Lori Otto Punke: Olympia should work to avoid more harmful tariffs

Last week, Washington state lawmakers began consideration of legislation that proposes the elimination of a reduction in the state business and occupation tax rate for the aerospace industry. The legislation intends to resolve issues with the World Trade Organization over claims of U.S. government subsidization of aerospace companies, and it deserves the strong support of state policymakers.

Without this legislation, the European Union will have the legal right under WTO rules to impose tariffs on Washington state exports to the European Union, threatening our competitiveness and putting Washington state interests in the crossfire of yet another trade dispute.

Washington state is already suffering from ongoing trade conflicts. Potential improvements from the new United States-Mexico-Canada Agreement and Phase One of the U.S.-China agreement may prove to be a turning point for Washington state interests, but we continue to be caught in the crossfire of painful trade and tariff wars. All of this has cost jobs, profits and livelihoods.

International trade has always been a cornerstone of Washington state’s economy. Indeed, Washington is one of the most productive and innovative states in the nation. Washingtonians are active traders – farmers, fishermen, ranchers, inventors, software and services suppliers, professionals, workers, and small- and large-business owners. Eastern Washington and the greater Spokane region are a critical part of this activity.

Washington is well-known as a significant provider of a variety of food products to the world, including apples, cherries, pears, hops and potatoes, as well as frozen vegetables, legumes, seafood and dairy products. Washington grows 67% of all U.S. apples and accounts for 90% of U.S. apple exports. Washington farmers are also the nation’s largest producer of hops, representing three quarters of all U.S. production and 25% of the global output in recent years.

Though best known for apples and airplanes, our dependence on trade is extensive. Sending Washington-made goods and services to foreign markets contributes to our economic growth, raises our quality of life, and sustains family-wage jobs in numerous local industries. Washington is the most trade-dependent state in the nation, with approximately 40% of all jobs tied to international commerce.

The European Union has issued a preliminary tariff list that targets foods and beverages like wine and coffee, agricultural products like apples and cherries, fish and shellfish, including Pacific salmon, and consumer goods like video games. By targeting these products, the European Union is targeting Washington directly.

Washington’s trade ties with the EU run deep, second only to China. Washingtonians export fish and seafood, fruits and tree nuts, vegetables, wheat and more to Europe. We export nearly $16billion worth of goods and services annually, which accounts for more than 85,000 jobs annually.

Without this legislation, the European Union would be authorized by the WTO to impose tariffs on U.S. imports into the EU. These tariffs would be a significant hit locally, and a new front in the trade war would be tough to absorb.

It is in Washington state’s interest to pass this legislation expeditiously. It shows respect for the trade rules on which we all depend, and it ensures that our citizens won’t be caught up in yet another trade dispute.

Lori Otto Punke is president of the Washington Council on International Trade.