Saturday, March 10, 2012

In sudden move, Montana governor shuts down Taiwan trade office

The governor denies any connection exists, but the timing of the announcement invites speculation that Chinese appetite for pork may have something to do with it

A sudden and unilateral decision by Montana Governor Brian Schweitzer to close the Montana trade office in Taiwan has sparked a furor in Taiwan and the US state, with legislators and the Montana Chamber of Commerce scrambling to come up with a solution.

In an abrupt announcement on Wednesday, Schweitzer said that as part of a cost-cutting program, the trade office would be closed and that in lieu virtual offices in three locations — Taiwan, South Korea and Hong Kong — would be launched. Schweitzer said it cost US$90,000 annually to employ a full-time representative in the office, which was opened in 1988. Local phone numbers would still be answered by a receptionist working on contract, he said, who would then transmit requests and messages to state officials.

Critics were quick to pounce on the governor, who has spoken proudly of his accomplishments in slimming down government.

Montana Senate President Jim Peterson said Schweitzer had made the decision alone, without consulting legislators, the business community or the Taiwanese government. “This is a longstanding relationship that deserves greater discussion than a spur-of-the-moment decision by the governor,” CBS News quoted Peterson as saying.

The announcement comes as Schweitzer has been courting Chinese investors to fund a US Department of Agriculture (USDA)-certified facility in Shelby, along the Canadian border, which would process 1.2 million hogs annually and employ 500 people.

My article, published today in the Taipei Times, continues here.

6 comments:

Taiwan Echo said...

"Schweitzer said it cost US$90,000 annually to employ a full-time representative in the office"

"Montana State Government statistics show that total exports to Taiwan in 2010 were US$93.5 million"

So they give up annual 93.5 million trade to save 90,000 monthly ?

Taiwan Echo said...

Typo. Rephrase:

So they give up annual 93.5 million trade to save 90,000 annually?

Michael Fagan said...

It won't be about "saving" money (90 grand is peanuts), it'll be about making more money and possibly votes and/or pull for Schweitzer.

How much of that 93 mil to Taiwan was pork?

And note that the Shelby facility means that local producers (50 of them - which must be a lot) will expand. So are they just going to double their exports of pork to China by dumping their customers in Taiwan?

That would be my bet if I'm right about the 93 mil being mostly pork.

Almost certainly the Chinese would have went through USDA rather than through Schweitzer directly. Why bother dealing with elected officials when you can just use the ropes of the U.S. regulatory system to leverage your twist?

Taiwan Echo said...

"And note that the Shelby facility means that local producers (50 of them - which must be a lot) will expand. So are they just going to double their exports of pork to China by dumping their customers in Taiwan?"

This reminds me of the Maokong Gondola Ma Ying-jeou built. Local shops around Maokong were promised a good future so they invested huge to expand their businesses. Last time I checked they all went broke.

Same thing happened in southern Taiwan banana farms. Huge orders from China were promised by Ma government, so the farmers invested in land purchase, facilities upgrade, business expansion, etc. Last time I checked, they went broke.

Would the Montana suffer the same fate ?

"Almost certainly the Chinese would have went through USDA rather than through Schweitzer directly. Why bother dealing with elected officials when you can just use the ropes of the U.S. regulatory system to leverage your twist?"

Good point.

On the other hand ... how US pushes Taiwan to accept her meat standard for their import would be a good lesson for China to learn how to push US to accept China's standard for China's export to US.

Michael Fagan said...

"Would the Montana suffer the same fate?"

Well I'm not too bothered about a few pig farmers chasing Chinese bucks.

I'm worried about the U.S.$.

The ironic thing is that the Left have a good point concerning the efficiency of global food production and logistics - that it is extremely fragile.

J. Michael Cole 寇謐將 said...

Schweitzer visited China in February. God knows what went on when he was there, and what promises and deals were made.

The meeting with the delegation in L.A. was a follow-up.

Montana also exports a lot of wheat (US$541.1 million in 2010, with 70-80% going to Asia). This is followed by inorganic chemicals, industrial machinery, mineral fuel and oil.

There is undoubtedly great room for expansion in China (which like Taiwan also has a ban on ractopamine in pork). At present, the pork industry in Montana doesn't appear to be a top sector, but this could definitely grow if plans to build the plant in Shelby are implemented (I suspect this is more than just about pork, though).

We should also note that the office in Taipei also looks after Hong Kong and China. If the office disappears and is replaced by three "virtual" offices in Taiwan, Hong Kong and South Korea, who will handle the China market? Don't be surprised if, in the coming months, we hear an announcement that a rep office is being opened in China.