State Trade ‘Embassies’ Pay Off

In a proposed state budget of $74 billion, $1 million is a relative pittance. But a $1-million proposal in Pete Wilson’s 1998-99 budget might pay the state more handsome rewards than even the Republican governor’s touted business tax cuts of recent years. The money would be spent to open four new California foreign trade offices, in Singapore, South Korea, China and Brazil.

When California first opened offices in foreign countries, back in the 1960s, critics scoffed at the idea of a state attempting to have its own foreign policy. The offices in Tokyo and London were padlocked when Ronald Reagan became governor. However, the promotion abroad of California products makes eminent sense now. Foreign trade has been a key to the state’s economic revival, jumping by 45% since 1992. Economists estimate that trade now accounts for as much as $250 billion annually, one-fourth of the state’s gross domestic product.

The new trade effort has been markedly expanded since Wilson took office in 1991. California now has 10 offices--in Mexico City, London, Frankfurt, Johannesburg, Jerusalem, Jakarta, Hong Kong, Taipei, Seoul and Tokyo. They market California as a prospective trade partner and work with individual California firms seeking to break into the export business in the markets the offices serve. California officials also consult with foreign firms on the location of new operations in the United States, providing technical assistance designed to convince them that California is the place to settle.

There is no way to measure the amount of business generated directly or indirectly by the trade offices, but it doesn’t take a Nobel economist to see it’s got to be a good deal. Export trade is a critical and integral part of the California economy, and the potential for growth in this area is enormous.

The best measure of the program’s success may be the fact that there is scant, if any, criticism of California’s foreign affairs today.