Influencers Opinion

Expanding trade between the US and other countries benefits California, Influencers say

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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California Influencers this week answered the following question: How will Californians be impacted by expanded trade between the US and other countries? Below are the Influencers’ answers in their entirety.

“The impact of International trade on California cannot be understated”

Jennifer Barrera - Executive Vice President of the California Chamber of Commerce

California’s economy depends on robust trading relationships with other countries. Expansion of trade between the US and other countries will further support California’s economic success and generate benefits for our businesses, communities, consumers and state government.

The impact of International trade on California cannot be understated: International commerce supports nearly 5 million California jobs – nearing 1 in 4 jobs.

Although trade policies are dictated beyond California’s borders, its impact here becomes very clear when looking at the numbers. In 2018, California exported $178.4 billion to 230 foreign markets. Further, in 2018, exports from California accounted for 10.7% of total U.S. exports.

All California leaders should enthusiastically support free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment.

Expand trade by protecting workers - here and abroad

Caitlin Vega - Legislative Director of the California Labor Federation

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. 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.

Ensuring these rules apply to NAFTA 2.0 (the USMCA) is at the core of the Labor Movement’s fight to stop a global race to the bottom. The expansion of trade without effective, enforceable standards will result in more of the same – imports of cheaply made goods that reduce jobs and production capacity. Instead, we can rewrite the rules to ensure that good-paying jobs stay here, that we sell California and American-made goods around the world, and that consumers in other countries can afford to buy them.

The Labor Movement supports expanding trade, but not at the expense of our jobs or fostering exploitative conditions around the world. The current rules only work for multinational corporations. We must insist on new rules to protect the people who do the work.

California should prioritize strong worker and environmental protections in trade policy

Jesse Gabriel - California State Assemblyman (D-Los Angeles)

There are huge gains to be achieved from foreign trade and opening up international markets to California exports. In the past year, we exported California-grown and California-made products to over 230 foreign markets. These exports support businesses that employ hundreds of thousands of Californians. However, as we consider the benefits of increased foreign trade, we should be mindful of ensuring robust labor and environmental protections both in California and abroad. If we pursue smart public policies, California can continue to show the world that strong worker and environmental protections can go hand in hand with strong economic growth.

“Ensure the state economy works for all Californians”

Lenny Mendonca - Chief Economic and Business Adviser to Gov. Gavin Newsom

Our fundamental objective, from an economic standpoint, is to ensure the state economy works for all Californians. As the world’s 5th largest economy, international trade is a critical component to our economic growth and it’s an undeniable engine for industry and job creation. No one knew what zero-emission vehicles were a decade ago. California set the most aggressive climate standards to encourage the development of that industry and now zero-emission vehicles are our eighth biggest export. Currently, one in five jobs in California relies on international trade and investment, and these jobs aren’t just in Los Angeles, the Bay Area, and San Diego. Trade supports over 200,000 agricultural jobs in our state – 70 percent of which are in rural counties – and has led to thousands of new jobs in the Inland Empire. What’s more, California trade and exports translate into high-paying jobs for more than 1 million Californians and over $600 billion in exports and imports each year. As we work to build an inclusive, sustainable, and resilient economy, now and for generations to come, expanding trade will support the growth of quality jobs, new industries, and bold ideas that will help revive economic mobility for all Californians.

“We need to work toward a regime of reciprocity”

Tom Campbell - Professor of Law and Economics at Chapman University

The question assumes we can have expanded trade with other countries: wouldn’t that be a welcome change! My worry is that trade has been cut back with China due to tariffs, and with other Asian nations, where our geography gives us an advantage, due to our withdrawing from the Trans-Pacific Partnership. 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. California can lead the world in intellectual property, film, and agricultural productivity -- if we were allowed to compete without having to surrender rights, just to get to foreign markets. 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. Also, social media firms, located in California, have to show courage to stand up to restrictions on freedom that China has imposed. We cannot force China to respect human rights, but we do not have to enable China in denying them.

