Assembly Select Committee on Asia/California Trade and Investment

Oh, hello. Perfect. Good afternoon. Thank you to everyone joining us today, both in person and via livestream, at the first hearing of the Assembly Select Committee on Asia California Trade and Investment. My name is Jessica Caloza and I am the Assembly Member for District 52 representing Northeast LA, East LA, and South Glendale.

I'm also proud to serve as the Chair of the Select Committee appointed by Speaker Robert Rivas. Joining me here today is Assembly Member Mike Fong, the Chair of the AAPI Legislative Caucus, as well as Assembly Member Catherine Stefani, who represents the San Francisco area. We have a full committee membership.

I know folks are running around right now between other committees as well, but we wanted to go ahead and get started and welcome everyone to our very first hearing. First, just want to thank all the guests who are with us for our luncheon right before today's hearing. It was really special to welcome everyone to the Capitol.

Many of you came very far, many of you drove hours, some of you flew from across the country, and some of you even flew all the way from Asia. So thank you for just your commitment to being here because this is a really important and timely discussion.

Before we begin presentations, I would like to address some logistical housekeeping items. As we proceed with the witnesses and public comment, I want to make sure everyone understands that the Assembly has rules to ensure we maintain order and run an efficient and fair hearing.

We apply these rules consistently to all people who participate in our proceedings, regardless of the viewpoint they express. We seek to protect the rights of all people who participate in the legislative process so that we can have effective deliberation and decisions on the critical issues facing California. Now let's cover other ground rules for appropriate conduct.

As you came into the hearing room today, the sergeants directed your attention to the rules for public attendance and participation, which were posted outside the door. In order to facilitate the goal of this hearing and hearing from the public as much within the rules of our time limit, we will not permit conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of legislative proceedings. We will not accept any disruptive behavior or behavior that incites or threatens violence.

The rules for today's hearing also include that public comment may be provided at the end of this hearing and that it may has to relate to the subject being discussed today. And so just wanted to, as Chair of this committee, share some of the rules for orderly conduct for this hearing so we can have an effective hearing.

But I know that won't be a problem today because everyone came here super early and this is like the on time caucus in terms of committee hearings. So thank you all so much for just your support. Now, onto the agenda. Today's informational hearing will focus really on the current state of trade and investment between California and Asia, as well as the effects of the federal tariffs.

I wanted to really take on the select committee because as a body and somebody who is serving in office in the Assembly my first year, we know how the effects of the tariffs at the federal level have so much impact on the decisions and the quality of life within all of our districts, whether you're in LA or San Francisco or the Central Valley. Has had a tremendous amount of impact.

Especially on trade and investment with countries in Asia and also how that impacts our local economy and our small businesses. And so really the main question that, you know, we really want to answer today is there's so much that's out of our control, there's so much partisanship, as we've all witnessed, especially coming from the federal level.

But today's select committee is really about what is in our control, what are the bridges that we can build to really advance California and to lead. And that's what I know so many of our speakers will bring to the table today. Because we know that as the fourth largest economy in the world, that's California's place, not just here in this country, but just globally.

We're in a strengthened position to really make sure that we make informed and thoughtful legislation, legislation, policy decisions to continue to ensure that we uplift a lot of economies both here in the United States as well as in Asia. California is also the second largest exporting state to Asia, with exports totaling 71 billion in goods to the region in 2024 alone. And we know that our state's long standing trade relationships with Asia have been essential in driving economic growth, fostering innovation, and creating jobs for Californians.

However, the evolving geopolitical dynamics, shifting trade policies due to the federal administration and emerging industries like AI and EV really necessitate a renewed focus on enhancing these economic partnerships across the Pacific and Asia. And so this is a really pivotal moment for us to help shape what our collective future looks like. Today's hearing will feature three panels with speakers from various industries, a lot of incredible leaders, and they will discuss trends and challenges observed really in this complex relationship between California and Asia.

Again, to answer the question that I'm going to come back to time and time again for this select committee is what can we do as California to really be a leader in this space and to continue to ensure that we strengthen and that we build our relationship with Asia and California so that we can all be prosperous. With that, I would like to introduce a very special guest who serves as the lead constitutional officer for international affairs, our California Lieutenant Governor, Eleni Kounalakis.

Is that on? Just one check. Want to tap it really quick? Okay. It's my button.

And there you go. Thank you very much, Madam Chair, Members of the Committee. Thank you for inviting me to be with you today to discuss California's relationships with our international trading partners in Asia. Before diving in, I'd like to congratulate you, Madam Chair, for smashing through a glass ceiling as the first Filipina elected to the California State Legislature.

Thank you for being a role model for millions of Californians and for exemplifying your leadership by establishing this timely and important select committee. I'm very honored to be here to open today's meeting with some words about the importance of California's ties with the Asia Pacific Region and the many ways our state has been deepening these ties for decades.

As California's representative for international affairs and trade, I've spent the last six and a half years working with the Governor's Office and key state agencies to bolster and expand relations with our Asian partners, both at the national and subnational levels.

California, as Madam Chair, you just noted, would now rank as the fourth largest economy in the world if we were a country. We routinely welcome visiting diplomatic and business delegations who seek to work with us to advance not only our commercial relationships, but also to promote our shared interests and values.

We also send representatives from within state government to participate in international conferences and trade shows. Through this engagement, we share best practices and we learn from others. This work is well established and ongoing, and I encourage you to hear from relevant state government officials about their experiences and expertise in future meetings of this committee.

But to start off with just a few examples, In January of 2020, I had the pleasure to lead a trade mission to New Delhi focusing on agriculture, tourism, and the film industry. Post pandemic in 2023, I led a major trade delegation to Japan focused on climate collaboration, clean energy, transportation, and trade ties.

Along with about 100 Members of our delegation, we went to Tokyo, Osaka, and Kobe, signing important agreements and meeting with ministers, governors, and major city mayors. Trade missions can be very effective, but for me, the highlight of this administration's engagement with our Asian partners occurred In November of 2023, when California was chosen by President Biden to host the Leaders Summit of the Asia Pacific Economic Cooperation Forum.

During the week long summit, we welcomed heads of state and high level delegations from 21 Pacific Rim countries, including of course, our own President Biden and the President of China, Xi Jinping. By all accounts, the 2023 APEC summit was a historic success for our state and for our country.

APEC was preceded by Governor Newsom's visit to China where he met with Xi Jinping. And I believe that California was chosen as the location for the summit because the Biden administration recognized that California's ties with Asia set us apart.

With over 800 miles of coastline along the Pacific Rim, we are deeply integrated into Asian markets. Some of our largest and most dynamic trading partners include China, Japan, South Korea, Hong Kong, Malaysia, India, the Philippines, Vietnam, and many others. In 2024, California Asia two way trade volume amounted to over $377 billion.

Over 40% of California's exports go to the Asia Pacific Region, a huge and growing market for products made or grown in California by Californians. And in terms of direct foreign investment, Asian companies operating in California account for over 213,000 jobs in agriculture, in tech, in clean energy, in entertainment, and in logistics.

All total, about 1 in 5 jobs in our state can be attributed to international trade, investment, and tourism. And Asia comprises the largest component of this activity. I know that one of the issues you'll be discussing at today's hearing is the impact of Donald Trump's tariff wars on our state's economy.

Let me kick off this conversation with one important fact. An analysis conducted by Axios estimates that California consumers and businesses have paid $11.3 billion billion in tariff related costs or tariff taxes just in the first six months of this year. This is by far the highest in the country.

I mention this to underscore that trade policies coming out of Washington D.C. like the tariff wars, disproportionately and dramatically impact our state. Another area where Washington's policies are disproportionately impacting California includes environmental policy. Tragically, Donald Trump seeks to set our country back in combating climate change and transitioning to clean energy.

But California will not back down and we will continue to work with our foreign partners to meet our goals. Whether it's partnering with ministries and provinces in China on carbon markets, working with Japanese and Korean partners to establish green shipping corridors, or exchanging wildfire strategies with Indonesia and Australia, California will continue to be part of a Pacific coalition committed to environmental sustainability.

Finally, I'd like to note that California is home to the largest Asian American Pacific Islander population in the United States, with over 7.1 million Californians, comprising 16% of our population. AAPI Californians are our educators, entrepreneurs, public servants, colleagues, friends, family, and neighbors.

And we all benefit from the cultural enrichment brought by the AAPI community, which truly shapes our collective identity. Thank you, Madam Chair, for convening this hearing. In an era of rising global tensions and shifting alliances, subnational diplomacy matters more than ever. California is not a passive actor.

We are actively shaping our international relationships through sister city agreements, trade and investment service desks, university collaborations, and MOUs on climate trade, green shipping, emergency preparedness, and so much more. By building direct ties with Asia's cities, regions, and leaders, we ensure that California is always at the table, helping to shape a future rooted in dialogue, not division. Thank you.

Thank you so much, Lieutenant Governor, for your leadership and your partnership. This is the first committee that I get to chair, and it's truly special to have you be our first speaker. You've done incredible work leading the way for women and girls on the international stage, and we're excited to see what you do next. So thank you.

And before we proceed, to our next speaker, a representative from the Consul General of Japan in San Francisco. I did want to take a moment to pause and see if any of my colleagues on the dais wanted to make any opening remarks. You don't have to. Assembly Member Fong.

Thank you so much, Madam Chair, Assembly Member Jessica Caloza. Thank you for your leadership and efforts in convening our select committee. Really appreciate the opportunity to dialogue on trade issues on international investment. And thank you to our Lieutenant Governor as well.

We know that trade between Asia and California is so crucial to our state and to our economy in terms of thousands of jobs, economic development, workforce development, the educational partnerships. As Chair of the AAPI Legislative Caucus, we know the value of not only the economic exchanges, but also the cultural exchanges that have been sustained over many years and centuries through countless obstacles that now make up a core part of the social fabric of California.

As you've heard from our Lieutenant Governor and our Chair, Asian American Pacific Islanders make up 16% of California's population. And as also as Chair of the Assembly Higher Education Committee, the working efforts on developing the workforce of tomorrow to meet the needs of industry, to meet the needs of investment here in California, to make sure that we have a skilled workforce to meet those needs is so, so critical.

