California INTERNATIONAL BUSINESS Report | |
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State is Still Bleeding Jobs The California Employment Development Department released figures in January showing that the State continues to shed jobs at an alarming rate. According to a survey of Employers, California lost 25,000 more payroll jobs in the month of December. In a separate survey of households, it was found that employment decreased by 22,000 jobs from the prior month and that California's unemployment rate was 5.8 percent, unchanged from November but that may be partly because some of the jobless have given up the search for traditional jobs. This was bad and unexpected news for the State, since the economy needs to be adding jobs to keep up with population growth. Continued ********************** Thank you for continuing to receive the California International Business Report- we hope you find this informative and useful. Subscription management- including a single click unsubscribe, is at the bottom of this document. There are also some important announcements about the California Trade Network at the bottom of this page. |
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 News and Politics back
Trade Deficit Explodes as Dollar Destabilizes
His friend Warren Buffet, the world's most successful investor, said that the trade gap will weaken the currency, "Unless we have a major change in trade policies, I don't see how the dollar avoids going down''. Chinese Economist Fan Gang, director of the National Economic Research Institute in Beijing set off alarms with currency traders recently when he said, that the U.S. dollar is "in our opinion is no longer a stable currency and is devaluating all the time". Not all the blame for the dollar's fall can be placed on the trade deficit. Last week, the White House forecast a record $427 billion budget deficit this fiscal year, as Congress and the Bush administration continue to spend vastly more than the Government receives in revenue. Democrats, who sought to make the widening trade and budget deficits issues in the presidential campaign, said the shortfall was further evidence that President George W Bush's economic policies were not working. "A trade deficit of $78.8 billion a month is a crisis and it needs to be addressed, not ignored," said Senator Byron Dorgan (D-ND), who called on Bush to convene an emergency meeting of key government policy-makers. The Bush Administration, however, believes that the solution lies outside the United States and wants to encourage other countries grow their economies so they will become better markets for U.S. goods and services. "We want to create more engines of world growth" said Treasury Secretary John Snow who told reporters that he wanted Europe and Japan to do more to stimulate their own growth. The Bush Administration policy has also been to trying to to convince China to stop linking its currency directly to the dollar, a practice US manufacturers contend has made the Yuan as much as 40 per cent undervalued, giving Chinese companies a competitive advantage. The Chinese, however, now hold an enormous amount of dollars and American debt and may choose to exercise other options. No one really knows for certain what will happen. Will the dollar keep falling, until it sparks a new wave of inflation? Will American consumers cut back spending so much that it brings on another recession? All we can say with complete certainty is that this is not a good thing. California May Face Summer Power Shortages. It might be a good idea to keep those high tech candles and flashlights handy. A recent surge in statewide electricity consumption has led regulators and energy planners to predict that there might be power outages this summer in California. They are quietly working to cut demand every way they can and have proposed that the state's utilities may have to to charge their largest users prohibitively high rates during power emergencies. One possible reason for the surge is that state residents are no longer following the conservation habits adopted during the 2000-01 power crisis. Those conservation efforts sent demand for power down as much as 14 percent at times, according to the California Energy Commission. The main issue for energy planners involves shaving peak demand as much as or more than reducing overall demand. That's because the utility needs to have enough power plants and transmission capacity to satisfy peak demand, although it may occur for only a few days each year. Politicians have begun to take notice- "This could be a rough year coming up for California," said Senator Dianne Feinstein. A recent daylong public forum in San Francisco brought together energy company executives, public officials and consumer groups and several panelists repeated warnings that Southern California could face power shortages again this summer. In a related story, Attorney General Bill Lockyer recently announced a $749.7 million proposed settlement with Mirant Corporation to resolve allegations of price gouging and other unlawful conduct by Mirant during the California Energy Crisis of 2000-01. "Given Mirant's bankruptcy, this is an excellent settlement for Californians because we will recover more than $320 million wrongfully taken from our pockets," said Lockyer. "I'm pleased we have resolved our disputes with Mirant, and I hope the reorganized company's new management will work constructively with California to make sure history does not repeat itself". Lockyer is also going after Enron, a company that made more than $1.6 billion off of Western states during the energy crisis. He believes Enron should pay $2.8 billion and reached the higher figure by taking a "market-based approach" that holds Enron responsible for developing gaming schemes that were copied by other companies and affected the entire energy market. In still another indication that the mess from the energy crises is still with us, a different class-action lawsuit has been filed against Sempra Energy and El Paso Natural Gas alleging that these companies conspired to manipulate the energy market in California leading to California's energy crisis in 2000 and 2001, will go to trial Sept. 2, it was recently announced. State Department issues Mexican Travel Warning. The State Department has issued a travel alert for Northern Mexico saying that violent crime, including murder and kidnapping, had increased along the Mexican side of the border. U.S. Ambassador Tony Garza has been taking criticism from President Vicente Fox, lawmakers, tourism officials, and the Mexican media for what U.S. officials say is stating the obvious- that drug violence along Mexico’s northern border is escalating and that local authorities have been unable to control it. The abduction of at least 25 U.S. citizens made it necessary for this warning be issued, they say. To soften the alert, Garza issued a letter saying that the lack of security near the U.S. border could have a "chilling" effect on trade and tourism. Garza said his letter was intended to give "fuller context" and "highlight the fact that the wave of border violence is partly the result of the successful efforts of President Fox's administration in the fight against organized crime." He said Mexico had increased federal law enforcement operations in the border region with support from the Mexican Army in its effort to combat organized