After GATT, Business in California Is Sifting the Agreement for Details
State's traders hope to boost current $104-billion export tally
CALIFORNIA almond growers envision more of their nuts showing up in German candy bars and Japanese cereal. San Francisco-based Levi Strauss & Co. sees more Europeans and Asians clad in denim.
But Bernard Lax, head of a Los Angeles apparel firm, worries about cheap sportswear coming into this country from the Far East.
A week after approval of the largest trading pact in world history, the impact of the agreement is just beginning to sink in among companies and consumers alike.
Everyone from pear growers in the Central Valley to chip makers in Silicon Valley have been going over the treaty's fine print.
The results are prompting some firms to rub their hands in anticipation of developing new markets overseas while others fret about competition from low-wage countries.
The impact of the 117-nation accord will be acutely felt in California. As the country's largest trading state, California offers a window on what the General Agreement on Tariffs and Trade (GATT) will mean.
Overall, the state is expected to benefit from the accord that lowers tariffs, quotas, and other trade impediments over the next 15 years. But there are some losers, and those that do stand to gain will not experience a boom overnight.
``California has a lot of industries that will benefit,'' says Joseph Wahed, chief economist for Wells Fargo Bank. ``But it will come slowly.''
Much of the optimism here surrounds the state's status as a trading colossus. Last year California exported $69 billion in goods - 15.4 percent of the United States total - and more than $35 billion in services. Even in the midst of a job-robbing recession, foreign trade has been one of the few bright spots in the state's economy. It has accounted for more than half California's total economic growth in recent years.
State economists variously estimate that the accord will generate 100,000 to 400,000 new jobs in the state over the next 15 years.
``The upshot is it's positive,'' says Lee Grissom, a state planner. ``But there are still critical components of the California economy oriented toward the future'' that do not receive a boost early on or were left out altogether.
The state's service sector, one of the world's most developed, should reap gains. This includes accounting, legal, and counseling services.
The outlook for another big area - financial services - is less buoyant. US negotiators dropped a proposal to open international financial markets and let US banks, stockbrokers, and other institutions go after foreign consumers. But the accord does set up a timetable for opening up financial services.
Similarly, the state's all-important high-technology industry sees both a cornucopia and some concern on the horizon. Computer chip makers and software developers are pleased with new protections for patents, copyrights, trademarks, and trade secrets as part of a broad agreement to protect intellectual property rights. They make it illegal, for instance, for other countries to pirate software programs.
Semiconductor firms may also benefit from provisions that discourage the dumping of foreign-made computer chips in US markets at costs much lower than those in their home market. But European tariffs on the importation of US-made chips, as high as 14 percent, are not dropping as much as the industry had hoped.
``We got only a portion of a loaf,'' says Daryl Hatano, a trade specialist with the Semiconductor Industry Association.
As the country's leading agricultural exporters, California farmers should be as plump with hope as a cantaloupe. Should be. Many have yet to see the final provisions of the pact.
What is known is that California rice growers will likely reap a bonanza from the agreement by Japan and Korea to open their markets a kernel. State officials predict other ``high-value'' agricultural products - grapes, walnuts, tree fruit - will do well as a result of an average 50 percent drop in farm tariffs.
Take the case of almonds. California is the nation's only almond producer. It accounts for 80 percent of world trade in the commodity. Lower duties should mean more California nuts showing up in cooking paste in Europe and snacks in Japan.
``We won't see a short-term effect, because we sell all we grow now,'' says Rodger Wasson, head of the California Almond Board. ``But longer-term, growers will be planting more trees.''
Other industries are not waving pompoms. The aerospace industry does not expect an immediate lift. Textile manufacturers predict widespread job losses as quotas on cheaply produced imported clothing are phased out.
The biggest loser, though, may be the entertainment industry. Its exclusion from the treaty means protectionist barriers against US-produced films and programming will remain, though some doubt the long-term impact will be too profound.