Empowering America's Small Businesses to Confront China

Empowering America's Small Businesses to Confront China
Chinatopix Via AP
Empowering America's Small Businesses to Confront China
Chinatopix Via AP
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America’s ability to rise to the challenge, from the revolution to the moon landing and beyond, defines our shared past. Time after time, the nation has met the moment because we marshaled the national resources necessary to do so. The Small Business Administration is one such example.

Created in 1953, the SBA sought to promote American small business development, recognizing the critical role small businesses serve in creating good jobs and economic dynamism, as America mobilized business investment and supply chains to compete and win the Cold War. Today, it is time to renew this mission of supporting the innovative entrepreneurs who create meaningful jobs. American small businesses face new challenges in the 21st century, and the current incarnation of the Small Business Act is ill-equipped for the task.

When the act was last reauthorized in 2000, only 41.5% of households had Internet access, and nearly all of those were using dial-up with speeds of 56k or less. In 2000, it would be six years before the iPhone’s debut; wind and solar power accounted for a fraction of a percent of our nation’s energy sources; and Americans bought fewer than 10,000 hybrid electric cars annually. It was also the year before China became a member of the World Trade Organization.

China’s accession to the WTO came with the optimistic promise of fair-market access, economic liberalization, improvement in Chinese political and human rights, and, ultimately, new export markets for American small businesses. This has not happened. Instead, China took advantage of this system and made a mockery of international trade rules, stealing American trade secrets and flooding our markets with illegitimate import competition.

America’s small businesses now face an unprecedented threat from the Chinese government and Communist Party’s systematic industrial espionage and coercion, large-scale subsidies, and sweeping obstruction of market access. In the last two decades, thousands of small manufacturers throughout the U.S. have been wiped out, with devastating effects on the small-business supply chain and availability of good work to millions of Americans.

Today, China carries out its comprehensive plan for expansion into the industries of the future at the direct expense of American jobs, businesses, and local communities. It is not a threat we can afford to ignore or simply oppose with defensive measures. Fortunately, we have options. Just as the SBA was instrumental in developing the technologies to win the Cold War and the space race, it can be the linchpin of our efforts to stay ahead of a rising China. 

When the U.S. Senate Committee on Small Business and Entrepreneurship considers a long-overdue reauthorization of the Small Business Act, we will do so with that objective in mind.  My goal in the forthcoming reauthorization is to ensure that it does just that by aligning SBA’s programs with our national interests: thriving and innovative American small businesses. By necessity, some of these programs must be modernized from 2000. To that end, the draft reauthorization will make three significant changes:

  • Replace outdated export programs with more effective policies to promote the success of innovative, high-growth small businesses in advanced manufacturing;
  • Enhance the Small Business Investment Company (SBIC) program’s ability to achieve its original goal of addressing market failures by providing patient capital for small business innovation in the physical economy; and
  • Increase federal funding for R&D available to small businesses, at no cost to the taxpayer, through reforms to the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

We will also increase access and coordination of SBA’s entrepreneurial development programs, streamline and create parity in contracting programs, and require agencies to take a harder look at how regulations affect small businesses.

In the years since 2000, China has pillaged the American economy, a pattern of exploitation we are only now seeing with clear eyes. We have an opportunity to transform the Small Business Administration into a tool that not only empowers individual- and family-owned businesses, but into one that will fortify these firms against foreign abuse and galvanize America’s economic development in the 21st century.

Rubio is chairman of the Senate Committee on Small Business and Entrepreneurship.

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