports

The Office of the U.S. Trade Representative is already assisting U.S. small businesses by removing barriers in the international trading system, with initiatives in the following areas:

Tariffs

High tariffs serve as added taxes on U.S. exports and imports, driving up the cost of small businesses’ products and narrowing their potential markets.

The United States is seeking across-the-board tariff reductions in the multilateral World Trade Organization (WTO) Doha Development Agenda negotiations and the elimination of tariffs on all industrial and consumer goods through bilateral trade agreements that will benefit all U.S. businesses, large and small.

Customs Facilitation

For small businesses, paperwork and inconsistency in customs policies and regulations can be as prohibitive barriers to trade.

USTR is working in the WTO to strengthen the trade rules governing customs procedures to ensure the free flow of goods and services. USTR is continuing efforts to advance ongoing complementary initiatives involving existing agreements, such as the WTO Agreement on Customs Valuation.

USTR is also working with key WTO members to ensure that technical assistance in this area is provided to increase trade and investment for all members.

Standards

Unjustified or unreasonable licensing requirements, inspections or bans can be costly and time-consuming for small businesses and can keep U.S. small business from competing in foreign markets.

USTR is working to identify such barriers to trade, including differences in standards and licensing and inspection regimes, that hinder small business exporters’ access to our trading partners’ markets.

USTR is pursuing the elimination of such non-tariff barriers to trade in the WTO, multilateral fora, and bilateral agreements.

Intellectual Property Rights

USTR is working with our trading partners to ensure that intellectual property rights (IPRs), such as patents, trademarks, and copyrights, are protected and enforced in foreign markets. USTR negotiators are keenly aware that the cost of acquiring IPRs is only worthwhile if they provide adequate protection for its holder’s intellectual property.

Learn more about U.S. government resources for protecting and enforcing IPRs in foreign markets by visiting www.stopfakes.gov.

E-Commerce and Services
For U.S. small businesses, e-commerce and the Internet can reduce transaction costs significantly, while increasing the pool of potential customers.

The United States is actively engaged in developing trade agreements that support the growth of e-commerce and the enforceability of electronic transactions.

Coordination and Outreach

As the President announced in his State of the Union address, agencies across the federal government are teaming up under the National Export Initiative to create jobs by expanding exports. USTR’s role in the National Export Initiative is reflective of our role as an agency – to tear down barriers to trade and open up new opportunities for American businesses to grow and create jobs through exports. In our efforts, USTR is partnering with the Small Business Administration (SBA), the Commerce Department, the Export-Import Bank, and others across the federal government to provide American businesses the resources and the opportunities they need to succeed.

Working with Congress and other agencies across the government, our objective is to both increase the number of small- and medium-sized businesses that export and to expand the number of markets and customers served by the SMEs that do export.

In order to better understand the key challenges that are constraining U.S. SMEs from fulfilling their export potential, we continue to reach out widely to trade associations and individual companies, from the National Association of Manufacturers, to the National Small Business Association, and to individual SMEs. And we are consulting with economists inside and outside the government, and with our interagency partners, to identify and remove barriers limiting SME exports.

Industry Trade Advisory Committees

Industry Trade Advisory Committees (ITACs) are integral links between industry and the United States government. Jointly administered by the Department of Commerce and the United States Trade Representative (USTR), ITACs provide a public-private forum to ensure that industry has a voice in formulating the trade policy of the United States.

ITAC 11, the Small and Minority Business ITAC, was chartered to incorporate priorities of small and minority businesses in formulating U.S. trade policy and to address issues of concern to small and minority businesses in trade negotiations.

Industry advisors serving on this and other ITACs provide valuable input as the Administration seeks to improve economic opportunities for America’s businesses, workers, and consumers through trade.

U.S. policy-makers rely on these trade advisors to help identify trade barriers and to provide advice on key objectives and bargaining positions for multilateral, bilateral, and regional trade negotiations, as well as other trade-related policy matters.

Transatlantic Trade and Investment Partnership (T-TIP) with the European Union

SMEs are the backbone of the American and European economies. The United States’ 30 million SMEs account for nearly two-thirds of net new private sector jobs in recent decades. SMEs that export tend to grow even faster, create more jobs, and pay higher wages than similar businesses that do not. T-TIP will enhance already strong U.S.-EU SME cooperation and help SMEs on both sides of the Atlantic seize job-supporting trade and investment opportunities.

