HOUSE SPECIAL COMMITTEE ON WORLD TRADE AND STATE/FEDERAL RELATIONS February 20, 1996 5:10 p.m. MEMBERS PRESENT Representative Ramona Barnes, Chairman Representative Eldon Mulder Representative Bill Williams Representative Gary Lee Davis Representative Gene Kubina MEMBERS ABSENT Representative Gail Phillips, Vice Chairman Representative Mackie COMMITTEE CALENDAR Overview by the Commissioner of the Department of Commerce and Economic Development. WITNESS REGISTER William L. Hensley, Commissioner Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811-0800 Telephone: (907) 465-5442 POSITION STATEMENT: Overview presentation regarding the Department of Commerce and Economic Development Debbie Sedwick, Deputy Commissioner Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811-0800 Telephone: (907) 465-5442 POSITION STATEMENT: Overview presentation regarding the Department of Commerce and Economic Development PREVIOUS ACTION No previous action to record ACTION NARRATIVE TAPE 96-1, SIDE A Number 000 CHAIRMAN RAMONA BARNES called the House Special Committee on World Trade and State/Federal Relations to order at 5:10 p.m. Members present at the call to order were Representatives Barnes Mulder, Williams and Davis. Representative Kubina arrived at 5:19 p.m. Members absent were Representatives Phillips and Mackie. CHAIRMAN BARNES introduced Commissioner Hensley to give a brief overview of what the Department of Commerce and Economic Development is doing in the area of world trade, as well as, state and federal relations. Number 099 WILLIAM HENSLEY, Commissioner, Department of Commerce and Economic Development stated that he was pleased Representative Barnes had taken the Chairmanship of this committee and that she had taken an interest in international trade. He felt that this was very important and said that the department was happy to work with this committee on trade issues. COMMISSIONER HENSLEY noted that since he met with the committee a year ago the department has met with hundreds of exporters and importers. They've hosted and been hosted by high level government officials from many countries. Personally, Commissioner Hensley said he had discovered the importance of trade for high level protocol. The department has organized visits by delegations from Korea, Taiwan, the People's Republic of China, as well as, the Canadian Ambassador to the United States. All of these visits had assisted them in cementing further, the State of Alaska's ties with their top trading partners. COMMISSIONER HENSLEY said that after various meetings with the countries as outlined, he came to the conclusion that Alaska in the overall picture is a small fish in a giant pond. A great amount of competitive activity is taking place in trade, which made it clear to him that Alaska has to make the most of the resources that they have in dealing with international trade and coordinating their activities and focusing their efforts. Number 347 COMMISSIONER HENSLEY also realized that Alaska in some areas does not have the best reputation as it could have, as a place to do business. Alaska needs to work on their image and their efforts in the international arena, but Alaska does have it's strengths. People around the world do recognize the magical aspects of the state of Alaska, particularly in those countries where there are millions of people packed into small spaces. The notion of Alaska and it's pristine environment, it's space and mystic is a real plus with Alaska's dealings abroad. Number 417 COMMISSIONER HENSLEY stressed that under the leadership of Governor Knowles the administration has made strenuous efforts to communicate with Alaskan businesses. The administration has worked to ensure that government does what's relevant to Alaska's efforts to create jobs and to diversify the economy. The governor introduced the notion of marketing Alaska in his "State of the State" message last year, when he said that the State of Alaska was open and ready for business. The department has tried to convey this concept during this last year. The governor also named 125 individuals to serve on a "Marketing Alaska" effort that worked extensively over the course of the summer and especially with those individuals in fisheries and tourism. The idea was to try to better position Alaska, by marketing Alaska's resources and expertise in a global environment. The Marketing Alaska Report contains literally dozens of recommendations to improve the business climate in Alaska. COMMISSIONER HENSLEY also noted that the Russia Agency Work Group had been formed and a variety of different interests are working in this arena. They have not had very good coordination thus far, but as of this summer, they've initiated periodic meetings with all of these groups to ensure that there is communication between them. Commissioner Hensley also sat on the Sahkalin-Alaska working group, which was named by the governor, to increase the trade and communications between Alaska and this oil rich region. He noted that this was a natural market place for the products and services of Alaska. Number 586 COMMISSIONER HENSLEY acknowledged that the governor has personally advocated trade opportunities with a number foreign guests, including President Lee, the governors of several far east regions, such as Sahkalin and Chukotka. He also attended