State officials, generally speaking, are well aware of the interdependence of global markets described in section 3.1. In the following paragraphs, I will move from the broad perspective taken in that section to a more state-specific and transatlantic point of view: By analyzing the governors’ state of the state speeches as well as taking into account the findings from the expert interviews, I will show that state governments’ engagement in transatlantic trade promotion is part of a larger focus on improving state economic development, which enjoys broad bipartisan support. This will be the basis for a later scrutiny of states’ active engagement with European businesses to promote trade and investment in light of the TTIP.
Economic Development Strategies
All states are concerned with creating jobs and boosting their economy. As markets have become global, this entails an economic development strategy that embraces international trade. Therefore, many state officials, especially the executive branch in charge of economic
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development, have prioritized international trade promotion in the form of increasing exports from the state and investments to the state. This is not a move related to the TTIP but to modern globalization in general. Several authors have highlighted how globalized markets have led to a reemergence of states as international actors (Blase, 2003, pp. 63-100; Fry, 1993, pp. 125-127; Kincaid, 1999, pp. 115-122; Kline, 1993, pp. 106-110; O’Neill, 1990, pp. 182-184). For much of the 19th century, state governments did not look outward much (Kincaid, 1984,
p. 98), whereas in colonial times, the future U.S. states had been endorsing their economies “by dispatching agents to Europe and circulating promotional literature” (Kincaid, 1984, p. 96).
Today, trade promotion has become a key component of states’ international activities. In fact, among state officials interviewed in the U.S., 80 percent said that trade promotion is the number one driver for states’ engagement in international affairs. Many interviewees explicitly stated that trade promotion takes precedence over trade policy. The finding from the interviews that economic development is the most important international aspect of governors’ work is validated when analyzing governors’ state of the state speeches, which enumerate governmental priorities and accomplishments.
In the 280 speeches for the years 2011 to 2016, economic development was the second- most addressed topic and mentioned by at least 70 percent of the governors each year (Willoughby, 2016). The main focus was overwhelmingly on education and jobs issues, a finding that has been confirmed in overview analyses of the speeches (Gehl & Willoughby, 2013; Smith & Willoughby, 2014, 2015; Willoughby, 2011, 2012, 2016) and overall, few international topics were included. Yet, export, trade and investment, while not among the most deeply discussed topics, were addressed by a number of governors in their speeches (see table 8).
Table 8. References to international trade in state of the state addresses Topic
Year Exports FDI Global economy Trade missions
2011 9 (Idaho, Illinois, Indiana, Kentucky, Michigan, North Dakota, Ohio, Utah, Virginia) 1 (Idaho) 6 (Alaska, Massachusetts, Mississippi, North Carolina, West Virginia, Wisconsin) 4 (Illinois, Massachusetts, Nebraska, North Carolina) 2012 7 (Illinois, Kentucky, Missouri, Ohio, Utah, Virginia, Washington) 1
(Alabama) 5 (Alabama, Iowa, Maine, Ohio, Virginia)
2 (Hawaii, Iowa) 2013 9 (California, Kentucky, Minnesota, Missouri, Nebraska, North Carolina, Pennsylvania, Texas, Virginia) 1
(South Carolina) 3 (Delaware, Maine, Utah) 6 (California, Missouri, Nebraska, New Hampshire, Nevada, North Carolina) 2014 12 2 1 (Minnesota) 4
85 (Colorado, Kentucky, Michigan, Minnesota, Missouri, New Hampshire, New York, South Carolina, Utah, West Virginia, Wisconsin, Wyoming) (Kentucky, South
Carolina) (Illinois, Virginia, Wisconsin, Wyoming) 2015 6 (Connecticut, Kentucky, Missouri, New Mexico, New York, Virginia) 2
(Delaware, Kentucky 1 (Wyoming) 4 (Kentucky, New York, North Carolina, Wyoming) 2016 5 (Mississippi, New Mexico, South Carolina, Virginia, Washington) 1
(South Carolina) 4 (California, Delaware, West Virginia, Wyoming)
2
(Colorado, Virginia)
Sources: Speeches found on governors’ offices’ websites
Notes: Exports refers to mentions of the importance of international exports, export statistics or governors’ calls for more exports. FDI refers to mentions of the importance of FDI, FDI statistics or governors’ calls for more FDI. Global economy refers to mentions of global competition or the importance of global markets. Trade missions refers to mentions of past trade missions, of past trade agreements with non-European partners or of future pushes for more trade missions.