And so I look forward to today's conversation about the state of our trade between California and Asia and how we can continue to strengthen and build upon those relationships. And thank you so much again, Madam Chair, Assembly Member Jessica Caloza, for convening all of us and for convening the select committee on Asia California Trade and Investment. Thank you.

Thank you so much, Chair Fong, for your leadership on the AAPI Caucus. Assembly Member Stefani.

Thank you, Madam Chair. First of all, I want to congratulate you and thank you for asking me to join the select committee. I was very excited to see say yes. And thank you to our Lieutenant Governor for kicking us off. I'm very excited to be here for several different reasons.

You know, I represent the west side of San Francisco and parts of San Mateo County, an area very rich in AAPI culture and people. And because of that, I've wanted to be on this committee. But also because when I was 18 years old, I was an exchange student in Japan, and I fell in love with Japanese people and everything Japanese. I lived in Osaka and Kagoshima.

I went back to Japan after I graduated from college on the JET program and taught English there for a year. And it's just something I've always looked to as a guiding force in my life in terms of wanting to be involved in all things AAPI. And I just had the privilege and honor to go back to Japan in May with the San Francisco Chamber of Commerce. And we have Rodney Fong with us here today.

And I want to give a special shout out to our next speaker, who is Deputy Consul General Ishihara, who was my translator as I got to reconnect with one of my host families that I hadn't seen for 32 years. They don't speak very much English, and my Japanese is not very good anymore. So to have him there for that most special moment to reconnect with the family where, you know, language wasn't our connector, it was our hearts.

And to be in that moment and to have him there and have him at dinner with me as I got to see a very special family in my life since I was 18 years old is just remarkable. And to have him here today at the select committee means a lot. I'm very much looking forward to hearing from him. So thank you again for allowing me to be part of this committee. I look forward to contributing as much as I can.

Thank you so much, Assembly Member Stefani. And I will just read off some of the other Members who are also on the committee who may be in another meeting at this moment, just so you're all aware of who makes up the rest of our membership because it's really important.

Assembly Member Patrick Ahrens, who represents the Silicon Valley. Assembly Member Tasha Boerner, who's the Chair of our Communications and Conveyance Committee. Assembly Member Phillip Chen from Orange County. Assembly Member Cottie Petrie-Norris, who is the Chair of Utilities and Energy Committee.

Assembly Member James Ramos, who's the Chair of the Native American Caucus. Assembly Member Esmeralda Soria, who's the Chair of our Agriculture Committee. Assembly Member Avelino Valencia, who's the Chair of our Banking and Finance Committee. And Assembly Member Lori Wilson, who's the Chair of our Transportation Committee.

So we have a lot of great Assembly Members who are leading in their cities and their counties and all these committees. And so we look forward to having everyone participate. And thank you both again for making the time to be here. And with that, without further delay, I would like to introduce our next speaker, a representative from the Consul General of Japan in San Francisco, Mr. Takeshi Ishihara, to share a few words with the committee.

Good afternoon. I would like to express my sincere gratitude to the committee for inviting me to today's hearing. Many thanks, Madam Chair, Assembly Member, and Chair of this Committee, Jessica Caloza, for your initiative to organize today's hearing.

As you may know, Japan is one of the largest foreign investors in California with approximately 3,300 businesses operating in the States and contributing to the creation of nearly 110,000 local jobs. Japan is also an important trading partner for California and the 4th largest export market and 6th largest source of imports.

This year, as Madam Chair mentioned, California became the fourth largest economy in the world, exceeding Japan. Congratulations. While personally I would like to see Japan retake that position, it's proof that the friendly competition, not fight, between Japan and California continues.

So today I would like to invite you to consider what we need to do to continue this competition in a mutually beneficial manner. First, we need to do is precisely understand the challenges we know we are facing, as well as the hidden challenges we may not yet realize we are facing. At today's hearing, I hope Assembly Members and other participants have opportunity to hear many views from the relevant stakeholders.

At the Consulate General of Japan, we are delighted to provide additional information on the challenges Japanese businesses are facing as well as opportunities to increase economic relations between Japan and California in cooperation with Japanese business organizations, such as Japanese Chamber of Commerce in Northern California, the CCMC, and Japan Business Association of Southern California, JBA.

Second, we need to accurately understand the economic potential between Japan and California. I think there is still room to expand the economic relations between two economies. To harness this potential, as Lieutenant Governor mentioned, I like to encourage all the Assembly Members to go to Japan.

As he mentioned. A recent delegation organized by the San Francisco Chamber of Commerce, including Assembly Member Catherine Stefani, visits Japan in this May. And a delegation led by the Cal Asian Chamber of Commerce, including you, Assembly Member Mike Fong, and as an Assembly Member, is planning to visit Japan in September. And also I heard that State Senators will also plan to go to Japan next spring.

So seeing is believing, as Assembly Member Stefani mentioned. Your visit, Assembly Members visit to Japan will provide clues to enhance economic relations between Japan and California. Thank you again for having me today. We hope to continue working closely at the state level to further promote investment and trade between Japan and California. I truly believe that we can overcome whatever challenge we face together. Thank you very much.

Thank you so much, Deputy Consul General. And we look forward to our partnership with the consular corps to advance this work for the select committee. Next, I would like to invite our speakers for our first panel to join us. When I call your name, please, you're welcome to approach and take a seat.

We will be starting off with an overview of California and Asia trade, tourism, and investment. Joining us today is Stephen Cheung, President of the World Trade Center Los Angeles, Rodney Fong, CEO and President of the San Francisco Chamber of Commerce, and Caroline Beteta, President of Visit California.

Thank you all for joining us. I think we can just start off with introductions. We can start with Steven and then make our way down the table.

If you can please introduce yourself, share a little bit more about your work, your organization in the context of the current landscape of what's happening and also as it relates to our Select Committee on Asia Trade and Investment. Mr. Cheung.

Thank you, Chair Caloza and Assembly Members, for having us today to discuss this important issue. My name is Stephen Cheung. I'm...

Do you want to move the mic a little closer maybe? Perfect.

How about this? Is it better?

Yeah, a little better, yeah.

My name is Stephen Cheung. I'm the CEO and President of the Los Angeles County Economic Development Corporation and a subsidiary, the World Trade Center Los Angeles, which is the international trade arm for LADEC.

We at the LADEC and the World Trade Center drive economic—inclusive economic growth—in order for us to support good jobs and good entrepreneurship opportunities in order to create economic mobility opportunities for Angelenos across the entire region.

And our hope is to be able to build competitive industries so that we can be not reliant on one single industry. As we've seen many economies across the United States, when they're dependent on one single industry, if anything happens to that industry, it becomes problematic for them.

And that's why LADEC has been working very closely with our public, private, nonprofit, academic, labor, all the different stakeholder groups, to grow these industries, including biosciences, aerospace defense, space commercialization, sports, entertainment, clean energy, so on and so forth, so that we can have a vibrant economy.

But we know that we can't do this by ourselves and Los Angeles is very dependent on their international trade partners. As we're going to have the discussion, you'll see and as the Lieutenant Governor and yourself have mentioned before, the trading relationship becomes the backbone for our economy as well.

And as we're getting ready for the world to come to Los Angeles for various events, including the FIFA World Cup in 2026, the Super Bowl will be coming back to LA in 2027, of course, we'll be hosting the LA Olympic Games and Paralympic Games in 2028.

But beyond that, we're also going to be hosting US Open championships for golf. We have NBA All Star game. All these different sporting events are coming to Los Angeles lined up until 2039. This is going to be a major, major sector for us.

And in order for us to really take advantage of that, we need the globe, we need the world to come to Los Angeles and come to California. Currently, we're facing some challenges, and that's why LADEC is working very closely to ensure that LA remains open for business and that's why this conversation becomes so important.

We need our elected officials and the state government to really show to the rest of the world that California is open to the world. And sometimes that message is not getting across. So, you open the panel by asking us what can the Legislature do? What can California do?

That's one of the most important things that can be done is to open those relationship to make sure that our sub national relationship is strong and to show that leadership, and as the Lieutenant Governor was mentioning before, trade missions, both ways, making sure we're able to attract these companies coming over here will be very, very important.

And lastly, LADEC and World Trade Center, every single year, we specifically do economic impact report on the foreign direct investment that's coming into California. So, this year we released the 2024 number. There are over 18,963 foreign owned enterprises throughout the State of California supporting direct jobs.

814,000 direct jobs, contributing close to $90 billion in wages to our local economy. That's what international trade does for our economy and that's why we need to keep this going as well. So, thank you for this opportunity and looking forward to the conversation.

Thank you so much, Mr. Cheung, and would like to welcome Assemblymember Patrick Ahrens to our Committee. Thank you so much. And he represents the Silicon Valley. And so, next, we'll transition to Mr. Fong. If you can answer the same questions, feel free to take a few minutes just to introduce a little bit about yourself, the work that you do in San Diego—I'm sorry, in San Francisco—Chamber of Commerce as a CEO and anything that pertains to the Select Committee that you would like to share in your opening.

Great, thank you very much, Assembly Members. Appreciate this opportunity and congratulations for convening this group together. I have a very unique background. I am a product of the California dream. I'm fourth generation, born and raised in San Francisco.

My great grandparents were born in San Francisco in 1898 and our family ran the Wax Museum down at Fisherman's Wharf and Movieland Wax Museum for those in Southern California. So, really grew up in the tourism business. Bread and butter—our family's bread and butter.

And recognized how important tourism from around the world is to San Francisco, to California. Have traveled on many sales missions around the world selling California, talking about California, and have seen the ups and downs.

And I think right now for San Francisco, which is—amounts to—about 33% Asian population it is an important opportunity for us to relay that there are still opportunities in California and in San Francisco. And the "open for business" sign must be open for the state. And we can relay that message around the world independently, bipartisanly.

It's important that we create those opportunities for people who are here that have an entrepreneurial spirit. And we talk about role models, but I think we have an opportunity to have business role models and success stories and failures, but also examples of what can happen in the state if we all work together.

So, I am looking forward to this opportunity. And again, California is open for business.

Thank you so much, Mr. Fong. And last but not least, Ms. Caroline Beteta. Please share more information about your role as President of Visit California. And we're so excited that you're here.

Thank you so much, Chair and Members of the Committee. It's a great honor to be here and great to see my good friend, Rodney Fong, who it's baked in his DNA. He'll always be part of the tourism industry and the iconic identity that represents the great Bay Area of San Francisco.