crime. “We certainly do not want at this time to advise Americans to refrain from traveling to Mexico by land or to avoid border areas, but it is our responsibility to alert them to the enhanced risks,” Garza wrote in a letter this week to Foreign Minister Luis Ernesto Derbez and Attorney General Rafael Macedo de la Concha. “We don’t accept a judgment or a grading from any foreign government concerning the policy actions that (Mexico) is taking to confront its problems,” Fox said in a TV interview. Foreign Minister Derbez also complained to new U.S. Secretary of State Condoleezza Rice in a phone call last week. In a commentary in the newspaper El Universal, former Pentagon official Ana Maria Salazar, now a political commentator in Mexico City, wrote that the letter was a “low blow” to a Fox administration that has taken unprecedented action against the drug lords. Ambassador Garza may have been mostly concerned with the Texas-Mexican Border where the violence has been worse, but Tijuana had an average of one murder each day attributed to drug traffickers. The City of Tijuana has responded by assigning additional police officers to border tourist areas and installing video security cameras on Avenue de Revolucion- an area frequented by Americans. Hollywood Campaigns for Immigrant Driver's Licenses. Hollywood stars are joining the fight to get driver's licenses for undocumented immigrants in California with a new ad featuring a mock award for "Best Nanny." More than 30 actors, musicians and writers, including Diane Keaton, Carlos Santana and writer and producer Paul Haggis, took out the ad Monday in the entertainment industry trade paper Variety. The group urges Governor Schwarzenegger to approve a new bill that would allow illegal immigrants to get a license as long as background checks found they had no criminal violations. Associated Press has reported that the ad was orchestrated partly by Sen. Gil Cedillo, D-Los Angeles, who has led the effort in favor of the licenses. He introduced his latest bill on the issue Jan. 13 and is making full use of Hollywood. Cedillo recently held a screening in Sacramento of the film "Spanglish," about a Hispanic maid who takes a bus to the Beverly Hills home where she works. About one-quarter of the 26 million to 30 million drivers on state roadways each day lack insurance, according to the Personal Insurance Federation of California.. An estimated 2.4 million people living in California are illegal immigrants. Jobs. (continued). Some economists questioned the numbers but the EDD defended them saying that there had been volatility in the entertainment industry and below-average hiring by retailers. Half of the job loss was attributed to a 10,300 drop in motion-picture jobs, reversing a 7,000 boost in jobs in the industry a month before. Christopher Thornberg, an economist at UCLA Anderson Forecast was quoted by the San Diego Union as saying that "San Diego, the Inland Empire, Orange County and Los Angeles have been cold for a couple months, which is troubling". He noted that that, "Southern California has been pulling the economy forward for the past year, and if Southern California stumbles, that doesn't bode well for the rest of the state". Another economist- Esmael Adibi, of Chapman University said that Northern California is still in a recession, "San Francisco, Oakland and San Jose are still losing jobs" he said. There are also troubling indications that the jobs being created are not as good as the jobs being lost. Professional and business services experienced the greatest growth during the year, adding 66,200 jobs- but many of those jobs were for temporary or part-time workers. Thronberg did not have a cheery prognosis. "The economy is not that healthy, We've got a king-sized real estate bubble, overstretched consumers who are spending 100 percent of their disposable income and a huge trade deficit. At some point in time, the economy has to rebalance, and rebalancing could be painful". He went on to say that "We're certain that there will be another recession in the next three years, and if the labor market starts softening, a recession could happen sooner rather than later".
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 Letters to the Editor back
Impressed by Attempts to Communicate with State Government Rob, Thanks for emailing me the January 2005 issue of the California International Business Report. As you might imagine, I was especially moved by your heroic but futile effort to find someone in State government who has given much real thought to California's foreign trade relations. All the best, Jock O'Connell Sacramento, California
Global Trade Program Events List from the USDOC
Dear Rob, I am writing to you on behalf of the United States Department of Commerce with the link below to the Office of Global Trade Programs' Trade Events List. The Trade Events List is updated monthly and includes all trade promotion events produced by the International Trade Administration. The list is searchable, includes links to event descriptions, and contact information for local U.S. Export Assistance Centers. If any of our trade events listed are of interest to you, please contact the Project Officer noted below each trade event. If you have any additional questions or comments, please call Meri Farrell on my staff at 202/482-6220 or by e-mail at Meri.Farrell@mail.doc.gov. Tim Thompson Greetings from the American Embassy in Tel Aviv, Israel! Dear Rob, Are you an American exporter of electronic components, networking equipment, computers & peripherals and/or related services for the hi-tech industries? If so, the U.S. Commercial Service would like to invite you to exhibit your product literature in our Embassy Catalog Exhibition Booth, to be held March 16-17, 2005, at the "High Technologies" trade show, Israel's largest electronics industry event in 2005. Why should you do business in Israel? In terms of technology, no place resembles Silicon Valley or Seattle more than Israel, and you should be doing business here. Israel has more companies listed on the NASDAQ than any other country, other than the United States and Canada. Israel remains a leading magnet for hi-tech investment, with over $1 billion raised in 2003. Israel has one of the most educated populations in the world, with 135 engineers per 10,000 people (the U.S. ranks second with 70 per 10,000). An impressive 46% of Israeli manufactured exports are classified as hi-tech. High-tech now contributes more than 15% of Israel's GDP and over 50% of exports (or $9 billion). Israel's electronic industry is expanding to over $3 billion a year and comprises over 1,800 suppliers selling components, equipment, accessories, tools and services. Roughly 53,500 people work in the Israeli electronics industry alone, of which 64% are engineers, scientists and technicians. For full details and to register online, please see: http://www.buyusa.gov/israel/en/hitech.html Mrs. Sigal Mendelovich Commercial Specialist The U.S. Commercial Service American Embassy in Tel Aviv, Israel Tel: 972-3-519-7491, Fax: 972-3-510-7215 Visit: www.buyusa.gov/israel and www.export.gov/cs
