Editor’s Note-Trade Matters
In the past, I have twice used this space to write “open letters” to Governor Pawlenty— once urging attention to industries (transportation, food processing, veterinary sciences) that help add value to Minnesota’s farm commodities, the second time stressing the value of state-sponsored overseas trade missions.
I wish I could use that device this month. “Dear Governor,” I would begin.
“Congratulations on your decision to become the first Minnesota governor to lead a business-development trip to India.” But I’m stuck: Vance Opperman, the CEO of the company that owns this magazine, now uses the open-letter format in his column, which appears opposite the inside back cover—and one is the precise maximum (and optimum!) number of times that an open letter should appear in any issue.
As you’ll read in this month’s “Going Global” department, the value of Minnesota-manufactured products exported to other countries reached $3.7 billion in the third quarter of 2006, up 4.6 percent from the same period in 2005. Although only a fraction of those exports go to India ($85 million in 2005, half of it in computer and electronic products), the number will grow. With a population of 1.1 billion, India is the world’s second-largest emerging market and possibly its fastest-growing. (China’s growth rate might be larger, but its estimates are notoriously imprecise.) India’s gross domestic product has expanded by 6 percent or more in every year since 1990, and in recent years the rate of growth has accelerated, reaching 9 percent in 2006.
Much of that growth has been fueled by European and American investment. Non-Indian private equity firms injected $1.1 billion into Indian companies in 2004, $2.2 billion in 2005, and $5.4 billion during the first nine months of 2006. That investment has contributed to the expansion of India’s middle class, which in turn has increased demand for Western-style consumer products. Pepsi, Citibank, McDonald’s, Motorola, and Reebok are household names in India. So should be consumer products produced in Minnesota.
A white paper distributed by the Minnesota Trade Office, which will organize the governor’s trade mission, indicates that demand is particularly strong for processed foods, health-care products, medical devices, and environmental services. India’s federal government, it notes, “has declared food procession as a priority sector” for development. “It will take an investment of about $28 billion to meet the demand.”
The trade office is a division of the Minnesota Department of Employment and Economic Development (DEED), which I headed from mid-1995 until Jesse Ventura’s inauguration in January 1999. During my first year on the job, I headed a trade delegation of environmental-product companies to Mumbai and New Delhi. Business delegates learned on that trip that it is easier for Americans to do business in India than in other country. One convenience is that all Indian contracts and most Indian Internet sites are written in English. Another is that the judiciary is independent and enforces a commercial code.
Since that visit, India has reduced its import tariffs and encouraged joint ventures with Indian companies.
Less fortunately, the Minnesota Trade Office has been reduced in size and budget since then. A staff of some 35 individuals has been reduced to 18 and moved from the former World Trade Center building into smaller quarters in St. Paul’s First National Bank Building. To be sure, two or three of the departed were farm-commodity specialists who were moved to the Department of Agriculture, and the remaining staff is remarkably capable, and the reductions were made in response to a $4.2 billion budget shortfall.
But the shortfall is in the past, and it should not be necessary to require, for example, the director of the office to assign a single trade representative to cover India and much of the rest of Asia. The legislature should take on its own mission to restore the office to its former size. Someone should write a letter.