And of course, Stephen, your incredible representative ambassador for the greater LA region. Visit California—a little bit of background on Visit California.

We actually been engaged for the past 30 years and we have a unique governance model modeled after the Agricultural Commodity Boards where the industry self-funds this organization through a series of assessments across about 18,000 businesses. So, traditionally, we don't receive any public money except for perhaps in times of crisis, like the Pandemic.

And Lieutenant Governor Kunalakis was such a great leader for this industry during that time, helping to support the efforts at a time where the industry fell off a cliff. You know, if you look back at some epic events that affected the tourism industry, 9/11, this was 10 times larger than 9/11.

And even in unemployment was twice that of the Great Depression for the travel industry. And I'll kind of bridge that to the end of the importance of partnership and our state leaders that help support and propel the industry to continue to innovate and thrive. So, with that, you know, we have this independent source of funding.

I've got a 37-member board of directors that represents every sector of the industry and all 12 official regions. We have a global plan of work. We're active in 13 countries across the globe that represent 84% of all inbound travel. And obviously, Asia is very, very important to us. We have offices in China, Japan, South Korea, India.

And we really like to say that tourism does indeed power California's economy and is the cornerstone for job creation, tax revenue, and certainly spending that helps support vital state services. In 2024, visitors spent $157 billion generating 12.6 billion in state and local tax revenue and gave Californians 1.2 million jobs.

International visitors are absolutely critical to the state's overall vitality. In 2024, they spent $26 billion in California. These visitors stay the longest, they spend the most, and they travel during critical off-peak shoulder seasons when the industry needs that business the most. You know, last year, we were able to maintain steadiness, 2024, softening of the environment.

But 2025 has been a very different story for us. It's the first time since the Pandemic that we're experiencing a year over year decline in visitation. Domestic visitation is relatively flat, but we're experiencing about a 9.2% drop in overall visitation.

And we'll I guess get into it in questions, but you know, there's economic pressures, strength of the dollar, sentiment issues, and then, of course, immigration, customs challenges there that are picking away at intent to travel. So, US consumer confidence, it's remained pretty steady down a little bit year over year, reflecting the concerns I just laid out.

But really, leisure travel, it's a discretionary expense. And at the end of the day, the bottom line is what's in your wallet is what's going to drive visitation. Across our priority international markets, you know, cost is a big issue, and that strength of the dollar, specific to Asia, you know, 2025, it's a mixed picture.

It's kind of interesting. South Korea's dipping 4%. We've got some green shoots in India and China, for example. So, it really, you know, for example, China's so important to us, but our lift hasn't recovered since the Pandemic. We're still about two thirds in terms of reduction of overall lift out of that market.

So, it's been very, very problematic for us. And then of course, the Russia-Ukraine conflict has closed airspace that also has put a ceiling on that lift, for example. Just China alone, only 4 out of 10 overseas visitors to California were from China, you know, pre-Pandemic. I mean, they really buttressed our economy here.

If you look at that from a perspective of New York, it was just one in less than half and Florida one in 20. So, the importance of that Pacific Rim proximity and those bilateral trade corridors are super important for us. And I think that's the synergy that you're starting to hear in this room.

But we've got some bright spots. India is projecting to be up. It's a powerhouse. It's raising middle class is projected to double from 400 million to 800 million by 2030, and the economy is growing by about 7% a year. So, we're trending up a little bit, about 3%.

And so, you know, just to close it off here for us, how can you help? I like to kind of frame this in terms of the partnership and the bridge. Five Ps, if you will, not in any particular order of priority, but partnerships, platform, product, people, and promotion.

And the partnerships and platform really represents what you can do, what Lieutenant Governor Kunalakis has done with her international council. She's been an incredible leader. I'm honored to sit on that council and participated with her and that delegation when we went to India and China, or, I'm sorry, Japan and India.

Super important in terms of what the State of California can do as being that platform to drive all growth and being a partner in this very delicate economy, and really where we sit in the visitor industry is California is a product. People can choose to come here.

They can go to the UK. They don't have to come here. It's a product. We have to nurture it, invest in it. And through my work with Lieutenant Governor Kunalakis, the industry, the chambers, when we work together through that partnership, that's where we win. It's hard fought.

You have to focus and lean in, just like you have to have the product. We are blessed with an embarrassment of riches, but we need to preserve those. And then, of course, you have to promote. You cannot sit back because there will be a vacuum and others from around the world will come in and take that void.

And we're blessed with this incredible asset in the state and the people.

Thank you so much, Ms. Beteta. You touched on so many great things in your opening and thank you so much for your leadership and the work that Visit California does. You know, I think especially what you said at the end is raising alarm about how tourism is down in California—should alarm a lot of us.

And the reason why we have the speakers that we do for this first panel and the overview is that this is a symbiotic relationship between tourism, between trade, between the members that make up LAEDC and the San Francisco Chamber, and also how it trickles down to our local economy.

And also, just to add, we know that it's really important not to take our trade and investment with Asia for granted and the tourism for granted, because as we saw with industry like the Film Tax Credit, if we do not invest in it, if we do not nurture in it, other states, in the instance of the tax credit will come for our product, our California product.

And so, we saw Georgia and other states continue to invest in that industry. And so, this is so timely. And so, I'll go to our first question.

To Mr. Cheung, what are some of the other biggest changes that you're seeing in investment coming from Asia and Southern California? Are there any industries being impacted the hardest? I know we heard about a lot of them already.

Yeah. I'll start with the trade and logistics sector. I think that's going to be the most obvious one. When the tariffs were moving back and forth, what we saw immediately were their blank sailings.

As many of you know, the Port of Los Angeles and Port of Long Beach are the number one and number two container ports in North America, controlling about 35% of all goods coming into the United States. Just one single region controls 35% of that. So, a lot of the goods are actually coming directly from Asia.

So, when the tariffs were fluctuating, what ended up happening is a lot of folks end up canceling the vessels that were coming over here. This equates to hundreds of thousands of TEUs, 20-foot equivalent units of boxes coming through, which means that our longshoremen, our truck drivers, our warehouse distribution centers, and our cargo owners are all impacted.

So, we saw drastic decrease in activities in those sectors, so that's one. Another aspect is manufacturing. I think a lot of folks forget that Los Angeles is actually one of the largest manufacturing centers in the United States.

We manufacture a little bit of everything, but a lot of it actually has to do—is contributed by the component parts are imported into our region in order for that to happen. That's another significant sector. I'll give you one specific case.

We had a company that actually wanted to manufacture batteries, in order for us to be able to reach our energy goals of clean energy and renewable energy, but the manufacturing of these type of batteries are currently the machines are made in China.

So, with a potential tariff imposing on them for 145% at one point, they weren't going to bring that here, and we are now delayed in our ability to meet our energy goals. So, those are the specific examples. And then as Caroline was mentioning, a tourism aspect obviously is a huge hit for us.

But another aspect that's tied into it as well as business travel that's coming through. The business travelers are now more reluctant because they're not sure whether they can actually get through customs and border patrol and make sure that they're able to actually enter the market, and this is also leading up to some fluctuation with our education sector.

We consider education as one of our largest exports because so many students actually come from around the world to study at the world famous universities throughout California. And at this point, we know for a fact that for example, there are about 141,000 international students in California, prior to the beginning of the year. That number has dropped significantly.

Last year, their economic contributions over $6.4 billion to our local economy. Because some of them are not able to get visas, they're not coming over here to spend the money, and then when they're graduating, or if they graduate at all, they're not actually staying here to contribute to our economy.

So, those are some examples of sectors are being impacted.

Thanks so much, Mr. Cheung. And you know, you alluded to the brain drain that's happening right now given the attack on our educational systems and our universities, which is a really major concern that I know we're facing.

And really, you know, many of you have talked about also the immigration issues, the over enforcement by the Federal Government and how that's not just impacting our work on the international stage, but just our constituents here locally. I'll direct our next question to Mr. Fong.

Representing the San Francisco Chamber of Commerce, you've talked about it in your opening, but what are businesses doing to adjust to the shifts in trade and investment with Asia giving the changing federal policies? You know, this is I think important for us as a Committee to hear in which what's happening?

What are you observing in San Francisco or other trends in California because of the uncertainty that we're hearing? As you heard from Mr. Cheung, one of the tariffs were as high as 145% and each day, it seems to be changing rapidly. It's incredibly hard to keep up with how the Federal Administration is continuing to attack our economy.

And would love to hear your thoughts on this topic.

Yeah, I'm not sure—I'm not sure if we really have the answers to all the pivots that are going to be required. I think the worst we have not seen yet, and Stephen's addressed them on an academia level, on a supply chain level, on a shipping level, on a real estate investment level.

And we all know in this room that our organizations take decades to build up, but they can snap and be broken in months. And we saw that happen in Covid and we're kind of seeing it again now.

So, now is the time, I think for us to step up and try to fortify, give assurances, create opportunities, incentives, and give some confidence that those opportunities still exist. Academia alone, I know that for many universities who depended on international students, they've had to shift their business plans dramatically.

And in fact, some of them I think are in financial straight—dire straits—at the moment because of that.

I know that some of our smaller businesses who are relying on the logistics of inbound into California using our ports and rail and shipping, are shifting their purchases, their buying decisions, their investment decisions on new equipment, which is going to take, if they want to ramp back up quickly, is going to take months, maybe years to do that.

So, we are ringing the alarm right now, I think, that we need to take some action and recognize that the worst is yet to come.

Thank you so much, Mr. Fong, and Ms. Beteta, we'll direct the next question to you. I know you already talked about the tourism perspective and how the shift in the number of visitors has already declined, which should concern all of us. Are there opportunities?

And thank you for the five P's that you're seeing as you look at all the work that Visit California does to better really align to help promote the tourism to California because there's so much tie in with our economic growth and development, and really, what is the opportunity that maybe you can see?

Are there any key industries that we should really dive into? And this is an important question too because in the audience, we have many leaders in the business community both here in California and also in Asia?

And so, I know that's why we've gotten the reception that we've had for the Select Committee is really everyone wants to know is how can we help and how do we continue to strengthen this tie with Asia?