Provide generational leadership by focusing on collaboration and cooperation in the global value chain

John Chiang - Former California State Treasurer

Expanding trade between the US and other countries provides market opportunities to highlight California’s strengths - and to address shortcomings - in the global economy. Diverse and entrepreneurial people, a diversified economy and world class institutions of higher education drive California’s ecosystem of innovation which has sparked advancements with worldwide impact and confirmed California’s status as an economic powerhouse. Ideally, the next chapter would highlight an enlightened California’s understanding and approach to the global value chain. Building on models of cooperation and collaboration through its extensive networks, deep expertise in its skilled workforce and strong private and public leadership working together, California can build opportunities for new, broad and enduring economic prosperity.

“Feed the world while expanding one of our states’ key economic drivers”

Chad Mayes - California State Assemblyman (R-Yucca Valley)

The recently announced agreement between Japan and the United States will end the growing competitive advantage other nations have enjoyed. Japan is the biggest foreign buyer of California beef and hay, is in the top five destinations for California almonds, dairy, wine, walnuts, processed tomatoes, olives and olive oil, and is the biggest purchaser of Yolo County agricultural products.

The recently announced trade agreement will immediately eliminate Japanese tariffs on almonds and walnuts and will gradually draw down Japanese tariffs on California wine, tomato paste and beef.

This agreement will allow California farmers and ranchers to continue doing what they do best; feed the world while expanding one of our states’ key economic drivers.

“We must do all we can to save agriculture and our most vulnerable counties”

Amanda Renteria - Board Chair for Emerge America

It’s important to put this question in the context of today’s trade environment. 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. 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. As an example, China is expected to become the world’s largest dairy marketplace in the next three years. So, as we think about trade policy today, it’s important to talk about the benefits of expansion, but before even getting there, we must do all we can to save agriculture and our most vulnerable counties from Trump’s trade wars.

“The federal government must give serious consideration to the impact trade agreements have on state economies”

Monique Limon - California State Assemblywoman (D-Goleta)

International trade is a part of job creation and economic growth in California. The expansion in trade opportunities has the potential of benefiting families and businesses by helping to sustain jobs in many sectors and at the same time providing a variety of California products to other countries. For example, in my district citrus, strawberries, avocados, and wine grapes are commonly grown crops. These crops are exported internationally to countries such as Japan, Canada, South Korea and Mexico among many. 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.

The federal government must give serious consideration to the impact trade agreements have on state economies. California could benefit from expanded trade agreements, but it is important to ensure state needs and tradeoffs are taken into consideration. California is leading the way in addressing climate change; trade agreements must include efforts to protect our agricultural businesses, invest in our farmers, and provide them tools to combat growing challenges.

Trump’s trade wars mean everybody loses, and especially California

Luisa Blanco - Associate Professor of Pepperdine University’s School of Public Policy

California is one of the top exporter states, where it is second after Texas. Data from the US Census Bureau on exports for 2019 (up to August), shows that Texas and California exports represent 20% and 11% of total US exports, respectively. Exports from the next state in the list of top exporters, New York, only represent 4% of total US exports. Thus, California is a key player on trade, and is significantly affected by it. Given that California trades the most with Mexico, Canada, and China, the current Trump trade wars mean everybody loses, and especially California. The trade barriers imposed by Trump create inefficiency and deadweight loss, which are detrimental to California’s economy and future. A report on the World Economic Outlook by the International Monetary Fund that was just released this month shows that global growth for 2019 is predicted to be at 3%, which is the lowest level observed since 2008-2009. According to Gopinath, the head of the International Monetary Fund’s, “the global economy is in a synchronized slowdown”, and weak business confidence due to the tensions on trade between the United States and China is a main factor explaining this slowdown. Thus, it is crucial for California’s economy, that the US trade policy moves away from protectionist policies.

“We benefit more than anyone from free trade”

Steve Westly - Founder and Managing Partner of the The Westly Group

California is one of the world’s greatest exporters. Because we are global leaders in technology, agriculture, manufacturing, and entertainment (to name just a few), we benefit more than anyone from free trade.