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Congress kills SBA loan subsidy. The Small Business Administration's most popular loan program will no longer get a federal subsidy. Congress eliminated $79 million in funding for the SBA's 7(a) loan program. That means the higher fees paid by lenders and borrowers that went into effect in October will remain in place. The Bush administration strongly supported ending the 7(a) subsidy. Congress decided the money was needed elsewhere. Now that the subsidy has been eliminated, fees on borrowers and lenders must cover all the program's costs, including any defaults on the government-guaranteed loans. Some politicians critised the decision. "These higher costs, which are nothing more than a new tax, will put small-business loans out of reach for many of our nation's entrepreneurs," said Rep. Nydia Velazquez of New York, the ranking Democrat on the House Small Business Committee. Another program: The "Small Business Investment Company" was reauthorized, but SBA officials say they will work to limiting the government's exposure to losses from this venture capital program. The White House estimates bad investments by SBICs could cost taxpayers $2 billion. SBA Associate Administrator Anthony Bedell was quoted as saying, "We need to stop that bleeding". San Diego and Tijuana may jointly bid for 2016 Olympics. A group of business persons from the United States and Mexico are considering a joint bid to host the 2016 Olympics in the San Diego-Tijuana Metropolitan area. The Binational Organizing Committee is headed by Malin Burnham of Burnham Real Estate service and has begun looking at critical issues such as funding and logistics. According to the San Diego Union, Burnham admits there are lots of questions without answers – how to get people back and forth across the heavily congested U.S.-Mexico border, where to house the athletes and when to stage the competitions. And the big question of how much such an undertaking would cost. Burnham said hosting the Games would mean developing more affordable housing, improving transportation systems and reassessing border security issues, but he doesn't believe any of these obstacles is insurmountable. The biggest issue right now is who gets the games in 2016- he said that if the Games go to New York than it’s unlikely they would be awarded to another U.S. city in 2016. According to Armando Escamilla, a spokesman for the city of Tijuana, Jorge Hank Rhon, the mayor of Tijuana is interested in the proposal. Escamilla said, “the mayor told them that it was a big objective but that nonetheless he would participate in any way he could, be it as a public official or personally”. Anti-Terrorism Program begins at SF International Airport. The U.S. Department of Homeland Security is launching a pilot anti-terrorism initiative at San Francisco International Airport. The program, called "US-Visit," will initially ask, but not require, most visitors holding foreign passports to test out new fingerprinting equipment and procedures as they depart the airport. The procedure will work like this: When foreigners arrive at SFO to check in, airline representatives will ask them to visit one of 18 computerized stations installed in boarding areas throughout the airport. Once there, travelers will be prompted to scan their left and right index fingers, and a digital photograph will be taken of them to match and authenticate identity data gathered when they first entered the country. Before boarding the aircraft, travelers will present printed confirmation of the procedure to airline staff. The procedure is designed to help the department keep better track of which foreign visitors leave the country when. Most Canadians and Mexicans carrying border-crossing cards will not be required to go through new fingerprinting procedures. The overall intent of the program is to help secure borders, facilitate the entry and exit process and enhance the integrity of immigration procedures, according to Homeland Security officials. Governor's Dual Citizenship is Challenged Governor Schwarzenegger is being attacked in Austria by a left wing politician who wants to strip him of his Austrian citizenship because he allowed a convicted murderer to be executed in California. Schwarzenegger rejected a clemency appeal by triple-murderer Donald Beardslee who was executed at San Quentin prison last month. "The death penalty is unacceptable in Austria and Europe. No Austrian citizen is allowed to take part in or order executions," Peter Pilz, the security spokesman for Austria's Green Party, was quoted as saying. Pilz represents the Green Party is the smallest political group in parliament, and says that Schwarzenegger's support for the death penalty not only violates Austrian law but has damaged the country's image as a modern peace-loving nation. While opinion polls routinely show that this Alpine nation of eight million overwhelmingly opposes the death penalty this campaign doesn't have much traction and is given little chance of success. Vincent Thomas Bridge gets Futuristic Lighting System. The Bay Area may not get it's shiny new suspension bridge, but the Port of Los Angeles has a pretty new iridescent blue facelift on face on the Vincent Thomas Bridge. The bridge has been outfitted with distinctive blue LED lights that are powered by solar cells. Hundreds gathered at the Port of Los Angeles to witness the inaugural lighting of the Bridge, now called "the Official Welcoming Monument of the City of Los Angeles". The 41-year old Port of Los Angeles landmark is now one of just a few bridges in the world to be illuminated by light-emitting diodes (LEDs), and this is the first such installation ever to combine LEDs with solar power. "What a great day for our City and the local communities," said Los Angeles Mayor Jim Hahn, who helped throw the switch to activate the lights. "Los Angeles' Official Welcoming Monument is now truly a beacon for the region," he said. State Senator wants to Regulate Peer to Peer Networks. A bill introduced by state Senator Kevin Murray (D- Los Angeles) to the California Legislature seeks to outlaw the selling, advertising, and distributing peer-to-peer (P2P) file-sharing software. Mr. Murray has close ties to the entertainment industry and his legislation seeks to control file-sharing companies. The bill would make it a crime to sell file-sharing software without taking reasonable care to prevent copyright infringement and pornography swapping. The entertainment industry has long being complaining that file-sharing software allows its users to break the law every single time they download a song or a movie. Others complain that it makes pornography easily accessible to children. In August, a federal court in California ruled that file-sharing companies are not violating copyright law when customers use their programs to trade copyrighted music, text, or video. The U.S. Supreme Court will hear the case in March. As we reported here last month, the Entertainment Industry issued a slue of lawsuits when they realized that the BitTorrent network was being used to share large files, including recent releases of DVD movies, at very high speeds. Mr. Murray was quoted by Red Herring Magazine as saying he wrote the bill because file-sharing companies have the legal responsibility to monitor the ways their networks are used. "Even if you aren’t selling crack, you can’t have a crack house", he said. This position has drawn fire from the high tech community because peer-to-peer networks are an effective technology and could be the wave of the future. "This guy is going to throw the baby out with the bathwater", one developer said..
