Insufficient access to finance, complex regulations, and rising transportation costs are the top barriers to exporting identified by U.S. small and medium-sized enterprises (SMEs), reports the U.S. International Trade Commission (USITC) in its report Small and Medium Sized Enterprises: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms.

The USITC, an independent, nonpartisan, factfinding federal agency, completed the report at the request of the U.S. Trade Representative.

As requested, in order to assist in the analysis of the performance of U.S. SME firms, the report compares the exporting activities of SMEs in the United States with those of SMEs in the European Union (EU). The report also describes barriers and trade costs associated with exporting, as well as strategies to reduce these barriers and costs. In addition, the report identifies the benefits to U.S. SMEs from improvements to the exporting environment resulting from free trade agreements (FTAs) and other trading arrangements.

Highlights of the report follow.

• The share of SMEs in U.S. manufacturing activity and total U.S. exports is smaller than the share of SMEs in EU manufacturing activity and exports. One reason for this is that the U.S. market is more integrated than Europe's and, as a result, the United States has larger firms.

• There is little difference between U.S. and EU agencies in granting medium- and long-term export credits; however, the United States provides a wider range of support for pre-export financing and short-term credit than is generally available in EU countries. On the other hand, SMEs from the EU appear to have access to more sources and a higher level of assistance in foreign markets than U.S SMEs do, as well as more financial support for participating in international trade.

• According to U.S. SMEs, the top barriers to exporting include: insufficient access to finance, complex and sometimes nontransparent domestic and foreign regulations, rising and unpredictable transportation costs, the small scale of SME production, tariff and nontariff barriers, time consuming foreign customs procedures, language and cultural differences, and lack of knowledge of foreign markets.

• SMEs identified numerous improvements to the exporting environment associated with U.S. FTAs and other trading arrangements, such as mutual recognition agreements, bilateral investment treaties, trade and investment framework agreements, and World Trade Organization agreements. These improvements include reduced tariffs and nontariff barriers, better market access, easier interaction with customs, trade facilitation, intellectual property protection, a more efficient and transparent regulatory environment, and stronger dispute resolution mechanisms.

• U.S. SMEs have developed a number of strategies to overcome some of the domestic and foreign barriers to exporting they identified. These include combining resources with other firms in the same industry, working with larger companies, brokers, or agents, and taking advantage of U.S. federal and state government support programs.

Small and Medium Sized Enterprises: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms (Investigation No. 332-509, USITC Publication 4169, July 2010) will be available on the USITC's Internet site at https://www.usitc.gov/publications/332/pub4169.pdf. A CD-ROM of the report may be requested by e-mailing pubrequest@usitc.gov, calling 202-205-2000, or contacting the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may also be faxed to 202-205-2104.

USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public unless they are classified by the requester for national security reasons.

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