Influencers Opinion

International trade is important to California. But it needs to be done right

Note to readers: Each week through November 2019, a selection of our 101 California Influencers answers a question that is critical to California’s future. Topics include education, healthcare, environment, housing and economic growth.

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Across the United States, anxious voters look for ways to withdraw from the rest of the world. But as isolationist sentiments grow elsewhere, California’s political and policy leaders recognize the economic benefits of increased international trade.

“California is one of the world’s greatest exporters. Because we are global leaders in technology, agriculture, manufacturing, and entertainment… we benefit more than anyone from free trade,” said former state Controller Steve Westly. “The U.S. should do everything we can to avert a global trade war, and California must continue its efforts to lead the world in innovation and global trade.”

Assemblywoman Monique Limon (D-Goleta) personalized the economic advantages of global trade and cited the indirect job gains as well.

“The expansion in trade opportunities has the potential of benefiting families and businesses by helping to sustain jobs in many sectors,” Limon said. “In addition to generating direct on-farm employment and revenue, agricultural production supports a wide range of other businesses, including packing houses, equipment dealers, labor contractors, trucking firms and repair and manufacturing facilities.”

Bay Area Council President Jim Wunderman quantified those gains, pointing out that more than a quarter of California’s 17.5 million jobs are supported by international trade.

“The vast majority of these jobs are higher paying than non-trade related jobs and have grown at a faster rate than other sectors,” Wunderman added. “It’s not just big companies that are benefiting; the majority are small and medium size businesses.”

State labor leaders support expanded trade opportunities as well, but with a cautionary note.

“Increased trade provides little benefit to working class Californians if it just means the loss of good jobs here and the increased importation of goods produced in abusive working conditions,” said California Labor Federation Legislative Director Caitlin Vega. “For trade to benefit California, we must enforce labor protections as an essential component of trade agreements. Reforming trade policy to uplift all workers will expand purchasing power, increase in-state production, limit off-shoring and address immigration issues by stabilizing the economies of our trade partners.”

USC professor Manuel Pastor echoed Vega’s concern, arguing that international trade is a contributing factor to increased wage discrepancies, which in turn has led to growing populist resentment toward trade agreements.

“The upside is that our state’s export industries – particularly high-tech services and advanced manufacturing – generally pay well,” Pastor said. “The downside is that logistics – the ways in which companies like Amazon move foreign products to domestic consumers – is often associated with low-wage and insecure employment in warehousing and delivery.”

Several California Influencers warned that President Donald Trump’s combative approach to trade negotiations represent a significant threat to the state’s economy.

“The trade barriers imposed by Trump create inefficiency and deadweight loss, which are detrimental to California’s economy and future,” said Pepperdine University professor Luisa Blanco Raynal. “It is crucial for California’s economy that the (United States) trade policy moves away from protectionist policies.”

Sacramento public affairs consultant David Townsend was much more direct in his criticism.

“Open markets with trade conducted between parties on the basis of need, cost and desire are always good for our economy,” Townsend said. “But in the world of trade by whim, tweet and madness, California tries its best to survive until there is sanity restored to the marketplace.”

Central Valley political leader Amanda Renteria focused specifically on the damage to the state’s agricultural sector.

“The consequences of Trump’s trade wars have revealed the importance of a healthy and stable U.S. trade policy. This is especially true in California’s most vulnerable counties that rely on agricultural exports,” Renteria said. “The current trade wars have already cut into California’s $20 billion/year agriculture export market and have the potential to completely wipe out key export products in the Central Valley.”

Other Influencers outlined more productive approaches that rely on negotiations through international entities like the World Trade Organization.

“We need to work toward a regime of reciprocity: where our goods and services are welcome in foreign markets as we welcome foreign products here,” said former Republican Congressman Tom Campbell. “The route toward that eventual goal, however, is through careful, step-by-step trade negotiation using the WTO, not withdrawing from international trade agreements and organizations.”

Lenny Mendonca, Gov. Gavin Newsom’s chief economic adviser, offered an example of how expanded trade opportunities could complement the state’s other policy priorities.

“No one knew what zero-emission vehicles were a decade ago,” Mendonca said. “California set the most aggressive climate standards to encourage the development of that industry and now zero-emission vehicles are our eighth biggest export.”

Dan Schnur, a veteran analyst and longtime participant in California politics, is director of the California Influencers series for McClatchy.
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