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Yahoo Moving Operations to Santa Monica. Yahoo Inc. has agreed to lease part of a Santa Monica office complex for up to $100 million in one of the largest commercial real estate deals in Los Angeles County in the last year. The Sunnyvale, Calif.-based Internet company will lease as much as 256,000 square feet in Colorado Center for the next 10 years. The complex is owned by Chicago-based Equity Office Properties but it will now be called "Yahoo Center". Yahoo's headquarters will remain in Northern California, but the vast expansion in Santa Monica will split the company between Hollywood and Silicon Valley. Yahoo's newly formed media group, headed by former ABC television network Chairman Lloyd Braun, will be based in Yahoo Center. During the dot-com boom, "marriages" between firms in Hollywood and the Silicon Valley were highly sought, but not always successful. Yahoo, however, has always continued to strategy of linking with Hollywood and and in 2001 took on former Warner Bros. co-Chairman Terry Semel as chief executive who proceeded to turn the company into an advertising giant. The company recently hired former ABC television network Chairman Lloyd Braun, to head their new Media Group which will also be based in Yahoo Center and plans "aggressive" hiring of media experts in the Los Angeles region. The Los Angeles Times quoted Braun as saying. ""When you look at the breadth of the content providers in Southern California versus Sunnyvale, we think there's a lot more opportunity in Southern California," he said. "I think we will have a competitive advantage by being in that arena and leveraging those relationships". Silicon Valley Exports Increasing. The high-value products associated with Silicon Valley industry, are on the rise after falling for three consecutive years, according to a new analysis from the Public Policy Institute of California of U.S. Census Bureau data. Based on 11 months of 2004 data, California has seen the value of its exports rise 6.5 percent above 2003 totals to $100.1 billion, says staff trade economist Howard Shatz. In spite of this promising news, Mr. Shatz also found that California's share of exports of computers and electronic products has dropped and said that this drop was worrisome. Disney Planning Global Expansion. Walt Disney Co. has laid out ambitious plans for international expansion, including television networks in China and India, as a strategy of long-term growth in presentations to Wall Street analysts. President Bob Iger said that Disney targeted bringing in 50 percent of revenue outside North America. Iger, who is the internal candidate to succeed chief executive Michael Eisner, has taken the lead role in many of the discussions with analysts. Disney parks chief Jay Rasulo said that Disney was considering a theme park in Shanghai, but first would expand the Hong Kong park due to open later this year. Europe OKs Takeover of Infonet by British Telecom. The European Union has approved British Telecom Group PLC's $965 million takeover of California-based network services company Infonet Services Corp. The EU head office said the deal "will not significantly impede effective competition" in Europe's telecom markets. "Infonet brings only a minimal incremental market share to BT," it said. With the deal, BT wants to increase capabilities for global customers. According to a company spokesman, El Segundo, California-based Infonet will boost BT's offering as the company seeks to expand its services in the United States. British Telecom has already received antitrust clearance from Washington. With the approval of the EU and Infonet shareholders, the deal can go ahead and is expected to be completed in the first half of this year. Rand Says No to Missile Defense for Commercial Aircraft. The Rand Corporation- a think tank based in Santa Monica, has recommended against equipping commercial aircraft with missile defense systems. Concern that a terrorist might fire a shoulder launched missile is the main reason for the perimeter security at Los Angeles International Airport, but according to their study the current technology is too expensive and unreliable. It would cost $11 billion to equip 6,800 aircraft and another $2 billion each year in operating costs- by comparison, the total transportation security cost in the U.S. is now $4.4 billion. This study might put them at odds with the Department of Homeland Security, where they're spending $122 million on an urgent push to come up with a missile defense system for commercial aircraft. Two companies, Northrup Grumman and BAE Systems, are working on laser defense systems, competing to present proto-types to the government in 12 months California Company Builds German Photovoltaic Plant. A partnership led by California-based PowerLight has finished construction of the world's largest solar photovoltaic (PV) power plant in Bavaria, Germany. Powerlight has been known for designing and constructing large projects in California where state incentives have helped support the solar industry. The incentives in California are based on the installed kW size of a project, while Germany's method delivers a certain rebate price per watt delivered by a particular project to the local electric grid. Germany's incentives are considered to be better than California's, and have been cited for pulling worldwide supply of solar PV to its borders while leaving shortages in other areas. This legislation, newly expanded to include ground-mounted systems such as the Bavaria Solarpark, is expected to drive further growth of the German PV market. "Over the next 30 years, the Bavaria Solarpark will generate hundreds of millions of kilowatt hours of emissions-free energy," said Tom Dinwoodie, CEO of PowerLight Corporation. "PowerLight looks forward to developing more partnerships across Europe to meet the increasing demand for solar power". Chinese Sue over Intellectual Property Rights Abuse. China Daily News has reported that two Jiangsu-based companies filed suit in the district court of San Diego alleging that the 3C Patent Group consisting of Sony Corporation, Philips Electronics and Pioneer Corp. have illegally fixed prices on DVD players. The plaintiffs claim that the three patent holders fixed prices and unlawfully linked their patents, in addition to conspiring to monopolize the DVD player market. All of which, if proven, would be in violation of US law- specifically the Sherman anti-trust laws. "We are seeking a judgment that the 3C patent pool is invalid and are calling for a monetary refund of all DVD player royalties collected," said Anton Handal, the plaintiff's attorney from the US law firm Handal & Associates.
