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The Import-ance of Import-ing, Part 3

The State of Trade blog has always been a strong proponent of exploring the benefits of trade to Washington state…which includes both exports AND imports. In fact, one of our first posts was cleverly titled “The Import-ance of Import-ing“.

Highlighting the net benefits of imports is a delicate subject, because globalization has caused a lot of job loss and economic disruption – especially for people in industries where production has largely shifted overseas, like shoe manufacturing (approximately 99 percent of all footwear sold in the United States is now being imported).

But to say that imports are all bad is a statement that ignores many of the jobs created in our state by imports, a fact that we referenced in our post “The Importance of Importing, Part 2.” And now that the International Competitiveness Strategy for Washington State has been released, we can actually quantify it.

Which makes this post the next installment of GTKTICSFWSSBP – Getting to Know the International Competitiveness Strategy for Washington State Series of Blog Posts. Here’s some important facts about imports that you need to know:

1) A quarter of all the trade-related jobs in Washington are import-related: At least 108,000 direct jobs in our state are related to imports, because of two significant factors – 1) our status as an international gateway to the rest of the country, and 2) the fact that we are home to a wide diversity of retail and manufacturing companies that leverage global supply chains as part of their market competitiveness. As a gateway for Asian goods, our state has tens of thousands of people who are engaged in the logistics of taking imported freight off of ships and airplanes and then transporting it to the rest of the country. And many Washington manufacturers and retailers also rely on imported goods to maintain their international competitiveness, which means that – while certain jobs are no longer located in Washington – these companies are using some of their increased revenues to create and retain well-paid headquarters-based jobs, such as marketing, sales, design, logistics management and engineering.

2) Imports lead to exports: The goods that are exported from our state’s ports are often shipped in containers that are here because they arrived carrying imported goods; so, were it not for the volume of imported containers that travel through our ports, we would not have the containers to ship our goods out. Additionally, for our retail and manufacturing companies, many imported products are used as inputs into final products that are then exported; the added value provided by Washington workers in utilizing these imports – for example, machinists assembling airplanes – is an important factor in measuring the cost-benefit to our economy of imported goods. A recent WTO report calculated that the U.S.-China trade balance in 2008 would be about 40% lower if estimated in value-added terms.

3) That doesn’t mean we should encourage Washington companies to import as much as possible: The implications of these finding are not that maximizing imports by Washington-based firms is the best job creation strategy. Increased importing leads to the loss of certain kinds of jobs for Washington residents, and – while there is a net benefit to our state’s economy – the pain of globalization is clearly felt by many workers; more must be done to ensure living-wage job creation in the United States, and to help retrain those workers negatively impacted by globalization. However, given that many Washington firms will continue to use global supply chains for the foreseeable future, it is incumbent upon our state to continue to invest in the transportation and logistics systems that make this a competitive location for such firms. In fact, many companies are based here primarily because this is a great place to import from, given our geographic proximity to Asia and our freight mobility infrastructure; many of these companies will only continue to maintain operations here as long as this is the most efficient place from which to manage their supply chains. Similarly, the only way that our state’s ports will continue to attract cargo in increasing volumes is if they can efficiently and expeditiously move this freight to the rest of the country.

While debate will continue at the national level in terms of how federal policy can properly incent domestic job creation, Washington state must focus on efforts and investments that allow it to take advantage of the current global economic system. And, as the International Competitiveness Strategy shows, there are benefits to imports that we can take advantage of to increase prosperity for Washington residents.

Now what about China? Aren’t they “not playing by the rules,” and taking advantage of our country’s trade policy to unfairly benefit their ability to import into the United States? Well, if you want to know the answer, you’ll need to tune in to next week’s installment of GTKTICSFWSSBP.

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