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Imports & Exports: Washington’s Burgeoning World Trade |
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Written On: September/October 2005 |
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Written By: by Ron Dalby |
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What do artificial fur, wood, airplanes, software, wheat, needlecraft sets and apples have in common? All are part of the eclectic mix of goods Washington exports to markets in every corner of the world.
In 2004 the total of goods and services exported out of Washington was $33.8 billion, down slightly from $34.2 billion in 2003. In round numbers that adds up to $5,500 of goods exported for every resident of the state. According to 1997 research by economist Dick Conway, Washington leads the nation in per capita exports, "...and the export trade directly or indirectly supports one out of every four jobs in the state.” He goes on to note that, "Washington state handles 6 percent of America’s trade flows (exports and imports) although the state accounts for only 2 percent of the U.S. population."
According to the Massachusetts Institute for Social and Economic Research, in 2003 Washington’s top five export commodities, in order, were: Aircraft, spacecraft and parts thereof ($20 billion); seeds, grain, fruit, plants, etc. ($1.66 billion); electrical machinery, sound equipment, television equipment and parts ($1.44 billion); industrial machinery including computers ($1.37 billion); and cereals ($1.11 billion).
It is not just the big firms like Boeing, Microsoft and the large farms that contribute to this mix. Exports in 2003 also included such diverse items as raw hides, skins and leather; glass and glassware; animal and vegetable fats; beverages, spirits and vinegar; needlecraft sets; works of art; and just about anything else you can name that is produced in Washington by businesses.
In 2003, the biggest buyers of Washington goods were all on the Pacific Rim. Japan was far and away Washington’s largest customer ($5.4 billion) followed by our northern neighbor, Canada ($3.3 billion). The two Chinas, Mainland ($3.2 billion) and Taiwan ($2 billion), made up third and fifth places respectively with Singapore ($2.1 billion) holding on to fourth place. The order changed somewhat in 2004; the top five buyers, in order, were: Japan ($6.3 billion), Canada ($4 billion), Mainland China ($3.1 billion), Taiwan ($2.14 billion) and South Korea ($2.06 billion).
Exports of products originating in Washington are only part of the story, though. A lot of jobs in this state are also due to "pass-through" exports. Pass-through exports are goods grown or manufactured in other states that are shipped through Washington’s ports to foreign destinations. In 1998, for example, state-originating exports totaled about $38 billion and pass-through exports another $11 billion. These figures and others that follow on imports come from a Chase Economics study conducted in the late 1990s and available on the state’s Web site, access.wa.gov, under the agency for Community, Trade and Economic Development.
Goods Flow Both Ways
Washington's exports, though, are only part of the story. The same ships and planes that carry Washington’s goods overseas don’t arrive here empty. Just as they take from our shores, so, too, do they deliver to our shores. The good news, though, is that, as a state, Washington has a very favorable balance of trade.
In 1998, state-originating exports of $38 billion were partially offset by state-terminating imports of about $14 billion. That's a balance of trade in Washington's favor of about 2.7 to one, a very nice ratio indeed when you consider the country as a whole and its growing trade deficit.
From a jobs standpoint, things get even better. Pass-through imports received and transshipped at Washington’s ports and airports totaled some $42 million in 1998. Our stevedores unloaded the ships, our trucks and railroads carried goods to other states and into Canada. Taken all together, the total of state-terminating and pass-through imports exceeded the total of both kinds of exports by about $17 billion.
The short version of all these facts and figures is that Washington is moving a lot of goods in and out of our ports to destinations around the world. And this means jobs, good jobs that pay well.
Jobs, Jobs, Job...
Earlier we noted the estimate that 25 percent of the jobs in Washington are either directly or indirectly related to world trade. What does that mean in terms of real numbers?
On July 19, Washington State Employment Security issued a press release that said as of the end of June, there were 3.12 million people employed in the state. If a quarter of those people owe their livelihoods to world trade, the import-export business in Washington creates or materially contributes to about 780,000 jobs in virtually all sectors of our economy.
There are the obvious jobs for stevedores, truckers, warehouse workers and the like. Then there are the indirect jobs, which include those who work at retail establishments where the direct employees shop and the service industries that they use as necessary parts of their lifestyles. Put another way, the number of people employed in Washington because of our import-export activities is greater than the entire populations of five states.
Also relative to the number of jobs produced by international trade in Washington, the Chase report notes that the combined ports of Tacoma and Seattle are the second-largest container cargo load center in the Western Hemisphere.
The Give and Take of Trade
While international trade does contribute much to the Washington economy, it sometimes creates major problems, even to the point of taking away from Washington's job base. Forest products were major staples in the Washington export economy as recently as 15 years ago. But a combination of factors, not least of which are environmental restrictions such as those generated by the spotted owl controversy, have led to a severe decline in forest-product production in Washington.
Lumber and wood products are now one of Washington’s largest categories of imported goods. In 1998, for example, Washington imported $2.3 billion worth of lumber and wood products, much, if not most, of which we provided for ourselves — with the attendant jobs — less than two decades ago.
Our neighbor to the north, Canada, is the source for the bulk of the lumber and wood products brought into Washington. Recently, U.S. policies regarding softwood lumber exports from Canada have come under scrutiny by Canadian officials. At issue is a U.S. decision in early August to ignore a North American Free Trade Agreement panel decision that found Canadian lumber exports posed no threat of injury to U.S. producers.
Canada's trade minister, Jim Peterson, has reportedly begun to identify areas where Canada could apply tariffs to cause maximum pressure on the U.S. economy while doing minimal domestic damage. "The idea is a wake-up call [to the United States]" Canada's Industry Minister David Emerson said recently.
As of the end of August, Canada was seeking WTO authorization for billions of dollars in punitive tariffs against U.S. imports. Canada believes that U.S. Customs has illegally collected $5 billion in tariffs on Canadian softwood since 2002.
While such actions do indeed create work for lawyers on both sides, the sad fact is that we're arguing over something Washington should be able to produce for itself — and to export elsewhere for profit.
Such, though, is the climate for international trade. Countries seek to export products they can harvest or otherwise produce efficiently, giving them a leg up on the competition. Increasingly restrictive environmental restrictions reduced Washington’s ability to harvest sufficient timber efficiently, thus another country latched on to the market for lumber.
Countries import goods that can be better made or harvested by others, primarily as a price advantage for consumers. When product dries up from one place, such as lumber from Washington, another country finds a way to fill the gap — Canada, in this case.
Overall, and looked at strictly on a worldwide basis, trade is in balance. Certainly some countries — Mainland China comes immediately to mind — run a trade surplus, often due to the relatively cheap labor available in a nation undergoing rapid economic and industrial development.
Other countries, such as the United States, rack up trade deficits by importing a higher-dollar value of goods than they export. And, the fact that the United States has the ability to handle a trade deficit year after year is a critical factor in the success of developing countries around the world. Not every country can have a trade surplus and not every country can have a trade deficit. Without both, there would be no worldwide balance.
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