Raw Deals for Small Businesses: U.S. Small Firms Have Endured Slow and Declining Exports under “Free Trade” Deals

By Public Citizen's Global Trade Watch

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Large corporations pushing for the Trans-Pacific Partnership (TPP) and Trans-Atlantic Free Trade Agreement (TAFTA), two sweeping deals under negotiation that would expand the status quo trade model, have created a new sales pitch: these controversial pacts would be a gift not primarily to them, but to small businesses. The Obama administration has made similar claims that these pacts would help U.S. small firms boost exports, often on the basis that small and
medium enterprises (SMEs) comprise most U.S. exporters.

But SMEs comprise most U.S. exporting firms simply because they constitute 99.7 percent of U.S. firms overall. The more relevant questions are what share of SMEs actually depend on exports for their success, and for those that actually do export, how have they fared under the “free trade” agreements (FTAs) serving as a model for the TPP and TAFTA?

Only 3 percent of U.S. SMEs (firms with fewer than 500 employees) export any good to any country. In contrast, 38 percent of large U.S. firms (with more than 500 employees) are exporters. Even if FTAs actually succeeded in boosting exports, which government data show they do not, exporting is primarily the domain of large corporations, not small businesses.