Foreign Investment in Idaho
Rep. George Eskridge shares Gov. Otter's thoughts on Foreign Trade Zones and Chinese investment in Idaho, from A Seat in the House
The Joint Finance and Appropriations Committee conducts a spring and fall meeting in the interim between the legislative sessions to update the committee members on Idaho’s fiscal situation, provide information on the implementation of legislative actions relating to appropriations authorized by the legislature and to arrange informational tours on various building projects authorized by the legislature.
As a member of the committee I attended the spring meeting of the committee held June 22-24 and was informed of our General Fund revenue condition as of the end of May.
The May report was positive but not as good as we were anticipating.
Based on the June Idaho General Fund report from Idaho’s Division of Financial Management, Idaho’s General Fund “grew by 131.1 million dollars in May to 2.189 billion dollars.” This increase was 8.0 million less than expected and as a result the year to date surplus of 74.2 million dollars reported for April fell to 66.1 million dollars as of the end of May. May is normally a lower revenue month so there is some optimism that our actual surplus on June 30, the end of this fiscal year, will be greater than the 66.1 million dollars.
The next General Fund report will be published on July 15 and will indicate the final revenue figures for this fiscal year.
Moving to another issue, I have had several individuals express concern related to Chinese investment in our state that circumvents normal treatment of foreign business transactions in Idaho. I asked Governor Otter to provide me information that would address these concerns; the following is information quoted from the Governor’s written response to my request for information on this issue.
“Capitalism and the free enterprise system have helped build a global economy in which American companies trade products and services and freely invest in business ventures globally, and international companies do the same in our country. In this open and increasingly competitive economic climate, it is more important than ever that we strengthen and diversify Idaho’s economy by finding new customers to purchase Idaho’s products and services. Global markets also present opportunities to attract investors who can help finance business ventures and job opportunities for our citizens.
“Foreign direct investment in particular has created nearly 14,000 jobs for Idahoans. I understand some of your concerns about foreign investment in Idaho, particularly by individuals or businesses from countries not governed under the principles of democracy. However, all individuals living in or operating businesses in the United States must operate under local, state and federal laws. That’s why Idahoans are the real winners when any kind of investment comes to Idaho.
“Recently, there have been reports about a Chinese state-owned company seeking investment and contracting opportunities around Idaho. These are private ventures that I understand are in the early stages of development. If a Chinese company were to invest or win a bid for one of these potential projects, it would be required to comply with a variety of laws, including the U.S. immigration stipulation to source local labor first, before hiring workers from outside the United States. Furthermore, there are additional laws in place to protect our national security, intellectual property, and worker and environmental safety. Any company doing business in the United States is subject to these laws.
“There have also been some discussions about establishing a foreign trade zone (FTZ) near the Boise airport. The Boise airport is not designated as a FTZ, but there have been discussions between a Chinese company and the City of Boise about whether construction of a FTZ at the Boise airport could be feasible. I understand these discussions are preliminary and I am aware of no concrete plans for an FTZ to be built near the Boise airport.
In general, FTZs are privately operated businesses that are regulated under the direct control of U.S. Customs and Border Patrol. They allow companies to bring goods into the zone on a tax-deferred basis and add value through additional manufacturing or assembly. FTZs are a job creation tool because they incentivize investment in the manufacturing sector by deferring, reducing or eliminating tariffs on incoming goods. Operating, owning or using a FTZ does not exempt an individual or company from existing U.S. laws regarding immigration, customs, and national security. Idaho now has a privately operated FTZ located in Eastport, near the Canada border. The facility is used to reload and transfer goods from Canada between trucks and rail transportation for eventual shipment within the United States or around the world.”
Hopefully this information from Governor Otter helps address the concern related to the Chinese activities. Regardless of the politics of individual countries we are in a global market that is highly competitive and it is to Idaho’s economic advantage to compete as effectively as possible within our state and nation’s laws to enhance the competitiveness of Idaho products.
Thanks for reading and as always feel free to contact me by phone at 265-0123 or by mail at P.O. Box 112, Dover, Idaho 83825.