Jan 16, 2014 - 4:30pm

Trade Agreements Are Essential to My Small Business


Director of International Business

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Elena Stegemann, director of International Business at NuStep Inc., in Ann Arbor, Michigan, is photographed immediately after her testimony on trade promotion authority legislation before the Senate Finance Committee. Photo: Ian Wagreich

If members of Congress want to do a service for their Main Street constituents, they need to start thinking globally. By that, I mean creating more opportunities for small businesses to sell their goods and services beyond our borders, where 95% of the world’s customers reside.

My employer, NuStep, Inc., located in Ann Arbor, Michigan, has experienced tremendous growth due in large part to our expanded presence in the global marketplace. We manufacture recumbent cross trainers for users who are unable to access regular exercise equipment due to injury, medical conditions, or other physical limitations. In 2009, our owner and CEO Dick Sarns decided that international expansion would be a good way to combat the recession-fueled decline in domestic sales.

Our first significant inroads into foreign markets came about through our participation in the U.S. Commercial Service’s CEO program, which enables newly exporting small companies to have a presence at the world’s biggest medical tradeshow, Medica, for a very reasonable cost. Our conversations with companies there in 2009 led to the eventual implementation of distributor agreements in several important European countries.

Since then, our international sales have almost quadrupled, currently accounting for nearly 20% of our unit sales. The number of NuStep employees has jumped from 50 in 2009 to nearly 100 today—20 of whom are involved in our international business. Asia is our largest export market, with containers full of our U.S.-made products being shipped to Japan and China. Europe and Canada are our next largest markets.

Small companies like NuStep don’t expect guaranteed success when competing overseas. We simply expect a level playing field where the prevailing trade rules don’t put us at a disadvantage. That is made possible through free trade agreements (FTAs).

U.S. businesses thrive in countries with which the U.S. has a free trade agreement. Nearly half of U.S. exports go to countries with which the United States has FTAs, even though those countries represent only 10% of global GDP. By tearing down foreign barriers to U.S. products, these agreements have a proven ability to make big markets even out of small economies.

The U.S., however, cannot enter into new trade agreements until Congress renews Trade Promotion Authority (TPA). TPA allows Congress to set negotiating objectives for new trade pacts, requires the executive branch to consult extensively with Congress during negotiations, and gives Congress the final say on any trade agreement in the form of an up-or-down vote. In short, TPA requires Congress and the administration to work together. I’m not from Washington, but that sounds like common sense to me.

With TPA in hand, the administration should move quickly to complete the Trans-Pacific Partnership (TPP). Over the past two decades, the booming Asia-Pacific region’s middle class grew by 2 billion people, and its spending power is greater than ever.

U.S. businesses and workers need better access to those lucrative markets. In addition to eliminating tariffs, the TPP could eventually make it easier for NuStep to comply with regulatory requirements in important markets including Australia, Canada, Japan, and Singapore. Countries would be encouraged to avoid radically different approaches to regulation whenever possible, freeing up resources that we must spend to comply with divergent regulatory standards.

Increased trade with Europe should be another priority. As strong as the EU-U.S. economic relationship is— total U.S.-EU commerce tops $6.5 trillion annually and employs 15 million Americans and Europeans—there is ample room for improvement.

The Trans-Atlantic Trade and Investment Partnership (TTIP) will take America’s trade with Europe to the next level. The flow of trade with the EU is so large that eliminating even today’s relatively modest barriers could bring big benefits.

At NuStep, we are proud that our products are gaining popularity in such markets as Germany, where consumers have very high standards and where we face intense competition. But U.S. firms incur significant costs complying with both U.S. and European regulations, even those that are similar.

For example, U.S. automakers run crash tests to comply with U.S. safety regulations but must do so a second time to comply with EU standards—and vice versa. Mutual recognition of these regulations would save consumers up to 7% on each car or truck and enhance the global competitiveness of U.S. and European companies.

The trans-Pacific and trans-Atlantic trade agreements represent a once in a lifetime opportunity to tear down the walls that have shut American goods and services out of foreign markets for so long. We need to seize this opportunity with both hands. And it starts with Congress renewing TPA.

 

About the Author

About the Author

Director of International Business

Elena M. Stegemann is Director of International Business at NuStep, Inc., of Ann Arbor, Michigan