APPENDIX G

AVAILABILITY OF STATISTICS ON PARTICIPATION OF SMALL BUSINESS IN U.S. FOREIGN TRADE, STATEMENT BY DEPARTMENT OF COMMERCE

Although it can be stated confidently that many small business firms in the United States participate in U.S. foreign trade, and to a significant degree, statistics on the number of such participating firms and the actual extent of their participation, or the magnitude of their export sales, are not available.

The Bureau of the Census, the compiling agency for U.S. foreign trade statistics, has never undertaken to tabulate export or import shipments according to the size of the exporting or importing firm. Nor has it provided for the reporting, by exporters or importers, on the export declaration and import entry forms which serve as the basis for compiling foreign trade statistics, of any information bearing on the size of the reporting firm which could be made the subject of a special tabulation. There is also a lack of other information on the statistical report forms which might be helpful as a rough indirect indication of size of firm, such as the statistical classification by industry of the export shipper or of the importing firm.

At present, therefore, there are no figures available on exports and imports by size of exporter or importer, nor are there any punchcard or other readily available statistical materials from which tabulation along such lines could be run. There is also an absence of indirect indications of size, apart, of course, from the detailed commodity composition of exports. From data on the values of various products exported some very rough impression could probably be formed of the importance of foreign sales to small business, through knowledge of the size distribution of corporations or of establishments in the industries producing export goods.

It is noteworthy that for decades past there has been widespread public interest in the comparative sizes of all firms and of all producing or operating establishments in various industries, and extensive data have been compiled and tabulated which show the relative position of small business. With respect to U.S. firms participating in export and import business, however, there has not been a similar interest in size distribution statistics.

Statistics on size-distribution data for U.S. exporting and importing firms could probably be produced, given the necessary budgetary support and the willingness of U.S. business to develop the requisite basic information and fill out Government questionnaire forms for this purpose. If the collection of such statistics were authorized, one possibility would be to circularize exporters and importers selected from export declarations and import entry forms submitted in the period or periods selected for study. Those in the sample could be sent questionnaires to secure information on the business size of the respondent or of the actual export shipper or importer where the respondent is an export broker, freight forwarder, or other intermediary. The information returned could be tabulated in useful classifications, such as size classes by number of employees or total annual sales (domestic as well as foreign), so as to reveal, as a group, small business participants in foreign trade and the volume of their foreign sales.

Such a one-shot sample study would be informative, and would involve a relative minimum of burden on the business community.

Another possibility, of very dubious merit, might be the establishment of routines of reporting by all exporters and importers, on the statistical forms they are required to file, of their business size according to one or more measures, and of tabulating data for periods to come on the distribution of exports and imports by business size of the exporter or importer. This would place on business a continuing burden to supply repetitiously information having nothing to do with the actual export or import shipments. It may be questioned whether there would be sufficient demand for the resulting statistics, or whether the facts they reveal would have sufficient usefulness to warrant continuous provision of the figures. Moreover, the tabulation of the information reported would be costly. The reporting could be confined, of course, to only a limited future period, say 1 year, although this would probably be far more difficult and expensive a way to secure the information for a limited period than the one-shot approach mentioned above. In either case, an appropriation would be required to finance the work, assuming the Bureau of the Census were to find no undue technical obstacles.

The firms actually reporting export and import shipments presumably embrace all those small business concerns which might have use for services of the Department of Commerce available to foreign traders. The directly exporting firms, however, are far outnumbered by all those businesses which benefit indirectly from foreign trade through selling materials and components which become incorporated into goods sold abroad by other firms. Manufacturers of highly fabricated products, such as power-generating machinery, tractors, etc., often have hundreds or even thousands of suppliers, very many of whom would classify as small business. This analysis of suppliers indirectly participating in foreign trade can, of course, be pushed back through earlier stages of production. Both small and large firms supplying the manufacturers of advanced products or goods ready for export sale in turn have their own suppliers, small as well as large. Through foreign sales of their business customers, small business suppliers in effect participate in, and therefore benefit from, export trade indirectly, even though they are one or more stages removed from actual export transactions.

Since exports embrace an enormous variety of materials and components produced in most U.S. commodity-producing industries, it is entirely reasonable to assume that the "indirect exporters" include an important fraction of the approximately 100,000 corporations in manufacturing (out of a total of around 130,000) having assets of less than $1 million. Probably the majority of the 100,000 such small manufacturing firms sell at least part of their output to other manufacturers or to export traders. Many of the purchasing manufacturers do some exporting, either directly through their own organizations for foreign distribution or through independent export trading firms.

To collect information on indirect exporters and their participation in foreign trade through tracing back the "input" relationships of directly exporting firms and of their suppliers would be both a difficult and a costly undertaking, and would necessarily involve great burdens on reporting business firms to secure information on size of business, industry classificaton, and perhaps other business characteristics. Interesting statistics could be forthcoming from such a project. However, from the standpoint of trade promotion, the results would be lacking in usefulness, inasmuch as foreign trade promotion services can be useful only to those U.S. producers whose products are actually directly marketable abroad.