Interests of Small Firms Lost in the International-Trade Shuffle

With the World Trade Organization set to hold its first U.S. meeting this year, federal trade officials did what bureaucrats always do to prepare for a big powwow. They held public hearings.

Five were held across the country in advance of the biggest trade event ever in this country, including Los Angeles hearings Monday and Tuesday.

The idea was to sound out businesses, labor, communities and individuals on trade issues. From this input, federal officials plan to push for changes in trade policy during the WTO meeting Nov. 30 through Dec. 3 in Seattle and later during official trade negotiations in Geneva, where the WTO is headquartered.

Heady and important stuff.

Yet the proverbial cannonball could have been shot through the central library’s Mark Taper Auditorium, where the hearings were held. Obscure local poets have drawn bigger crowds than came to give comment before the five high-level trade officials.

As one trade consultant who didn’t attend said, “The WTO deals with governments and corporations. I don’t think it looks to the smaller guys. It’s looking at a perspective so large, they don’t even realize we exist.”

It’s an unfortunate yet probably accurate perception. Although the WTO is composed of 135 countries that control 90% of global commerce, it has no subgroup dedicated to SMEs, or small-to-medium-sized enterprises, as they are called in government parlance.

Yet small firms make up 90% of U.S. exporters and probably a similar percentage globally. Although small exporters represent only 30% of U.S. merchandise export revenue, that figure continues to grow.

In addition, many small companies may be indirect exporters, selling products and services domestically as outsource suppliers to large corporations that in turn export finished products. In this way, small companies make up an invisible exporter network that is also affected by changes in trade policy.

Some international trade negotiating groups have included small companies. For example, the Trans-Atlantic Business Dialogue, or TABD, which includes about 100 U.S. and European chief executives, contains a permanent SME working group, said Janet Wells, a Cerritos manufacturer who headed it for four years.

“Often, small companies and large corporations have similar export problems, but it costs small companies more money and they don’t have resources in terms of money and people,” Wells said.

Wells, along with Candace Chen, a Los Angeles manufacturer who now heads the TABD-SME group, and Corinne Murat of the Los Angeles Area Chamber of Commerce, who spoke at the WTO hearing Monday, outlined issues facing small exporters that need to be addressed, if not by the WTO, then by other negotiating bodies.

* Metric-only labeling: Currently, U.S. products sold in Europe are required to carry both metric system and inch-pound labeling. But the European Union is pressing for metric-only labeling. U.S. manufacturers would have to double-package all their products, some with metric-only labels and others with inch-pound, requiring double-warehousing, Wells said. Postponement of the law for 10 years has been proposed.

* Safety standards and certification: The CE safety mark required in many European countries is the equivalent of Underwriters Laboratories approval in the United States, which is not recognized abroad. U.S. products or machines must go through a second certification process that can involve an entire redesign of the product sold. For example, Wells, who sells heat-transfer machines for apparel makers, lost business while she spent more than $12,000 to get approvals and redesign one of her machines. Ultimately, she had to redesign all 12 of the machines she sells and now has two versions, the UL- and CE-certified. A reciprocal agreement would aid small businesses in particular, she said.

* Exporters association for SMEs: Small companies often lack an in-house attorney or trade expert and aren’t aware of changing trade policies. For that reason, an SME network should be established by either the Department of Commerce or the Office of the Trade Representative.

* Euros: Touted as making exporting easier for small companies, the euro could actually harm small companies because the European currency partners will be able to trade from one country to another without money-conversion fees while U.S. firms have to convert dollars to euros, Wells said.

* Intellectual-property rights: If a company in another country copies a U.S. product or technology, violating a trademark or patent, the only recourse is legal. But small companies often lack the money to pursue this option. In the case of stolen technology, once it’s copied, demand can dry up and the business may be forced to close.

These are just a few of the trade issues that affect small businesses. Firms that want to inform the WTO of others should send written comments to Gloria Blue, Executive Secretary of the Trade Policy Staff Committee, Room 122, Office of the U.S. Trade Representative, 600 17th St. N.W., Washington 20508 or send e-mail to [email protected].

Small firms needing help with trade problems should contact a local export-assistance office, call (202) 482-5767 or go to https://www.mac.doc.gov/tcc.

*

Times staff writer Vicki Torres can be reached at (213) 237-6553 or [email protected].