Mr. Varghese George, President of Westex Group, Inc., Director , Small Business Exporter's Association, Washington, D.C.

Statement of Mr. Varghese George, President, Westex Group, Inc. and Director, Small Business Exporter's Association, Washington, D.C.

Testimony Before the Subcommittee on on Tax, Finance, and Exports
of the House Small Business Committee

"Do Unilateral Economic Trade Sanctions Unfairly Penalize Small Business?"

June 24, 1999

Thank you, Mr. Chairman and Members of the Sub-Committee, for the opportunity to testify. My name is Varghese Robert George and I am the President of Westex International, Inc., a Washington, D.C.-based export company since 1983. Westex International Inc. is an exporter of American equipment, machinery, and materials to clients worldwide. I am also an active member of the Small Business Exporters Association and I have been privileged to serve on the board of the organization for many years.

During the last 16 plus years of operation, Westex has been responsible for over $80 Million in exports, either as a direct exporter or as a facilitator. Westex lost approximately $25 Million in sales due to unilateral sanctions over the past few years. Likewise, members of our association may have lost billions of dollars in sales. Recently, we were forced to abandon our targeted marketing and sales operation for consumer products in a country under sanctions, primarily due to the uncertainty. In addition, we had to postpone indefinitely our plans to develop five world trade centers in Southern India, after purchasing the rights to do so and conducting several feasibility studies. The market potential for American goods and services was enormous for this project.

Speaking as the owner and operator of a small exporting business, and as a member of the Small Business Exporters Association, I am against unilateral sanctions. I would like to make the following remarks about sanctions common to the members of the Small Business Exporters Association

Unilateral sanctions adversely affect small business in terms of lost opportunities and wasted efforts and resources. All things considered, U.S. brands have the highest market recognition, and will be purchased if the price is competitive. We are only hurting ourselves by not allowing the free market to prevail in international commercial transactions.

What is perhaps more disruptive to American business interests is the stop-and-go nature of the sanctions policy. Westex has been involved in transactions in which we had to disengage mid-stream in order to comply with our government policy, at a considerable loss of time and money. European and Far East competitors were only too happy to step in and fill the vacuum caused by our departure. We are always at a disadvantage to re-enter these markets once the sanctions are lifted. Allowable U.S. exports to these countries are also at a price disadvantage, since sanctions increase transactions costs in terms of insurance coverage and credit underwriting.

Our credibility as a dependable source of supply is threatened by the sanctions. I encounter prospective clients in countries where sanctions have been lifted who are wary of working with U.S. firms.

Sanctions, to be effective and fair, require the participation of all developed countries, especially our historical allies. Competition from European and Far East companies has eroded the market share of US exports in many markets. Adding the sanctions policy to this scenario only weakens US business interests. In order to remain competitive in the global marketplace, we must refrain from declaring unilateral sanctions.

We believe America's economic well being and prosperity will very much depend on our ability to sustain and increase our exports. Any dilution of our efforts through unilateral sanctions will indeed pose a threat to our economic security now and in the future.

We, as small business exporters, must be given more opportunities, not less, by our Government to develop new markets without the threat of future disruptions by sanctions.

We believe the unilateral sanctions, prior to implementation, should be subject to comprehensive impact studies, especially on small companies like Westex. The impact of sanctions on jobs and families must be considered prior to any decision by the U.S. Government to invoke sanctions.

Thank you, Mr. Chairman, for the opportunity to present our views.

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