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Now: Rubio Chairs Hearing on the Coronavirus and America’s Small Business Supply Chain

Mar 12, 2020 | Press Releases

Washington D.C. — U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, has convened a hearing titled “The Coronavirus and America’s Small Business Supply Chain.”
 
The hearing is live streamed on the committee’s website here.
 
Chairman Rubio’s opening remarks as prepared can be found below:
 
Rubio: “I want to thank you all for being here, and extend a welcome to our witnesses. 
 
“Today’s hearing is about the spread of the novel coronavirus and its impact on America’s small business supply chain.
 
“Our immediate priority should be to help small businesses and the families who rely on the jobs they provide weather this outbreak and fight the disease.
 
“To this end, we have already included some funding for the Small Business Administration Economic Injury Disaster Loans in the supplemental bill passed last week.
 
“I am also working directly with President Trump and his Administration, Ranking Member Cardin and the members of this Committee, and members of the House Small Business Committee to expand relief to small businesses during this time.
 
“I am hopeful that together — with bipartisan and bicameral support — we can help small businesses outlast this pandemic and take care of their employees.
 
“Today’s hearing will help frame that effort.

“The spread of the coronavirus and its effect on small businesses occurs against a structural backdrop.

“The backdrop is that our economy is dangerously reliant on China for the production of critical goods, including goods and technologies needed to fight the coronavirus.

“This would have been an important subject even if the coronavirus had been contained in China, but unfortunately, China’s failure to contain it – and the Chinese Communist Party’s willful attempts to cover up its existence — means the vulnerability of America’s supply chain is of even graver consequence.

“We rely on China for far more goods than we know, and we are beginning to realize this now.

“According to a compilation of filings to the U.S. Trade Representative produced by the American Economic Liberties Project, American businesses rely on China as the sole supplier for a broad swath of goods, including: surgical materials, hospital robot components, basic chemicals, solar panels, electric motor engines, flat panel televisions, air conditioning components, thermometers, and countless more.

“According to the U.S. Census Bureau, last year, China accounted for 88 percent of electric hand drill and saw imports, 87 percent of air conditioning machinery imports, 83 percent of hydraulic jacks and hoists, 72 percent for cell phones and parts, 58 percent of fork lifts, and 51 percent of lithium ion batteries.

“We will hear from our witnesses today how for some medical goods, we are almost totally reliant on China.

“As a result of this extreme reliance on China, the spread of the coronavirus began hurting American small businesses even before it hit our shores.

“More than 40 percent of manufacturers in the American heartland have already reported supply chain disruptions.

“The Food and Drug Administration has announced the first shortage of an essential drug.

“Our assistance to small businesses during this time must consider this structural reality.

“Ultimately, the way to both fight the virus most effectively and keep the economy from falling into recession is to ensure that our small business supply chain is strong enough to produce the goods and services that Americans need.

“First, there is the immediate consequence of not having the capacity to produce the essentials here at home.

“Small businesses are going to experience a good deal of economic pain as the spread of the coronavirus reduces consumer activity.

“But within this economic contraction, there is going to be increased demand for medical supplies, surgical masks and pharmaceutical drugs.

“The problem is that our small business supply chain in these critical sectors has been weakened by two decades of off-shoring our productive capacity in these goods to China.

“The absence of domestic businesses that can ramp up production to meet demand for these critical goods limits our ability to mitigate the worst effects of the spread of the virus.

“The absence of a domestic supply of these goods means the spread of the virus will be worse, and its effects felt more sharply.

“We are already seeing this. 

“One of the reasons why we have struggled to produce testing kits is that we rely on foreign producers for the chemicals needed to make them, and there has been a shortage.

“The absence of productive capacity will also have economic consequences for small businesses.

“Short-term loans to keep businesses from going bankrupt, and tax measures to help consumers pay the bills will be necessary, but they are alone not sufficient.

“The economy grows when businesses invest. If businesses are not investing during this period, as many of them will not be able to, we are going to have a serious economic contraction, maybe even a recession.

“We will get through the pandemic and discover an economic downfall on the other side.

“So for designing any economic stimulus, we need to consider getting capital in the hands of the businesses that are most likely to spend it.

“The growth sector in our economy should be the small business supply chain, which is seeing increased demand now due to the effects of the virus on foreign suppliers and the need for all sorts of goods to mitigate the virus.

“Second, there are the long-run consequences of vulnerability to China.

“Our reliance on China wasn’t some accidental byproduct of globalization.

“It is the outcome of a deliberate strategy by the Chinese Communist Party, which made biomedicine and high-end medical equipment a priority of its “Made in China 2025” plan.

“The plan put in writing what had long been practiced by Beijing:  further encouraging its domestic companies’ predatory practices while providing short-term bargains for foreign companies’ presence in China.

“For years, China has enticed American multinational corporations with access to its markets in exchange for off-shoring and sharing intellectual property.

“Americans watched as Beijing captured critical portions of global supply chains, including in pharmaceutical drugs and medical equipment.

“Today, up to 80 percent of the active pharmaceutical ingredients in American drugs are sourced abroad.

“Now, in the face of a pandemic, the absence of domestic capacity in critical medical sectors has critically endangered both the U.S. health care system and our economy.

