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Expanding View of Trade Called a Must for State

by Kristi Heim
Seattle Times, March 25, 2006

In the new global economy, Washington needs to compete like a small nation, not simply another state, Gov. Christine Gregoire says.

"This is not about comparing Washington state to North Carolina or to Texas or to any other state," she said at an international trade reception in Renton Thursday night. "If we do, we compare ourselves to mediocrity. This is about comparing ourselves to Japan. It's about comparing ourselves to India."

Gregoire unveiled the results of a yearlong study by the Global Competitiveness Council, a group of government, education and business leaders charged with identifying steps to improve the state's economic strength.

The council has more than 40 members, including the CEOs of Boeing Commercial Airplanes, Washington Mutual, Alaska Airlines and Costco, as well as executives from Microsoft and Vulcan.

Their recommendations ranged from improving the state's educational system and building infrastructure to marketing its natural beauty and quality of life.

Washington is already the nation's most trade-dependent state. Its exports totaled $3.09 billion in 2004, third behind California's $6.84 billion and Texas' $4.46 billion. But on a per-capita basis, that's $498 per person in Washington, compared with $190 for every Californian and $198 for every Texan.

In Washington, one of every three jobs is related to international trade, according to a study done for the state's Department of Community, Trade and Economic Development.

This reliance on trade can be a double-edged sword. The state can reap more benefits from expanding into world markets, or it can suffer disproportionately if it fails to capitalize on them, the report notes. Trade wars between the United States and other countries also can do more damage here.

Gregoire gave the state's competitiveness a grade of B-, above average, but not by much.

Staying competitive requires a more global perspective and some urgent action now to raise the educational bar, Gregoire said.

"If you talk to any business, they will tell you education is why they either come or stay," she said. "We've survived thus far, but now it's time to say we're going to have a world-class education system. If we do that, we're en route to an A. If we do not, we're going to fall well behind."

The Competitiveness Council's 10-year goals for education included creating a voluntary model curriculum, starting with mathematics, that meets international standards; encouraging more foreign language and culture courses; aligning educational programs with work-force requirements; and increasing college-enrollment slots.

The council said it intends to contribute to the 18-month Washington Learns study already under way by sharpening its global competitiveness focus.

Infrastructure recommendations included making high-speed Internet service available throughout the state; conserving, storing and treating water more effectively; expanding rail capacity and port-rail connections to ease freight traffic, finding more renewable energy sources; and increasing air capacity of Seattle-Tacoma International Airport.

The council did not provide budget figures for the projects, which were written as a more general strategy outline, but identified many of them as public-private partnerships that should include private investment.

In the globalization spiral that tends to favor the lowest-cost location, Gregoire is convinced the state can maintain an edge by emphasizing quality.

Encouraging specialized clusters around industries such as biotechnology and alternative energy can attract other new investors to the state, she said.

She also cited recent successes in negotiating to bring new aerospace suppliers to the area, persuading to expand in the state, and a possible $350 million investment by semiconductor maker SEH America of Japan.

On Thursday, the state's far-flung trade representatives came in from China, Germany, Japan, Mexico, South Korea and Taiwan to talk with local companies.

New competition is affecting Washington's efforts to market itself globally. Japan's economy is now emerging from more than a decade of recession, providing an opportunity to sell more state products or attract Japanese investment here. But the landscape has changed, and much of the new Japanese investment is going into China.

"It used to be we said invest in Washington, not Oregon or California," said Timm Tuttle, director of Washington state's trade office in Japan.

"Now we have to get them to think about investing in the U.S. first before we can say invest in Washington."

Kristi Heim, Seattle Times business reporter
Expanding View of Trade Called a Must for State
Seattle Times, March 25, 2006

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