Legislature(2007 - 2008)CAPITOL 106
02/13/2007 11:00 AM House ECONOMIC DEV., TRADE, AND TOURISM
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| Presentation by World Trade Center Alaska | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
February 13, 2007
11:05 a.m.
MEMBERS PRESENT
Representative Mark Neuman, Chair
Representative Vic Kohring
Representative Bob Lynn
Representative Andrea Doll
Representative Mike Doogan
MEMBERS ABSENT
Representative Carl Gatto
Representative Kyle Johansen
COMMITTEE CALENDAR
PRESENTATION BY WORLD TRADE CENTER ALASKA
-HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
GREG WOLF, Executive Director
World Trade Center Alaska (WTCAK)
Anchorage, Alaska
POSITION STATEMENT: Provided the World Trade Center Alaska
presentation.
JOHN MARK POMMERSHEIM, Consulate General
U. S. Department of State
Vladivostok, Russia
POSITION STATEMENT: Provided comments and responded to a
question during the World Trade Center Alaska presentation
ACTION NARRATIVE
CHAIR MARK NEUMAN called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
11:05:28 AM. Representatives Doll, Doogan, Lynn, and Neuman
were present at the call to order. Representative Kohring
arrived as the meeting was in progress.
^Presentation by World Trade Center Alaska
11:06:40 AM
GREG WOLF, Executive Director, World Trade Center Alaska
(WTCAK), provided a PowerPoint presentation titled, "Alaska's
Role in the Global Marketplace". He informed the committee that
for the year of 2006, annual worldwide exports for Alaska are
anticipated to be $4 billion, which represents 10 percent of
Alaska's Gross State Product ("GSP"). Alaska's GSP is the sum
of all goods and services produced in Alaska in a given year.
Profits from exports also represent new money added to Alaska's
economy and directly and indirectly support thousands of jobs
resulting in a stronger, more diversified economy for Alaska.
The exports reflected in this report, Mr. Wolf explained, are
only commodities such as logs, coal, natural gas, and seafood.
The value of export services, such as construction services,
engineering services, and oil and gas field services, is largely
unknown and is not included in this report.
CHAIR NEUMAN inquired as to how many Alaska businesses have
employees working outside of Alaska.
11:10:43 AM
MR. WOLF replied that he does not have the exact number of
overseas employees; however, projects overseas support business
activities in Alaska for the employer. According to a study by
the U. S. Department of Commerce, export-related jobs often pay
13 to 15 percent more than jobs tied solely to the domestic
economy. In Alaska, higher paying jobs tend to be those that
are related to mining, seafood, and the fertilizer industry.
Exports also encourage the growth of expanded markets and the
customer base, thereby allowing Alaska businesses to grow beyond
the limits of a small market. When comparing the amount of 2005
exports valued at $3.6 billion, Alaska ranks 40th in the nation
for trade exports; however, considering total exports on a per-
capita basis, Alaska ranks 4th in the nation, and when exports
are specified as a percentage of the GSP, Alaska ranks 8th in
the nation. Alaska is a trade-oriented state and also attracts
foreign direct investment, primarily from the development of oil
and gas on the North Slope.
MR. WOLF noted that through November of 2006 worldwide exports
totaled nearly $4 billion, which is a 12 percent increase from
the previous year. This is the fourth consecutive year of
double-digit growth for foreign trade, and the total amount for
mineral exports has doubled due to higher prices.
REPRESENTATIVE DOLL requested that Mr. Wolf specify which
minerals have increased in value.
11:16:28 AM
MR. WOLF indicated that the growth in mineral exports and
precious metals was caused by increased prices. He returned to
the subject of export trade highlights for 2006 and noted that
exports to China have increased by 41 percent, which makes China
Alaska's fastest growing major market, and exports to The
Republic of Korea ( South Korea) have reached an all-time high.
MR. WOLF presented a graph that indicated Alaska's exports
increased from 1993 to 2006, with the exception of 1998. The
Asian currency crisis of 1997 is reflected by the $750 million
loss in exports during 1998. Notable steady growth in the past
3 to 4 years reflects increased demand from the growing markets
of China and India. Mr. Wolf said that Alaska's top export
products are seafood, minerals, energy, fertilizer, forest
products, and precious metals.
MR. WOLF, in response to questions, relayed that the lack of
available natural gas has affected the Agrium U.S. Inc. (Agrium)
fertilizer plant and that the impact will be seen in 2007.