“The inability to quickly increase the production of key supplies, such as surgical masks, medical gowns, and pharmaceutical drugs limits our ability to mitigate the worst effects of disease in this emerging crisis and in any future pandemic.

“It is unacceptable that China holds this much leverage over America’s public health and economy, which are both essential components of our national security.

“The time to take back our ability to make these critical goods is right now.

“Global supply chains have been thrown into flux due by the spread of the coronavirus.

“We need to be empowering small businesses to bring their production of critical goods in-house, and getting American multinationals to buy domestically.

“This is good for our public health, economy, and national security.

“I look forward to hearing from our witnesses about where and how we most need to achieve this.

“The spread of the coronavirus and its effect on small businesses occurs against a structural backdrop.

“The backdrop is that our economy is dangerously reliant on China for the production of critical goods, including goods and technologies needed to fight the coronavirus.

“This would have been an important subject even if the coronavirus had been contained in China, but unfortunately, China’s failure to contain it – and the Chinese Communist Party’s willful attempts to cover up its existence — means the vulnerability of America’s supply chain is of even graver consequence.

“We rely on China for far more goods than we know, and we are beginning to realize this now.

“According to a compilation of filings to the U.S. Trade Representative produced by the American Economic Liberties Project, American businesses rely on China as the sole supplier for a broad swath of goods, including: surgical materials, hospital robot components, basic chemicals, solar panels, electric motor engines, flat panel televisions, air conditioning components, thermometers, and countless more.

“According to the U.S. Census Bureau, last year, China accounted for 88 percent of electric hand drill and saw imports, 87 percent of air conditioning machinery imports, 83 percent of hydraulic jacks and hoists, 72 percent for cell phones and parts, 58 percent of fork lifts, and 51 percent of lithium ion batteries.

“We will hear from our witnesses today how for some medical goods, we are almost totally reliant on China.

“As a result of this extreme reliance on China, the spread of the coronavirus began hurting American small businesses even before it hit our shores.

“More than 40 percent of manufacturers in the American heartland have already reported supply chain disruptions.

“The Food and Drug Administration has announced the first shortage of an essential drug.

“Our assistance to small businesses during this time must consider this structural reality.

“Ultimately, the way to both fight the virus most effectively and keep the economy from falling into recession is to ensure that our small business supply chain is strong enough to produce the goods and services that Americans need.

“First, there is the immediate consequence of not having the capacity to produce the essentials here at home.

“Small businesses are going to experience a good deal of economic pain as the spread of the coronavirus reduces consumer activity.

“But within this economic contraction, there is going to be increased demand for medical supplies, surgical masks and pharmaceutical drugs.

“The problem is that our small business supply chain in these critical sectors has been weakened by two decades of off-shoring our productive capacity in these goods to China.

“The absence of domestic businesses that can ramp up production to meet demand for these critical goods limits our ability to mitigate the worst effects of the spread of the virus.

“The absence of a domestic supply of these goods means the spread of the virus will be worse, and its effects felt more sharply.

“We are already seeing this. One of the reasons why we have struggled to produce testing kits is that we rely on foreign producers for the chemicals needed to make them, and there has been a shortage.

“The absence of productive capacity will also have economic consequences for small businesses.

“Short-term loans to keep businesses from going bankrupt, and tax measures to help consumers pay the bills will be necessary, but they are alone not sufficient.

“The economy grows when businesses invest. If businesses are not investing during this period, as many of them will not be able to, we are going to have a serious economic contraction, maybe even a recession.

“We will get through the pandemic and discover an economic downfall on the other side.

“So for designing any economic stimulus, we need to consider getting capital in the hands of the businesses that are most likely to spend it.

“The growth sector in our economy should be the small business supply chain, which is seeing increased demand now due to the effects of the virus on foreign suppliers and the need for all sorts of goods to mitigate the virus.

“Second, there are the long-run consequences of vulnerability to China.

“Our reliance on China wasn’t some accidental byproduct of globalization.

“It is the outcome of a deliberate strategy by the Chinese Communist Party, which made biomedicine and high-end medical equipment a priority of its “Made in China 2025” plan.

“The plan put in writing what had long been practiced by Beijing:  further encouraging its domestic companies’ predatory practices while providing short-term bargains for foreign companies’ presence in China.

“For years, China has enticed American multinational corporations with access to its markets in exchange for off-shoring and sharing intellectual property.

“Americans watched as Beijing captured critical portions of global supply chains, including in pharmaceutical drugs and medical equipment.

“Today, up to 80 percent of the active pharmaceutical ingredients in American drugs are sourced abroad.

“Now, in the face of a pandemic, the absence of domestic capacity in critical medical sectors has critically endangered both the U.S. health care system and our economy.

“The inability to quickly increase the production of key supplies, such as surgical masks, medical gowns, and pharmaceutical drugs limits our ability to mitigate the worst effects of disease in this emerging crisis and in any future pandemic.

“It is unacceptable that China holds this much leverage over America’s public health and economy, which are both essential components of our national security.

“The time to take back our ability to make these critical goods is right now.

“Global supply chains have been thrown into flux due by the spread of the coronavirus.

“We need to be empowering small businesses to bring their production of critical goods in-house, and getting American multinationals to buy domestically.

“This is good for our public health, economy, and national security.

“I look forward to hearing from our witnesses about where and how we most need to achieve this.”