''TIME OUT!'' Proposed for State Trade Legislation
Comprehensive plan for California trade promotion strategy outlined
SACRAMENTO - 03/19/04 - California Governor Arnold Schwarzenegger should immediately request that the State Senate and Assembly "refrain from enacting any international trade-related measures during the current session," according to a proposal being circulated among selected government agencies and members of the state legislature.
"It's crucial that the Legislature take a 'time out' to study the state's existing trade situation and take considered, appropriate action," said Jock O'Connell, a global business analyst and principal in the Sacramento-based Clark Street Group international trade consultancy.
There are currently more than 20 pieces of legislation in both the Senate and the Assembly covering a broad range of trade-related activities including resurrecting the state's now-shuttered overseas trade offices, outsourcing, tourism, food labeling, re-establishing an export finance program for small and mid-sized businesses, terminal operations at the ports of Los Angeles and Long Beach, and maritime security.?
The proposal "is the result of an ongoing dialogue with state legislators, the leadership of the Business, Transportation and Housing Agency, the California Council for International Trade, and a significant number of individuals active in California's international trade community," he said.
According to O'Connell, who drafted the proposal, it's important for the Legislature to enact a moratorium "on any international trade-related measures'that would anticipate the outcome of a comprehensive assessment of the policies and programs needed to promote California's competitiveness in the global economy."
The Governor, he wrote, "should establish an International Trade Policy Task Force chaired by the Secretary of Business, Transportation and Housing Agency [BTH]."
The BTH, headed by Sunne Wright McPeak - former head of the Bay Area Council who was named to head the state agency by Governor Schwarzenegger last November - is responsible for the oversight of the few state-directed trade-related functions that survived last fall's defunding of the now-defunct Technology, Trade & Commerce Agency.
The function of the proposed task force, O'Connell said, "would be to define state government's most effective role in advancing California's competitiveness in the global economy."
"The task force would further identify the specific policies and programs which should be implemented if state government is to successfully assume that role," he said.
The task force, he proposes, should include "bona fide" representatives of California's international business community, university specialists on trade policy and economics, experts on transportation and logistical matters, and local economic development authorities.
The Secretary of BTH "would be authorized to solicit non-state funds to support the task force's activities, including outreach and targeted research."
The task force would report its findings to the Governor and the Legislature by December 31, 2004.
According to O'Connell, the task force should examine whether the state ought to establish a permanent and politically independent World Trade Commission to provide on-going advice and counsel on adapting state government policies and programs to changing circumstances in the global economy."
Careful consideration, he wrote, "should be given on how best to insulate the commission from the political misuse that had severely compromised the recently abolished California State World Trade Commission."
The task force, he said, should "primarily strive to understand how international business is actually conducted, not how it is imagined to work by elected officials and government authorities with no professional experience in the field of global commerce."
For example, the task force might conclude that, while the state's seaports play a prominent role in foreign trade, most of California's export trade actually moves by air.
"The competitiveness of California industry in the global economy is more likely to depend on the steps state and local governments take to provide for the efficient operations of the state's airports than on what is done to facilitate cargo movements through its seaports," he said.
Likewise, he adds, the task force "might also observe that a substantial portion of all cross-border trade involves the movement of goods among related parties and that, for many smaller companies, cracking into the existing supply-chains of US-based multinationals is often a more effective path to international trade than hunting for customers overseas."
In a similar vein, the task force might consider the actual methods multinational corporations employ when evaluating foreign direct investment options, the proposal states.
Such an inquiry "might reveal the fallacy of believing that state foreign trade offices might play an important role in attracting foreign direct investment to a specific state."
The task force "might also distinguish between the provision of services on a 'wholesale' as opposed to a 'retail' basis.
Past trade development activities, O'Connell said, "often placed state trade officials in the mode of providing advisory or assistance services directly to specific 'clients.'"
In doing so, he wrote, "the state paid little attention to a wide variety of similar assistance programs available from other governmental entities, educational institutions, and volunteer organizations" - what he calls "partner" groups.
O'Connell proposes the task force "investigate whether state government should seek more to coordinate a wide range of existing services provided by such "partner" groups than to re-establish the old hands-on approach to state export promotion."
Ample consideration, he said, "should also be given by the task force to the importance of incorporating into the state's K-12 system curriculum components addressing issues of globalization, including global economic integration."
A particular effort to "devise a mechanism for identifying how and where California's interests in international trade differ from those of the nation and for insuring that the Golden State's often distinctive interests are better articulated in federal policymaking" should also be a primary goal of the task force, he concluded.
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