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Trade policies, taxes lend uncertainty to Oregon's economy, a different kind of disruption

PMG FILE PHOTO - One in five jobs in Oregon is supported by international trade, which could face headwinds thanks to policy decisions from the White House.

President Donald Trump's disruptive foreign policies have not yet hurt international trade overall in Oregon — but they still could contribute to a worldwide recession that would hurt the entire global economy.

That was the consensus of a panel of experts who spoke on the topic of Oregon trade and the global economy before the Columbia Corridor Association last Wednesday, Aug. 21. Most critical of Trump's policies was Scott Goddin, who retired as director of the U.S. Commercial Service for Oregon and Southwest Washington last year. Although Goddin admitted total Oregon trade revenue is on track to increase to $12.4 billion this year, he said that was despite the administration's policies.

"We are doing a lot of damage across a lot of fronts. This administration has a theme of disruption with limited success," said Goddin, who moderated the discussion and admitted he could talk more freely now that he is no longer a federal employee.

Goddin also said that, although the escalating trade war with China gets the most attention, more Oregon jobs are actually dependent on trade with Canada and Mexico. Although the Trump Administration has renegotiated the North American Free Trade Agreement (NAFTA), it has not yet been ratified by Congress and may fall victim to partisan politics, which would especially harm the state's agricultural economy.

Another Oregon business that would be hurt is Greenbrier Companies, which builds North American rail cars using raw and semi-finished materials from suppliers across the company and has one of its assembly plants in Mexico. Jack Isselmann, the company's senior vice president of external affairs and communications, told the breakfast forum that all 1,600 employees are dependent on the work done at the Mexico plant.

"If NAFTA goes away, we can't operate. Every job depends on NAFTA and our ability to assemble in Mexico," Isselmann said.

Although the treaty has little direct impact on Portland-based Simplex Aerospace, the president and CEO Mark Zimmerman said all trade barriers hurt everyone by raising the costs of goods and services. The company, which makes aerial firefighting systems and other advanced airborne equipment, sells 60% of its products to Pacific Rim countries, and is making headway in China that he hopes continues. He worries that tariffs and counter-tariffs being imposed and threatened by the leaders of the two countries will hurt sales.

"We're having a great year and 2020 looks phenomenal, no thanks to our self-inflicted trade problems. Government is not helping business," Zimmerman said.

Isselmann and Zimmerman noted that other governments actions can harm trade, too. They said both of their companies were financially hurt when the U.S. government shut down for 35 days beginning on Dec. 22, 2018. Isselmann said the uncertainty created by the shutdown was "not helpful," while Zimmerman said all business stopped during the shutdown, and complained the Federal Aviation Administration has still not completely recovered and is still slowly approving some of the paperwork needed to complete transactions.

Isselmann also worried that a global recession could be triggered if Great Britain pulls out of the European Union without an agreement — a so-called hard Brexit.

"A hard Brexit could be very tough on Europe, and if there's a global recession, freight won't be moving by rail, so there'll be no need for new railcars," he said.

Isselmann and Zimmerman also criticized new taxes on businesses approved by city voters and the 2019 Oregon Legislature. Isselmann said the gross receipt tax to fund schools was a factor in his company's recent decision to buy two manufacturing plants in Arkansas instead of elsewhere. Zimmerman said it and the 1% Portland Clean Energy Fund surcharge will reduce his company's available revenues without providing any benefits.

"I'd rather give the money to my employees and let them decide how to spend it. I'm thinking about whether to stay in Oregon," Zimmerman said.

The discussion began with a presentation on trade in Oregon and Portland by Dr. Michael Wilkerson, a partner and project manager at the EcoNorthwest consulting firm. Drawing on findings from the recently completed 2019 Oregon's State of Trade study conduct for the Value of Jobs Coalition, he said trade is a major driver of Oregon's economy, supporting one in five jobs and generating 12% of the state's gross domestic product. Trade directly supports 76,700 jobs in Portland, making it 14th out of the top 100 trade-dependent metropolitan areas in the country.

The Columbia Corridor Association is a membership organization representing businesses in the largely industrial area along the Oregon side of the Columbia River from Swan Island to Airport Way.


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