Ninety percent of Agrium's product is exported internationally.
Mr. Wolf also noted that the WTCAK is researching the source of
the aircraft and spacecraft exports.
MR. WOLF, in response to other questions, informed the committee
that about 50 percent of Alaska's seafood products are exported
to the Lower 48 and 100 percent of mineral and energy production
is exported to those markets with refinery capabilities.
Liquefied natural gas (LNG) is primarily shipped to Japan and
the majority of the coal is shipped to South Korea and South
America. Approximately 95 percent of the fertilizer is shipped
internationally, wood products are shipped primarily to Canada,
and round logs are shipped to China and South Korea. He said
that these statistics illustrate the fact that many Alaska
businesses are 100 percent supported by the overseas markets.
He also confirmed that the WTCAK is encouraging businesses to
add value to natural resources before they are exported.
REPRESENTATIVE DOLL expressed surprise that minerals are no
longer exported to the Lower 48.
MR. WOLF observed that at least for the last 18 years, minerals
have been shipped almost exclusively overseas to markets that
have the refining industries.
MR. WOLF discussed the dollar value of Alaska's top exports for
2006, and then referred to Alaska's top ten export markets.
Japan remains Alaska's largest market, followed by South Korea
and China. The decline in exports to Japan is mitigated by
growth in exports to South Korea and China. China has now
replaced Canada as Alaska's third largest export market.
11:27:54 AM
MR. WOLF, in response to a question, relayed that the artificial
weakness of China's currency - the yuan - is an issue of great
contention between the U.S. and Chinese governments; however,
the Chinese government has taken some steps to strengthen its
currency. Alaska continues to benefit from economic growth in
China.
MR. WOLF pointed out that certain European countries import only
one product, making the European markets relatively one-
dimensional, and that is one of the reasons the WTCAK believes
Alaska's focus for future markets should remain on the Pacific
Rim and Asia. In addition, Alaska has the natural resources
that the Pacific Rim and Asia need, is also of geographic
proximity to the Pacific Rim and Asia, and is a politically
stable trading partner.
11:32:09 AM
MR. WOLF, in response to a question, confirmed that Alaska
exports of wood, minerals, and precious metals are all raw
exports. He then emphasized Alaska's dramatic growth in trade
with China. Exports to China have increased from $100 million
in 2001 to $470 million in 2006, and are expected to continue to
grow. He summarized by pointing out that Alaska's exports, from
January through November 2006, are up 12 percent over the
previous year. World Trade Center Alaska forecasts trade
results for 2007 will depend on commodity prices and continuing
growth with China. China's cities are in a period of remodeling
and new construction to prepare for the 2008 Summer Olympics in
Beijing and the 2010 World Exposition in Shanghai.
MR. WOLF, in response to a question, affirmed that China has
tariffs on import goods; however, since joining the World Trade
Organization (WTO), China must conform to international levels
of tariffs. The imposition of tariffs is not a big obstacle to
Alaska's export businesses. Mr. Wolf said he expects that the
2007 export trade to be about $4 billion. He then described the
WTCAK as part of the global World Trade Center (WTC)
organization that includes 300 trade centers located in 78
countries. World Trade Center Alaska was established in 1987 as
a private, nonprofit organization, and its mission is: "To
assist Alaskans to successfully compete for trade and investment
in the global market place."
11:39:50 AM
MR. WOLF advised the committee that the WTCAK is supported by a
combination of funds from the State of Alaska, the U.S.
Department of Commerce, and membership fees from over 100 Alaska
companies. The five core functions of the WTCAK which are: to
help Alaska companies become "export ready" through information
and technical assistance, to find new markets and trade
opportunities for Alaska companies, to provide information and
hands-on assistance to make trade happen, to provide office and
conference room space to facilitate business meetings, and,
through the WTC network, to provide members with access to
facilities and international trade support services around the
world. Networking by the WTCAK with the U.S. Department of
Commerce ensures access to U.S. Embassies and Consulates. In
addition, the WTCAK holds relationships with foreign government
agencies such as the Korean International Trade Association. At
this time, the WTCAK is placing emphasis on the development of
four programs: Japan Focus, Korea Connection, China Calling,
and New Markets New Customers.
11:45:41 AM
CHAIR NEUMAN spoke of the Second Alaska/China Business
Conference in November 2006, and asked for the schedule of
upcoming conferences.
