Testifying in front of House lawmakers on Wednesday, small business stakeholders spoke in support of free trade agreements and expressed concern about the potential impacts of recently announced U.S. tariffs.
Working with China to get its intellectual property regime in order should involve U.S. officials stressing to their Chinese counterparts the importance of IP for economic growth in bilateral negotiations—and not tariffs, Raymond Keating, chief economist for the Small Business & Entrepreneurship (SBE) Council, said during a House Small Business Committee hearing.
Keating’s written testimony describes SBE as a nonpartisan advocacy, research and training organization devoted to protecting small business and promoting entrepreneurship.
Both Keating and fellow hearing witness Charles Wetherington, president of Hanover, Md.-based physical therapy equipment manufacturer BTE Technologies, said that the United States should work with China toward a free trade agreement.
Through such a process, the United States could “constructively advance” the cause for open markets and property rights, including for IP, in China, and such an agreement would greatly expand business opportunities for small companies and workers in both nations, Keating said in written testimony.
He mentioned that U.S. goods exports to China rose by 579 percent between 2001, the year China joined the World Trade Organization, and 2017.
As of now, there are many foreign investment risks for U.S.-based exporting related to the IP regimes of other countries, witnesses indicated.
“When we started to first engage in countries, particularly [in] Asia, [like] China, we looked into IP protection. Part of the issue is…it’s difficult to navigate,” said Ken Couch, director of product management and international business development for Harrisonburg, Va.-based ComSonics, a test equipment provider for the cable TV industry. “As a small company, there’s a lot involved in, particularly, those rules.”
Couch expressed concern that if the ComSonics reached some sort IP protection agreement with the government of China, Beijing wouldn’t honor it, because as a small company, ComSonics “can’t really afford” to invest its resources in a legal department to monitor its IP protection and therefore could get “run over” by that government, he said.
“In our case, we chose to forgo it, mainly because we are in a niche market, and we felt like the chances of the IP being exploited is minimal,” Couch said.
ComSonics buys a lot of components from overseas, including electronics components from Asia, so U.S. tariffs likely would put upward pressure on business costs and hurt the U.S. company’s ability to compete globally, he said.
“In the same context, if we have to export and retaliatory tariffs are imposed on our products, that will also impede our ability to compete internationally,” Couch said.