Tariffs may help some industries and a few states, but given we’re the #2 exporter behind Texas — nearly $179 billion in 2018 — we stand to lose substantially. The Cal Chamber of Commerce data shows California makes up nearly 11% of all US exports and conducts more trade with China than any other state.

We should all be proud that California is the world’s 5th largest economy (ahead of the UK). But, to continue to grow our $2.9 trillion economy, we need to expand the share of our economy that currently comes from trade. The US 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.

“Continued globalization is the likely long-term trend for America and California”

Manuel Pastor - Director of USC’s Program for Environmental and Regional Equity and Center for the Study of Immigrant Integration

While the current trade tantrum by President Trump has led to a weakening of our commercial relations with China, continued globalization is the likely long-term trend for America and California. The upside is that our state’s export industries – particularly high-tech services and advanced manufacturing – generally pay well. 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.

This is one part of a larger story of California’s widening wage divide: over the last 40 years, real wages for full-time year-round workers with a college degree or a post-graduate degree have risen by 20 and 31 percent respectively while real wages for those with a high school degree or less have fallen by 15 and 23 percent respectively. While trade is not the only factor, such growing inequality has fueled a national populist backlash against globalization. To temper this, expanded trade must be accompanied by better supports for wages, training, and education – and just as with addressing climate change, California will need to lead a reluctant and seemingly paralyzed nation on a more progressive and inclusive approach.

“The benefits to Californians from expanding trade are huge”

Jim Wunderman - President and CEO of the Bay Area Council

First, the question is all wrong. It should read: How will Californians continue to benefit from expanding foreign trade? The answer: The benefits to Californians from expanding trade are huge. California businesses exported more than $312 billion in goods and services in 2017, according to data from the Business Roundtable. And the more than 4.7 million jobs that trade supports – both direct and indirect – across California account for more than a quarter of the state’s total 17.5 million jobs. The vast majority of these jobs are higher paying than non-trade related jobs and have grown at a faster rate than other sectors. It’s not just big companies that are benefiting; the majority are small and medium size businesses. And when you consider that 80 percent of the world’s purchasing power resides outside the United States, expanding foreign trade as an economic driver is a no-brainer. That’s why the Bay Area Council has opened four offices in China to provide a landing pad for businesses looking to enter that massive marketplace. It’s also why we’ve worked to strengthen economic ties with business and government leaders in Canada and elsewhere in the western hemisphere, India, and across Europe.

“California needs to act in its own best interests and go it alone”

David Townsend - Managing Partner at TCT Public Affairs

Under the current Presidents trade policies, whatever they are on a day to day basis, no one can honestly say what trade practices will or will not occur. Open markets with trade conducted between parties on the basis of need, cost and desire are always good for our economy. But in the world of trade by whim, tweet and madness California tries it’s best to survive until there is sanity restored to the marketplace. As the world’s fifth largest economy, California needs to act in its own best interests and go it alone whenever and however we can until sanity is restored in White House.

There are no limits to global prosperity

Maria Mejia - Los Angeles Director for Gen Next

International trade is never free, and Californians have long understood this reality.

Sometimes the cost of trade is absorbed by large manufacturers in the form of tariffs, sometimes directly by consumers as taxes, and in others, by day laborers who travels hundreds of miles to work our farms.

This is the price we pay in exchange for a vibrant and healthy world economy, where opportunity is vast, and where diverse market strengths can be leveraged to improve economic benefits for all.

It is an economic system that is easily taken for granted however.

As the nation’s largest and most integrated state economy, the end of the U.S.’ trade war with China should be more than a moment of brief economic relief. Instead, we should feel moved like never before to protect free enterprise, and the system that makes our own economic well-being possible. We should reject the nationalist sentiments and fears dominating current trade negotiations and replace it with a renewed approach towards international collaboration, partnership, and world-wide economic prosperity.

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