From the July 2005 issue of Entrepreneur

In recent years, the U.S. has run record trade deficits. Both political parties made trade, foreign competition and outsourcing key issues in the November 2004 elections, even charging that some foreign nations, such as China, were not following free trade deals, dumping products onto the U.S. market.

That trade has been a key political issue is hardly surprising: As free trade has expanded, competing in a global environment has become increasingly important to small businesses. And Entrepreneur's "Point/Counterpoint" team, veteran New York Democratic congresswoman Nydia Velázquez and young Arizona Republican congressman Rick Renzi, are battling for the interests of U.S. small companies.

Entrepreneur: What, if anything, do you think the broad role of Congress should be in helping entrepreneurs deal with international competition?

Rep. Velázquez: For small businesses to be able to work in an international environment, they must have access to trade export assistance. Unfortunately, the fiscal year 2006 budget request [submitted by President Bush] cuts vital funding.

Rep. Renzi: Congress should support retraining programs for workers who lose their jobs from international competition. The SBA [should increase efforts] to go to the ground and work with local community colleges to do training for these guys.

What specific government programs do you think are most effective in helping entrepreneurs handle foreign competition?

Velázquez: The SBA's U.S. Export Assistance Centers [which provide exporting advice to small companies in many U.S. cities]. But they were cut by $1.5 million in the 2006 budget. The Overseas Private Investment Corporation, which provides project financing for U.S. businesses in 144 developing countries, [is also effective].

Renzi: What the SBA can do with community colleges or military veterans, they can [do with] people who have lost jobs through trade--in manufacturing, for example--and are trying to make the transition to [owning] their own small business. They need help learning how to open a business and how to get capital from a local bank. But the SBA's budget [is lean]--when you talk about vocational training, we're not doing enough for these guys. I push back against my party on the SBA budget.

Which countries, if any, are entrepreneurs in your district most worried about as far as competition? What specific remedies do people in these industries expect from Congress?

Velázquez: The area of most concern is the manufacturing subassembly, which now takes place mostly in Mexico and China. As this phase of assembly continues to take place abroad, competition [increases among] manufacturers here.

We do have to get foreign countries to truly abide by these trade agreements [such as not dumping goods]. Many countries are not living up to these requirements. We should be working toward creating a more level playing field so that all small-business exporters have the tools they need to successfully compete, and goods and services included in the trade agreement [must] cover those industries that our nation's small businesses participate in.

Renzi: In the free trade agreements, you've got to find ways to protect fragile U.S. industries from short-term unfair trade competition. Small U.S. manufacturing is particularly fragile because if you look at the labor costs, our labor costs are lower in Arizona than in some other states, but they still don't compare to China, so in our state, small manufacturers are going out of business. And China is trying to dump products below cost into the U.S., to drive U.S. companies out of markets, so Congress needs to push the World Trade Organization to closely scrutinize Chinese trade.


Joshua Kurlantizick is a writer in Washington, D.C.