the Taiwan United States of America/Republic of China (USA/ROC) conference in Anchorage which was held there. He also met with the governor of Hokkaido, Japan during the Sahkalin earthquake relief mission last summer. He also met with the Yukon government leader to discuss joint issues of tourism, trade, transportation and maintenance, as well. The department also met with the Canadian Ambassador regarding conflicts of seafood fisheries in Southeast Alaska and also on other issues. COMMISSIONER HENSLEY said that the Lieutenant Governor has met with the South Korean president, as well as, the Chinese President to discuss among other things, marketing Alaskan natural gas and North Slope crude oil. The governor has appointed a group of Alaskans to work with the Gore-Chernomyrdin Working Group. Commissioner Hensley personally attended the meeting held in Seattle last year. He is one of the appointees to the Ad Hoc working group. The purpose behind this organization is to increase commerce between the west coast United States and Russia, as well as the Russia Far East. They expect to meet again in March in a planning group. The U.S. Department of Commerce in Washington is finalizing the agenda. Number 702 COMMISSIONER HENSLEY reminded the committee members that Alaska is a participant in the Northern Forum, as well as, the Arctic Council. The governor sent Commissioner Hensley to Hokkaido to represent him at a meeting of the Northern Forum this past year, where the Commissioner was able to communicate directly with a variety of governors from different parts of the Arctic. During this past year, the Commissioner has been exposed to trade at a variety of different levels and he continues to recognize that trade has been important in Alaska's past. Trade will be important and critical in the future, consequently the department is working on an agenda for the governor to travel to some of the state's key trading areas. He noted that the Assistant Commissioner will go into more detail about the specifics of what the department has done, including the department's efforts to build a better focus on tourism and trade, as well as economic development. Number 761 REPRESENTATIVE ELDON MULDER thanked the Commissioner for his presentation and said he appreciated the Commissioner's efforts in expanding marketing opportunities for Alaska. He agreed that efforts the department can take to add additional revenues for the state will help plug the budget gap, as well as, increasing revenues from taxes or any other opportunities. He thought that these efforts were along the lines consistent with where the state is trying to go. REPRESENTATIVE MULDER referred to the Natural Gas Pipeline. He then asked the Commissioner what the administration's position is on this project and what objectives the department has taken thus far. What is the administration's position with working with the Natural Gas Pipeline producers and what will they propose to the legislature as a course of action. Number 830 COMMISSIONER HENSLEY stated that firstly, he was very keen about learning more in relation to the production of natural gas. When they first met with the producers last year, it was an educational experience. It was hard for him to believe that after all these many years of producing oil, Alaska and the producers had never been able to sit down and talk business about the future. He noted that former Governor Hickel's efforts to finalize some of the outstanding legal suits with the oil companies and the competitive nature of other vast, spaces being opened up for exploration had furthered these discussions along. COMMISSIONER HENSLEY said that when they met with Exxon, Arco and BP, the department queried them about the natural gas. Knowing that these are very large companies that have interests throughout the globe, the department was keen on finding out what their opinions were about the Natural Gas Pipeline. All of them recognize that gas is a major resource, especially Exxon who said that in North America gas was their largest resource. Through the Oil and Gas Policy Council and exploring a variety of other issues, the department has not gotten into Liquid Natural Gas (LNG) specifically at this point, although he mentioned a briefing by the oil companies regarding what they had learned to date about the design and engineering, the credit sources and the market as of two months ago, prior to their travel to the other potential market areas. COMMISSIONER HENSLEY added that during Governor Hammond's term in office, he served on a panel lead by former Governor Hickel which looked at the Natural Gas market. He felt as though this was one of those projects which was so large and complicated it almost seemed like the stars had to be lined up for it to become a competitive reality. The governor has tasked a sub-group of the cabinet to look at about a dozen to 14 different issues which they need to discuss regarding the LNG project. It is such a hugh investment, from the production end, to transportation and to the consumer end. The department is looking at a wide range of issues that they need to resolve in their own minds. He feels that the private sector has to be a driver in this project. They need to see the return in this. Alaska's role is to try and facilitate every way that they can, not only