By PHK
I hadn’t thought much about world trade for some time. I know the balance of trade between the US and China is, well, heavily imbalanced in China’s favor and that the balance between US exports and imports worldwide annually is heavier in the second category by about an estimated $.84 trillion.*
Before I moved to New Mexico in 1998, I was surprised to learn that many of the state’s exports were destined for Asia. Of these, a large percentage were computer chips being shipped from a major Intel plant just north of Albuquerque to computer assembly plants on the Pacific Ocean’s west rim. Many of the chips were then and still are imported back into the US as parts of finished or partially finished products.
When I was cultural affairs officer at the US Embassy in Manila between 1992 and 1994 international trade, not national security, was the name of our foreign policy game. So I learned a lot about ASEAN and APEC and various other pieces of the complex US-Asian trade relationship –one that very much included the Philippines.
At the time, the US Embassy’s Commercial Office’s library and resource center was located in Makati - Manila’s major business district – in the same building as the much larger and now defunct USIS Thomas Jefferson Cultural Center and Library which, as Cultural Affairs Officer, I oversaw. We worked with our US and Foreign Commercial Service colleagues whenever possible. This included pooling – and not duplicating - library resources. USIS also backstopped the US Foreign Agricultural Service and its trade shows that promoted the sales of American agricultural products to Filipino companies.
As a result, I discovered a fair amount about how our Commercial and Agricultural Attaches and their Filipino staffs operated. I also learned the basics of US trade policy – although I confess I never was – and never will come close to being expert.
New Mexico’s Trade with Asia and more
When I had the opportunity to attend an Albuquerque International Club lunch last week which featured a speech on New Mexico’s trade with Asia by Mathew D. Woodlee, New Mexico’s International Trade Office Director, I went – in part because Asia fascinates me - but also as a respite from the deadening drumbeat of depressing news from the Middle East and the Bush administration’s failed foreign policies there.
What did I learn? A lot: some of it upbeat, some of it not - and it didn’t only pertain to New Mexico.
95 percent of the world’s consumers live outside the US and this – for those who care in Washington and elsewhere throughout our fifty states – should mean tremendous global export and trade opportunities for American firms. Further the ten-member Association of Southeast Asian Nations (ASEAN) has a combined population equivalent to that of the US (about 300 million) and these countries have large – and growing per capita purchasing power (ppp). And ASEAN doesn’t include Japan, South Korea, or China.
New Mexico exports
No surprises then that New Mexico’s exports continue to be Asia oriented. Woodlee said that New Mexican exports to Europe come in second, but the Middle East is an important region for future New Mexico trade expansion as is Latin America.
Even if Intel’s primary export (digital monolithic chips) is removed from the equation, six of New Mexico’s top ten export markets are in Asia along with Canada and Mexico, the United States’ largest trading partners. This past year China leads New Mexico's export pack. Malaysia and the Philippines come in second and third. Without Intel’s chips sales, add Hong Kong to the list.
The state’s International Trade Office focuses on helping small and medium sized New Mexican businesses market their products and services abroad. Emphasis on helping small and medium sized American companies do the same is also a primary goal of the US and Foreign Commercial Service with less than 200 American employees in the US and abroad. State and federal goals and activities should, therefore, mesh nicely.
New Mexico’s exports include aviation products, alternative energy, water treatment, arts and antiques, textiles and food. For chili pepper fans – New Mexico is a leading grower – and “red or green?” is the state question.
Lots of New Mexico pecans are sold to Taiwan. Looking for organic products? This state has many organic growers. Organic lip balm? Try Taos-based Private Label Select, Inc., a small New Mexico company based in Taos which is starting to market in Asia. Native American culture and arts sell well in Europe and also Japan. Much R&D and innovative manufacturing technology come from scientists and engineers associated with, or formerly associated with Sandia and Los Alamos National Laboratories both long time residents of the state.
New Mexico is the only place in the US that is building a space port. Singapore and the Arab Emirates are its other competitors. Solar energy? The state now offers incentives to users and manufacturers – and products developed here may well have export potential. The overseas markets are there.
How about foreign tourists? New Mexico is one of this country’s most attractive states: the scenery is spectacular and its multiethnic culture, well preserved historical buildings and archeological sites are well worth the visit. Besides, the state’s high quality fine and popular arts, ethnic festivals, cuisine (the chili comes as red or green) and spas are hard to beat. Furthermore, New Mexico is neither overgrown nor over-populated, its roads are in far better condition than California’s and its climate and pace of life are pleasant.
More foreign tourists come to New Mexico from Germany than anywhere else. But the Japanese who 
arrive are bigger spenders and the New Mexico Department of Tourism markets the state through a representative in Japan. China and India also have huge tourist potential for the state and the International Trade Office will soon embark on a trade/tourism mission trip to New Delhi.
Leaving it to the States
What surprised me most, however, was that US international marketing and foreign trade relations seem ever more to be left to the states - if they are to happen at all.