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Robert Reich, previously the Labor Secretary in the the Clinton administration, has joined the Board of Springboard Forward, a non-profit coaching and mentoring service in Mountain View Jim Benson, founding chairman and chief executive officer of SpaceDev, has been appointed to the California Space Authority board of directors. Benson's two-year term of office will run until December 2007. The British American Business Council Los Angeles unanimously nominated Paul Wright, an international lawyer and the Director of the International Mediation and Arbitration Center, to become the President of the BABC LA . Barry Harvey, the past President will take on the role of Chairman. Michael Ross was named chief executive officer of Team San Jose, the organization that oversees operations at the California city’s McEnery Convention Center. Most recently, Ross served as general manager of the Sacramento Convention Center. John Taylor, the U.S. Treasury's point man on international issues, is expected to step down and be replaced by senior Bush campaign adviser Tim Adams. ,Taylor is on leave from Stanford University in California and potentially could return to teaching there. Taylor is an economist and author of the "Taylor rule" used by central bankers as a guide for setting short-term interest rates in order to maximize economic growth while controlling inflation. Lyn Hebenstreit , the CEO of Global Resource Alliance, headquartered in Ojai, California, plans to scale Mount Kilimanjaro in Tanzania with GRA team members Tara Blasco, Tania McCracken as well as the leaders of several African non-governmental organizations on this six-day trek to the summit of Mount Kilimanjaro to raise | |
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No need to be a right-wing homophobe to be outraged by this one. The University of California has created a $192,000-a-year job of "international strategy development" for the domestic partner of incoming UC Santa Cruz chancellor Denice Dee Denton. Her long time partner is Gretchen Kalonji, a professor of materials science at the University of Washington in Seattle and she will also be getting a full tenured professorship. The University of California Provost: M.R.C. Greenwood was quoted as saying that "This is one of the most talented women engineers in the country who has turned her skills to developing international strategies, something which the University of California doesn't really have right now". Greenwood claimed that UC officials already were talking about creating a strategy position anyway when Kalonji became available so they approved her hiring in a closed door meeting. Mary Higgins, president of the Coalition of University Employees, which represents 16,000 clerical employees, protested that the UC would make this kind of hire during times of serious cutbacks and rising student fees, "it's just so arrogant. It's so unethical" she said. We have to agree, so add this to the list of really unfortunate and ill-advised moves the State Government has been making in this area recently We have absolutely nothing against Ms.Kalonji- in fact she would have had to have been an absolutely idiot to not take this job- it is a prestigious, life long, and high paying position- and the State will also be paying her moving expenses and up to $50,000 to help her "make the transition" to California. An important position like International Strategy Development - if it really was in their plans, should have been filled with a State-wide, nation-wide or even world wide search- and we think the University of California, with all the smart people who hang out there, should have known this. As readers of this newsletter know, we have been trying for some time to learn about the State's international business strategy- if there is one, and have been very concerned that the State might repeat some of the really terrible mistakes they made before- and unfortunately that is exactly what seems to be happening. The State recently made another one of these backroom deals- this time with the Federal government and several "non-profit" trade associations, to the exclusion of just about everybody else in the State. When we learned that these groups had been meeting secretly with the State Government we immediately called Barry Sedlik- the Under Secretary for the California Business, Transportation and Housing Agency He wouldn't take our call and instead referred me to Ben Saremo- who had been with the old Technology, Trade and Commerce Agency during the Davis Administration. Mr. Saremo confirmed that they were having another meeting of the "Steering Committee" for their "Partners". He wouldn't tell me who these "partners" were or how they got to be partners and instead demanded that I write still another letter describing our interests and concerns in this area- and promised that this time I would get a prompt response. That was almost a month ago, and this was apparently another bureaucratic delaying tactic as they never bothered responding to our letter. We did, however, manage to get a copy of this "memo of understanding" from the local office of the U.S. Department of Commerce. Matt Anderson, the Manager of the USDOC office in San Diego sent us a copy saying that "now that it has been signed" it was public information and they could release it. He told us that this this was a done deal and that it had been signed by all the parties including Sunne McPeak- the Secretary of the California Business Transportation Agency. We reviewed this document and found it to be seriously flawed- and even having to potential to greatly damage California's international business development for years to come. Some of it was simply underwhelming - in many cases repeating work that had already been done. They plan, for example, to produce an "annual" calendar of events and a newsletter, provide cross training for their staffs, share market research and jointly promote trade events. Other parts of the agreement were more obscure, and you would have had to have been a party to