Promoting Commodity Exports through Governor-Led Trade Missions: Governors' Constitutionally Permissible (and WTO Permissible) Role of Exporter-in-Chief

Article excerpt

U.S. state governors led over 500 trade missions in the ten years prior to the recent economic downturn. (1) While state budgets are under pressure during the economic downturn, governor-led trade missions continue, albeit at a somewhat reduced rate. In the last seven years, Nebraska Governor Heineman (or other high-level state officials, such as the lieutenant governor or the head of the Nebraska Department of Agriculture) led nine overseas trade missions, including four to Cuba and two to China. (2)

The purpose of governor-led trade missions is to expand existing export markets for products from the state or to open new markets. A state's department of economic development and/or the department of agriculture will plan and coordinate the trade missions depending on the types of products likely to find a market in the targeted country. In the case of trade missions focusing on agricultural products, delegations will include producer associations, growers, and corporations representing agricultural interests. Of the nine overseas trade missions led by the Nebraska governor (or other high-level state officials), delegations have varied in size from 10 to over 60 persons. Nebraska agricultural officials coordinate the state's trade missions with the U.S. Department of Agriculture's Foreign Agricultural Service, which has roughly 100 offices in 82 countries throughout the world and provides marketing information on an additional 80 plus countries. Governor-led trade missions are also generally coordinated with the U.S. embassy in the visited country as well.

Nebraska is not the only state in the nation's heartland engaged in these types of trade missions. Iowa's Lieutenant Governor Kim Reynolds recently led a delegation to China and had discussions with China's Vice-President Xi. (Interestingly, Iowa Governor Branstad has a nearly 30-year relationship with Vice-President Xi that began when the Vice President was a leading local official in Hebei, China, which established a sister-state relationship with Iowa during Governor Branstad's initial term as Iowa Governor in the mid-1980s). South Dakota Governor Daugaard sponsored a trade mission to China whose timing overlapped in part with the Iowa trade mission, as did a broader U.S. Department of Agriculture trade mission. Minnesota Governor Drayton led a trade mission to China in the last year as well. Nebraska Governor Heineman will be leading another mission to China in July 2012.

Countries to be visited on a mission are selected based on a variety of factors. Suggestions from producer groups and USDA marketing information and advice play a key role. Activities of other U.S. states and the high "entry fixed costs" (3) of exporting to particular markets, including language and cultural barriers or great involvement of the government in the economy of the tbreign country, also play a role in selecting countries to be visited. Countries visited may be large purchasers already, potentially vast future markets, or markets that only recently opened to trade with U.S. entities.

Nebraska's experience is informative. One of the nine trade missions was to Japan, the single largest purchaser of U.S. corn, soybeans and wheat. Two more missions were to China and/or Taiwan, which are fast-growing markets for U.S. agricultural products, with China now the leading export market for U.S. soybeans. Four trips were to Cuba, a market that only opened in late 2000 to U.S. agricultural exports, with the lifting of sanctions on food and medical exports to the communist country.

Newspapers often report "agreements" being concluded between state governors and the foreign country at the conclusion of trade missions. What this typically involves is a non-binding memorandum of understanding (MOU) between the governor and representatives of the foreign country or government-run import authority of the foreign country in which the foreign entity signals its good-faith intent to purchase a set amount of agricultural products from state producers. …