A welcome calming on the trade warfront
A collective sigh of relief was heard this month among businesses that rely closely on international trade here in Oregon.
Both news of the handshake agreement of the U.S.-Canada-Mexico Agreement (USMCA) by congressional Democrats, combined with President Trump's promise to hold on the latest set of tariffs on China, gives businesses a moment of safe harbor to rebuild, restore and renew relationships in the global marketplace.
Few may realize that one in five jobs are connected to international trade in Oregon — and those jobs pay more on average. Our recent report highlights not only the important impacts that trade makes in Oregon, but how interconnected the products and ideas we make here are to the global marketplace.
This year, for the first time, the Portland Business Alliance invested in a new federal affairs director and brought the Pacific Northwest International Trade Association (PNITA) in-house with executive director Maria Isabel Ellis.
This added capacity within our government affairs team has elevated international trade as an important focal point within our region's largest and most diverse chamber of commerce. Ellis and members of PNITA are advocating and educating others on the importance of doing business beyond the borders of the U.S.
Few may realize the incredible importance of fostering international relationships for Oregon businesses. Trade relationships take time to develop and are essential for supporting valuable jobs in our state and region, contributing to a strong and thriving economic ecosystem.
As Ellis shared earlier this month, it also helps that we have strong regional leadership on international trade in Washington, D.C. Two of the nine members of the USMCA Working Group are from Oregon. With a largely Democratic delegation, the votes of Oregon Representatives Suzanne Bonamici and Earl Blumenauer are important for ratifying any agreement.
As we wrap up 2019, the news of a USMCA agreement and cooling off on tariffs could not come at a better time. The uncertainty around national trade policy and the whiplash-style in which tariffs have been deployed has led to a continued decline in manufacturing output, and significant, long-lasting losses for agriculture in Oregon. Businesses have put investment and hiring plans on hold, unsure of what new, unwelcomed, surprise tariff the future might hold.
Getting these agreements ratified in early 2020 could provide Oregon and Washington companies some safe harbor of predictability, encouraging them to continue investing and expanding business across our global markets.
Currently, there are roughly 150,000 Oregon jobs connected to trade activity with Canada and Mexico. Canada is Oregon's second most important trade partner, and Mexico is No. 14. These markets are also important sources of intermediate imports — or inputs — for products that are made here at home. For example, 75% of what we import from Canada and 40% of what we import from Mexico are used to make other products.
Additionally, when it comes to trade wars with China, the latest agreement announced this month gives farmers a much-needed break.
Initial reports outline China's agreement to make more substantial purchases of U.S. agricultural products, $24 to $40 billion annually for the next two years. This is important because the tariffs have particularly hurt farmers. Farm bankruptcies have increased nationally by about 25% since the tariff war began. In the Pacific Northwest, that figure is closer to 70%.
In our region, Chinese tariffs are higher than 50% on many of our products, including hazelnuts, fresh apples and cherries. While wheat exports to China had been our fifth-
largest in the last three years, there have been no wheat shipments to China in months. Oregon's exports of hay to China are also down 50%.
We're hopeful that the actions this month signal a commitment by our national leaders to de-escalate a trade battle that has rattled global markets permanently.
What's next? After quick action last week, we fully expect by the time this column goes to press, the House will have passed the USMCA and sent it to the Senate to vote on in early 2020. And hopefully, the president's promise of holding off on any more tariffs with China will stay on track.
Clearly, there's work to do, but the calm, for now, is a welcomed reprieve. We're proud of the collaborative efforts that continue to help our region's industry leaders in technology, agriculture and manufacturing come together to speak with a unified voice and advocate from the smallest to the highest levels of government.
Vanessa Sturgeon is chair of the Portland Business Alliance board of directors and is president and CEO of TMT Development. Read more on trade in Oregon at: PortlandAlliance.com/PNITA
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