Absolutely. On the promotion front, we really look at this through a short term lens and a long term lens of brand—and I'm talking all of California brand—building, desirability, intent to buy, visit, engage in business. We all sit together.

As a matter of fact, many people see all of us in this room as kind of separate components, but when it comes to international tourism, international tourism is considered a service export because foreigners come in and they spend foreign currency for their experience and then they go home.

So, it's qualified from the U.S. Department of labor as a service export. And so, we're tied to that. Every Chinese visitor, for example, spends about $3,064 on a trip.

And if you were to get the export equivalent of, let's just say our agricultural rich commodities, just for one Chinese visitor coming in, you would have to export 545 pounds of cheese, for example. So, we, that's how we lean in. We can do citrus or almonds, whatever, whatever the product you prefer. And but you make the point, we are all tied together.

So, short term and long term, while we may be marketing in these vertical lanes to reach tour operators, media travel agents, influencers, wholesalers to bring in visitors, at the same time, we need that State of California platform that's been so helpful because we're actually stronger together when we go overseas on trade missions like we have in the past, even though we're individually working in these verticals.

So, it's a very long-term proposition to have strength and resilience in what we call, in a marketing vernacular, brand, but it's really our image.

And so, to continue that support, the spotlight you're putting on international Asian business and inbound travel, is just critically important in understanding that it can't be done by any of us as individuals, but has to be done together.

So, really, really appreciate your time and leaning into this topic because it just can't be done as individuals when you have this fourth largest economy in the world.

Thank you so much, Ms. Beteta, and I will turn it to our Members if anybody from the dais have a question for any of our panelists. Assemblymember Patrick Ahrens.

Thank you, Madam Chair. I just want to first of all, thank you so much for convening this really important Select Committee and I think it's really critically important that we have this and I think as a freshman Legislator, convening this conversation together with a packed audience and with a robust agenda.

You know, I just want to appreciate the leadership and the time and effort that you and your team has taken to convene us today.

Because without these Select Committees and without Assemblymember Caloza's leadership, we're not having these conversations, we're not having intentional conversations in the Legislature about the impacts of the tariffs, which I know we'll be talking about, not only for the economy in Silicon Valley, but the economy in Los Angeles and San Francisco and the rest of California and the country.

And I'm just wondering if you can sort of speak to—I know you sort of spoke broadly about sort of the overview of, of the impact on the investment trade.

I'm wondering if you can give us any advice or direction as we navigate the politics of California and the impact that the rhetoric and the policies that are coming out of the Federal Administration. Have you seen the impact from any of your colleagues or counterparts in any other states about what they're doing?

I think oftentimes in California, we tend to rest on our laurels. And although we are the fourth largest economy, I think it's important for us to really just put in the record, are there other states that you are seeing that are doing things that are effective that California perhaps is not, or agencies or departments?

And what sort of advice or interactions have you all had with your counterparts in other parts of the country that you think that California is not focusing on and perhaps we should be looking into, regarding this Committee's purview?

Sorry, if you don't mind. Assemblymember, thank you for the question. I currently serve on the Board of the International Economic Development Council and have the opportunity to hear many of my colleagues from across the state with their approach as well. Many of them are also facing severe cuts and severe challenges.

From an international trade perspective, one of the things that's been significant in terms of what they are doing, many states and many local regions as well, is that they continue to invest in those relationship that I think this panel has been talking about. What we unfortunately don't always do is to work together as a state.

So, sometimes Los Angeles would go, sometimes San Francisco, sometimes San Diego, sometimes Fresno, but for them, they don't see this regional or statewide effort. So, the feedback is that other states are coming to us all the time creating those relationship and we don't see you enough, so we don't know whether you are actually still interested in working together with us and having that direct relationship through trade missions, through MOUs, as the lieutenant Governor was mentioning, it's key to the success, to their success.

I think we could do a much better job of making sure that we have these coordinated, mission-driven trade missions, but also at the same time attract them and invite them over because sometimes we take it for granted in many ways thinking that they will come.

And I think as Caroline was hinting at, is that they won't come if you don't advertise, if you don't promote because other folks will over-promote their aspect. I'll use one case study. This is from a couple years ago.

We went to Colombia for a trade mission and in meeting with them, they were informing us that they were a bit confused about the statistics we were given because Miami was the largest port in the United States. Why would Port of Los Angeles, Port of Long Beach come to Colombia?

They were given information that's not correct but they were out-advertising us, so they didn't want to take the meeting with us. So, this is what we need to do to make sure that we actually have the fact number, but also the relationship to communicate effectively that California is open for business.

Thank you, Mr. Cheung.

I'll go really quickly. I think, you know, we've had the pleasure of being Californians and things coming to us. In this period, I think we need to be in the business attraction and retention perspective. Caroline mentioned the word image and the irony and coincidence of this room and the artwork that's in this room represents images, resources, riches of California.

And I think we need to get back out there. And that means putting ourselves in roadshows and inviting people to California to see the opportunities. You mentioned the film industry and what Illinois created and really kind of stole a lot of the filming away from the Bay Area, in California, they created tax incentives.

And so, I think there are a number of job creation tax incentives, real estate investment tax incentives. Tech, of course, is not going anywhere. I think we need to really make sure that we're providing those sort of opportunities to reinvest into California.

Thank you, Mr. Fong.

Well, I think some good news for California from a tourism perspective—first and foremost, I serve as Vice Chair of the U.S. travel Association—and we are very active nationally because whatever policies happen in Washington, we feel it the most.

We compete with Florida head to head on the largest international inbound travel destination in the US. We're actually number one, the number one destination when you combine domestic and international, but we want to be at the table when those decisions are made.

And the industry knows that we've got to do as much as we can to get positive policy out of Washington and then we can compete after that.

One great example that, where California, I think, stands strong from a tourism perspective and an example that fortunately we are not in a challenging, as challenging situation out Asia, is what has happened in Canada recently, which is really the nose of our international downturn. I mean, cataclysmic.

It's really bad when, you know, you've got a national leader talking about 51st state rhetoric. It has immediate downside, you know, implications. And our Canada visitation is very, very declined in that situation. So, we all can't just sit back and let that happen.

Had a great partnership with the industry as well as the Governor to fight back against that rhetoric. And I think that is the silver lining for all of us in California is that we do stand separately. We are the fourth largest economy in the world and we are known globally as being very diverse and inclusive culture.

And that gives us a bit of a silver lining. It doesn't take care of everything, but it gives us a hedge. And so, to be able to go into Canada and talk about the synergies between Canada and California authentically, really, really helps stem that tide. We were able to downsize the projected forecast.

It's still going to be down, but super helpful. Those are the things that we have done as a group and will continue to do. You just can't sit back and let that hang. You've got to be very aggressive and proactive.

And you, as Chair, our Members, the lieutenant Governor here, have been extremely disciplined about working together as a community to fight and combat sentiment issues that are very real for us.

Thank you.

And I guess my final comment, Madam Chair, is although today we're focused on, on trade and investment and a wonderful lineup of speakers, particularly in Silicon Valley in my district, where over half are Asian American, I think it's important that, that we recognize that in study that was released just a couple of months ago, that over half of AAPI adults have experienced some form of hate, Asian hate crimes, physical violence against this community.

And I think that impacts everything, right? That impacts our trade, that impacts speculation of investment. And that is something that is not just happening during the Pandemic. It is still real and persistent and continues, especially with the rhetoric that we're hearing from the Federal Government.

And so, that's something that's very keen on our minds in the Legislature and continues to elude largely a lot of us in these positions that we need to be more diligent about addressing.

And so, I just want to put that into the record that it's something that affects everything that we're doing and everything that we try to do to represent and protect our constituents and something that I look forward to working with my colleagues on.

Thank you for that.

Thank you very much.

Thank you, Assemblymember Ahrens. Does anybody else on the Committee have any questions? Assemblymember Stefani.

Thank you, Madam Chair.

I have a question about sister city relationships and how important those are to strengthen our ties and encourage that type of tourism and investment. I know that I've participated in our sister city relationship with Assisi in San Francisco. Obviously, we've—in San Francisco, we have one with Osaka that we're working on.

So, I'm just wondering if you can speak to the importance of sister cities and sister states.

I think they're great. I think we should fire that back up. You know, all of these relationships that maybe end up as a business relationship start as a cultural toast, a handshake, a discussion about wardrobe. And so, I think they're really important.

And whether they're outbound or inbound and us hosting or going abroad, I think is really important.

Complete ditto. And it's interesting, I get that question a lot, even though I represent the entire state. And I think Rodney just really pointed that out that it's the cities that can create. They start as ceremonial, but then they actually evolve into true business development. Because every business interaction starts with a relationship.

So, to start there becomes business interactions that drive bilateral relationships, that drive airline lift. You know, when we talk about Asia, you can't get in a car to do commerce there. The airlines are our critical conduit, and we've got to have lift. And those city-to-city relationships is how route structures are created.

So, your instincts are right. They're really, really important.

I'll ditto that as well. And I'll say that I sit on the sister City of Los Angeles board. I sit on many boards. This is one of them. And one of the things that we did before is that we created something called the Tripartite Economic Alliance.

What we did is we used the sister city between Los Angeles and Auckland and Los Angeles and Guangzhou. And we found out that Guangzhou and Auckland were also sisters, so we're three sisters.

So, we then utilize that relationship and put an MOU agreement on top of it, an economic agreement, specifically identifying the sectors that we want to grow in. And so, once we have that relationship, what we promise each other is that every year we'll have a rotating summit bringing our businesses directly to those cities.

So, we hosted and after the first round, they liked it so much they continued a second round. So, it lasted for six years. And because of that, many business relationships were created. So, we're definitely underutilizing the sister city relationship and we need to continue investing in it.

Thank you.

Great point. And thank you for your question, Assemblymember Stephanie, any other questions from dais? Okay. Thank you so much to our first panel. Thank you for laying that strong foundation and giving us an overview of trade and tourism and the tariffs that are being that are impacting California right now. Thank you so much.

Now we will transition to our second panel, which will dive into the impact of federal tariffs on trade between Asia and California. Joining us here today are Mr. Glenn Fukushima, Senior Fellow at the Center for American Progress.

Please make your way and take your seat, as well as Dr. Kyle Handley, economics Professor and Director for the Center for Commerce and Diplomacy School of Global Policy and Strategy at my Alma mater, the University of California, San Diego. Thank you both so much for joining us. And so we can just start off with introductions.