in-state, but as well as working with Washington, D.C. They will need the support of the National Administration in order to compete with other parts of the world, which has an abundance of gas. Number 1102 REPRESENTATIVE MULDER said he applauded the administration's efforts, but for what it's worth, he felt it would behoove the administration to include a majority and minority member from both the House and Senate in these discussions. As the trustees of Alaska, the legislature is also charged with making certain that Alaskans get the best return for their investment of resources. The legislature and the administration need to walk hand in glove, not as partisans, but as a unified front. If together they can come up with a concrete policy, this would mean additional revenue and additional jobs for all Alaskans. COMMISSIONER HENSLEY said the gas pipeline would be a world class investment and after traveling through Asia he felt as though Asia needs this type of pollution-free energy. The administration is definitely supportive of the project and they are working at discovering for themselves, answers to key questions. Number 1185 CHAIRMAN BARNES believed that on the point of natural gas, that there was a window of opportunity for Alaska. She felt as though they were nearing a point where this window will close. There are other large pockets of gas in the world which will come on line. If Alaska isn't out front to force this pipeline or whatever it takes to get this gas to market, or to develop a strategy to make it economically feasible, then Alaska will miss the boat. CHAIRMAN BARNES said she spoke to Exxon about going a different route into Western Alaska, out of Kivalina. She thought that this would be great, but there are no existing permits for this route. They could use the Northern Sea Route, in order to carry this gas to market, but she was afraid if they went back into the permitting process for a different route that this would delay again Alaska entering a world market. Alaska is behind the "eight ball" as it stands now. CHAIRMAN BARNES also has met on three occasions this year with both the Chairman of the Board and the President of China Petroleum. The last time she was in China, they even encouraged Alaska to become a participant in the line. She told them, she didn't know if Alaskans wanted to become a participant, but said there were other ways for them to break into this market. COMMISSIONER HENSLEY said he knew this alternate route was being looked at, but he didn't know if it was primarily done so with the notion of looking at a design and an alternate which would make it more economically feasible. He understood what Chairman Barnes said about the problems which permitting might create. In earlier days, things were done for national defense reasons. Alaska is the only Arctic region the United State has. The idea of the Arctic port has some benefits for the nation, as well as, Alaska, for the purpose of shipping coal, LNG or zinc. He knows that the producers have also looked at this alternative from the perspective of Arctic shipping and even in light of the ice conditions they think it's feasible, but he understood Chairman Barnes concern. Number 1386 CHAIRMAN BARNES again stressed that her only concern with this particular project was that she feels there is a window for Alaska to enter the world market. Unless the state is able to get an expedited review of permits, she felt as though it would take forever for the state to get into position to build an Arctic port. Tetalina has been studied as a deep water port, which is part of the latest report done by the Corp of Engineers. The Corp studied three ports, Tetalina, Haines and Unalaska. She thought that these ports should be developed, but she didn't necessarily want to see them tied to the gas which needs to get to market. If they could build a port at Tetalina, what it would do for zinc and coal would be tremendous. Number 1449 REPRESENTATIVE GENE KUBINA said the more he listens to this debate and after having read about other markets around the world, he fears that two to three years from now, this major project, whether in India, Qatar, or some place else, will be in motion at a cost higher than what Alaska's project will be. He said he's not sure everything possible is being done to determine just how competitive the Alaskan project really is. He noted that the players in the Alaska project have interests in other countries as well and that a conflict of interest might exist. He asked what Alaska should do to protect it's interests. He added that this project is a safe bank account for 20 to 40 years and wondered if it would be better to develop these projects in other countries and leave the Alaska reserves for next generations. COMMISSIONER HENSLEY felt as though he understood what Representative Kubina was saying. He pointed out that often times he is personally uncertain about what the real situation is. These companies do have substantial interests throughout the globe and of course they are looking out for their own interests. He felt that Alaska needs to have their own plan and he felt as though the governor is beginning to focus on the right questions. He noted that the administration has constant interactions with industry. He said it's hard to determine at what point to begin