State legislators utilized Pennsylvania’s 2021-22 state budget to secure funding to reopen the state’s Office of Trade and Investment in Taiwan, previously closed by the Wolf Administration.
Within a $40.8 billion state budget, legislators saw the closure as short-sighted, particularly since the trade office received just $100,000 in funding. There were also concerns that the closing was unannounced, and a surprise for many people. The Taiwan office opened in 2005.
In a June 3 letter to Dennis M. Davin, Secretary of the Department of Community and Economic Development (DCED), legislators noted that the Taiwan office facilitated 80 percent percent of the trade between Pennsylvania and Taiwan, which – for the entire United States – totaled $86.2 billion in 2017. The 2020 exports from Pennsylvania to Taiwan totaled $335 million, down 12 percent from 2019.
However, the legislators see a bigger picture and they write that “with proper strategies and relationships, investments between Pennsylvania and Taiwan are poised to increase.”
To support that longer view, lawmakers cite the shifting economic and geopolitical dynamics in East Asia. In their letter to Davin, they write that “currently, tens of billions of dollars are being reallocated by Taiwanese companies from the People’s Republic of China and investors are seeking new locations, such as the United States, to relocate. Pennsylvania can and should be one of those locations for investment but without having an official Pennsylvania Office of Trade and Investment, we will miss out on these critical opportunities.”
Four lawmakers – state Sens. David Argall (R-Schuylkill) and Cris Dush (R-Jefferson) and state Reps. David Rowe (R-Snyder) and Ryan Mackenzie (R-Lehigh County) – took the lead in making the reopening effort part of the state budget process. Their effort had strong bipartisan support. The House and Senate letters were cosigned by 52 representatives and eight senators.
In an interview with Pennsylvania Business Report, Rep. Rowe questioned whether the Administration’s decision to close the Taiwan office might have been “part of a larger geopolitical analysis” linked to East Asian tensions. He doubted it was a decision based solely on budgetary reasons since the cost of the Taiwan office, as noted above, is just $100,000 per year; a tiny sum, he commented, compared to overall trade numbers and overall state expenditures.
In the 2021-22 state budget the Office of International Business Development is budgeted at $5.83 million, the same amount as last year. That Office is within the State’s Department of Community and Economic Development (DCED), for which funding is cut considerably in the new budget, from $181.6 million to $123.5 million, a 32 percent decrease.
Indeed, on the Administration’s side, saving money was a concern. Casey Smith is DCED Communications Director. She noted that 2020-21 has been “an unprecedented year and DCED needed to review its expenditures.” She noted further that “Taiwan is a relatively small market compared to other international offices, and difficult decisions needed to be made after thorough review and consideration.”
An import/export fact sheet from DCED presents a Pennsylvania-Taiwan trade picture with much lower impact than the assertions from legislators.
Taiwanese companies, for example, have nine locations in Pennsylvania providing 61 jobs, an employment number in stark contrast to the House letter that “Taiwanese companies create thousands of jobs in Pennsylvania.”
According to the DCED factsheet that cites July 2019 data from Dun & Bradstreet, Taiwan ranks 36th for the total number of firms and 47th for the total number of jobs in Pennsylvania. In comparison, Pennsylvania’s top international partner, England, has 793 companies providing 49,382 jobs. Germany is second largest with 718 firms in Pennsylvania employing 41,774. Imports from Taiwan totaled $761 million in 2018. Exports from Pennsylvania were $407 million in 2018.
Nevertheless, as the budget directs, Casey said the Department will reopen the Taiwan office in the upcoming fiscal year. The legislative budgetary language requires reopening “no later than March 31, 2022.”
The Pennsylvania Manufacturers’ Association (PMA) has been closely tracking the Taiwan trade office developments. In a recent blog it comments on and compliments the legislative budget directives. PMA officials, too, are looking at possible future investments resulting from turmoil and changes in East Asia and the need to have a Pennsylvania trade office ready, when needed, to help facilitate those moves out of Asia. PMA cites a new $12 billion microchip factory being constructed in Arizona as the type of investment that could happen in Pennsylvania as markets shift.