Budget crisis threatens state’s foreign trade offices - East Valley Tribune: Business

Budget crisis threatens state’s foreign trade offices

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Posted: Thursday, May 8, 2003 6:57 am | Updated: 1:13 pm, Thu Oct 6, 2011.

Arizona’s government budget crisis is threatening to bring an end to the state’s four foreign trade offices, which have spurred exports by Arizona companies since the late 1980s.

Gov. Janet Napolitano will meet today with the directors of the four offices, which are in Guadalajara, Mexico; Tokyo; Taipei, Taiwan; and the United Kingdom, to reassure them of her support for their work.

"I am sure she will give them her assurances they will continue to be funded," said Gail Howard, the governor’s policy adviser for economic development. "We think they are important and need to be preserved."

In addition, the session will serve as a get-acquainted meeting between the new governor and the state’s trade representatives, who have not yet had an opportunity to meet Napolitano.

The trade offices are among the programs eliminated in the Republican Party budget for the fiscal year beginning July 1, according to the Department of Commerce.

The program, which is budgeted for $976,000 this fiscal year, is supported with lottery funds rather than taxpayer money. Napolitano’s proposed budget continues lottery funding for all four of the trade offices, Howard said.

But Rep. Russell Pearce, RMesa, chairman of the House Appropriations Committee, said sufficient carryover funds will be available to keep the offices functioning in the next fiscal year until a tourism and economic development reorganization committee composed of legislators and business representatives can make recommendations next year on which Department of Commerce programs are worth keeping.

"I have asked for more information about the four offices," Pearce said. "They cost just under $1 million. That’s a lot of money. I’m not sure what the return on that investment is."

He added, however, that he has heard strong support among businesses for keeping the offices running.

The purpose of the trade offices is to help small and medium-sized Arizona companies find foreign markets for their products. Also the offices scout for companies in other parts of the world that might be interested in investing in Arizona.

The state contracts with private firms to provide the trade representation. In the case of Mexico, Japan and Taiwan, the contractors have no other clients and devote their full time to Arizona business, said Sally Spray, director of the international trade and investment division of the commerce department. In the case of Europe, Arizona contracts with a large firm that provides three staff members assigned full time to the Arizona account, she said.

The program also has a support staff of five people working in Arizona.

Spray said the benefits far outweigh the cost.

"We are a great resource for small and medium-sized companies that need that help," she said. "We have people working on the ground looking specifically for trade opportunities for Arizona companies . . . No one else in foreign countries is doing that specifically for Arizona companies."

Arizona businesses exported nearly $12 billion in goods and services last year, Spray said.

Several companies that have been helped by the trade offices are endorsing the program. Tom Salamone, senior vice president of Hypercom, a Phoenix-based company that makes pointsale-equipment, said the office was instrumental in introducing the company’s products to China. The resulting sales "will be a significant chunk of business for us," he said.

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