their discussions to know what they are up to. For example they plan to create a state-wide index of the Trade Partners expertise and put this into a database that will be maintained by U.S. Foreign Commercial Services, and to have "Coordinated Electronic Information Sharing and outreach via shared databases". Their real purpose, however, was at the end of the document- they plan to discuss, "Joint Grant Applications and Implementation Strategies" - they put in a disclaimer that, "US&FCS will not provide any information that is not generally available to the public" - but given the way they have gone about this why would anyone believe them? It is obvious that they have already been sharing information that is not available to the public and they apparently have even already agreed how funds will be dispersed for this project. They saved the worst for last: "By mutual written consent of all signatories, this Agreement can be expanded to include additional organizations, provided that such organizations agree to all provisions of this Agreement in writing". In other words they have given themselves veto power over any other organization that wants to work with the Government. There are at least 100 business associations in this State- actually probably 500 or more- if any single one of these organizations wishes to work with the government with this same "partner" status they will need written approval from EVERY ONE of these organizations. They also promised to "share credit on success stories" an approach that we thought had long ago been thoroughly discredited here in California. This apparently is the brain child of Michael Liikala, previously a commercial officer at the US Embassy in Madrid who was assigned by the USDOC to organize the "California Trade Initiative". His first move was to make a special arrangement with the Tradeport organization that provided trade information from the U.S. Commercial Services Office in Spain- a project that has since been abandoned. He also was apparently responsible for the collapse of an earlier MOU with the State as we reported here last October. This agreement was also done in secret, but it is our understanding that it involved staffing the foreign offices of U.S. Commercial Services with Federal Employees who would represent California- and then charging the State for their services. This was presumably unacceptable to the State Government because of the money involved, it would have been unacceptable to the other States and we are not sure how they thought they could get away with this or if anyone has been held accountable. This latest agreement is "really just to provide justification for Liikala's job here" one well known trade policy consultant told us. Mr. Liikala has not returned repeated phone calls and email messages asking for information about these programs. We wondered if other interested parties were also kept in the dark about this, when it occurred to us that this is what our elected representatives are for- this was, after all, an agreement between two major branches of government. Has the State Legislature also been cut out of the deal? We called the office of our Assembly Representative Lori Saldana and spoke with Alejandra Solis- who hadn't heard of this agreement but was checking into it. We also called the office of Leland Yee- the Speaker Pro Tempore of the California State Assembly and spoke with staff member Renee Pittin- "this is the first we have heard of it", she said, "it's news to us". The California Legislature has committees responsible for international trade policy in both the Senate and Assembly. They seem to have become inactive in recently so we're not sure if they have abrogated their responsibilities in this area but we will do our best to find out. We were incredulous that two separate branches of Government could be responsible for such a poorly thought out agreement, so we made several calls back to Matt Anderson at the USDOC to verify the information that the information he gave us was correct, finally caught him before publication date. This time, he retracted his earlier statement that this agreement had already been signed by the State and said that his earlier information had been incorrect, however another source who didn't want to be identified told us that it had either already been signed or was about to be signed, "the have been working on this in secret for the past nine months" he said. In any event, if this has been signed it needs to be rescinded- California deserves better and this is just plain sloppy public policy. Meanwhile, the "Amend of Arnold" campaign seems to be getting more serious. The group that wants to amend the U.S. Constitution so that Governor Schwarzenegger can run for President has opened a full-time office in Menlo Park. The Governor has formally distanced himself from this effort but the group organizer: Lissa Morgenthaler-Jones doesn't seem concerned,"He's done everything but send us smoke signals" she said, and also noted that they now have volunteers in all 50 states. Governor Schwarzenegger clearly wants to work on the national stage- he recently said that he would be enlisting donors from across the country to fund a multimillion-dollar fight over California's public pension system and its voting districts. "We all know the issues we are addressing are not just state issues, that the rest of the country is looking at California and as California goes, so goes the rest of the nation" he recently told a reporter for the Los Angeles Times. Were not sure about the voting districts- we suspect that is really being pushed for the benefit of the Republican Party, but we strongly support the Governor's efforts to reform the State's pension system- almost no one outside of Government gets a pension anymore, and government employees already have job security far beyond anything that people in private sector can even dream of. Still, we think the Governor needs to paying attention closer to home. There seems to be some shenanigans happening on his watch, and California is badly in need of leadership right now.