Table 8 provides a succinct overview of governors mentioning the global marketplace and other trade and investment-related topics in their state of the state addresses. Among those issues, exports were most frequently mentioned. As one example, a 2015 quote from Republican North Carolina Governor Pat McCrory shows a multitude of implications raised by the research questions:
Let’s talk about jobs. As you know, the fight for jobs is global, played at the highest level, and the competition is on our heels. In California while visiting high-tech companies and venture capital firms, I ran into Governor John Kasich of Ohio. I know he wasn’t there to tour the wine country, and neither was I. Just a few weeks ago while on an economic development trip in Europe, other governors preceded me, and I know, followed me after I visited a major company. The governors I’m competing against are good friends, and often neighbors. Like North Carolina, they have cut taxes, invested in education and built good roads. (McCrory, 2015)
Governor McCrory acknowledges that global markets and job markets determine North Carolina’s standing, addresses interstate competition for business and investment in the U.S. federal system and mentions his transatlantic travels in order to boost economic development. Other governors who brought up exports did not choose the anecdotal way in which McCrory went about the topic: Rather, export statistics are a preferred way of showing a state’s economic strength, growth or recovery. For instance, Democratic Kentucky Governor Steven Beshear laid out plans to boost state exports, especially by small and medium sized enterprises, in 2011 and 2012 and then bragged about his state’s export growth
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statistics in each of his addresses from 2013 to 2015. Similarly, Illinois Republican Governor Pat Quinn called for a doubling of exports between 2011 and 2016 and Utah’s Republican Governor Gary Herbert challenged businesses in his state to export more.
Some governors concurred with their colleague McCrory in stressing the importance of trade missions: Every year, at least two governors said they had been abroad or wanted to go abroad on trade and investment missions. Asia was at the top of the list, but five governors also talked about their trips to Europe (Alaska’s Republican Governor Sean Parnell in 2012, Illinois’ Republican Governor Pat Quinn in 2014, Wyoming’s Republican Governor Matt Mead in 2014, North Carolina’s Republican Governor Pat McCrory in 2015 and Virginia’s Democratic Governor Terry McAuliffe in 2016). In talking to state-level experts, trade missions to Europe were confirmed as an important aspect of states’ transatlantic trade relations. These trade missions are organized differently by each state, but the general goal of getting in touch with European businesses is the same (analyzed in more detail later; see pages 89-145).
Foreign direct investment was, compared to exports, a negligible issue in the state of the state speeches: Only one or two governors per year specifically mentioned FDI statistics or their state’s successes or goals in attracting FDI. Yet, even without being included in the speeches, investment attraction is a major international undertaking all states engage in, as the expert interviews revealed. Those respondents directly engaged in trade and investment promotion in Europe, via their state representative offices, actually emphasized FDI attraction over export promotion in two thirds of the cases.
Analyzing the interviews and official documents allows for the conclusion that economic development is a high-priority issue for state officials. With economic development strategies having a strong international component, states emphasize export promotion and FDI attraction. Engaging in transatlantic trade promotion is thus embedded in the larger framework of states’ strategic economic development efforts.
Reasons for Focusing on Trade Promotion
State documents and the interviews conducted for this study show that international trade promotion is a top priority for state governments across the country. Further analysis of these sources reveals the underlying personal and political reasons for this emphasis.
International trade promotion is a goal shared by all U.S. states. In the state of the state speeches, there is no pattern as to which governors report on international trade in their state of the state speeches. 15 states never addressed international trade issues in the time frame under consideration, but that means, in turn, that a majority of the states (70 percent) did reference such topics. Among this majority, all regions, parties, sizes and economic structures are represented. Agricultural exports featured heavily in Missouri or Minnesota, for example, while Alabama stressed its car exporting business. Legislatures in sparsely populated Iowa and Wyoming heard about their governor going abroad just as in densely populated California and Illinois. Republican governors in Alaska and Utah agree with their Democratic counterparts in Delaware and Massachusetts about the implications of the globally competitive market for their states. From Alaska to Hawaii and California to New York, governors from all regions of the U.S. touched upon international trade in economic development.
There is also no change over time: The topic is never the main issue in the speeches but attracts roughly the same amount of attention each year (see figure 11 on the following page), with the only big spike in the mentions of exports after the world economy had put the worst of the economic downturn behind it by 2014.
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Figure 11. Number of governors referencing international trade in their state of the state addresses
Notes: Exports refers to mentions of the importance of international exports, export statistics or governors’ calls for more exports. FDI refers to mentions of the importance of FDI, FDI statistics or governors’ calls for more FDI. Global economy refers to mentions of global competition or the importance of global markets. Trade missions refers to mentions of past trade missions, of past trade agreements with non-European partners or of future pushes for more trade missions.
The expert interviews underline the ubiquity of states’ economic development efforts in the U.S. For example, in talking to state-level experts in a strongly Democratic state with high-tech exports, a big population and many urban areas or in a strongly Republican state with agricultural exports, a small population and many rural areas, the importance of seeking economic partnerships in Europe was stressed. State officials from the executive repeatedly pointed out the importance of international trade and investment, for example mentioning that more than 90 percent of their markets are abroad, which necessitates an international trade strategy for states (US1-10.1).