We can start with Mr. Fukushima, if you can just introduce yourself. Did you have a question? Mr.

I'm just, I'm grateful for them, at least not from USC.

We maintain decorum in this Committee. No disorder, Mr. Aarons. But back to Mr. Fukushima, please introduce yourself, your work as it relates to our Select Committee. And thank you for flying all the way from Washington, D.C. to be with us. Thank you so much.

Well, Madam Chairman, thank you very much for inviting me to join this very timely and important panel. I'm Glenn Fukushima. I'm a center at the Center for American Progress In Washington, D.C. a think tank where I'm a senior fellow.

From this fall, I will be a senior fellow or a visiting fellow at Stanford University and spending a year doing research on Silicon Valley and relations with Asia. So I look forward to interviewing the Assemblymember about this topic.

From 1985 to 1990, I worked at UST or also the US Trade Representative in Washington, D.C. on trade negotiations with Japan and China. From 1990 to 2012, for 22 years, I was based in Asia, primarily in Japan, working for one European company and four American companies.

I also during that time served as Vice President and President of the American Chamber of Commerce in Japan. So over the last 40 or so years, I've been intimately involved with trade relations between the United States and Asia. I'm also an army brat who spent part of my childhood in Northern California.

My father was assigned at Fort Ord, so my second, third and fourth grade I was in the Monterey seaside area. And when I was in fifth grade, he was assigned at the Presidio of San Francisco. So I went to the Winfield Scott School, the, what is now the Cesar Chavez School on Shotwell.

It used to be the Hawthorne School and then the Sucrose School near the Presidio. Then I also went to college at Stanford. So I feel very familiar with Northern California, although I did go to high school in Los Angeles.

So since 2012 I've been back in Washington D.C. at the Center for American Progress, spending about 50% of my time in Washington D.C. 40% in Asia and 10% in San Francisco. Over this time I've had the opportunity to watch very closely and to be engaged to some extent with the trade and investment activities between the two countries.

Especially from the standpoint of Washington D.C. I have been concerned that the Federal Government's engagement with Asia in terms of the government's activities. For instance, to give you an example, the CPTPP, which started out as a TPP, the Trans-Pacific partnership negotiations started under President George W. Bush and then concluded under President Obama.

President Trump on the second day in office in 2017 withdrew the United States from the TPP. So what started out as a 12-member group ended up with 11 members. But because it has been so attractive, Britain has applied and has been accepted. So Britain is now a member of the TPP.

Recently I was having a discussion in Tokyo with the German ambassador to Japan. She told me that there are discussions taking place between the EU and the 27 members of the European Union and the CPTPP to engage in cooperation because each group believes that they can benefit from being involved.

So there are these groups, whether it's CPTPP or APEC or RCEP, the Regional Comprehensive Economic Partnership. These are frameworks for economic cooperation, trade, investment, trade facilitation in Asia that the US unfortunately has been, I think, less involved with over the last several years. RCEP is a group that the US is not a member of.

So I think that for the United States generally, but especially California, to benefit fully from the activities, the opportunities that are presented in Asia, it's important to engage on the sub-national level and to cooperate with countries in Asia but also with other states.

Has been mentioned before like-minded states in the United States can I think cooperate to further our economic activities in Asia.

And so I very much welcome this opportunity to engage in discussions about ways in which working with Washington, but also on the level of states and sister states and cities that economic cooperation and the interests of the United States and interest of California can be further promoted.

Let me close my opening comments there and I'm happy to answer questions about tariffs in the discussion.

Thank you so much, Mr. Fukushima. And next we can go to Dr. Kyle Handley to introduce himself and his work at UC San Diego.

Thank you. So I want to thank the Chair and the Members of the Committee for the Invitation to speak here today. My name is Kyle Handley.

I am Professor of Economics at UC San Diego and Director of the Center for Commerce and Diplomacy, which is a research center that tries to connect research to business and policymakers and get people talking, sort of put research and policy into practice.

I'm also a research associate at the National Bureau of Economic Research and an adjunct scholar at the Cato Institute. My research focuses on international trade, trade agreements, policy uncertainty, and how firms adjust hiring and investment to shocks like tariffs and export controls.

I just want to make a few points to frame this discussion before we go to direct questions. First, is that tariffs are taxes on imports and they are paid by the importer of record. Some of that cost may be absorbed by foreign firms, but a meaningful share is passed through to prices paid by businesses and consumers.

And there's ample research showing that that is the case. In many cases, the foreign seller and the US buyer are the same multinational firm. So Apple Computer, Nvidia, Qualcomm, Google, Alphabet. These cases are more the rule than the exception. And this shows up clearly in California, where our businesses are deeply integrated in global supply chains.

Second, California is uniquely exposed to the trade and tariff wars that we're going through right now. Our ports handle $800 billion worth of imports and exports. And to put that in perspectives, that's the same amount of imports and exports that the country of Australia runs every year. About 15% of US imports are bound for.

Sorry, I was about to say Australia, bound for California. And about 70% of imports are handled through the State of California. We're the number two exporter in the United States after Texas, because we don't have all the energy resources that Texas does.

But our ports and distribution centers and our supplier networks make the state more productive, but also means that we're very sensitive to changes in trade policy. So when tariffs or related measures raise the cost of imported inputs and equipment, margins tighten and small and large businesses struggle. These effects go beyond the prices of imports.

The US has also stepped back from its policy commitments worldwide. Firms respond to this uncertainty by pulling back when tariffs are going to change almost daily. Projects get delayed, Investments in new capacity and retooling are scaled back or just outright canceled. Hiring slows.

And even if headline trade volumes and economic activity look steady, the business decisions foregone that are taken now reduce future growth. Third, a slowdown in imports from Asia is going to affect the entire ecosystem built around our ports, warehouses and freight infrastructure.

Making this worse are new federal fees on Chinese built or Chinese operated vessels that start this fall. And for California especially given the importance of LA and Long Beach and their scale, this could noticeably raise costs of trade with Asia. And the carriers will spread out some of those freight costs through higher rates.

But some of the trade may reroute to avoid those charges which would drive more freight to Canadian in Mexican ports on trade that will enter the US over land, possibly cutting California out of the loop. That's not necessarily a crisis, but it's another cost our shippers and state will feel.

So finally, I want to address what our state can do. California should double down on the open rules based trade and investment system that has powered our innovative economy.

Washington is open to void California leadership can fill use this moment to advance targeted tax and regulatory reforms and public investments that will offset new federal frictions, prioritize changes that raise growth in any political cycle and make California the preferred destination for investment in jobs.

This would entail activities or investments like keeping ports of entry fast and predictable, expanding our land ports of entry with Mexico, scaling up export assistance for small firms and cutting costly permitting delays for new business expansion and housing. These steps can help keep California competitive at home and abroad, even as federal policies abroad. Sorry. Evolve.

I look forward to your questions.

Thank you so much, Dr. Handley. And I think you hit the nail on the head. The federal tariffs are taxes and it is crushing a lot of economies around the world, including our tourism and economic development here in the state.

Would love to direct my first question to Mr. Fukushima and given the work that you're doing at the Center for American Progress, you've done a lot of analysis and covered a lot of the recent federal policies, particularly regarding tariffs on imports from Asia. How do you believe California's economy has been affected by. At. By.

At both the consumer and industry levels? Do you believe that these tariffs have the potential to achieve their intended strategic outcomes?

Well, on the first part of your question about California's economy, we at the Center for American Progress have done studies about the impact overall in the US not specifically on specific states. I think Dr. Hadley can probably answer that question better.

But one of the problems I think we have in trying to assess the tariffs and whether they will produce the intended strategic outcome is that there have been at least six goals or objectives or purposes that I've heard about why these tariffs are being applied and it's hard to sort this out.

The first is the President often says that tariffs is the way to bring manufacturing back to America. So that he argues that if we have tariffs that will force companies to automobile companies and others to invest in the United States. So that's one.

The second is to reduce the trade imbalance because in his view, a bilateral trade imbalance is bad for the country that has the deficit and good for the country that has a surplus. Basically that the surplus country is the winner and the deficit country is the loser.

Now that's not necessarily agreed to by most economists, but on a bilateral basis at least. But that's a second. A third is that it's often said that tariffs are applied in order to reduce unfairness, that tariffs are somehow unfair against American exporters and therefore they should be reduced.

Fourth, tariffs are cited as a way to earn tax revenues for the U.S. treasury. And the President has boasted about how much money has been accumulated as a result of the tariffs. A fourth, a fifth, is to use tariffs as a tool to open markets.

Now that's been more of a traditional view of using tariffs as a threat, mainly to try to open markets. And certainly when I was at ustr, that was one of the tools that was used. But in those days the whole purpose was to open markets rather than to restrict markets.

And the sixth goal that is often mentioned for these tariffs is there are non economic reasons. Whether it's immigration issues or fentanyl and drug issues, or in the case of Brazil, the President didn't like the way that the Brazilian government treated the previous President and therefore he is imposing tariffs.

So there are these six different views or different stated purposes of what terrorists should do. And that's why it's difficult to know when you ask whether they're going to achieve their intended strategic outcome in some of these cases over a long period of time, perhaps they will.

But it's hard to see in a short period of time that they're going to produce the kind of economic results that are often talked about.

The final thing I would say is, and especially as someone who spent a lot of time in Asia, is that one of the effects of these tariffs is really to alienate a lot of countries that we should be cooperating working more closely with.

I can think of countries like Vietnam, for instance, and others that are very important to the United States economically and strategically.

But as a result of imposing these unilateral tariffs, I think it has the effect of alienating some of these countries and creating opportunities for China in particular to argue that they are the country that is providing the free and open and stable predictable trading environment and regime.

So that's a byproduct of these tariffs that I think needs to be recognized. Thank you.

Thank you so much, Mr. Fukushima. And we're all asking ourselves the same question still, I think, is what is the purpose of these federal tariffs? And there's a lot of, I guess, both intended and unintended consequences that we're seeing that we've heard about throughout this entire hearing that is impacting the entire state and a lot of Industries.

To Dr. Hanley, if we can ask you the next question, given your work and feel free to add to what Mr. Fukushima has already mentioned, but what affects our current tariffs, especially those imposed on trade with China, Mexico, Canada, having on the volume of imports, export destinations and overall economic costs for businesses in California.

