To Reopen or Not to Reopen…That is the Question
State Senate panel hears arguments for and against reestablishing California’s network of overseas trade offices
SAN FRANCISCO - 12/05/05 - At San Francisco's City Hall recently, a range of politicians and business leaders called for the state to reopen its offices in China and elsewhere in the Far East, reports the San Francisco Chronicle.
A series of witnesses appearing before a hearing of the state Senate select Committee on Asia-Pacific Rim Trade, Commerce and Culture asked a pointed question: How can California, the world's sixth-largest economy and a force in global markets, be the only major state without its own diplomatic representation abroad?
The hearing came on the heels of Governor Arnold Schwarzenegger's widely-touted trade mission to China.
The state's formerly grand network of 12 trade offices, shuttered in 2003 amid a budget crisis, is reduced to a small outpost - an office in Yerevan, capital of the former Soviet republic of Armenia, that is funded primarily by Southern California's politically powerful Armenian community.
The lack of foreign representation "has made California a laughingstock in other states and overseas," said Jerry Levine, a director of the California Council on International Trade, a business lobby.
Senate Majority Leader Gloria Romero (D-Los Angeles), who chairs the select committee, brought the hearing to San Francisco, where she appeared with San Francisco City Supervisor Fiona Ma and Assemblyman Mark Leno (D-San Francisco).
It's hard to imagine that California, which does $47 billion in trade with eastern Asia, doesn't have any permanent representation over there," said Romero.
She noted that most other states have several foreign offices - for example, Florida has 13, New York has eight, and Washington has five.
"After the trade offices were closed, we have heard quite an earful, and there's pressure to reopen them," she said.
Romero, Leno, and Ma said a key challenge would be to avoid one of the problems of the state's previous trade network - the selection of many office locations based on politics rather than economics.
Some of the offices had easily justified locations, such as Hong Kong, Shanghai, Tokyo, Mexico City, Singapore, Seoul, Taipei, Frankfurt, and London.
Others, however, were in locations that do relatively little trade with California - Tel Aviv, Johannesburg, and Buenos Aires, for example.
Regions where California has far greater trade interests - such as India, northern China, and the Philippines - had no California offices.
Howard Shatz, a research fellow at the Public Policy Institute of California, said that the state could save money by contracting out its offices to in-country business organizations rather than using state employees, as well as by charging fees to California firms that wish to use the services.
The idea was seconded by Curt Augustine, deputy secretary of the California Business, Transportation & Housing Agency.
Augustine testified that the governor supports the creation of two offices in East Asia and one in Mexico - with the exact locations to be determined later - but funded primarily by private firms rather than by the state.
He called the Armenia office "a model for what we support."
After the hearing ended, some in the audience indicated that any move to spend government funds on foreign trade offices would face tough opposition because of the state's fiscal troubles.
"How can California afford staffing trade offices when our schools don't even have librarians?" asked Victor Menotti, international director of the International Forum on Globalization, a liberal San Francisco think tank.
"My daughter's school, Hoover [Middle School in San Francisco's Sunset District], has no library open because there's no money for a librarian," he said.
"California's businesses can't have it both ways," Menotti said. "It's hypocritical to advocate reducing government's role in trade, like regulating e-waste exports or quotas on H1B visas, while at the same time asking government to hold your hand and open new markets for you."
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