Wednesday, 08 December 2010 09:43
Expanding Louisiana's International Trade and Creating New Jobs
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President Obama's 10-day trip to Asia in November and the December 3 announcement of a long-awaited U.S.-South Korea Free Trade Agreement serve to highlight the importance of exports for U.S. business growth and job creation.  With the domestic economy still hurting, the President announced in February in his State of the Union address a National Export Initiative with an ambitious goal of doubling exports over the next five years.

 

The U.S.-Korea FTA alone will expand American exports of goods by at least $10 billion a year and “support tens of thousands of jobs,” the Obama administration said.  The agreement must still be approved by Congress.

 

The rebounding global economy, plus pending new trade agreements with Colombia and Panama, and selling opportunities in vibrant other emerging markets such as China, India, Indonesia, Brazil, Turkey, a number of Mideast countries, and South Africa offer outstanding opportunities for U.S. goods and services, as will additional potential for Louisiana companies from the upcoming expansion of the Panama Canal and the eventual resumption of U.S. trade with Cuba.

 

No state stands to benefit more from increased trade and transportation services than Louisiana. The state ranked 8th in the value of merchandise exports in 2009 with total exports of $32.6 billion, the second best year ever despite the lingering effects of the global economic slowdown. In just the first nine months of 2010 merchandise exports from Louisiana to other countries reached $27.5 billion. 

 

Going forward Louisiana is well-positioned for both increased outbound and inbound cargos and the related added value and jobs that could be generated through new distribution facilities, industry, technology, and logistical services. The state already has significant assets that work to its advantage internationally, including:

  • A Rich History: Settled by the French and Spanish 300 years ago for trade and commerce, that objective is as important today as it was then. We are a very multinational, multicultural, and multilingual state and should do more to fully exploit that intrinsic competitive advantage. For example, greater use should be made of the New Orleans Consular Corps, and the number of consulates should be expanded.  
     
  • The Mega-Port Complex: Louisiana is an international transportation hub and distribution center to and from Mid-America due to the state's strategic geographic location via the Gulf of Mexico, the Mississippi River, its vast inland waterways network, the Gulf Intracoastal Waterway, six Class I railroads, the Interstate highway system, and its airports. Few of our own residents -- let alone outsiders -- are aware that the lower Mississippi River has the busiest port complex in the world in total waterborne commerce (five deepwater ports from Baton Rouge to the Gulf), a powerful asset that needs to be leveraged and jointly marketed more aggressively worldwide. One in seven jobs in Louisiana is estimated to be maritime-dependent.
     
  • Upgrading the Ports:The ports along the river are mainly transit points but they can be much more than that, as in other states. They have the potential to add more processing, value, and jobs to inbound and outbound cargos (such as has been done with coffee) for steel, rubber, petrochemical, agricultural, forestry, seafood, and other products. But greatly increased, coordinated financial support from State government and the Legislature to upgrade the port facilities is essential to accomplish that objective, as happens in other maritime states. Investing in Louisiana's transportation infrastructure is an assured statewide economic multiplier many times over.
     
  • The Hemispheric Advantage:The Mississippi River is truly "The Avenue of the Americas," a magnificent water highway leading to and from the rest of the world, and especially to nearby Latin America. In 2009 nearly 30 percent of the state's exports went to Latin America and the Caribbean region. Several studies commissioned in recent years by various organizations analyzing Louisiana’s trade and transportation potential all endorsed a geographic emphasis on Latin America.  
     
  • A Higher Profile:Ever-increasing globalization could result in further gains for Louisiana’s economy. Greater public awareness and identity is needed to highlight the benefits of trade for the state, its businesses, and its workers. Our ports and international trade seem to be taken for granted. There is obviously much greater enthusiasm among the public in our tourism, food, music, and film-making industries. Not to mention the Saints and Mardi Gras. But our citizens need to be aware that job-creating cargoes have for three centuries been moving continuously up and down the river and internationally in good times and bad, including post-Katrina when most of the area’s economy was brought to a standstill for a lengthy period.

One visible and productive way for our top political leaders to increase public awareness of trade and transportation would be for the governor and mayors of key cities to commit to leading well-planned and executed trade missions abroad on a regular basis.  In cooperation with organizations such as the World Trade Center, chambers of commerce, and port authorities, these missions would be comprised of top leaders from a variety of sectors.  If properly done, countries around the world would quickly take notice and so would our own citizens, and with the right follow-up there would be widespread positive results.
 

  • Strategic Action: Clearly a comprehensive global strategic plan is needed for the state and its separate regions, bringing together the assets and resources of government, industry, commerce, transportation, banking, agriculture, fisheries, tourism, our academic communities, and other key interests. In that regard, State Senator Conrad Appel has created a Task Force through Senate Resolution 119, whose basic goals are to identify impediments to business growth and job creation by focusing on the global trade sector.

Finally, in 2009 both houses of the state legislature unanimously passed HB215 offering Louisiana-based companies a $5 per ton import/export tax credit for shipping containerized and break bulk cargoes using Louisiana ports. The new measure was widely promoted by shippers and port authorities to their international clients and customers. Unfortunately, for technical reasons raised by the executive branch, it has not yet been implemented, which has been embarrassing and frustrating to the shippers and ports and creates a negative image for the state. This situation needs to be rectified promptly and the cargo tax credit implemented as planned.

______________________________________________________________________

Guest Opinion:

 

Eugene Schreiber retired in July as Managing Director of the World Trade Center for 31 years and is now an international trade consultant.  He continues to serve as a Senior Advisor with the WTC. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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