the real push. These other countries do have the benefit of controlling their own governments and their own resources, which makes attractive investments in their own country. Alaska is not quite as flexible. Alaska would need a boost from the federal government in helping to be competitive. He added that they would certainly work with the legislature to accomplish this. Number 1636 REPRESENTATIVE KUBINA noted a section of the meeting notes with China Petroleum Company where the president of this company said he's waiting patiently for this line to be constructed. China appears to be involved in exploring and willing to invest in Alaska. He thought these meeting notes would be good reading for the Commissioner. COMMISSIONER HENSLEY said that he did meet with this same gentleman on their trip since it was shortly after President Lei's visit to Alaska. They literally threw the doors open. This type of investment would certainly help make the project more feasible. He noted that an investment such as this would be a great asset. CHAIRMAN BARNES said the Chinese have committed to buy 25 percent of Alaska's gas, just as when she first went over there. She noted to the Commissioner that this committee would not exist if they did not have a lot of concern about what's going on as it relates to world trade and Alaska's competitiveness in the area of world trade. The committee needs to be kept informed. They should not have to fight to be a part of whatever is going on in Alaska. She should not have to call up and demand agendas and this type of thing. The legislature should automatically be made part of meetings or to participate in any trips. She used the USA/ROC conference as an example of this lack of legislative involvement. COMMISSIONER HENSLEY said he agreed that communication is important and he said that his office is open to her for any information which she might need. CHAIRMAN BARNES said specifically, in regards to the Chernobyl project, that it's important that Alaska not continue to loose to Seattle. Alaska continues to loose over and over, in any venue, Seattle manages to beat Alaska. This has got to stop. The emphasis in on a global economy and Alaska has to be a player. Alaska cannot be a player unless the legislative body is not involved in the process. The department can't do it by themselves because first of all they won't have the money. People are not going to give them money for things that they don't understand. COMMISSIONER HENSLEY said he got her message and clearly the department is trying to do more with less. The budget for trade activities has been substantially reduced over the years. He felt as though their efforts needed to be cooperative. Number 1889 REPRESENTATIVE MULDER stressed his message about the department and the legislature moving hand in hand. He noted that the members of the legislature have established a repertoire with different entities and could be a good resource to the department. He also stressed the task force appointed by the governor dealing with the gas pipeline. This pipeline issue is very important to the state. If they can come to a consensus before hand, this would make sense. There's plenty of credit to go around on the work that's already been done. What matters is a good return for their constituents and for the generations yet to come. Number 1990 DEBBIE SEDWICK, Deputy Commissioner, Department of Commerce and Economic Development was next to testify. She pointed out that trade plays a crucial role in Alaska. Each year Alaska exports more than $2 billion of goods and products to the world, everything from resources such as timber and zinc to value added products, such as salmon ham and cold weather technology. This doesn't even take into account the export of services such as telecommunications or environmental services or the approximately $2.5 million which goes through Alaska's airports every year. MS. SEDWICK noted that in Alaska there is British money in oil, Korean money in coal, Canadian money in mining, Japanese money in fish, etc. The impact of this trade is far-reaching. It provides good paying jobs and growth statewide. Based on a U.S. Department of Commerce survey, Alaska's exports create about 50,000 jobs a year in Alaska, but as Chairman Barnes pointed out, Alaska is very vulnerable and the department recognizes this. She noted that Alaska is anything but secure in all of these areas because competition is very intense. MS. SEDWICK stated that Alaska faces smart, well financed competitors who are happy to grab Alaska's market share. Today there are 56 American offices and 105 foreign offices in Japan, ready to take what Alaska is sending to these countries. The state of Alaska must work well and together to better position themselves in order to succeed abroad. Number 2092 MS. SEDWICK outlined for the committee the direction which the department is taking. The department has created out of the former divisions of Trade and Economic Development, the division of Trade and Development (DTD). They hope to save money by doing so and this enables them to put their specialists together with their marketing people. The people in the department have been working closely together, but the coordination from the top had been lacking. By bringing these entities together, saving money will help and having