In the European Union and the United States, small and medium-sized enterprises
(SMEs) and start-up enterprises are critical motors of growth and job creation. Ninety-nine
percent of European and U.S. companies – over 20 million companies in the
European Union and 28 million – are SMEs. In the European Union,
SMEs provide two-thirds of all private sector jobs and have a tremendous capacity to
create new employment. 85% of net new jobs between 2002 and 2010 were created
by SMEs., small businesses have provided over half of all jobs and
two-thirds of all net new jobs in recent decades. On both sides of the Atlantic, SMEs
are an important source of innovation, new products, and new services, and are already
benefitting from transatlantic trade.

U.S. International Trade Commission Releases Report on How T-TIP Will Benefit Small Businesses

Washington, D.C. – A central goal of the Transatlantic Trade and Investment Partnership (T-TIP) negotiations is enhancing the ability of small- and medium-sized enterprises (SMEs) to participate in transatlantic trade by addressing trade barriers that may have a disproportionate impact on them.

The Office of the U.S. Trade Representative (USTR) believes that U.S. trade and investment policies are made stronger when they are shaped by the broadest possible input, including from SMEs, the engines of growth of the U.S. economy.

Pursuant to a request by USTR, the United States International Trade Commission (USITC) today issued a new report entitled “Trade Barriers That U.S. Small and Medium-Sized Enterprises Perceive As Affecting Exports to the European Union.” USTR requested that USITC undertake this study as part of USTR’s effort to gather input from the public on the ongoing T-TIP negotiations.

Over the past six months, the USITC, USTR, the U.S. Small Business Administration (SBA), and the U.S. Department of Commerce worked together to convene 28 small business roundtables in cities around the United States, in addition to a hearing held in Washington, D.C., to hear directly from small businesses about barriers to exporting to the European Union (EU). The USITC report identifies cross-cutting and industry-specific barriers that U.S. small businesses have identified as disproportionately burdensome to them, compared to large companies, and also includes suggestions for increasing participation by U.S. SMEs in trade with the EU.

Ambassador Michael Froman welcomed the report, stating that “Small businesses are the backbone of economic growth, job creation, and a stronger middle class in communities across America. Nearly 95,000 U.S. small businesses export to the EU, sustaining good jobs at home. Tackling trade barriers in the EU that may disproportionately affect small businesses, and expanding market access for U.S. firms of all sizes through T-TIP, will help U.S. companies, farmers, and workers unlock opportunity by finding new European customers and boost job growth.”

The EU is an important export destination for U.S. SMEs. SME merchandise exports to the EU totaled $67 billion in 2010 and $76 billion in 2011 (latest available data). However, many SMEs reported that EU technical regulations and other trade barriers limit their ability to export, and they expressed concern that standards-related measures may pose a greater burden on SMEs seeking to export to the EU than on larger companies. While complying with standards, technical regulations, and conformity assessment procedures can be costly for larger firms, it is potentially prohibitive for SMEs because many costs are fixed, regardless of a firm’s size or revenue. Small businesses also cited difficulties involving patenting costs, logistics challenges, difficulties navigating customs requirements, and differing tariff classifications for products. SMEs also perceived that tariffs affected them disproportionately, in contrast to large firms.

Small businesses also reported industry-specific barriers in chemicals, cosmetics, biofuels, emerging technology products, machinery, electronics, and apparel. For example, SMEs producing machinery, electronic, transportation, and other goods cited a lack of harmonized international standards and mutual recognition for conformity assessment, as well as problems complying with technical regulations and conformity assessment procedures. Agriculture SMEs reported a range of export barriers, including high tariffs, inconsistent EU rules and testing mandates, non-science-based regulations, and a lack of harmonization between U.S. and EU standards. U.S. services SMEs in the healthcare, engineering, testing, and audiovisual industries highlighted the lack of mutual recognition of licensing, credentials, and standards, as well as other issues. In the T-TIP negotiations, the United States and the EU aim to make their approaches to regulations and standards more open, transparent, and compatible while maintaining high levels of consumer, environmental, and labor protection.



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  • Article Name: Small and Medium Enterprises
  • Author: Marcia Walek
  • Description: Small and Medium Sized Enterprises (SMEs) Small businesses are the backbone of the U.S. economy, and the primary source of [...]

This entry was last updated: March 25, 2017

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