Beyond statistics and broad economic development strategies, a governor’s personal interest in international trade issues was noted as a key driver of states’ trade promotion activities in Europe (US1-5, US-14, US1-15, US1-21, US2-5, US2-10), confirming previous research on governors in international affairs (McMillan, 2012). As an example, politicians might strongly emphasize job creation and economic growth in their (re)election campaign for governor and then, after being elected, make trade promotion a part of their strategy to fulfill that promise. It was found that governors’ personal platforms and what they perceive to be their constituents’ economic priorities are important determinants of their international trade promotion activities. As one respondent put it broadly, a governor’s personal motivation is important, but it reflects citizens’ concerns (US1-14). Thus, voting preferences might play a role in determining gubernatorial interest in international trade: If political candidates conclude that jobs and the economy are topics that could get them elected or reelected, they will try to highlight all issues related to economic development. Governors’ trade promotion goals are therefore linked to their constituents’ needs for jobs and economic growth (US1-14, US2-9, US3-6).
Furthermore, transatlantic trade promotion is a goal shared by state governments across the U.S. because it is politically easier to handle than trade policy. For this reason, too, state organizations’ representatives named trade promotion one of the topics where they can become active: Since many state associations like the Council of State Governments or the National Governors Association have to focus on issues with broad, bipartisan agreement, not
9 7 9 12 6 5 1 1 1 2 2 1 6 5 3 1 1 4 4 2 6 4 4 2 0 2 4 6 8 10 12 14 2011 2012 2013 2014 2015 2016
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all international topics lend themselves to joint actions due to party political differences. Export and FDI promotion, however, is one of the areas where states from all regional and political backgrounds have common objectives. While there is also strong interstate economic competition, especially for FDI from Europe, states do not disagree along party lines on the general need to foster robust trade and investment relationships with European businesses.
The state of the state speeches stress this state preference for talking about international trade and investment in terms of economic development strategies and not in terms of trade agreements. While many governors addressed international trade in general, not a single governor mentioned the politically charged TTIP negotiations. Only one governor, Democrat Christine Gregoire of Washington in her 2012 speech, referred to international trade agreements at all. When talking about the rise of international trade and its importance to get out of the preceding recession, she said, “New free trade agreements with South Korea, Panama and Colombia will open new markets for Washington” (Gregoire, 2012).25
The absence of the TTIP negotiations from the state of the state speeches is partly due to the nature of the speeches and the time frame under consideration: In 2011, the majority of addresses occurred before the final report of the High-Level Working Group had been published, so most of that year’s speeches could not have referenced the TTIP negotiations in the first place. Later during the recovery from the 2008-2009 recession, one of the worst economic downturns in history, the states were very much focused on fiscal matters, tax issues and job creation in order to boost their economies. Especially the speeches from 2011 to 2013 were dominated by the downturn and even the 2016 round of addresses was characterized by a limited number of topics, restrained language and few innovative promises (Willoughby, 2016). Moreover, gubernatorial speeches typically deal with in-state topics (Nugent, 2009, p. 52).
Yet, apart from the time frame of the addresses, another reason for omitting the TTIP from highly publicized speeches is governors’ wishes to stay clear of politically sensitive and partisan topics. One respondent’s statement can be seen as an overall summary of the findings on gubernatorial trade promotion. The interviewee held that governors might remain silent on the political issues related to trade because they do not want to take a blanket position either pro-free trade or anti-free trade (US2-5). Taking a controversial political stand, other respondents concurred, would have little benefit for them but high political risk (US1- 4, US2-9). By focusing on trade promotion over trade policy, governors and other state officials chose a topic with wide bipartisan and constituent support over one with potential political pitfalls (for more on this, see pages 115-116). While it might be hard to find outspoken pro-free trade governors, most governors are “pro-exporters” (US2-5):
Pro-exporters mean, you want to push out as much exports (…) as you can. That doesn’t mean that you’re going to get into the trade policy agreement. You just focus on, what are the tools that you need to make your businesses export and what do you need to do to attract investment? (US2-5)
Lastly, trade promotion is an area of activity for all states because there are few constitutional limitations or restrictions imposed by the federal government. As was seen in section 3.2, states cannot enter into treaties, but, as one respondent put it, they are allowed to do “pretty much everything else” (US1-17) in the economic development realm. This concerns active trade promotion efforts, direct contacts to European businesses as well as
25 Trade promotion agreements with Colombia and Panama entered into force in 2012 as did the revised free
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signing of memoranda of understanding with national and regional actors in the EU. These types of cooperation with foreign governmental actors, in the form of personal exchanges or formal, yet nonbinding, agreements have become more common over the past 10 years. One expert (US1-22) highlighted how the State Department has decreased requests for prior approval or interference regarding states’ activities abroad, suggesting a move towards encouraging the states to become engaged in trade promotion in Europe.