this money for programs will help as opposed to fixed costs. MS. SEDWICK stated that as a newly emerged division, their mission is to increase and enhance the demand for Alaska's products and services, to ensure a supportive business climate and to stimulate economic growth statewide. They also will strive to increase private sector employment and economic opportunities for Alaskans. Most immediately, they have been working on the "Marketing Alaska" initiatives which will provide a blueprint for the state as a better place to do business. They will continue to focus on this in the months ahead. MS. SEDWICK added that in the trade arena, the department works to build trade in a number of ways, finding buyers for Alaskan sellers, getting up to date market information for Alaskans and building the state's relationship with key trading partners. She noted some of the following examples: DTD lead a seafood trade mission to and from Taiwan over the past year, bringing buyers and sellers together which resulted in a 340 percent increase of purchased fish, mostly from Alaskans, which will take salmon exports to about the $4 million mark this year. Entech, Inc., which is a subsidiary of Arctic Slope Regional Corporation, worked with the department of Trade and Development to find markets for it's incinerator technology, as a result of the efforts of the department they were able to locate an opportunity in Malaysia. DTD helped them find the federal funds in order to send a trade mission over. They are currently conducting test burns in Malaysia. MS. SEDWICK went on to note that the Alaska-Sahkalin working group, which the Commissioner spoke about, was organized by DTD and staffs the Alaska Sahkalin Working Group which is the public partner initiative that seeks to build business ties for Alaskans on Sahkalin Island. She stressed that securing jobs in the oil fields service industries are the target here. DTD spearheaded the state's strategic protocol efforts providing links with Alaska's most important trading partners. As the Commissioner spoke about, the department had participated in visits by Taiwanese President Lee, Korea President Kim, Canadian Ambassador Chretien and also officials from Indonesia, Japan, Russia and elsewhere this year. They also lead the state's earthquake relief efforts to Sahkalin Island, as well as the September 1995 Northern Forum Conference. MS. SEDWICK said that the department's work is always going to be sector driven. When the state does trade shows, they would like companies to be with them. This will help to ensure that when they host delegations from abroad, private industry is always at the table. When Sahkalin Governor Farkhutdinov came to visit last September the staff raised nearly $11,000 from private industry to underwrite the cost tied to this visit. This type of private/public partnership is essential to how the department works and it will remain important to them. They must ensure their efforts are tethered to industry's needs. MS. SEDWICK stated that in regards to Alaska's overseas presence they are maintaining offices in Japan and Korean, as well as maintaining their contractor in Taiwan. There are good reasons for this structure. Asia is by far and away Alaska's most important customer. Japan alone counts for roughly two thirds of all of Alaska's exports and in the first nine months of 1995, Japan imported more than $1.6 billion worth of Alaskan products. Korea imported roughly $164 million and Taiwan imported roughly $60 million. All of these figures are up from 1994. MS. SEDWICK noted that the Korea and Japan offices serve four main roles: access, intelligence, visibility and advocacy. Overseas staff makes contacts on Alaska's behalf, provides access for Alaskans seeking buyers and investments from abroad, they arrange meetings for dozens of missions and they identify specific trade opportunities which are publicized by the Anchorage office. A specific example of this was in the Korean office. Katchemack Seafoods of Homer and Dutch Harbor, Owner, Bill Sullivan let the department know that he was looking for buyers for fresh cod. Today, he employs four to five people year round and ships approximately $800,000 a year of fresh cod to Korea. As far as providing intelligence which is very important to sellers, trends and forecasts, alert what's going on which can immediately aid to people in Alaska. An example of this would be Sea Alaska Corporation which has limestone deposits in southeast. They used the Japan office to research the potential for their exports, they undertook a feasibility study and are now sending commercial samples to potential Japanese importers. MS. SEDWICK said that the department provides visibility, helping Alaskans to battle fierce global competition. They participate in trade shows and meet regularly with key government officials. They worked on the trade delegation which Mayor Rick Mystrom hosted last fall, providing services to this forum and also to the Anchorage Economic Development Corporation. As far as advocacy, the department handles unfair trade practices and resolves trade disputes. In Taiwan, Ida Yao, Alaska's new contractor will focus on seafood and tourism, two areas which the department feels has great promise. This contractor will also focus on trade missions to Alaska and to