The new head of the Washington Council on International Trade, the nonprofit agency that advocates for the state’s businesses and their employees who rely on healthy trade ties, started in her new job in mid-December at an unsettling time.
Then-President-elect Trump had promised to scuttle not only the Trans-Pacific Partnership but also NAFTA and the Export-Import Bank during his campaign. The trade pacts and the export lender are viewed as crucial to manufacturers, agricultural producers and others in the state, raising concerns for WCIT’s new president, Lori Otto Punke, who before leading the agency participated on its board and held senior public affairs positions at Microsoft and Starbucks.
“Even before last summer, we knew this was going to be a challenge,” Otto Punke said earlier this week during a meeting with The Herald Editorial Board.
President Trump did pull the United States out of the Trans-Pacific Partnership, a trade pact that last year had completed negotiations among 11 other Pacific Rim nations. But since taking office, Trump has moderated his stance on the Export-Import Bank and NAFTA. Trump announced he would seek to keep Ex-Im open and his since nominated a chairman and a board member to fill vacancies. Likewise, he said he would seek to renegotiate, and not scuttle, NAFTA.
On both, Otto Punke said she sees opportunities that will benefit the state and its employers, though challenges remain.
The Export-Import Bank is key to trade in Washington state and the nation. In operation for 83 years, the bank facilitates loans, loan guarantees and insurance that promotes exports to other countries from small, medium and large businesses in the United States. Boeing and the Chateau Ste. Michelle winery in Woodinville are among the better known companies benefiting from the bank’s services, but a number of small- and medium-sized business in Snohomish County have relied on the Ex-Im Bank’s assistance. The bank is self-supporting, operating off the interest it charges and regularly returning a profit to the U.S. Treasury, more than $3.4 billion since 2005.
After a contentious battle, the state’s congressional delegation helped win reauthorization of the bank in 2015, but conservatives in Congress have since hamstrung its operations by refusing to confirm nominees to its board. Without a full board, the bank cannot make loans of more than $10 million, which has sent companies, including Boeing, elsewhere to find financing for their customers. The bank, The New York Times reported in May, authorized only $5 billion in financing last year, about a quarter of what it was authorized to lend in 2014.
Trump has nominated two former Republican congressmen: Scott Garrett of New Jersey as president and chairman, and Spencer Bachus of Alabama as a board member. Both have yet to be confirmed by the Senate.
But as ardent as their support for the Ex-Im Bank has been, the state’s Democratic Sens. Patty Murray and Maria Cantwell have objected specifically to Garrett, because while in the House he was one of the leading voices seeking to close the bank.
“At best, this was an uninformed choice. I will continue to push for someone who actually believes in the agency’s mission and is committed to helping Washington state workers and businesses succeed,” Murray said in a statement released Wednesday.
A modernized NAFTA also could have benefits for Washington businesses, Otto Punke said.
In the past 20 years, Washington’s exports to Canada have increased by 200 percent and to Mexico by 700 percent, WCIT figures show, trade that supports about 330,000 jobs in the state.
Renegotiating NAFTA, Otto Punke said, could open access for Washington dairies to Canadian markets and also allow the sale of Washington wines in British Columbia stores. WCIT also wants to see rules updated to free up exchange of digital information; streamlining of regulations; language to keep tariffs from increasing; and updates to the limits at which online sales are taxed (currently Canada can levy taxes on purchases over $20, and Mexico, over $50.)
Talks also could help strengthen enforcement of provisions, Otto Punke said, as had been outlined in the TPP. Trump appears intent on ensuring good, enforceable deals for the nation. Toward better enforcement, Sen. Cantwell last year won approval for a Trade Enforcement Trust Fund, $15 million annually, to assist the U.S. Trade Representative’s office resolve trade disputes before the World Trade Organization.
While seeing the U.S. walk away from the TPP was a disappointment, the WCIT chief said, it hasn’t diminished Washington state’s stature among those nations or with China, earlier demonstrated by Chinese President Xi Jinping’s visit to Everett and Washington state in 2015 and a similar visit in 1979 by then-Vice Premiere Deng Xiaoping.
Why is all this important?
Washington state’s economy is heavily reliant on trade. The state Department of Commerce reports that 1 in 3 jobs in Washington are related to exports, and the state is the fourth largest exporter in the nation, shipping nearly $80 billion in goods worldwide in 2016. Among the leading exports are apples, timber, wine, software, robotics and aircraft and aerospace components — much of it built here in Everett and Snohomish County, of course.