And feel free to share anything around impact to supply chains as well.

Sure. So I want to start a little bit talking about this is round two kind of Trump 2.0 with these tariffs. And during the first Trump Administration there were substantial increases in tariffs, primarily against China, but also on steel and aluminum. And we're doing all that again, but 10 times more.

But even those tariffs were very costly to US Firms. A lot of businesses found themselves paying more for steel and aluminum. These are like primary inputs that you use to manufacture other goods. And that impacted them.

And some of the research that I've done on this, a lot of the firms that export goods to the rest of the world also import a ton of other things that they use to build stuff. And because those imports got more expensive, their exports went down.

And so it maybe doesn't make any sense, but it also goes to one of the goals of the Trump Administration is that they're trying to reduce the trade deficit. But a lot of these import tariffs will actually reduce exports too. And so the trade deficit won't actually get any better.

In the cases that we're dealing with now with these sort of across the board tariff increases of 10 to in some cases 145%, these things are definitely going to increase costs for US businesses.

I think there's going to be some shifting toward Canadian and Mexican trade because at the moment, Canada and Mexico are still kind of just barely holding on to the exemption on a lot of these tariffs due to their membership in what's now called the US Mexico Canada Agreement.

If they lose that exemption, then there's really going to be nowhere to hide for US Firms that are trying to source intermediate inputs and goods from other places. And so I think that's definitely something to keep an eye on.

More so for California because we share a border with Mexico and there's tons of cross border trade and business with Mexico and that will be affected if it turns out that Mexico eventually loses its US Mexico, Canada exception. So I would expect like lots of supplier contracts to be reworked, lots of supply chains to be reworked.

It's not obvious to me at all that, you know, jobs are necessarily going to come back or manufacturing is going to come back. What we anticipate most firms will do is they'll try to cut costs in other ways.

And so it'll be things like there used to be a dozen different types of this Ford truck that you may be used to buying every 10 years.

And the way Ford or General Motors or what used to be Chrysler are going to save money is they're going to reduce the number of varieties, they're going to scale back all the degrees of freedom that they have.

And people will be surprised in next month or in four months or at Christmas time when they're trying to buy gifts and things like that. A lot of things seem more expensive. There aren't as many varieties. I can't get things customized the way I used to.

And so those are the ways that I think that individuals in California will feel this and just General consumers. But a lot of businesses are basically dealing with the same thing, except they're trying to get a customized part, they're trying to find a place they can get it because now it's 50% more expensive.

And in a lot of cases, as I mentioned in my opening statement, they're just holding off right now because they don't know what to do. And at some point their inventory of parts and supplies is going to run out. And I think we're already starting to hear those kinds of stories and that's likely to get worse.

Thank you so much. Dr. Handley. I think your last comment really about the uncertainty of what's happening right now in our economy is really what we're trying to bring some stability to by taking a hold of what feels like a conversation that's beyond our grasp because the things that are happening are at the federal level.

And so I think that brings me to really, my next question is really the question that I open this Committee with is how can California lead? What can we do as a body in the Assembly to really advance potentially fruitful policies?

And so would love to ask you about which emerging markets or sectors Whether it's clean tech or in the beverage industry or. And agricultural experts offer the strongest potential for expanding California's trade and foreign direct investment footprint. Me or both of you, you're both experts.

Thank you. All right. So, I mean, I think it's maybe somewhat obvious where California's like leading sectors are, have been in the semiconductor industry and advanced manufacturing for some time.

Obviously leading companies like Apple, Google, Qualcomm, Nvidia, Intel, I mean, the list goes on and on that have been at the forefront of a lot of this high tech stuff. And there's more and more things being done where I think California is leading in terms of biotech, pharmaceuticals.

There's obviously in the pharmaceutical industry in particular, there could be a lot of synthesis between Mexico and California in terms of supply chains. I think that, you know, in Mexico, they want to build that up.

And I think that'd be a safer route than trying to build it up, say with India, given the President's animosity last week toward India, although this could change. Right. And so those are the sort of creative sectors, innovative sectors that have, I think, led California growth for a long time.

But I think in terms of what California can do, I mean, I think, you know, federal policy, tariffs are all controlled at the federal level. We're not in charge of our own currency. There's no California dollar.

But you have to be able to try and make California a place where people want to do business with California, companies want to invest in California and sort of think about what are the regulatory changes that we can make, what are the public infrastructure investments that we can make. And a lot of those things will be permanent.

And it doesn't matter if tariffs go up or tariffs go down. If you reduce the cost of doing business in California and you make maybe the roads better and you increase throughput at the ports by building more infrastructure that makes things move faster, that reduces costs, and that is going to bring more business to California.

And so I think those are the sort of policies that are sort of tariff proof in some ways and don't depend exactly on what's happening in Washington that can make California a place where business can do well and there may be more investment and more jobs forthcoming.

Thank you, Dr. Handley.

Yes, I completely agree with what Dr. Handley has said and the sectors that he's mentioned, especially in whether, I think, you know, Silicon Valley and currently the companies he's mentioned.

And AI, the future of AI is clearly advantage that California has in the Hollywood movie industry in the south and biotech These are all areas where California really has a real advantage. And certainly visiting Asian countries, there's a real interest and fascination with California because of the innovation and the dynamism that the state offers.

For instance, in September I'm being invited to give a speech at a innovation startup conference that the Ministry of Economy, Trade and Industry is putting on in Osaka at the Osaka Expo. And they're inviting people from around the world to engage with Japan on these high tech and innovative issues.

And as a former businessman, I also have to say that as the doctors, Dr. Handley has mentioned that creating the environment for business to be able to do business more freely and with fewer restrictions is really key. And I think I'll give you one specific example.

You know, there are a number of states in the United States that have these reciprocal driver's license agreements with countries like Japan. And this really does facilitate, you know, business people being able to go back and forth. And California, for whatever reason, I haven't really investigated the reason has been a laggard in this.

But that's just kind of one example of how California, without really creating costs, you know, or burdens, you can actually facilitate and make easier the ability to, to do business between California and other countries.

And I think there are many other examples how, I mean, I'm sure you have some kind of a Committee here where you actually have the opportunity to meet with business people from other countries and ask them, you know, what are your problems, you know, what are your complaints and how would you like things to, to be improved so that business can be facilitated?

I think there's a lot of things California can do and there are so many attractions that California offers that I think if you reduce the burdens that that will really enhance the ability of California to be maybe number three in the world in terms of the overall economy.

Well, thank you, Doctor. I'm sorry, I'm giving you another degree to your bio, Mr. Fukushima. You've already have so many, but no, thank you for that. And where I'm going to manifest being third in the world for having the largest economy. I think Assembly member Ahrens. Did you have a question?

Thank you, Madam Chair. So we're talking a lot about the federal impacts of the tariffs on Asia, California trade and investment. I'm wondering if in your expertise you can sort of speak to, you know, where we go from there because I'm trying to be cautiously optimistic in that the, the tariffs will end one day.

What do you see the impacts of the tariffs having long term? How quickly can we undo the damage that's being caused by these tariffs. Are we talking a matter of years? What type of are there long term implications that these tariffs are going to have on our economy?

And what does California need to be mindful of as eventually we hope to repair the impact that the negative impact that these tariffs are having.

But assuming that we can undo them in the future when they are undone, what, what are the things that we need to be mindful of and how can we best position ourselves to go back to ensuring that we maintain a robust economy in a post tariff world between California and Asia?

So it's a really important question, but difficult to answer because I think being in Washington, people find it very difficult to predict the future.

And part of it is frankly that in this Administration that when even cabinet officers are asked in Meet the Press or Face the Nation in these programs, they're asked questions about the future, their usual answer is I'm not going to get ahead of the President because they. Don'T know what the President, the President doesn't know either.

But so, but to answer your question, in a General sense, you know, Secretary Bessant, Secretary of Treasury, actually said a few days ago he was quoted as saying, well, you know, if things improve, the tariffs may melt away.

And so I don't know what he has in his mind because I'm not sure in his mind which of the six purposes he thinks the tariffs are supposed to remedy.

So I mean, is it a reduction in the trade imbalance or is it that there's more exports to the country or is it that we get more tax revenues or, you know, it's not clear which of these six, at least six, there may be more things that the Administration, the President in particular, wants to achieve.

And so that's why it's hard to know will it be six months from now, a year from now or three years from now, which, which of these factors has to improve by how much in order to justify removing the terrorists?

Now, one thing I could predict is that if the terrorists do have the negative impact on the economy in terms of inflation, in terms of negative impact on the stock market, I think these will get the secretary of Treasury and the head of National Economic Council, Council Economic Advisors and others to advise the President that maybe he needs to cut back on some of the tariffs because of the negative impact they're going to have on the economy and presumably on the midterm elections as well.

So all of that, there's so many variables that it's hard to predict. But I think it's safe to predict that if the economy heads in a worse direction, the likelihood of the terrorist.

Being lifted, improve?

Well, I certainly don't hope that.

Yes.

but it's sobering to begin to be forward thinking as we're trying to mitigate the immediate concerns that we're also thinking long term as well.

But Dr. Handley said before was important because he said that you have to, you should be taking matters basically that tariff proof the economy so everything you can do, I mean the things that are not in your control, the tariffs and know other border measures that the Federal Government has responsibility for, states can't do, but everything in your power, in the power of the state, you should be doing in order to, you know, improve the economy and make it easier to trade and invest.

Thank you.

You want me to say a little more?

Sure.

Okay. I have two things I want to add to that. I think in the short to medium term, if the tariffs came down or were just completely removed, I think a lot of things would go back to the way they were precisely because so much business decision making is basically on hold right now. But there are a lot of investments that just aren't happening.

And they're things like you've got to retool the factory, you've got to invest in capacity and machines are getting worn out and they're not getting repaired. And so there are hits from that to long term growth or medium term growth that we won't recover from quickly. But there's a longer term hit I think basically to U.S. credibility.

And a lot of international trade is just based on trust. As we heard in the first panel. You're trading with people because you trust them and you have these relationships and the US has destroyed a lot of its credibility and trust. And so during the financial crisis, the United States had a lot of different trade agreements.