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U.S. Commerce Department TOPS Program. The U.S. Department of Commerce "Trade Opportunity Program" database has been opened to the public. This is the program that supplies trade leads generated by U.S. Commercial Services Representatives in U.S. Embassies and Consulates around the world. This information was previously only available in a paid service operated by the Federal Government. The TOPS program is currently "under review" and we are getting conflicting reports on whether the government plans to continue to support this service. Some people have said that the quality of the trade information is dropping, while others have said that they plan to revamp and improve the program. In any event, you can see for yourself at this link:http://www.export.gov/comm_svc/tradeleads/stradeleads.asp. The downside of this information being open to the public is that it is open to the public. In other words, this trade information is open to the whole world so you can expect lots of competition from anything you find here. The U.S. Commercial Services Market Research Reports are also available to the public and can be retrieved at this link:http://www.buyusainfo.net/adsearch.cfm?search_type=int&loadnav=no A Few Interesting Newsletters: We thought we would recommend a few off beat newsletter's this month. One is The "Rude Awakening" with a subscription link at http://www.dailyreckoning.com/. The other is "The Sovereign Society" with a subscription at this link:http://www.sovereignsociety.com/ . These are written by "contrarian" investors, and they are involved in all areas of international trade: commodities, currency, real estate, etc and provide an interesting point of view. Caution- these guys are anything if not prolific- we recommend that you have this delivered to one of your web-based email accounts.
Please send ideas for listing here to caltrade@gmail.com. | |
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February 1-2: Rancho Mirage: Nanotech Investing Conference. BF's 4th Annual Nanotech Investing Conference will cover investing trends, deal structures, intellectual property, and the commercialization process of nanotechnology. http://echo.bluehornet.com/ct/ct.php?t=826025&c=477346934&m=m&type=1 February 2: San Jose, Untapped Opportunities in the Chinese Telecommunication Market. A Business Promotion and Informational Seminar. Registration & fee information: Call 1-800-665-3609 http://www.apucc.org/calendar/02-26-2005/default.htm February 8: Ontario, Inland Empire Logistic Forum. Sponsored by the Distribution Management Association. Non member fee $40 in advance, $50 at the door. For more information: http://www.dmasocal.org/eventDetails.php?event=28 Feb. 8-10: Tulare, World Ag Expo 2005, The Expo will attract attendees from across the state and the nation, as well as international visitors from more than 50 nations. There will be new exhibits this year, including the California Crop Center, with seminars and specialized displays focusing on California's farm economy. World Ag Expo, contact George Wilson at the International Agri-Center, 1-800-999-9186, or 688-1751. For more information www.farmshow.org. February 10: Oakland, Global California: Expanding Opportunities. Organized by TradePort, Monterey Bay International Trade Association and the CalTrade Report. Location: the Waterfront Plaza Hotel in Jack London Square, 8:00am - 4:30pm, Registration link: http://www.tradeport.org/global-california-conference-2005/ February 16: Los Angeles, International Trade Delegate Luncheon & Trade Fair. Sponsored by the Foreign Trade Association of Southern California. Keynote by Dr. David Andrews, Director of the EU Center of California and Associate Professor of Politics & Intl. Relations, Scripps College Special guests: trade commissioners from over two dozen countries. For more information: trade delegate luncheon.pdf February 16: San Francisco, International Mixer, Sponsored by muybueno.net, International Diplomacy Council, World Affairs Council's Young Professionals, BAWTC. For more information visit: www.muybueno.net February 23: Oakland, FedEx International Trade Workshop, A description of Fedex international services. No fee. For more information call Laura at 510.251.5903 or visit www.acteva.com/go/bawtcevents February 25: San Diego,The 7th Annual California Trade Policy Forum, Trade policy forum with Federal and State lawmakers organized by the California Council on International Trade and hosted at the University of California, San Diego, Graduate School of International Relations and Policy Studies. For more information:http://www.ccit.net/ February 28: Long Beach. 5th Annual Trans Pacific Maritime Conference. Sponsor:Trans Pacific Maritime. Cost. $575.00 (before 01/28) and $675.00 (after 01/28). For more information:http://www.joc.com/conferences/tpm/
Please send events for listing here to caltrade@gmail.com. If your event is near the first of the month, please make sure we get your listing at least 5 weeks in advance. | |
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A Tale of Two Philosophies In doing research to try to learn a bit more about the trade deficit, I came across this extraordinary little essay in an Internet publication called SierraTimes.com (based not in California but in Ohio) and I have reprinted an excerpt from it below. While this is a progressive site, and they have some strong things to say about the current President, I encourage you to read and think about the following statement even if you do not fully agree with it:
This is a point of view that for some reason has become politically incorrect, but it shouldn't be dismissed out of hand. If true, is suggests that if we don't take action our entire economy might be going into a downward spiral from which there can be no real recovery. Why hasn't this point of view received more attention? One reason is that "free trade", at least on the surface, seems to be a much more appealing philosophy, and our politicians are fearful of of being attacked as being "protectionist" or "anti-business". Some other politician might come along and talk about our "great optimism" and make a few inane comments that we should "let the Eagle soar" - and then go on to win. Free trade, however, is not all it is cracked up to be. The basic argument for fit is an economic theory called "the Law of Comparative Advantage" which says that free trade promotes the well being of both parties. Exporting routine work to lower wage countries, for example, allows us to spend our resources on higher value activities. Recently, however, the distinguished American Economist and Nobel laureate Paul Samuelson noted that this theory might have a fatal flaw: "what happens if the lower wage country also captures the advanced industry?" he asked, "Free Trade is not always a win-win situation. It is particularly a problem in a world where large countries with far lower wages are increasingly able to make almost any product or offer any service performed in the United States". Did we really need a Nobel Laureate to tell us this? As a society we need to have at least some ability to act in our own self interests. I sincerely wanted to understand more about the Conservative and Republican view of the trade deficit, and I didn't have to look very far. By putting "trade deficit" in the search engines, I triggered one of those annoying pop-under ads- and this one had a picture of President Bush holding a microphone and looking at me sternly with a caption that said "Open Trade is not just an Economic Opportunity, it is a Moral Imperative". I clicked on the link, as the President requested, and was taken to a site called "Americans for Growth through Trade" - and it turned out to be a branch of the Business Roundtable- a Corporate lobbying group. Their site encouraged visitors to send their Congressman the following form letter (excerpt):