Maybe these relations were always state driven – but from what I’ve read in back issues of the American Foreign Service Journal – the U.S. and Foreign Commercial Service (USFCS) has had some problems over the past several years. I may have it wrong but it looks like the USFCS has been hit with ever fewer positions than previously, more work, too many task masters and too many tasks. The latter were always problems, but the fewer positions and more demands have just exacerbated the situation and make it less likely that it will be in a position to help America’s small and medium sized businesses compete abroad.
According to Woodlee, there are only 300 US federal employees working domestically devoted to US international trade promotion versus over 1,000 employed in the same field for state and local governments. According to FSJ articles, there are fewer than 220 US and Foreign Commercial Officers worldwide – and this includes those posted to Washington.
The US Department of Commerce has a staff of two in New Mexico – co-located with New Mexico’s Office of International Trade – to help promote exports. An aside: this is two more than the US State Department has in New Mexico to handle its international educational exchange programs here.
But only two federal employees in this state to help promote exports and only 81 USFCS staffed offices at Embassies abroad in 2005? No wonder the US has had and continues to run a major trade deficit. The federal staffing shorfalls are just symptomatic. The priorities - as we see on the 24/7 news - are elsewhere.
On the positive side, Woodlee said that the US Embassy commercial offices in the ASEAN countries function well – and that their staffs - both American and Foreign Service nationals - have provided excellent support when he takes groups of New Mexico business people to East and Southeast Asia. This is as it should be, but I also understand that support from Commercial Offices in US Embassies elsewhere is uneven. Or the problem may be even deeper – US commercial relations are handled by non-specialist multi-tasked State Department Foreign Service Officers in 91 countries where USFCS has no staff at all.
The Internet can be a godsend especially for more established companies – or those whose products can be delivered through it, but face-to-face meetings between exporters and importers often remain crucial for clinching deals with Asians.
So. . . before the Bush administration and members of Congress blame the Chinese and other Asian countries for US trade deficit woes, maybe they should look at the federal government’s own priorities and its trade promotion infrastructure and ask some long and hard questions.
Here are just a few that come to mind:
• Why is a relatively poor state like New Mexico targeting at least some of its commercial efforts with China through Chihuahua, Mexico’s representative in Beijing? This is not a case of “one of our fifty is missing,”** it is a case of pragmatism.
• Why has New Mexico decided to use a private Indian firm to arrange appointments for an upcoming trade mission to India – rather than relying on USFCS support as it does for trips to Southeast Asia?
• Why are Asian countries turning more to the 50 US states in developing trade relations with the US? Could it be that they not only find more economic resources at the state level, but receive greater political support as well? Taiwan, for instance, is going state by state to seek support for a free trade agreement with the US.
• Why do numerous U.S. states have permanent trade or tourism representatives based abroad? I know this is not new, but if the federal government supported the effort adequately would the states then spend their own money to promote their exports? Shouldn’t there be sufficient competent federal staff abroad so that this is an aberration, not the rule?
• Why should the US be spending about $6 billion per month (and this was before the upcoming surge of troops in Iraq) on an invasion gone wrong when it could be promoting trade and improving America’s image abroad for a fraction of the cost? The Germans and Japanese learned the lesson well in the 1940s that international power and influence do not necessarily emit from the barrel of a gun. In fact, “might-makes-right” can have a nasty way of backfiring.
• And finally, why is it taking the State Department so much longer than its webpage promises to process passport requests from Americans since the new passport requirements for travel to Canada, Mexico and the Caribbean went into effect January 23, 2007? The New York Times reported that the US Passport Service – despite its protestations to the contrary - cannot keep up with the increased workload and that American business travelers are hurt the most.
Selling American products abroad today: where to begin?
I’m sure it must be far harder to sell American products and brands in countries where the U.S. image has sunk below the horizon as is the situation right now. But I wonder if the current administration’s approach to facilitating US exports abroad is the most effective way to help American small and medium sized businesses enter and expand into the vast global market?
So American small and medium businesses, please educate yourselves about the world and its huge markets beyond our borders. Get out that entrepreneurial spirit for which you are so famous, check out Business for Diplomatic Action’s new Executive Guide for Business Travelers and the US-ASEAN Business Council’s matchmaking website, but above all run, don’t saunter, to your own state’s Office of International Trade.
With special thanks to Mathew Woodlee, Director, Office of International Trade, New Mexico Economic Development Department and the Albuquerque International Club.
For New Mexico the website is: www.goNM.biz/InternationalTrade .
*Current estimated US Exports are $1.024 trillion (fob) and Imports are $1.869 trillion (fob) according to the U.S. Department of Commerce.
**Red or Green chili refers to the color of the chili sauce served with New Mexican dishes.
Photos credits: PHKushlis: 1) Manila Bay, Philippines from hotel on Corregidor Island, 1994; 2) Sandia Mountains from Albuquerque, New Mexico January 2007.