Statement for the Congressional Record: “Maintaining American Technology Leadership”

By SBE Council at 13 January, 2026, 9:38 am

Dear Chairman Smith, Ranking Member Neal, Chairman Smith and Ranking Member Sanchez:

Entrepreneurs and small businesses are the drivers of innovation and vibrant growth across all sectors of the U.S. economy. The Small Business & Entrepreneurship Council (SBE Council) appreciates the leadership and work of the Ways and Means Committee in supporting American innovation and the critical tech sector, and exploring opportunities and challenges to provide further support through today’s hearing – “Maintaining American Innovation and Technology Leadership” – hosted by the Subcommittee on Trade.

SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For more than 30 years, SBE Council has worked to advance a range of private sector and public policy initiatives that have strengthened the ecosystem for strong startup activity and small business growth. Over the years and up to the current moment, SBE Council has supported policies that promote investment, innovation, global market access, intellectual property (IP) protections, and educational programs that help small businesses and their teams adopt new technologies that strengthen their competitiveness, and to create innovative products and services that keep America’s economy vibrant and competitive.

Since the dawn of the Internet and up through the current era where artificial intelligence (AI) is driving business decision-making and new opportunities, SBE Council has educated small business owners about the benefits of new technologies and how to use digital tools, reported on the opportunities and challenges associated with these new technologies, and supported new or modernized policy to encourage greater innovation, investment, and competition across sectors through startup activity.

The One Big Beautiful Bill included an array of investment incentives that will help innovative startups and entrepreneurs generate more tools and breakthrough technologies, while also encouraging small business owners to invest directly in new technologies that lead to greater efficiencies, productivity, revenue growth, quality job creation and growth for their firms.

The restoration of the research and development (R&D) tax credit, for example, which included added benefits and retroactivity for small businesses, is vital to helping small-innovative companies compete with larger players at home and across the globe. Access to capital via investment incentives is crucial to the origination and development of new innovations and innovative technologies generated by entrepreneurs and startups. This activity – the risk-taking of startups and small businesses – is what fuels and sustains U.S. innovative leadership. Maintaining that leadership means we must continue to focus on strengthening our startups and small businesses.

A quick snapshot of various sub-sectors reveals the dominance of small to mid-size businesses in certain innovative sectors:

Of course, innovative companies stretch across many industries. Again, small to mid-size firms are dominant across sectors, and maintaining U.S. innovation and tech leadership requires that policy must meaningfully impact these entrepreneurs and their innovative businesses.

Protecting and Strengthening IP. Dynamic entrepreneurship relies on strong intellectual property (IP) protections at home and in international markets. A strong IP framework encourages startups, and it allows entrepreneurs and small businesses to attract capital and scale their firms. It pushes innovation forward, providing entrepreneurs with confidence to capitalize on opportunities in domestic and international markets. This productive activity serves as the engine for economic growth, job creation and a better world for everyone.

The significant economic contributions that are generated through innovation spans 127 industries that depend on IP protections for their creative works, such as patents, trademarks, copyrights, and trade secrets. The U.S. IP system supports strong economic growth, accounting for $7.8 trillion in GDP. That represents 41% of total GDP and more than 47 million jobs.

Trade agreements and domestic frameworks that protect IP are beneficial for all. Thankfully America leads in protecting IP sending both a message and model for other nations that desire to become more entrepreneurial, attract investment, and grow their economies. Without enforceable IP rights, small firms face rapid imitation, forced price competition, and market displacement – by larger or foreign competitors that can scale faster and absorb losses.

Small technology businesses, for example, are uniquely vulnerable to IP theft. Software, algorithms, product designs, and digital content can be copied and distributed worldwide at minimal cost. Weak enforcement disproportionately harms small firms that lack the legal and financial resources to pursue prolonged disputes.

As noted above, IP protection underpins investment and access to capital. Venture capital, angel investors, and strategic partners routinely evaluate patents and trademarks as indicators of defensibility and long-term growth. When IP protections are uncertain or weak, capital flows away from early-stage innovation or opportunities to scale. Protecting IP is therefore not only about defending individual businesses, it is about safeguarding America’s innovation ecosystem, high-skill jobs, and leadership in emerging technologies.

The Role of Trade Agreements and Trading Partner Enforcement. Strong IP protections must be a core component of U.S. trade agreements. For small businesses, access to global markets is meaningless if their innovations can be copied, reverse-engineered, or misappropriated once they cross borders. Trade agreements that include clear, enforceable IP standards help ensure that American firms compete on innovation, not on who can copy fastest or cheapest.

