Foreign-Trade Offices Are More Politics Than Business

SACRAMENTO —  In a move straight out of the Jerry Brown playbook, Gov. Gray Davis stunned the international business and diplomatic communities earlier this month when he abruptly canceled a Far Eastern trade mission a mere week before its scheduled departure. His excuse--the state’s long-simmering electricity supply crisis demands that he remain close to home--persuaded no one. Whatever the real reasons for scrubbing the mission, the episode reinforces an image of an administration whose handling of state trade policy and programs has been remarkably clumsy and cavalier.

Nowhere is this more apparent than with respect to the state’s foreign trade offices. When Davis took office in January 1999, there were nine such commercial outposts scattered around the world. Today, there are 12, and plans are to open three more next year.

Ostensibly, their role is to promote California’s exports and convince foreign businesses to invest in the state’s economy. Given the pace at which new offices are being established, Sacramento officials must believe the investment--$6.5 million in the current fiscal year--is merited. Regrettably, there is a real question whether these offices exist primarily to serve the state’s commercial interests or the political interests of its elected officials.

According to the latest figures compiled by the state’s Trade and Commerce Agency, the nine offices in operation during the 1998-99 fiscal year, “directly generated 160 deals, totaling $330,024,876 and creating 1,349 jobs in California.” That would represent a considerable return on the taxpayers’ investment of $5.9 million to run the offices. Yet, critics suggest the agency’s claims are about as reliable as those of a near-sighted duck hunter.

Even within state government, the trade agency’s number-crunching is considered unreliable. In 1996, the state auditor found the agency lacked adequate tools for measuring the performance of its foreign trade offices. The bipartisan legislative analyst has repeatedly counseled legislative committees to demand harder data on existing overseas offices before funding new ones.

Outside state government, organizations such as the California Council for International Trade and the Foreign Trade Assn. of Southern California have urged the state to bolster the capabilities of existing offices and to adopt more focused export-development strategies, rather than add new outlets. Furthermore, a study published last year by the Institute of Governmental Studies at UC Berkeley concluded that the state’s overseas trade offices are “so understaffed and underfunded that they are able to do little more than answer phones and faxes.”

Since the first one opened in Tokyo in January 1987, the trade offices have been run as though they were retail establishments to serve virtually any small or medium-sized firm interested in exporting. Regardless of what public officials might like to believe, it is simply preposterous to think that an office staffed in most cases by no more than three or four individuals can adequately represent the infinitely diverse range of industries that make up California’s $1.3-trillion economy. Certainly, no company would dispatch salespeople who were not proficient in describing every aspect of its products or services. But the state assumes that its overseas office personnel can easily go from aiding an agricultural exporter in the morning to assisting a biotechnology firm at lunch to helping a software company in the afternoon to explaining California’s tax policy to a prospective foreign investor over dinner.

Unfortunately, administrators of the state’s trade programs do not seem much interested in what international businesspeople might think about programs that theoretically exist to aid international business people. For example, last November, a California Research Bureau study noted that Trade and Commerce Agency officials, in preparing a foreign-office location study in 1998, had not bothered to seek the advice of actual exporters.

This penchant for keeping the state’s trade community out of the state’s trade policymaking loop is particularly unforgivable because the policymakers themselves seldom have any appreciable experience in international business. Over the last decade, most of those charged with administering the state’s trade programs have been political appointees who have never shipped anything other than their own luggage across an international border. One foreign-office director named by former Gov. Pete Wilson was so conspicuously devoid of professional credentials that the Sacramento Bee reported her appointment on its society pages. More recently, the press release announcing Davis’ choice of a new director of the state’s London office failed to cite any pertinent international business experience. It did, though, detail that individual’s activities over the preceding 12 years as a State Bar staffer.

Earlier this year, the Legislature enacted a bill requiring that foreign-trade office personnel possess at least one year of international-business experience, along with minimal education and foreign-language qualifications. The measure was vetoed by Davis on the ground that such mandates would “deprive the Trade and Commerce Agency of the flexibility it needs in hiring overseas staff.”

Such indifference to professionalism is also evident in the membership of the state World Trade Commission, a body originally created to provide state leaders with expert advice from California’s international business community. Yet, actual world traders are a distinct minority on the current commission, whose 14 private-sector members include five real-estate developers, two restaurateurs, a hospital administrator, a phone-company executive and an employee of the Southern California Assn. of Governments.

In state government, a program’s effectiveness sometimes matters less than appearances. Supporting the creation of yet another foreign-trade office is the easiest way for a California politician to demonstrate his or her internationalist credentials to voters. Not surprisingly, California’s foreign-trade programs have become so thoroughly politicized that they are now more valuable as props in political theater than as business assets.