Toward Defining an International Trade Strategy for California

By Jock O'Connell


March 15, 2004

Legislative Moratorium/Governor’s Task Force

The Governor should immediately request that the Legislature refrain from enacting any international trade-related measures during the current session that would anticipate the outcome of a comprehensive assessment of the policies and programs needed to promote California’s competitiveness in the global economy.

At the same time, the Governor should establish an International Trade Policy Task Force chaired by the Secretary of Business, Transportation and Housing Agency.

The function of this task force 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.

The task force 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 BT&H 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.

Task Force Agenda

Among the issues the task force should examine is 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 should be given to 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 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. Accordingly, 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.

Likewise, 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. 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 often placed state trade officials in the mode of providing advisory or assistance services directly to specific “clients.” In doing so, the state paid little attention to a wide variety of similar assistance programs available from other governmental entities, educational institutions, and volunteer organizations. The task force might wish to 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 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 intergration.

The task force should make 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.