Taiwan. MS. SEDWICK noted that this structure has and will continue to produce important results, creating opportunities for our Alaska exporters and a strong base for Alaska's economy. In round table discussions, the department knows there are challenges. They've talked with exporters and met with community leaders and through the legislature's own recently completed trade survey, they know there are challenges. They need to better coordinate the trade assistance services that are offered now by a variety of different agencies. They need to work more efficiently, since funding levels continue to fall. In the past years, international trades funding has fallen 40 percent and the department took another 10 percent cut this year to meet the governor's spending plan. MS. SEDWICK stressed that they need to protect Alaska's position in key markets like Japan and Korea, while still finding resources to help exporters branch into new areas. They need to sharpen their efforts and be more proactive. They need to make sure that all their actions are of value to Alaska's business community so they can better measure their outcomes and results. MS. SEDWICK outlined the department's future efforts. The division working directly with Commissioner Hensley established the Russian Agency Working Group, which develops ties with the Russia Far East. They are looking at all ways of saving money, simple steps such as using E-mail instead of faxes, which has saved them about $14,000 this year. In her opinion everything is something that needs to be looked at. MS. SEDWICK stated that overseas after they made the decision to merge trade and tourism staffs in Tokyo, they are closing down the office that trade and tourism occupies. They have found new, less expensive space. They expect this will save them $40,000 this year. They are also looking in Korea to share office space with Anchorage Visitor Convention Bureau (AVCB) and some of the private sector people. They hope by the end of this fiscal year they will be able to say they found an opportunity there to leverage private sector dollars and save some money. TAPE 96-1, SIDE B Number 011 MS. SEDWICK said the department is expanding into emerging markets, taking steps to ensure that Alaskans find new markets for their goods and services. They are broadening their efforts in Taiwan to increase support for their Taiwan contractor next year to promote seafood, tourism and technical services. They are promoting technical services exports, oil and gas services, environmental services and telecommunications to find new markets in Asia. They will place particular emphasis on Korea, the Russian Far East and the other growing Asia markets, strengthening their government ties, for instance, the Alaska Sahkalin Working Group and the Gore- Chernomyrdin Ad-hoc Working Group. Through strategic protocol efforts they will continue to work on government to government ties, because they feel as though a more stable business environment for their traders is one of the most important things they can do in this area. She also noted building new seafood markets, possibly through trade missions to China and Singapore. Their challenge is great, they must maintain their position in existing markets, but help their companies find new buyers else where. They must reduce their spending and increase their efficiency, they must ensure that their work is valued by the private sector. There are many committed, qualified people working to build Alaska's markets overseas. She has spent a good deal of time since September meeting with these people, learning about their efforts and assimilating their recommendations into work plans for the coming year. Number 040 MS. SEDWICK responded to a question by Representative Davis regarding the limestone market in Southeast. She said they were looking at the raw materials with an eye to a value added commodity. She saw this as an opportunity to explore as much as they can. Number 072 CHAIRMAN BARNES noted that on two separate occasions she had asked for a breakdown on the money spent in Taiwan. MS. SEDWICK said she had this information and would deliver it first thing in the morning. CHAIRMAN BARNES stated that she felt Alaska's emphasis should be more broad and should go further than just Japan and Korea. Number 140 REPRESENTATIVE GARY DAVIS asked about the job opportunities related to the Sahkalin Island project. He understood that even in the natural gas area, he thought that this was a great find, but the extent of it hadn't been delineated yet. He understood the reserve was tremendous and he noted Alaska's experience with cold weather technology. He also mentioned the oil company executives from Alaska, such as Marathon, etc., which are also active over there, but he pointed out that there is a lot of unemployment there now. This export technology would be more technical though. He thought this would really fill her plate, if the department chose to pursue all of these avenues. MS. SEDWICK noted that Alaska has a lot of talented people residing in their state. Last year when Arco had their big lay off, there were a lot of people who wanted to stay in Alaska. If they could find opportunities for these people of expertise, they would stay. When she traveled to Taiwan, she was overwhelmed to see that there was a real need for Alaska's