OK, all together now: One out of every three jobs in Seattle is linked to international trade. In other words, Washington is the most trade-dependent state in the country. We hear those mantras so often from our political and business leaders that they are deeply dyed into the fabric of regional conversation about how the economy here works. But these statements, important as they are, often produce a blind spot on the true nature of trade here.
Two new leaders of established international trade organizations are out to change perceptions about international trade and its impact on the Seattle area economy. Both are unabashedly pro-trade, pro-international Seattle, pro-exports, and pro-jobs. That last one might be a bit of a surprise because they are talking about creating new jobs from trade, not just those traditional ones at Boeing and the Port of Seattle.
The two organizations are the Washington Council on International Trade (WCIT) and the Trade Development Alliance of Greater Seattle (TDA). Eric Schinfeld is the new president of the Trade Council, focusing on federal trade policy. Sam Kaplan is the new president of the TDA, replacing Bill Stafford, the long-time face of that organization, focusing on the TDA’s traditional role as connector for the trade community.
Both are savvy individuals, ready to apply the new tools of social media to the sometimes arcane world of international trade. Most of us, for example, see trade in terms of jobs statements or the big container ships that ply the waters of Puget Sound. But did you know that a foreign student at the University of Washington or Seattle University can be counted as an “export” that adds to the international tally sheet of the Seattle area’s trade world?
Both Schinfeld and Kaplan agree that global trade is often underestimated, misunderstood, or simply feared. The fear comes from those who see it as a force pushing U.S. jobs abroad. Last year, an NBC/Wall Street Journal poll found that, for the first time, a majority of Americans (53 percent) said trade agreements hurt the nation overall.
Even here in trade-dependent Washington, international trade sometimes gets a bad rap. Gov. Chris Gregoire has been to Asia and Europe in the past year, promoting trade with Washington state. Yet the comments on news articles about the trips decry them as vacations or junkets. On-line commentators on news stories may not represent a measured cross section of opinion, but they do reflect the ambivalence that exists on trade issues. Schinfeld, in his new State of Trade blog, took on the issue recently, calling such trips “essential to our economic and community success as a city, region and state.”
Trade is important here, there is no getting around that. More than 70 percent of Boeing jets are exported – the easiest example of foreign trade. Other Washington exports are less obvious. More than half of Microsoft’s software is exported, although the fact is often lost in trade statistics because of the way software is counted. There is also a huge trade in services based in the Seattle area from architects, environmental service firms, and global health initiatives. Even those foreign students contribute about $350 million annually to the regional economy in the form of tuition and other spending.
“Everyone says we should get away from this consumer economy that got us into trouble,” said Kaplan. “But what kind of economy do we need to move to? The only one that works is an export economy.”
The Washington Council on International Trade has been around for nearly 40 years. Such local leaders as Pat Davis, former Port of Seattle commissioner, and China expert Bob Kapp have run it. The council got some negative fallout as one of the sponsors of the disastrous World Trade Organization meeting here in 1999: Several years ago, when funding dried up for the organization, it went to an all-volunteer status. But in May, the Greater Seattle Chamber of Commerce reinvigorated the Council, adding it as a special program based at the Chamber. Phil Bussey, Chamber president, said that having the Council and the TDA working together at the Chamber, “strengthens its role in fostering economic growth and prosperity in our region.”
The Trade Development Alliance has been around for 20 years, with Kaplan taking over as president in July. Kaplan sees the TDA as the connector, bringing together the various trade stakeholders and acting as a clearinghouse for trade groups. WCIT will focus on policy issues, while the TDA continues its “on the ground” work.
“If we are so trade dependent, we really need a voice in D.C.,” said Schinfeld. There are any number of issues bubbling to the surface in D.C. these days that could affect the regional economy, such as President Obama’s export initiative, Gov. Gregoire’s similar push on a state-wide basis, trade agreements pending with large traders like South Korea, and the potential impact of the expansion of the Panama Canal on trade routes. “We need to look at the practical and policy barriers to trade here,” Schinfeld said.
“If WCIT tries to get a level playing field for the region, it’s the TDA’s role to play on it,” Kaplan said. One of Kaplan’s main issues is foreign direct investment. He sees it as a way to produce jobs here, yet points out that the 10 states with the largest amount of FDI are all east of the Mississippi.
“I’ll be looking at what we have, who we are, and what is working, and look for gaps,” said Kaplan. “The Port, students, tourists, manufacturing, all are assets. We can look at FDI and see if we can leverage those assets. Coordination and leveraging, that’s the key.”
Asked about the divisive issues in trade – such as the loss of jobs – Schinfeld admits there are some issues where agreement is hard to reach. But he points to such issues as port competitiveness, foreign visas and clean technology exports as areas where all can agree.
“The harbor maintenance tax is an example,” Schinfeld said. “The port, unions, trucking companies, and so forth probably all would support changes since it adds costs.” The Harbor Maintenance Tax is a federal tax imposed on shippers based on the value of the goods being shipped through ports, according to the American Association of Port Authorities. The tax is placed in a trust fund to be used for maintenance dredging of federal navigational channels.
Both Kaplan and Schinfeld believe statistics on trade are not good indicators of its real value. Kaplan said trade statistics are like baseball statistics 30 years ago. “We need to get our game up,” he said. Schinfeld agrees, pointing to a National Association of Manufacturing presentation that showed that both China and the U.S. have lost manufacturing jobs. He said 80 percent of the jobs lost to other countries have been to countries without trade agreements with the U.S.
“This is an interesting time for WCIT,” Schinfeld said. “There are tangible things happening. We have three pending free trade agreements, the President’s export initiative, the potential for exporting to add jobs.”
Both also agree there are problems to face: Puget Sound ports face increasing competition from Canada and from the expansion of the Panama Canal. Savannah, on the Georgia coast, is a likely stopping point next year on a Chamber-sponsored intercity study mission. “Savannah hopes to benefit from the wider canal and see more container traffic bypassing the West Coast,” said Kaplan.
Five year plans? Kaplan said TDA would be successful if there were more resources devoted to international trade. He also expects trade missions to become more sector-specific, looking at individual sectors like global health. And, he says, the TDA database is an extensive resource that could and should be used more.
Schinfeld has realistic goals for WCIT. “I want it to be a sustainable organization.” Success, he says, will be measured by increased understanding by the electorate and officials of the link between international business and international trade. “We need a nuanced understanding of trade and trade policy,” he explained.
Trade is a complicated issue. A trade pact with South Korea, in the long run, is good for the country and will increase jobs overall. But there is little doubt that some U.S. jobs in industries that compete with imports will be lost. In a large complex economy some factors help spur job creation in one part of the economy, while a factory worker in another part loses his or her job.
The macroeconomic facts mean little to any individual. The Seattle area is fortunate that it is more likely to benefit from trade than other parts of the nation. The labor force here is more likely to get a new job than lose one. Unfortunately, another macroeconomic fact is that it’s unlikely that workers displaced from their jobs will find other employment quickly or easily.
Another plus for the Seattle area? It is home to two organizations — WCIT and the TDA — on the forefront of trade issues and working to make this region one that prospers.