Arizona Foreign Trade

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The Phoenix Committee on Foreign Relations presented its 10th annual International State of the State recently. Panelists looked at Arizona’s place in international trade compared to other states and NAFTA partners. While the nation’s exports increased 23 percent over a five-year period, Arizona’s declined two percent. Keith Galbut, the Chairman of the Phoenix Committee on Foreign Relations and Steven Beschloss, an award-winning writer, journalist and filmmaker, will discuss Arizona’s international trade picture.

Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. The Phoenix committee on foreign relations recently held its 10th annual international state of the state. Panelists discussed a variety of trade-related issues, including numbers that show Arizona's international trade in decline while the U.S. rate is increasing. We spoke with Keith Galbut, the chairman of the Phoenix committee on foreign relations, and Steven Beschloss, an award-winning writer, journalist, and filmmaker.

Ted Simons: Good to have you all here.

Keith Galbut: Thank you for having us.

Steven Beschloss: Good to be with you.

Ted Simons: Arizona's place in international trade. Where are we?

Keith Galbut: We have a lot of work to do. We have been making progress over the years. Arizona has a long history of strong international trading relationships, but we're falling behind and there is a lot more work for us to do to maintain par and get ahead. For example, in the Metro Phoenix area, which is the 6th largest city in the country, ranks 27th as it relates to export trade. There is a lot of work to be done.

Steven Beschloss: I will jump in. That is below San Antonio, below San Diego, below El Paso. Below Greenville, South Carolina, and Peoria, Illinois. It just underscores the fact that Arizona has been overly dependent on tourism and real estate and the kind of things that don't actually drive growth for the state.

Ted Simons: Is that the reason, depends on other things other than exporting out of the country?

Steven Beschloss: I think historically, an over-dependence on a small amount of industries to drive Arizona's progress. It is clear it has to change. If you go back to 2008, we haven't gotten back to that level since the great recession. We're still trying to get back to where we were then. And at a national level, the country is actually at a record high in terms of its overall exports.

Keith Galbut: I was going to say, Ted, I think as well we often in Arizona have short memories as it relates to recessions. During the recessionary period, we think about taking action, steps towards diversifying our economy, but as the recession generally closes and we start to lift out of it, we forget. One of the problems with of course, the great recession, this period has been much longer than normal. And so it's put punctuation on the need for us to diversify our economy more broadly.

Ted Simons: You mentioned Arizona has a rich history as far as international trade is concerned. What were we doing then that we may not be doing now? Greenville, South Carolina, what are they doing that we are not doing now?

Keith Galbut: My view, a greater level of collaboration among the private sector and public sector leadership all aimed at a very direct and specific way at enhancing international trade. There needs to be a much greater level of enthusiasm. It helps to create jobs and it really helps us to advance our community. And to even out these ups and downs that we experience during recessionary and expansionary times.

Ted Simons: Why is there not more enthusiasm?

Steven Beschloss: Mexico represents an extraordinary asset for Arizona's growth. It already represents one third of our total exports, even a little more than that. And if you look at what's happening in Mexico, I mean, you have major automakers from around the world that are spending billions of dollars investing in the growth of their industries. They recognize opportunities that exist there, and, you know, we're still just kind of getting there. This has been a bump because you have the commitment on the part of the city of Phoenix and others to open an office in Mexico city, and then you have Mexico committing to opening an office in Phoenix. These things, they help. They start to move the needle. But as Keith was saying, it is so important to be able to have groups that are focused on kind of global development who are giving people the tools that they need to do more, exporting.

Ted Simons: What are some of the tools? What should be happening out there?

Keith Galbut: I think on the theme of what is happening and how can things get better, in the last 10 years, there has been a substantial effort put in play, and enhanced level of leadership to further international business. The efforts of the greater Phoenix economic council, GPEK, commerce authority, groups like the chamber, and regional groups focusing on Arizona, for example, Canadian growth, led by Glen Williamson, very helpful for advancing those relationships. There is a momentum. In my view, that momentum is really important because it gets important together to talk about opportunities and people seize upon those opportunities and expand.

Steven Beschloss: By the way, that is why the Phoenix committee on the foreign relations, last three years, has started to focus more on how to bring people together to have those conversations, talk about general global issues but to dig in and focus on what are the ways that we can begin to move the needle. Partly it is a matter of building relationships. I mean, it sounds like maybe a light thing to say. If you want to start doing business in Malaysia, it helps if somebody can give you an introduction. It is data, knowing how to go to those markets and it is being able to have the introductions that allow you to function there successfully.

Ted Simons: 87% of exports, Arizona exports are from small and medium-sized firms. Is that a good thing? Is that a healthy thing?

Keith Galbut: Think it is a great thing. I think that is what Arizona is. Always been about entrepreneurism. Not a major headquarters for many large companies or even regional headquarters. A number of small and medium-sized enterprises who are entrepreneurial, interested in expanding, and so being that that is, in fact, the statistic that 87% are from small and medium-sized companies, we should be focusing on that segment of the market to expand. This correlates to employment as well. Trade-related employment grows at four times the average of non-trade-related employment. When we think about all of the small and medium-sized businesses within our community, if we can turbo charge that effort it can make a big difference.

Ted Simons: Computer stuff, transportation equipment number two, minerals and ores number three, is that a nice portfolio are could we get more diversified?

Steven Beschloss: Diversification is key to this thing. The whole conversation, not being dependent on a few things. Semi-conductors may be up one year and down the next year. Same with aerospace and military. So, what we're -- right now what we're saying, we have 7,000 businesses which is that 87.5% that are operating outside of Arizona that are recognizing the opportunities. That's great. But the question is, how do you get them to do more? How do you get them to focus on markets that they haven't looked at and make a more significant commitment to it?

Keith Galbut: And in large part, that's what we're working on doing this coming Monday at the international state of the state. 10th annual state of the state. We are focusing on international trade bringing together the minds of the education, Larry will be moderating the panel, president of thunderbird, as well is government, representative salmon and representatives from the chamber of commerce and from the United Kingdom.

Ted Simons: We have about a minute left here. I am an elected official. Tell me why I should pay attention to this? Why this is a big deal.

Keith Galbut: My initial answer and most important view I think is it is about jobs. It's about increasing our economy and doing it in a very healthy way to create opportunities that currently don't exist. Or that we currently don't pursue. And if we are able to really focus on that, it can make a big difference.

Keith Galbut:Chairman, Phoenix Committee on Foreign Relations; Steven Beschloss:Writer, Journalist and Filmmaker;

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