That’s one of the most exciting findings of the new International Competitiveness Strategy for Washington state. The Strategy may be most famous for its finding that 40% of all jobs in Washington state are tied to trade, but there’s so many more important pieces of information and analysis. And, each week, I’ll be blogging about one of those findings as part of our GTKTICSFWSSBP (Getting to Know the International Competitiveness Strategy for Washington State Series of Blog Posts) initiative. This week: services exports, which account for $23 billion of our state’s annual exports!
The Twilight Zone reference in this blog post title is actually appropriate in some ways when in comes to WA services exports, because they’ve always been sort of a mystical part of Washington’s trade story. Mostly, of course, because there’s been very little data to quantify the impact of services exports on our state economy. Data isn’t currently collected at the state level on services exports, and – as with many things – if we can’t measure it we tend to ignore it. How often have you heard that Washington exports $64 billion a year, when that’s only goods exports? People just ignore the services piece because they can’t quantify it.
Well, thanks to the brilliant folks over at the Trade Partnership in DC, now we can quantify it: $23 billion in services exports, with $13 billion coming from software, another $3.6 billion from international tourism and $2.5 billion from professional services like finance, legal and business consulting (not even including the half a billion in architecture and engineering services). These are huge numbers, accounting for over a quarter of our over state exports. And they’re huge relatively, too; Washington ranks fifth out of all fifty states in terms of overall services exports (not per capita…I’m talking gross export value)!
There’s one other thing that really fascinates me about our services exports, which is the orientation toward Europe. When most people think about Washington exports, they think of our markets in Canada and Asia. Which is true…for our goods exports. But our services are much more focused on destinations like the UK, Germany and France. Not that Asia isn’t important, but we can get carried away with our West Coast orientation and forget that a quarter of our export economy is at least more balanced, if not weighted eastward.
So, what does this mean for Washington state? To me, it’s a major reorientation of how we think about trade policy and the investments we need to make in Washington state. If we only care about goods exports, then it’s all about ports, freight mobility infrastructure and lower tariffs on goods. But as we realize that services matter too, then our trade policy priorities shift to things like international intellectual property protections, international tourist visa reforms, attracting more international direct routes in and out of Sea-Tac Airport and services trade liberalization negotiations.
The Washington Council on International Trade is planning to be even more active in the year ahead in promoting the importance of services exports to our state economy, and in advocating for policies and investments that support Washington’s services exports. And we look forward to working with all of you to achieve that goal.
In the meantime, tune in to next week’s edition of GTKTICSFWSSBP, where we’ll be exploring the fascinating topic of how imports benefit (!) Washington’s economy.
