Just four years ago, California dozed placidly in the sun overlooking the Pacific, blissfully shipping more than $4 billion in agricultural exports while investing almost nothing to promote this hefty stake in international trade. Today--though only in part due to such benign neglect--the state's foreign agricultural trade has slipped to $2.7 billion.
The slippage in exports could have been even more severe had the state not begun to wake from its lethargy. One indication of the changing attitude is rapidly growing support by the state government. Its investment in international trade ventures--$403,000 two years ago, 20th among the 50 states--has grown to more than $10 million this year, tops in the nation.
Moreover, before the year is out, California expects to open its first foreign trade offices--in Tokyo this fall and in London this winter.
Part of the state's increased official awareness of the importance of foreign trade--particularly with the nations on the Pacific Rim--stems from the fact-finding and trade promotion efforts of the California State World Trade Commission, created by the Legislature in 1982. The commission's latest project is publication this month of a two-volume compendium of economic and non-economic barriers inhibiting further growth of the state's exports to its Pacific Rim trading partners.
It is a catalogue of grievances that the commission hopes will help arm U.S. negotiators this fall in a new round of multilateral trade talks.
'Wholesale Attack' on Trade Barriers Urged
"Barriers to Trade" concludes that the United States should drop what has been a mostly conciliatory approach toward overcoming unfair trade practices and instead confront them head on.
"Instead of trying to ease the effects of these barriers on particular commodities," the study says, "California should launch a wholesale attack on the barriers themselves. . . . Only by fighting trade barriers across the board can we affirm the principle of comparative advantage that gives California's diverse farm industry so many overseas opportunities."
"We've been very patient," Gregory Mignano, the commission's executive director, explained in an interview Thursday. "We've been able to be patient because exports were in good shape for a while. But as agricultural exports and the farm economy of the United States plunges, we need to pursue these trade barriers that we have treated lightly or ignored entirely in the past." The stakes are large for California, the world's seventh-largest economy, Mignano observed. International trade through the state's ports approaches $100 billion a year, but imports lead exports by almost 2 to 1.
Volume 1 of "Barriers to Trade" deals with China, Japan, Korea, Taiwan, Hong Kong, Singapore, Malaysia, Indonesia, Thailand, the Philippines, Australia and New Zealand.
"Japan, Taiwan and South Korea discourage our imports with quotas, licensing restrictions and questionable plant and animal quarantines," the study notes. "While lucrative markets exist throughout the region, barriers of many forms limit California's trade opportunities." For example, Japan's tax on liquor adds $4 to the price of a $6 bottle of California wine, and Indonesia imposes a surcharge of up to 300% in addition to its basic customs duty.
Other Barriers to Trade
However, non-economic trade practices such as licensing requirements and import restrictions--imposed ostensibly to control agricultural pests--are greater trade barriers than confiscatory tariffs, the survey finds. "Korea, for example, limits citrus imports because government officials say they fear infestation by the Mediterranean fruit fly--a pest that was eradicated by California several years ago."
In Japan, on the other hand, fresh cherries may be imported only after July 1, which effectively blocks the entry of fruit from California, where the brief harvest peaks in late May and early June. Japan's date limitation reflected a desire to protect what the report calls a "small but vocal" domestic industry. (Japan reportedly may take another look at the issue.)
The Philippines and Indonesia, struggling with shortages of foreign currencies, have defined many of California's specialty crops as "luxuries." On that ground, Indonesia has banned many nuts, meats, fresh fruits and vegetables since 1982, slashing its imports of California fresh fruit to less than $48,000 from $9.2 million. Raisin sales to the Philippines exceeded $1 million several years ago but amounted to less than $100,000 last year.
On the other hand, Hong Kong and Singapore, with few natural resources and little arable land, are virtual paragons of free trade. Here the challenge tends to be to increase sales by improving packaging to cut spoilage and by stepping up promotional activities, according to the report.