October 28, 2014
Phoenix Business Journal
Eric Jay Toll

Arizona has lots of opportunity when it comes to increased exporting, according to panelists at the Phoenix Committee on Foreign Relations' International State of the State. The Monday session centered on the two major trade bills rambling around Congress. The Trans Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) will slash tariffs between the U.S. and Asian countries with one treaty and the European Union with the other.

Lowered tariffs makes U.S. products more competitive overseas, and the increased competition opens ports to more products from Arizona. Larry Penley, president and chief academic officer of Thunderbird School of Global Management, defined Arizona's position in the world of trade.

The state ranks 16th in population, but 26th in exports. With 2.1 percent of the U.S. population, Arizona creates 1.7 percent of the national gross domestic product, but only 1.3 percent of the nation's exports.

The lagging numbers should be leading indicators of Arizona export potential. The state attracts foreign interest in schools like Thunderbird. This semester, Arizona State University has more than 9,000 foreign students enrolled.

U.S. Rep. Matt Salmon, R-Ariz., told the crowd of around 300 people that exporting provides many opportunities to grow. He said that the two treaties, which are being prepared by trade representatives from the countries involved, should be passed by both the House and the Senate. Salmon said there is support for improved trade, despite some critics.

Chris O'Connor, consul general for the United Kingdom, said, "Increased trade with other countries in the European Union will be easier with the TTIP in place. The U.K. is one of the easiest countries with which the U.S. can trade."

The U.S. Chamber of Commerce Senior Vice President for Asia Tami Overby talked about the importance of exporting. "When looking at consumer markets, 95 percent of the market is international," she said. "The (TPP and TTIP) offer a level playing field for U.S. companies."

"Pure trade never happens in a win-lose way," said O'Connor. "Anything blocking (a win-win opportunity) is bad."

The importance of the trade agreements was punctuated with examples. Overby said that some countries are starting to require businesses to store domestic data domestically. She explained, "This means that a multinational company would be required to have separate data centers in each country where they do business."

The problem with the data centers is one example of non-tariff trade barriers.

Getting the trade bills through Congress will not necessarily be smooth sailing. "The challenge is that special interests and fear mongering could undermine the trade negotiations," she said.

A major aid to small and mid-sized international traders is the Export-Import Bank, which helps finance international trade. "Even though this is one of the few governmental institutions that actually makes money for Treasury," said Salmon. "There are many in Congress who want to shut it down."

The Ex-Im Bank was reauthorized through mid-2015, but Salmon cautioned that the long-term renewal bill is in the House Appropriations Committee led by Texan Hal Rogers, who is vehemently opposed to the institution.

"(Ex-Im) is not out of the woods," cautioned Salmon. "I'm the only member of the Arizona delegation that supports it. It needs a show of support."

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