We had NAFTA, we had deals in the works with Korea, Australia, Singapore, Chile. And so in US trade toward those trade agreement partners was very robust during the financial crisis when the rest of the world was kind of blowing up.

And it was because those trade agreements offered insurance against protectionism that you knew that your business relationship with the United States was solid because there wasn't going to be this knee jerk increase in tariffs because the US is going through a downturn and everybody else is going through a downturn. That insurance is gone.

I mean, the United States has gone to almost every country that we have a trade agreement with and basically acted like it doesn't exist. And we're negotiating new deals which are based on executive orders that may not be legal.

And so it will take a long time to rebuild what was essentially the entire post World War II order of trade. And so I think there are much longer term effects and residuals that will, that will extend possibly for decades, even if everything were to go back to normal in terms of tariffs tomorrow.

I think. Thank you. Thank you, Madam Chair. I think that's just very sobering for us to acknowledge because as we, you know, people often think that these are immediate impacts, but the impacts of these tariffs are, are decades to repair. And I think the people of California need to understand that as well. So thank you for saying that for the record. Thank you, Madam Chair.

Thank you so much, Assembly Member Ahrens. Mr. Fukushima, Dr. Handley, thank you both so much for being part of our second panel to really look at the impact of trade and tariffs on California. Thank you both so much.

And the Select Committee looks forward to leaning on your expertise, both at UC San Diego and your forthcoming capacity at Stanford University. So thank you both so much.

Thank you.

Thanks for having us.

Last but not least, thank you so much for your patience.

We will go to our last and final panel, which will be exploring the economic relationship between Asia and California and really to focus on the future and explore potential opportunities, which is why I know so many of you came from both near and far to be here today.

The first speaker we have is our honorable Chris Cate, Chief Executive Officer of the San Diego Regional Chamber of Commerce. We have Mr. Elvin Lai, the Chair of Asian Business Association California. And last but not least, Ms. Susie Pryor, Regional Director, Central California Small Business Development Center, SBDC. And so with that, we will start with introductions.

If you can tell us just about your work in San Diego. And congratulations for being the new CEO for the San Diego Regional Chamber of Commerce. We'll start with Mr. Cate.

Thank you, Assembly Member Caloza. And thank you for the opportunity to speak to you about a subject that is not only vital to San Diego, but also all of California. The San Diego Regional Chamber of Commerce represents over 2,500 businesses, 300,000 jobs in 80 different industries, not only in San Diego, but in the Baja region as well, too.

We're proud to serve as a gateway to the Pacific. Our geography, our industries, and our communities position us uniquely to strengthen ties across the Pacific. Countries like Japan, South Korea, and the Philippines are not only key allies in global security, but also some of the region's most important economic partners.

These relationships support local jobs, drive innovation, and ensure California remains competitive on the global marketplace. In 2024, California exported more than $71 billion in goods to Asia. These exports represent everything from advanced technologies to energy to agricultural products that feed families around the world.

San Diego's industries such as life sciences, clean tech and semiconductors, which account for $15 billion, $10 billion, and $55 billion in economic impact, respectively, are on the front lines of this exchange. Japanese investment alone supports nearly 12,000 jobs in our region. While partnerships with Korea, Taiwan, and the Philippines continue to open new doors for collaboration.

We also see an impact at the San Diego community level. Asian Pacific Islander owned businesses generated more than $15 billion in economic impact in 2024, creating over 116,000 jobs and strengthening our neighborhoods with deep cultural exchanges that enrich our region. The Chamber has worked hard to build on these ties.

In recent years, we've met with leaders from many different Asian countries such as Japan, Vietnam, and South Korea, to name a few. These conversations are not trade statistics. They are about shaping the future of our economy, making sure San Diego businesses are connected to opportunities to elevate their business. There are challenges ahead.

Tariffs, shifting supply chains and raising costs of goods are creating uncertainty for our businesses. However, with our innovative background, our San Diego businesses will find creative solutions to not only benefit the San Diego regional economy, but both sides of the Pacific.

Our goal at the Chamber is to make San Diego region the best place to live and work. We cannot do that without being an active participant in trade with our global partners. By deepening this relationship, we are building a stronger, more resilient future for our businesses, our economy and our communities. Thank you.

Thank you for your work in San Diego and your leadership, Mr. Cate. Next we'll go to Mr. Elvin Lai to introduce yourself and your work at ABA California.

Thank you, Chair Caloza. Hello. Thank you for having me here. My name is Elvin Lai, I own, operate and manage restaurants, hotels and soon airport concessions. I'm a fourth generation owner, third generation operator, so one can say hospitality runs through my veins.

I am also honored to serve as a new Commissioner for Visit California that you will be swearing me in for very shortly. So thank you very much. Representing the San Diego contingent. The biggest gap I see is access.

This country was built on mom and pop businesses and it feels like the mom and pops are the ones that are being penalized all the time because we don't have access. Large corporations, have the resources to navigate trade and tourism, but small and minority owned businesses are often left behind.

We don't always have a seat at the table even though we're the ones who feel the impact first when costs rise or visitors decline. I feel your role is to bridge the gap between policy and practice. Trade and tourism strategies can't just be listening to the Fortune 500s. They must include small, independent, minority owned businesses.

That means access to trade missions, grant funding for events, cutting the red tape that keeps us out of global markets and more importantly, listening. Listening to what is happening on the ground with small businesses. We will be your early indicators on how things and what things are happening.

Compression is a term that I probably will want to bring up right now. Compression is like throwing the stone in a steel lake. The larger the stone, the larger the wake. Supporting missions that bring large group conventions and live events to California will help small businesses because of the compression that are it has on everyone around it.

So when downtown fills up in San Diego, I know my boutique independent hotel will feel it all the way in Pacific Beach. Thank you.

Thank you Mr. Lai. And last but not least, Ms. Susie Pryor from SBDC.

Thank you, Chair Caloza. I appreciate the opportunity to give voice to California small businesses and that is my purpose here today. So I'm going to build much on your remarks. I currently serve as the Regional Director for the Central Valley Small Business Development center.

I cover 14 regions, but we have SBDC offices all over the state and we work daily with small businesses. So this is an incredibly important topic for us. I want to lay the groundwork just a little bit in terms of the relationship with Asia, which we feel very, very deeply since World War II.

We've often said that the United States enjoys a special relationship with the United Kingdom. But I think it is equally true to say that the State of California is enjoys a very special relationship with our Asian brothers and sisters. And I don't think we can really overstate the importance of that relationship.

You've heard a lot of data today about the size and scope of the Asian Californian trade relationship. And it's very true and it's often easy to get lost in those numbers because they are just so large. But I'm going to give you two more because they relate to small business.

And that is to say that we know that California's economy is fueled by the 99% of businesses here which are small businesses under 500 or in the case of manufacturing under 900. And in truth, 95% of that import export activity also runs through California small business. So it's an incredibly important part of the equation.

I want to make a couple of remarks about the California Small Business Development Center Network because it is funded by CalOSBA and GO-Biz and is a very important part of the work that the state does to fuel this economy. So over the last 36 months, we have helped create 6,600 small businesses.

I'm going to come back to why that's important in a moment. We've supported more than 333,000 jobs in the state and helped small businesses in the state bring in almost $5 billion in new capital. And that, the reason those numbers are important is because they just scratch the surface.

So when I think about this question of what can the state do in partnership with small businesses, particularly in the area of Asian trade, I think about very similar to the prior comments, we need that additional commitment to the infrastructure that supports small businesses.

Because the truth is it's technically complex for small businesses to engage in importing and exporting. They need technical assistance. It can require new forms of technology and upgrading existing services and capabilities. That is something that the state can certainly help with. And then finally, those businesses need access to capital.

So we say this in all walks of small business, but it is particularly true in the import export equation. So these are things that if we can pull these off successfully, can really help. We like to compete with Japan on the economy. Let's be friendly trading partners who are competing with growth.

I'm going to give you an analogy because it's what I think about every single day when we work with small businesses. I get goosebumps because while we're sitting here, this state is being powered by businesses who are not necessarily orchestrated in their activities. So I'm from the State of Kansas. We have tornadoes.

I'm going to use the tornado analogy because what Kansans know about tornadoes is there are lots of thunderstorms, there's lots of high winds. But when conditions are right, when we really have winds operating in multiple directions at multiple levels, we get these tremendous forces that we call tornadoes, right?

200 mile an hour winds that have just devastating capabilities. And that is how I view the power of small business in the State of California. We are rich in this asset.

But if we can help incubate it at multiple levels and in multiple forms, we can drive the economy in ways that really counteract things that are external to the state. So I appreciate being in this conversation. We welcome not only questions, but suggestions for how we can help you because that is what we are here to do. So thank you.

Thank you so much, Ms. Pryor, and thank you for your incredible work on the SBDC. You provide a tremendous amount of technical assistance to our small businesses.

And that's why we are concluding our select punique on this conversation is really to talk about the local impact to the work that all of you do and what we can do about it most importantly. I also want to take a moment to pause and welcome Assembly Member Avelino Valencia to the Committee. We've had a very robust discussion.

Assembly Member Valencia chairs our Banking and Finance Committee as well. And so I'll direct the first question to Mr. Cate. You know, given the work that you're engaged in in San Diego and feel free to comment for other parts of the but have you observed any challenges given the federal tariffs, how has it been hitting San Diego?

And drawing back to the question that I opened this Committee with is where is the opportunity? How can we help as a body, as a Legislature, to, as other speakers have said, tariff proof California?

Thank you for the question. And I want to revert back to Dr. Handley, who raised some excellent points regarding the impacts of tariffs and something that we are hearing at our chamber in San Diego. And we're uniquely positioned because of the work that we do in the Cali Baja region.

A lot of our members are across the border and we partner with them every day to try to determine the future, especially as it comes to to tariffs. And we are hearing from members directly that they are pausing their investments because of the uncertainty with tariffs.

Up until recently, a lot of these organizations and companies have absorbed the cost impacts of those tariffs, but that is now ending. And those are prices that, price increases that will eventually revert back to consumers because they're going to have they're not they're going to have to absorb those costs.

They're not going to eat them on their own. They're going to pass them on to to consumers. And so one of the things that we have been trying to do is educate our policymakers.

