World trade office seeks to expand Vermont beyond Canada

For many years, Vermont's export trade consisted of little more than shipping products from IBM's Essex factory across the nearby border into Canada.

That's still largely the case in 1996. Canada currently accounts for about $2.5 billion of Vermont's $3 billion a year in foreign exports. And IBM computers and related electronic equipment comprise $2.3 billion, or more than 90 percent, of the state's annual sales to Canada.

But some new initiatives, along with a few longer-running trade promotion efforts, are aiming to broaden and increase Vermont's foreign commerce. The focus is on marketing Vermont's goods and services in countries other than Canada, while also enticing Europeans, Asians and Latin Americans to invest in the state.

"The time is now in terms of the opportunities available to us." said Roger Kilbourn, head of the Vermont's new World Trade Office. "The idea of going international is no longer as daunting to local companies as it was just a few years ago."

Recently signed treaties, such as the North American Free Trade Agreement (NAFTA) and the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), are cited by Kilbourn as the chief catalysts for many companies' growing interest in overseas markets. Awareness of the potential profits to be made abroad is on the rise among Vermont farmers as well as manufacturers.

"I've been trying to preach the gospel of globalization ever since my first prospecting trip overseas in 1985," said Steve Justis, an international marketing specialist for the state's Agriculture Department. "The message generally fell on deaf ears until the past year. A lot of small businesses, including family farms, can be a bit shortsighted because they're so worried about meeting next week's payroll or staying solvent."

Now, however, the farming sector's curiosity about foreign outlets "is really taking off," Justis said.

More and more producers become eager to export as they discover that some overseas markets are as easy to enter as are other states in the US itself. Justis noted. In many foreign lands, he cautioned, it can take a year or longer for Vermont farmers to find openings for their products.

"But as I point out, the upside of making the attempt and being patient is that when markets decline in the US probably somewhere in the world there will be markets that are flourishing."

Businesses throughout Vermont are fast realizing that they can no longer depend solely on domestic sales for their future profitability. The' term "global economy" is increasingly understood to be relevant not only to giant transnational corporations, but to mid- and small-size businesses outside the major commercial centers on the east ant west coasts. The more far-sighted Vermont firms know they will have to forge international linkages if they are to prosper in the highly competitive worldwide economy of the 21st century.

Already, 40 percent of companies in the state are engaged in some degree of export trade, according to Marie Dussault, a loan officer at the Vermont Economic Development Authority. And about 20 percent of existing jobs in Vermont are related to export activities, added Tom Myers, a world trade promoter at the state's economic development agency.

Despite the burgeoning interest in overseas markets, it won't be easy to expand Vermont's share of US export sales.

One reason is that the state already ranks high in foreign trade volume on a per capita basis. Relative to population size, only Alaska, Washington and Louisiana sell more products abroad than does Vermont.

Again, though, IBM is almost entirely responsible for this comparatively strong performance. Without Big Blue, Vermont would languish near the bottom among the 50 states in both its gross and per capita amount of exports.

Economic development officials have not been particularly successful in their past efforts to find foreign buyers for Vermont products. The state sponsored a trade office in Montreal for a couple of years in the late 1980s, but it was closed down because it failed to generate enough new business to justify its high operating expense.

Many states meanwhile continue to run their own export offices in various cities in Europe, Latin America and Asia as well as in Canada, California, Texas, New York and other large states have a worldwide promotional presence that Vermont cannot hope to match. And the competition among all 50 states is becoming fiercer as each actively seeks to boost its exports and to attract foreign capital.

Vermont's World Trade Office, launched in Burlington and Montpelier in January, is partly intended to compensate for the state's lack of self-promotion sites overseas. Office director Roger Kilbourn has wide experience in the economic development field, having worked most recently with the Greater Burlington Industrial Corporation and, prior to that, with Colchester's local development office. He has also performed similar duties in Michigan and Colorado.

With $75,000 in start-up funding from the state, Kilbourn will strive to coordinate the many export-expansion programs already in place and to foster needed initiatives. Working in cooperation with a consortium of Vermont colleges, the World Trade Office will conduct seminars for business executives, offer consulting services, and make information on foreign markets widely and instantaneously available via electronic mail and the Internet. Kilbourn also hopes to establish trade offices throughout the state with the help of matching funds from the private sector.

Kilbourn's operation is meant to stand as one leg of a trade-development triad that includes state and federal agencies.

Jim Cox, director of the US Commerce Department's Montpelier unit, apprises Vermont businesses of export opportunities identified by his department's network of offices overseas. The Montpelier office also offers companies access to a data bank listing contracts coming up for bid and carrying news about foreign market regulations.

The US Commerce official is likewise helping coordinate displays of Vermont products at an upcoming trade show in Japan and, tentatively, in England as well.

