- INDEPENDENCE ISSUE PAPER oy 15-87 | Independence Institute + 14142 Denver West Parkway #101 * Golden, CO B0401 * (303) 279-6536 December 11, 1987 FAR EAST TRADE AND TOURISM: IS COLORADO SERIOUS? By J. William Artist Introduction: The Editors To maintain Colorado's prosperity in the STRBARY OF RELOBUEHDA TIONS 1990s, business and political leaders must Co oradctea SMG ra [eed a COneNC er adopt a wider horizon and acquire a new THOU Internat otaleetredegiua abet. language. The state is in a race to learn Tae Seelam eeeey iommspeckanaci hic Rim: | | admission, The international mar- | 2 cotoredo in the past_ may actuelly hare | | He,dazunds tht Colorado be con derived ecoronte, strength fron 85 geo- | i graphic and political isolation from the i s Test of the country and the world. But the Pete ocienare ten Rene montis isolation ended with a series of events in MGMChE OUTHat aplaneateast tataetie recent years, and Colorado now has no AHERETLOTOPECA ME CSRS PUGET choice but to compete vigorously in both Térnatiodall trade stboeh 16K aha the national and international arena. The Sreeeneera 4g only alternative is a decline in living B penal sThe two present trade offices -- The culttvatton of foretgn trade relation- fn Tatwan and Japan -~ should con ships for the state, particularly in the Gincr RSINGL PMOL Gee vere Far East, makes compelling sense. But a these before attenpting a great there seems to be no clear strategic plan for doing this. Bill Artist, a former ea uuoheee cacti a (ce wreigul state legislator deeply versed in the publ Isha teseOets Pec liic ep lanace fining markets and actual goals. issue, offers the following analysis: “A database must be created immedi- Background of Trade Effort, 1982-1987 ae es UarCArer STCNC ETAL Five years ago, Colorado did not even have na Ee tee ce ake an international trade office. Our public Lee. niche. Ba Whateesbaneiee O96 policy-makers were not interested in in- ca ee ee ternational trade, and Colorado did not So eee ae ECT yet realize that it would have to compete tee ea end nationally, let alone internationally. : But when State revenues began to drop, : policy-makers began waking up to the Set the: broper min ottenitior potential of international trade as part ae (c) inbound tourism to achieve those goals. (Continued on page 2) |____(continued on page 2) Note: The independence Issue Papers are published for educational purposes only, and the authors speak for themselves. Nothing written here is to be construed as necessarily representing the views of the independence Institute or as an attempt to influence any election or legislative action.Recommendations - Continued ae oer "The legislature should have the di :t "Define the role of the government vis-a-vis oversight, either through a standing com- business. Businessmen do deals; the govern- mittee, or a specific ad hoc committee to ment is the repository of information and monitor progress and hold the executive a necessity for protocol, but not a compe- branch accountable for governmental titor of local businesses. policies. ‘We must provide proper and adequate staff «It is imperative to make the office res- for the international trade office. ponsible directly to the governor, not some cabinet official. A capable trade sThe private sector should be encouraged to office director has been hired, and needs participate in helping shape the plans and to have room to maneuver in the market oversee progress. place. Background - Continued of an overall economic development strategy to replenish the coffers, stimulate the economy, and create jobs. International trade in the state of Colorado has always been a hard sell. There are not immediate results, and many legislators tend to place a higher priority on handling acute problems, rather than attempting to "seed the clouds" for future results. Additionally, the governor in office at that time was not exactly pro-business, pro-growth, or pro-trade. In 1983, legislation was passed to create the Colorado International Trade Office. The minimum staff (2.0 FTE) did a fairly good job with almost no Support. Trade office personnel organized a basic structure to do business. They started making specific introductions and contacts in Europe and the Far East, with exceptional results in Taiwan. During the next three years, the office grew slightly, and interest in international trade started to become a priority. In 1986, with the election of a new governor, there was a new attitude toward business and economic development; high expectations were set. Although these expectations were never defined, there was a public perception that the governor was pro-growth, pro-business, and pro-trade. The Colorado business community (those focused both domestically and internationally) felt we now had a chief executive officer who would lead us out of the doldrums and into the promised land. Governor Roy Romer has proven to have a pro-business attitude, a "can do" style, and almost endless personal energy, But even given those positives, is state policy in international trade well focused? Do we, in fact have a direc- tion that will lead us to the promised land? If so, where is that direction defined? It became clear part way through the 1987 legislative session that there was no plan from the governor's office regarding international trade, so the legislature passed a bill dictating to the executive branch that Colorado should focus in the Far East. The legislation directed that offices (or agency - relationships) could be established in four countries: Taiwan, Korea, Japan, and the People's Republic of China.The bill did not specifically dictate that all these offices should be established at once. Rather the intent of the legislature was that an office be opened in Taiwan, that an agency relationship be established in Japan, and that Korea and the People's Republic of China be studied further, The sum of $660,000 and 6.0 FTE were dedicated to the effort, which was a significant increase from the parsimonious expenditures previously conmitted. A most important aspect of the bill was that the international trade office should report directly to the governor, and that the personnel in the trade office be exempt from the state personnel system -- since the restrictions of that system had severly hindered activities in the past, Putting the trade office directly under the governor provides the needed flexibility in dealing with foreign governments. It allows the governor to move quickly and decisively when he must -- presuming he has earlier outlined a strategic plan with proper goals. Most importantly, it allows the governor to hire the most qualified people available, and to dismiss those who cannot or do not produce prescribed results. why the Far East? Why Taiwan? Why did the legislature pick the Far East, with specific emphasis on Taiwan and Japan? As a group, the Pacific Rim is the hottest area in the world. All the major countries are generating enormous economic growth, and the success of Japan alone is legend. There is every reason to expect that the economies of Taiwan and Korea will follow in these remarkable achievements, and since Japan has been a pattern to follow, we can predict with some certainty the ability for the United States, and more specifically, Colorado, to do business with countries such as Taiwan and Xorea. All these countries are pro-Western, with an emphasis on free economic systems, and especially in Taiwan where America has no diplomatic relations, they recognize that they must tie their political fortunes to strong commercial relations with the U.S. Thanks largely to the work of Bob Bayne, the ITO liaison officer who now heads our Taipei office, the State of Colorado has as good contacts in Taiwan as any state, and better than most. From 1983, when the Republic of China (Taiwan) sent a procurement mission to Colorado to purchase $13 million of wheat, through the present time, the Taiwan government has purchased approximately $30 million in goods from Colorado. Colorado this fall became the very first American state to open a Taiwan office, which has generated a great deal of attention from public officials in that island country. Taiwan has over $60 billion in foreign currency reserves, and is in the process of freeing its currency, so private citizens will be permitted to invest overseas as much as $5 million each. The state also has targeted Tainan because an arrangement has been made with Price-Waterhouse in Taipei to provide office space and facilities, substantially reducing the cost to Colorado tax- payers. With the pro-U,S. attitude, the strong ties in Colorado, and this newly (Continued on page 6)