services. She added that sector people need to be in place to market these skills as well. Number 239 CHAIRMAN BARNES noted for everyone's information that Taiwan is exactly the size of the Kenai Peninsula with 23 million people living there. They have one of the most robust economies in the world. They are fourteenth in the world economies and it's a company which offers tremendous potential to Alaska. REPRESENTATIVE DAVIS stated that it appears that the department's approach seems to fit his philosophy, that people need to come to the department with ideas, then the department can pursue markets and make contacts. They don't need government telling people what they need, rather they need people coming to government asking for assistance. MS. SEDWICK referred to the "Marketing Alaska" effort, which would be presented next week. It addresses this concept of private sector driven initiatives and a lot of the ideas came from the private sector. Number 316 CHAIRMAN BARNES thought it might be important for this committee to know that the Anchorage Economic Development Authority and their new director is very actively working to put together Alaska's cold weather expertise. She thought they were doing a very fine job. She then went over the materials in everybody's packets. CHAIRMAN BARNES made reference to the letter from Representative Elton, which was sent to the Speaker and Chairman Barnes regarding a meeting at his house about the foreign trade liaisons from the Alaska Seafood Marketing Institute. She then referred to materials regarding a trade mission to Russia, a trade mission to China, and the agenda regarding her recent trip to Taiwan. These materials she went into more detail about, since it wasn't in report form. CHAIRMAN BARNES was the guest of the Pan-Pacific Professional Management Conference in Taiwan and was the key-note speaker there. She spoke right after President Lee opened the conference and the agenda included the ten days which they spent there, as well as, three days they spent in Kaohsiung. She noted that at the back of their packets the attendees should find a newspaper article where she met with the mayor of Kaohsiung. At each of these meetings there was quite a large delegation of businesses. CHAIRMAN BARNES then addressed the return visits scheduled to Alaska. Mr. John Kao is one of the guests scheduled to attend. He heads the Tuntex Group, one of the largest firms in the world for a country of that size, and does $7 billion worth of business a year. They are very interested in doing business in Alaska, particularly in the market of hotel construction. Chairman Barnes noted that when the base was closed at Shublik Bay in the Philippines, this company invested $200 million to develop an industrial center, but there was a problem with the local government. They just walked away from this $200 million project until these problems can be worked out. They're big enough that they can walk away from this large investment. Mr. Kao will be visiting from March 1 - 5, primarily to find out what it's like here in the winter time. If the Ship Creek Redevelopment project fell through, he's willing to build the whole project. It wouldn't be a small hotel, because they don't build anything smaller than 600-room facilities. He will be Chairman Barnes's guest and she took the opportunity to invite anyone who will be in Anchorage area during this time to attend their scheduled meetings. Number 478 CHAIRMAN BARNES then referred to the trip to Russia. This group were guests of the Krasnogorsk people. A return trip to Alaska has been in the planning stages since September of 1995, but unfortunately the mayor of Krasnogorsk, Roman Popkovich, is a retired Major General from the Soviet Army and was also a member of their parliament and Chernomyrdin would not let he and his delegation leave. Chairman Barnes encouraged everyone to attend these meetings, especially during the visit of John Kao since he is very interested in investing in Anchorage. Chairman Barnes also said that ties with Russia are very important, not just with the Russia Far East, since this has been a mistake made in the past. Russia has a centralized government and unless this government says things are going to happen, they don't, not even today. The committee's emphasis has been on this central government and they've met with their equivalent of the United State's National Oceanic and Atmospheric Administration (NOAA), in regards to the Northern Sea Route. She also noted that Representative Davis went to Japan for a Northern Sea Route meeting there. Number 596 CHAIRMAN BARNES noted that she wanted everyone to have these packets outlining all the things the committee has done and the people who have accompanied them during these trips. The return visits are paid for and taken care of. She said that if anyone wonders where she got the money to do all of this, she was the guest of the Taiwanese when she went to Taiwan, the guest of Mainland China when she went there, and she was the guest of Russia when she went there. Hence, these people will be her guests when they come here. There were legislators and business people who were very involved in these delegations. ADJOURNMENT CHAIRMAN BARNES adjourned the House Special Committee on World Trade and State/Federal Relations meeting at 6:15 p.m.