Cox said three sectors in particular are being targeted for their export potential: giftware, software and environmental cleanup technology. With a bit of assistance, he said, some of Vermont's many craftspersons could well find outlets overseas for their baskets, pottery, weavings and similar artifacts. The state's growing pollution-control and prevention industry should also be able to capture a larger share of the growing foreign demand for "green" services and processes.

Cox shares space in Montpelier with Tom Myers, the state economic development agency's international trade specialist. One of Myers' key tasks is to host visits to Vermont by foreign dignitaries interested in cultivating new trading partners for their respective countries.

Recently, for example, Myers helped arrange a reception for Japan's consul general at the Trapp Family Lodge in Stowe. A number of Vermont software company executives and specialty food producers attended that event. Such gatherings also serve as an important means of encouraging travel and tourism to the Green Mountain State, Myers noted.

In addition to feting potential foreign investors and importers of Vermont goods, the state's promoters regularly travel to trade shows in other countries where they engage in the same sort of marketing efforts.

This month, Kilbourn is scheduled to accompany a delegation of Vermont computer executives to Hanover, Germany, the annual site of the world's largest software fair. This is one of me fastest-growing manufacturing sectors in the state, Kilbourn said, with about 175 mainly small businesses currently writing software in Vermont. The trip to Hanover has the dual purpose of establishing contacts with buyers worldwide and of highlighting Vermont's attractions to foreign companies considering capital investments in the US.

A similar venture is planned for June -- this time to Taiwan.

For the third consecutive year, Vermont specialty food producers will have their wares on display at a large show in Taiwan's capital, Taipei. Emu and ostrich meat are among the featured items, along with bottles of Vermont Pure Spring Water and mounds of beans and jugs of joe from Green Mountain Coffee Roasters.

At last year's show, noted Norman James of the Vermont Export Council, members of the delegation also had discussions with Taiwanese importers of wood products. The island's business executives have been impressed, James reported, by the persistence and preparation of the visitors From Vermont. It was the eastern-most US state represented at last year's fair in Taipei.

The Vermont Export Council, which functions as a standing committee of the state Chamber of Commerce, focuses on facilitating exports to Pacific Rim nations and on securing investments from Asian entrepreneurs.

Taiwan, in combination with the People's Republic of China, is about on a par with Britain in terms of the volume of Vermont companies' sales to foreign countries. Those sources each bought about $100 million of Vermont goods and services last year. With the exception of Canada, only Italy imports more from Vermont than does China and Britain.

"The opportunities in the Pacific Rim are enormous," said James. "And Vermont is positioning itself well to take advantage of them."

The state's Agriculture Department is also paying close attention to the lucrative markets of East Asia.

Steve Justis pointed to a recent congressional report suggesting that only in that part of the world is there likely to be a significant increase in demand for US dairy products in the coming years. "We see particular advantages for some of the products we produce here," Justis said. "In Southeast Asia, for instance, one of the things they are screaming loudest for is super-premium ice cream."

And Ben & Jerry's is eager to do more business abroad. In addition to its outlets in Russia, the makers of "Vermont's finest" are finding success in England's supermarkets.

As is the case with Cox of Montpelier's US Commerce office, Justis acts as liaison between local producers and a worldwide network of trade offices -- in this case, the export-promotion units sponsored by the US Department of Agriculture.

Most of Vermont's farm exports go a Canada, but a significant share -- worth about $75 million a year -- is shipped to overseas destinations. Britain, Denmark and Australia, for example, are major buyers of livestock from Vermont. England and Ireland import tons of Vermont-grown apples each year; in fact, Justis said, 16 percent of the state's apple crop is sold overseas.

Canada's protectionist quota system prevents large-scale imports of Vermont dairy products, but the state does manage to sell $30 million worth of milk, cheese and butter to Taiwan and Mexico as well as to countries in Africa and Central and South America. Japan is meanwhile emerging as a significant market for processed maple products.

The Vermont Economic Development Authority has recently begun performing liaison functions similar to those carried out by state and federal agencies. Earlier this year, VEDA was designated as an intermediary for both the Export-Import Bank and for the Small Business Administration's export capital program.

VEDA can now help Vermont businesses obtain loan guarantees and other assistance from these two divisions of the federal government. A firm lacking the capital needed to fulfill a contract with a foreign partner may be eligible for guarantees of as much as 90 percent of the value of a private loan, explained VEDA's Marie Dussault. She said that the Ex-Im Bank can also serve in some instances as a lender of last resort.

Although VEDA's intermediary role was only recently defined, Dussault said that she has already received several inquiries from Vermont companies regarding the foreign-assistance services offered by the Ex-Im Bank and Small Business Administration.

"Things are moving very quickly," she said.

Kevin Kelley is a freelance writer from Burlington.

Copyright Lake Iroquois Publishing, Inc. d/b/a Vermont Business Magazine Mar 01, 1996
Provided by ProQuest Information and Learning Company. All rights Reserved