Note that this position calls for completely unrestricted "free trade"- there is not even a hint of the concept of "fair trade". Moreover, this is a weak argument- they are unable to defend their position with anything other than platitudes. Instead they attack the opposition by misrepresenting their position- in this case by saying, "they support a dangerously isolationistic approach". The Business Roundtable is comprised of CEOs from major Corporations, and they are very influential in the current administration, but they should be ashamed of this unfair and misleading information. In reality, both protectionism and unrestricted free trade are extremist philosophies, but what is scary is that that one of these extremist philosophies is fully supported by the President of the United States. In fact, last week the President gave his State of the Union Address and didn't even mention the trade deficit. Instead, he told the American people that we have a, "healthy growing economy" and that America is "the economic leader of the World". While some of our political leaders are calling it a true national emergency in need of immediate attention, the current administration considers reform of the Social Security system to be our most pressing issue. So what is going on here? Don't these people care about America? In a word, no - because the people forming our international trade policies are not Americans, they are multi-national Corporations and many of our politicians and bureaucrats are beholden to them. They don't care about the dropping dollar because they are leveraged in all major currencies. A few of the automobile manufactures, for example, made more from currency trading then they did from making cars. They don't care about America jobs because they operate in global labor markets- and they certainly don't care about American wages- from their perspective Americans are "overpaid". To them, America is just a vast consumer market and their primary interest is that currency and business keep flowing- it flowed in the form of dollars leaving the U.S. with a government and consumer spending binge financed by debt and a run up in real estate values, and now they will want these dollars to flow back in the form of "foreign direct investments". The international interests of small business and major corporations are diverging. It has already shown up in pressures in some business associations. The National Association of Manufacturers, for example, had to adjust their political position to address the concerns of their small business members that the U.S. more actively enforce trade rules. The problem is that virtually no one in our government is looking out for the interests of small business. The Republicans are solidly in the hip pocket of big business, and the Democrats are often controlled by Labor Unions and Government employees. Here in California, however, we still have a chance to do things differently. We need to understand that the stereotyping being encouraged by the administration in Washington doesn't need to apply here. In truth, not too many people in California are for completely unrestricted "free trade" and not too many are in favor of "protectionism" for inefficient companies and industries- most people are somewhere in the middle. In fact, unless we stereotype each other, it is difficult to discern a "Republican" or "Democratic" point of view on International Business issues. I see no reason why California can't have a strong and independent international trade policy that includes small business. What we need first is for people to recognize the gravity of the situation, and then work towards ways to protect our own interests while pursuing an active, positive engagement with the world. RG
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The California Trade Network The California Trade Network is a small business, private sector initiative with the goal of providing high quality information and communication services for California's international business community. This service operates a Registry of firms and professionals in California with international business interests. This includes a free international profile record, directory listing and access to our basic trade database for any company or professional in this State. We have recently greatly expanded the utility of this service by including all companies in California that we know to be involved in international trade and business. As a precaution, we are only including basic information and web addresses in the public listings for the California International Business Directory but full contact information is available in our secured database. Please review the directory and if you find a listing for your company use the Password Request form to request access to your international business profile. or send us a remove request if you want to be delisted. If you are not listed please register on the CALTRADE.COM portal. In general, we are seeking the person responsible for international business development or international marketing in each organization. The California Trade Network also operates premere services including a Trade Opportunity Database as well as several other information services and on-line business forums. We are also developing more sophisticated commercial services including an international trade opportunity matching service and higher quality information content and communication services. We are especially excited about the new CALTRADE Community Portal - it uses a business networking technology with integrated Internet Telephony- and can be used for communication and collaboration among international business professionals. We are actively looking for partners and sponsors for these initiatives so please contact us if you would like to discuss business possibilities. For more information about the current services of the California Trade Network please see this link or visit us on the web at: This report is published by the California Trade Network and we are solely responsible for its content. Please send comments, suggestions, corrections and ideas for inclusion to CALTRADE@gmail.com or call 858-483-7250. We will also consider short opt-ed pieces. This is part of an outreach effort to the international business community in California. Please help us by using the link at the bottom to forward this to the person responsible for international business development in your organization, or to your associates who may be interested in this topic. To remove yourself from this mailing list use the "unsubscribe" link at at the lower left. Also use the unsubscribe link if you want this delivered to a different email address- the current delivery address will be removed and a form will display that will allow you to enter a new email address. | |
The United States Trade deficit has broken another record according to figures recently released by the U.S. Department of Commerce. The November trade deficit was $60.3 billion dollars and is expected to hit $600 billion when the end-of-year figures are released. In the last 23 months the U.S. has sustained over one trillion dollars - $1,000,000,000,000.00 of Trade Deficits. "We now have the Grand Canyon of trade deficits" said the head of one economic forecasting firm. "Actually, deficit is really a misnomer. Chasm, gorge, black hole, infinitely deep well all fit the description better". At the same time, confidence in the U.S. Dollar is falling dramatically around the world. Bill Gates, the world's richest man, for example, is now betting against the dollar. "I'm short the dollar" he said, "The ol' dollar, it's gonna go down". 
