Two Paragraphs on Trade from the State of the Union

Last night’s State of the Union featured two paragraphs on international trade. Let’s not get into a discussion of whether that’s too little or too much for a speech that’s about economic opportunity and job growth, especially for a state like Washington where 40% of all jobs are tied to international trade…OK, I guess we got into that a little bit. But that’s not the point of this blog post.

Let’s talk about those two paragraphs, though. The second paragraph was relatively direct:

Even as we protect our people, we should remember that today’s world presents not only dangers, but opportunities.  To boost American exports, support American jobs, and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership.  And tonight, I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union – because trade that is free and fair across the Atlantic supports millions of good-paying American jobs.

That’s actually not only tangible but good news. There was some uncertainty about whether the Obama Administration would proceed with a US-EU FTA, and now it’s official.

The first paragraph on trade was more subtle, however:

After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. Caterpillar is bringing jobs back from Japan.  Ford is bringing jobs back from Mexico. After locating plants in other countries like China, Intel is opening its most advanced plant right here at home.  And this year, Apple will start making Macs in America again.

This section is notable because it never uses the word imports or outsourcing, but rather talks about manufacturing job growth. The thing is, it’s conflating two things that aren’t entirely related. Let’s parse!

First, “After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three.” This is a great thing. We love manufacturing jobs, particularly because of their high wages and the high multiplier effects they have throughout the economy. Here in Washington state, about 10% of our employment is in manufacturing.

But then, the rest of the paragraph talks about examples of onshoring work that has been done abroad. Again, fantastic stuff. These investments by leading corporations are a sign that our country is increasing the competitiveness of its infrastrucutre and education and business climate issues…or at least benefitting from global trends like rising Asian wages and increasing fuel/shipping costs that make domestic manufacturing more affordable.

HOWEVER, we want to make sure we don’t miss the (false) connection that is being made that there’s a dichotomy between domestic manufacturing employment vs. global supply chains. One of the findings of the International Competitiveness Strategy is that about 25% of our state’s trade related employment is tied to imports…including jobs in manufacturing. By leveraging global supply chains, Washington companies with retail and manufacturing facilities here can actually increase their success in the global marketplace, and therefore increase domestic hiring in the kind of high-wage, high skill jobs that Americans truly benefit from. We’ve seen that here in Washington with significant increases in Boeing employment, even while Boeing is using global partnerships for some pieces of their airplanes. The jobs in final assembly and related manufacturing have been growing as 80-90% of those airplanes are then sold to foreign customers.

So, hurray Trans-Pacific Partnership & Transatlantic Trade Agreement. And hurray examples of onshoring. But ALSO, hurray successful leveraging of global supply chains that help our companies increase their success and grow jobs for our state’s residents.

 

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