We were able to recently host new U.S. ambassador Ronald Johnson as well too, in San Diego in our offices to educate him about what we see every single day we have when it comes to trade and manufacturing. For example, Dr. Handley used, I think, a Ford Ranger, I'll use a Toyota Tacoma for this example.

But a Toyota Tacoma will cross the border five or six times before it's finished. We are essentially taxing ourselves for those productions. San Diego is also in the Baja region, the largest medical device manufacturing location in the world. And so these are all things that are very conducive to our local economy and State of California's economy.

And so when you have this uncertainty with tariffs and what we're seeing the impacts currently as we speak, it's very detrimental to our local economy and the state economy.

Thank you for that, Mr. Cate and appreciate your Tacoma analogy there. We're hearing about all the things today. To Mr. Lai, just a very similar question to what I asked Mr. Cate. You talked about your work and somebody who is an investor both in Asia as well as California.

How is this impacting the hospitality industry, the small business community? And just back again to that question of where do you think there's opportunity for the Assembly to make an impact, please.

So I didn't know about my Asian investments. I'll have to ask my wife about that one. So clearly they're in purses. But first of all, the sentiment about the tariffs first and a lot of conversations about that. I think small business sentiment right now is we don't have a choice.

We are the victims of a system that is going on and we have to figure out or we're not going to survive. So a lot of individuals are on the brink of not survival or being figuring out how they increase, how they work with increased cost of goods.

So the increased cost of goods are every down from, from a head of cabbage to a bundle of carrots all the way to me trying to buy beer tanks and I couldn't get an order because no one could figure out what the price of beer tanks was going to be. So it completely stopped all production, all construction.

I think 32 jobs were halted because of that one job that wasn't in action. So it halted all process of opening that facility in Temecula which is now still delayed for another six months.

So the brewing team is not hired anymore, the restaurant team's not hired, all because of that six month delay due to the fluctuation of the tariffs. So what can you do? I mean first and foremost, I think giving confidence to the constituents that you guys are doing something. Right?

I think there is a lack of confidence that anybody can do anything. Not knowing what the answer is, not knowing what the future will come, but some assurances would be very, very impactful. On the hotel side of things, I also would like say, you know, the sister cities was a great idea that was awesome.

But then investing in bringing groups and live events here into California, into the cities, that can cause compression, cause trade, and as well cause people to visit our hotels, go into our restaurants and really start spending money, bottom line.

Thank you, Mr. Lai. Ms. Pryor, what, very similar questions, what policy actions or legislative support would be most impactful in helping SBDC? Because you're on the front lines of the receiving end of a lot of these federal tariffs, please.

Well, the state has been, has really been tremendous since about 2019 in terms of trying to put together packages to support organizations like ours that provide technical assistance. And I think that the continuation of that, of course, is sort of foundational. Right? The nice thing about investing in a program like ours is that we do get match.

We get match internally from host institutions, we get match from the Federal Government, so we're able to maximize those contributions. So there is no doubt in my mind that that funding retained and grown is a good investment for the state.

But I also think that for the state right now, SBDCs and other organizations like us have competing sort of taskmasters we're trying to appease. The Federal Government has certain requirements from us, things that they'd like to achieve. I'd love to hear a stronger voice from California about that.

And when I gave the analogy of the tornado, it was because you can see where focused attention becomes extremely important. And the reason I was so excited about today's panel was we've not really focused regionally and we know our relationship with Asia is not transactional. It's very multi generational. There's a lot of richness there to be explored.

So I could very well see the state talking about how do we better connect small businesses with our counterparts in Asia to really build those relationships specifically. So it would be a type of programming that I don't think we have really done formally. We've worked on things like advanced manufacturing, we work on procurement activities. But I do think there's a lot more to be exploited in those relationships.

Thank you so much, Ms. Pryor, and I couldn't agree more. And the last thing I'll add is in addition to what you all shared, for a lot of the businesses who are in this Committee hearing, for those watching online, our Chambers of Commerce, our SBDCs, do a tremendous amount of work to support that relationship between Asia and California and also locally.

I know that you have a tremendous amount of technical assistance that you provide as well. So thank you for your work in helping nurture that relationship. I want to take a moment to pause as well and see if Assembly Member Valencia had any comments or anything, any questions that you had for the panel. You don't have to. Just wanted to make a moment to pause.

Thank you, Madam Chair. Appreciate this very timely discussion. As we well know, the globe gets smaller as time goes by. Everything is interconnected. And the fact that we're having this California Asia conversation when it comes to commerce and trade is extremely critical. I also want to thank the Chair for her diligence and leadership on this end. To all the speakers for being here today, thank you.

Thank you so much. Assembly Member Valencia. We will lean on all of you for the Select Committee. And really you have my commitment and the Members of this Committee that we look forward to working with you on really next steps and really what's ahead.

So unless you all had any last minute comments, we can. Oh, go ahead, Mr. Lai.

I have a question. Sorry.

I don't know if you're allowed to ask Mr. Questions, Mr. Lai, but this is my first time as Chair. Go ahead.

What is the negative feedback loop that the state has that you get information on how the economy is doing at the bottom level? How do you know small businesses in your communities are doing well? How does that information feed up to you?

Yeah, I would say, you know, each Assembly office is different. There are 80 Members of the Assembly. I represent District 52, which is Northeast LA, East LA, and South Glendale.

I also have and I was really itching to talk about this, but since you asked me a question, I also represent the Dodgers, which has a very important relationship with Japan. And I don't know why you're shaking your head, Mr. Cate. But each office varies in how that information trickles up to us.

But I think consistently it doesn't matter which Member you talk to. We get very consistent feedback that our small businesses are being attacked, whether it's the cost of business in California, to the federal tariffs, to the immigration raids, to Covid, to what happened in my part of California, the fires in Eaton and Palisades, there's crisis upon crisis in California.

And to the point that a lot of the speakers made, why we wanted to have a very intentional conversation about drawing a spotlight to these issues that we've been hearing about all year long.

And I think it's very important, while we have really partisan, unfortunately partisan conversations this week around things like redistricting that we continue to elevate and talk about issues around trade and investment because there's a lot of opportunity here and we can have multiple conversations at the same time. And that's why I'm so grateful for the turnout and tremendous support that we've received today.

And really I want the public to use a Select Committee as a vehicle to share your feedback and your opinion about what's happening, whether you're a small, medium, or large size business, so that we can take that feedback and ultimately come up with hopefully really good policy recommendations and even maybe potential legislation in the future so that we can continue to advance our relationships between California and Asia.

And so the question goes back to you that this is really incumbent on all of us to really participate in the process, because I know I'm really dedicated to this as Chair and all of our Members on this Committee, as I mentioned earlier, chair their own committees, and that's really powerful to have that participation and membership so that we can really move the needle forward.

Amazing.

Yeah. And with that, thank you all so much for being part of our last panel. We really appreciate your time. Now I will move to the portion of public comment. We invite anybody who wishes to share their thoughts to please approach the microphone.

We kindly request that you state your name, affiliation, and please limit your comments to one minute.

Thank you very much, Madam Chair. Other select Members, Members of Select Committee. My name is Jordan Rivers. I am a community organizer for Global Engagement and resident of the City of Sacramento and currently the Chief Liaison and sole organizer for a freelance passion project of mine called the Global Residence Initiative.

A common theme has emerged from this Select Committee hearing. Obviously, one, Asia, and two, more importantly, California's agency and autonomy when it comes to addressing issues of global engagement in the state.

As someone who has led efforts, starting with the Global Residents Initiative starting in January, I began this proposal towards the final week of the previous Administration, anticipating the upcoming and seemingly ongoing dilemma of the current Administration when it came to our foreign relations. It obviously is very important to us. We're looking to revitalize our existing global ties and community.

And I was very pleased that the core vessel in which we're trying to do so, Sister Cities, was brought up numerous times from the Lieutenant Governor and other Members of the previous panels and the forums brought here by the Select Committee.

So in keeping with the quorum and trying to keep the, you know, these public comments to one minute. Someone who has actively spoken to higher jurisdictions outside of the city, from the county and state. I can tell you exactly what the issue is when it comes to California's investment.

When I reach out to the governor's Office of Business and I tell them that, you know, this is a product, this proposal.

If you can kindly wrap up your comments.

Thank you. Sorry, I apologize. This is a product and a proposal that, you know, we're looking to do. We want to see if this actually happens to the city. If you're able to fund us. They tell us no, they say that we don't fund things like this.

Thank you.

So if it's within the agency, you know, if this is possible. We want to make sure this can happen. Thank you.

Thank you so much. And we'll definitely get your information after the Committee to get your feedback on this. And thank you so much for being with us.

Madam Chair, Members of the Select Committee who attended, thank you. Also Assembly Member Valencia for being here. Andrew Antwih with Shaw Yoder Antwih Schmelzer & Lange here today on behalf of the Port of Los Angeles. Our port serves as a major gateway for goods movement, especially with the Asian market.

A significant portion of our cargo volume is destined to and comes from, originates from the Asian countries. I wanted to highlight, of course, the fact that China is our largest trading partner in the Asian market, but other countries include but not limited to Japan, South Korea, Vietnam and Taiwan.

Recognizing the time here, I just want to cut to the chase on also the proud work that we've done in establishing voluntary environmental agreements to establish green shipping corridors is a big part of the planning that we're doing. There was heavy focus on the tariffs and the economic impacts there and the uncertainty.

But the working relationships in these markets have been over decades and will endure past the fluctuations that we expect to endure, to go through and have already experienced at the Port of Los Angeles.

We went from mid year to second quarter of 2025 to low volumes, to the highest volumes in the history of the port just last month. So thank you very much and we appreciate the Committee's Select Committee's focus.

Thank you so much. And we look forward to working with the City of Los Angeles and the Port of LA for the next hearing. And so, you know, with that I just want to thank again the members of the audience, every single person who took time to be here today.

Members, speakers also want to thank the sergeants who are here as well as my staff on this Committee, Selena Valencia, my Chief of Staff, Kathleen Gonzalez, my scheduler, as well as Katherine Del Rosario, my District Director. Thank you all for being here. Please stay tuned for the work of the Committee.

We hope to have our second hearing in Los Angeles next month. And thank you all so much for your time and together I know we can work to strengthen our relationship and our partnerships and most importantly, our opportunities between California and Asia. And with that I conclude our first hearing.