MR. WOLF announced that the Third Alaska/China Business
Conference will be held this fall, and invited all members of
the Alaska State Legislature to attend. The Alaska/China
conferences continue to be a high quality source of information
and feature speakers from the private sector; the field of law;
and experts in trade and economic development representing the
U. S. and Chinese governments. Mr. Wolf said he feels that the
WTCAK Alaska/China conferences benefit all entities that need
information about the opportunities, and pitfalls, of doing
business overseas.
REPRESENTATIVE LYNN endorsed the WTCAK conferences.
REPRESENTATIVE DOLL asked Mr. Wolf to predict the changes in
Alaska's top export products over the next five years.
MR. WOLF predicted that growth in the next five years will be in
precious metals and mining, due to the opening of new mines and
new exploration; and seafood sales will continue to grow, due to
European and Asian interest in healthy foods.
CHAIR NEUMAN referred to agriculture and the possible export of
seed potatoes.
11:51:11 AM
MR. WOLF agreed that efforts to export seed potatoes or table
stock potatoes have begun. However, work still needs to be done
to prove that Alaska's agricultural products benefit from its
isolation, which protects products from pests and diseases, and
from soil conditions and climate. Of course, products must also
be cost competitive, but the first step is to convince foreign
governments that the products are safe. At this time,
agricultural exports are an opportunity of the future. In
response to a comment, he confirmed the existence of a company
located on the Kenai Peninsula that hopes to convert harvested
blueberries into a nutriceutical. The important question, he
emphasized, is whether or not Alaska companies can develop
unique or better products that are priced competitively.
MR. WOLF concluded by noting that the WTCAK is a public and
private partner of the State of Alaska, the private business
community of Alaska, and the U.S. Commercial Service.
JOHN MARK POMMERSHEIM, Consulate General, U. S. Department of
State, Vladivostok, Russia, informed the committee that the
office of the U.S. Consulate General in Vladivostok includes
representatives of the United States and Foreign Commercial
Service (US&FCS). The US&FCS representatives have a mission to
assist U.S. businesses overseas and to promote U.S. exports,
including the export of services. Mr. Pommersheim told of his
recent meetings with Alaska companies that are exporting
services to Russia, including companies involved in hydrocarbon
projects on Sakhalin Island, Russia. There is also a tremendous
amount of interaction between the citizens of Alaska and
citizens of the Russian Far East, not only in business but also
in the area of cultural ties and through Rotary International
clubs (Rotary) and University of Alaska student exchanges.
Although Russia is not mentioned as one of the top export
markets presently, he assured the committee that the U. S.
Consulate General in Vladivostok has a team ready to support
future business between Alaska and the Russian Far East.
MR. POMMERSHEIM commented on the importance of exchanges between
Russia and the U.S. on issues related to democracy and pointed
out that the U. S. government has, in the past 13 years,
assisted 50,000 Russians in visiting the U.S.
12:02:03 PM
CHAIR NEUMAN asked Mr. Pommersheim whether there is anything
that [legislators] can do to make trade with Russia or other
countries, easier?
MR. POMMERSHEIM reiterated that there are long-term
opportunities for U.S. companies in Russia. The current
economic growth rate in Russia is over 7 percent and Russia has
experienced a 50 percent increase in U.S. investments in the
past year.
MR. WOLF referred to the initial work done by the WTCAK and the
U.S. Commercial Services Department to support developments in
oil and gas on Sakhalin Island, and in the Russian Far East.
Lynden Logistics, Inc. (Lynden) is one of several Alaska
companies that are doing business on Sakhalin Island. Lynden
provides transportation for goods and materials; other companies
are providing oil and gas field services, construction services,
and material supply services. These successful businesses
demonstrate that Russia is a major market for the export of
services. Alaska companies have developed technical and
professional skills by working in remote areas and under
difficult conditions, far from supply lines, and with strict
environmental regulations. These skills are in demand around
the world. He estimated the dollar amount of service exports to
be $500 million to $750 million.
12:06:19 PM
CHAIR NEUMAN added that the WTCAK report only includes the value
of commodity exports, and does not reflect the substantial
market for services between Alaska and Russia. Chair Neuman
thanked the presenters and asked committee members to consider
how to promote business and economic development for the State
of Alaska.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, Trade, and Tourism
meeting was adjourned at 12:07 p.m.
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