As the nation’s most trade-dependent state, Washington is particularly susceptible to ripples in international commerce. So it is that two recent news items are resonating in this state. While there is reason for consternation, the prudent action would be for trade watchers to take a deep breath and relax, understanding that the complexities of international business do not leave room for a panicked response.
In one of the items, the World Trade Organization ruled that Washington state’s tax subsidies for Boeing violate international rules. In 2013, the Legislature approved an extension of tax breaks for the aerospace giant, providing subsidies that are expected to be worth $8.7 billion over 25 years; in exchange, Boeing agreed to build the 777X in the state.
While the deal secured thousands of jobs for the Puget Sound region — and ensured work for suppliers — it also triggered debate. After the agreement was reached, Boeing began announcing that other jobs would be moved out of Washington, essentially thumbing its nose at taxpayers. As The Columbian has written editorially, lawmakers should have been more diligent about tying up loose ends in the agreement to ensure that the company was beholden to citizens. There were good reasons to negotiate with Boeing; the company has about 80,000 workers in the state, making it Washington’s largest private employer. But the deal was imperfect.
That provides some subtext for the recent decision from the World Trade Organization, which ruled that requiring Boeing to assemble the 777X and its composite wings in the state violates rules about foreign goods and local products being treated equally. The decision followed a complaint from the European Union — which subsidizes Boeing’s primary competitor, Airbus — and it was the latest salvo in on ongoing trade war between the two companies. Notably, the trade organization’s ruling rejected most of the European Union’s complaints about the deal, and Boeing officials hailed the decision as a victory for U.S. manufacturing.