Just as it is important to include strong IP protections in agreements, they must be enforced. IP commitments on paper are insufficient if trading partners do not implement them in practice. Failure to enforce IP rights – through lax administrative procedures, weak judicial remedies, or tolerance of counterfeiting and piracy – undermines U.S. competitiveness and rewards bad actors.

For innovative small businesses, delayed or denied enforcement can lead to a permanent loss of market share. Since small firms often lack the resources to navigate inconsistent or weak foreign IP systems, the failure to honor patents, trademarks, copyrights, or trade secrets, can effectively shut out these firms from markets. Robust IP chapters in trade agreements provide predictability, transparency, and legal recourse. These are critical safeguards for small businesses exporting software, hardware, digital services, and advanced technologies. Again, enforcement is key. When trading partners honor IP protections, U.S.-based small businesses are more willing to invest, hire, and expand internationally, which drives innovation and high-quality job creation at home.

USTR Special 301 Report. SBE Council is very pleased to see a renewed focus by the United States Trade Representative (USTR) on protecting American IP and reporting the unjust practices of specific countries through a revitalized Special 301 Report. During the Biden Administration, the Special 301 Report weakly defended IP and did not emphasize its value, or the rights of innovators to profit from their IP around the globe. The 2025 report – the first of this Administration – aligned with its original purpose: to raise awareness and call out unjust IP practices in specific countries, compel IP violators to improve enforcement, and reinforce the principle of IP rights and protections.

A return to vigorous IP advocacy and real enforcement among U.S. trading partners would provide a productive boost to America’s innovators and small businesses.

Protectionist Regulatory Activity by U.S. Competitors. While protectionists laws in various countries – such as the European Union’s Digital Markets Act (DMA) and Digital Services Act (DSA) – directly target America’s largest companies, the downstream effect on U.S. small businesses, tech innovation, small business suppliers, investment, and the startup ecosystem is quite harmful. SBE Council is pleased by efforts and oversight in Congress and the Trump Administration to push back on this flagrant protectionist activity. The U.S. must continue to communicate that the EU and low-growth countries and regions must confront their poor policy environments and anti-growth barriers that are harming innovation and successful startup activity and growth rather than punishing the U.S. tech sector.

Unfortunately, other nations such as Australia, Brazil, Japan and South Korea are emulating the EU’s misguided approach – a harmful trend that must be stopped in order for U.S. tech entrepreneurs and small businesses everywhere to have a shot at vibrant growth and global market access. SBE Council is pleased that many Republican House members are standing firm for American free enterprise and the market incentives that make the U.S. the best place in the world to start and grow a business.

In addition to pushing back on protectionism around the globe via the targeting of specific U.S. industries, Congress must also push back on efforts by some in the U.S. to “import” and adopt intrusive policies that will prove harmful to U.S. tech leadership. Such is the case with the DMA-styled “American Innovation and Choice Online Act,” proposed in the prior Congress and expected to reemerge in 2026.

The bill, which (wisely) was not fully acted upon by the House and Senate – not only hurts America’s leading technology platforms, but also the millions of U.S. small businesses that benefit from free or low-cost tools. Taking an EU-style approach to tech regulation here in the U.S. would not only damage our tech ecosystem and U.S. leadership across the globe, but small businesses across various sectors that have used platforms and digital tools to grow, innovate and explore new markets.

SBE Council appreciates the work of the Ways and Means Committee, Subcommittee on Trade in recognizing the importance of maintaining U.S. innovative leadership in the global marketplace. At home, lawmakers and policy leaders can work to continuously improve the policy environment by incentivizing investment and innovation, and reducing government barriers and burdens that divert capital away from productive uses.

When it comes to global matters abroad, standing firm by calling out protectionism and weak efforts on enforcing IP protections are necessary to change actions and behaviors that put U.S. firms and our economy at a competitive disadvantage. Moreover, rejecting EU-style regulation and taxes at home is critical to maintaining the policy high-ground that will hopefully move the EU and other nations to advance pro-innovation, pro-business reforms.

U.S. entrepreneurs and small businesses will benefit significantly from these focused efforts to support our business ecosystem, and we look forward to working with committee members on solutions and legislation that leverage and support the innovative spirit of America’s entrepreneurs and risk-takers.

Sincerely,

Karen Kerrigan, President & CEO