Trade Creates Jobs for Hawaii Creating and preserving quality U.S. jobs is a goal shared by all Americans. With 95 percent of the world’s consumers living outside of the United States, it makes sense for small and large businesses to partner to build stronger trade ties with countries seeking U.S. goods and services. Trade creates jobs for Hawaiians. Export growth increases jobs by generating new business for Hawaii’s manufacturers, services providers and farmers. Imports support jobs and keep costs low, helping Hawaii businesses compete and saving Hawaii families real dollars at the cash register. Foreign investment in Hawaii creates good jobs across a range of sectors. MORE THAN 1 IN 5 HAWAII JOBS DEPENDS ON TRADE Hawaii workers need trade to maintain and create jobs. •

Today, 201,700 jobs in Hawaii depend on trade.

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In 2008, 23.1 percent of jobs in Hawaii depended on trade, up from 11.4 percent in 1992.

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Hawaii’s trade-related employment grew more than twice as fast as total employment from 2004 to 2008. Hawaii Jobs Tied to Trade, 2008

Wholesale & Retail Trade Transp. & Warehousing Prof., Sci., & Tech. Services Finance & Insurance Information Manufacturing

26,000 7,800 7,300 6,000 3,600 500

Small and Large Employers Partner to Export Small and medium-sized enterprises (SME) and workers in Hawaii supply goods and services to large U.S. companies in and out of the State. Those bigger companies use the SME goods and services to make other products and services that they, in turn, export to customers around the world.

Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants. Newly exporting firms increase employment almost four times faster than non-exporting firms.

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HAWAII’S INDUSTRIES, SMALL BUSINESSES AND FARMERS GROW WITH EXPORTS According to the U.S. Department of Commerce, Hawaii’s exports totaled $959.6 million in 2008. •

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Other

Tob. Prod. 4% In 2008, Hawaii companies sold their Computers/ products in nearly 120 foreign markets. Electronics 5%

The top export market is Australia ($375.4 million). Other leading markets include Korea ($110.4 million) and Japan ($93.9 million).

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The Philippines is one of Hawaii’s fastest growing trading partners. In 2008, Hawaii companies exported $16.1 million worth of goods to the Philippines, an increase of 229 percent since 2002.

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Transport. Equip. 43%

One of the fastest growing export 16% categories for Hawaii is petroleum and coal products, increasing at an average annual rate of 20.6 percent since 2002. Beverages &

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Leading Export Products

Transportation equipment was Hawaii’s leading export category in 2008 accounting for 43.7 percent of total exports.

In 2008, exports accounted for approximately 1.5 percent of Hawaii’s state gross domestic product (state GDP). Since 2002, exports have increased nearly twice as fast as state GDP.

Waste & Scrap 10%

Petrol. & Coal Prod. 22%

Leading Export Markets Singapore 8%

Other 24%

China 8% Japan 10%

Korea 12%

Australia 38%

Services exports are also important to Hawaii, including port services, education of foreign students at Hawaii colleges and universities, and spending by foreign visitors to tourist destinations in Hawaii, including Waikiki and Mauna Kea. In 2008, cruises alone created $545 million in direct spending in Hawaii, generating nearly 16,000 jobs. Overall, services companies employ 603,700 workers in Hawaii. In 2008, 142,200 Hawaii services jobs depended on trade. Hawaii is a leading exporter of certain agricultural products. The State is the ninth largest exporter of tree nuts in the United States and is the only U.S. state that produces either macadamia nuts or coffee. Hawaii’s other leading exports products include fruits and fruit products and wheat products. Key markets are Japan, Canada, and France. These exports directly benefit Hawaii’s farmers in Kona and on the Big Island.

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HAWAII’S SMALL AND MEDIUM BUSINESSES PARTNER WITH LARGE BUSINESSES TO EXPORT Exports particularly benefit workers at Hawaii’s small- and mid-size companies. In 2007, 582 – 87.4 percent – of Hawaii’s exporting companies were small- or mid-sized companies. Larger Hawaii companies are also important exporters. For the United States generally, half of U.S. exports are generated by U.S. multinationals. Small and medium-sized Hawaii companies also indirectly export when they supply goods and services to larger Hawaii exporters. Every job at a Hawaii worldwide company supports nearly two others at companies that are part of its supply chain.

Leading Hawaii Exporters Company

Products

Island Ventures Ltd. Hawthorne Pacific Power Systems Greenwell Farms Fastpak Hawaii Kona Brewing Company HFM Food Services French Gourmet Inc. Bayview Farm Koyo USA

Perfumes, cosmetics Generators, radiators Coffee Household goods Beer Food products Pastries bread, muffin mixes Building materials Bottled water

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Foreign Markets Hong Kong Pacific Islands Sweden, Germany Philippines Japan Pacific Islands Singapore, U.A.E. Philippines Japan, Singapore

MORE OF A GOOD THING FOR HAWAII – TRADE AGREEMENTS LEVEL THE PLAYING FIELD The United States has some of the lowest trade barriers in the world. Trade agreements level the playing field by lowering other nations’ trade barriers and opening up foreign markets to U.S. exports. Hawaii has increased its exports to partner countries following the implementation of the U.S. bilateral and regional free trade agreements (FTAs). •

FTA partner Australia is Hawaii’s largest export market, led by exports of transportation equipment and computers and electronics.

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Since the U.S.-Singapore FTA went into effect in 2004, Singapore has become the fifth largest export market – up from 11th in 2003 – for Hawaii’s products.

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In fact, half of Hawaii’s top ten export markets in 2008 were FTA partner countries, including previously small markets like Guatemala and El Salvador.

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Following passage of the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), Hawaii’s exports to DR-CAFTA countries increased from just $2.5 million in 2005 to $67.8 million in 2008.

The United States enjoys a trade surplus in manufactured goods with its FTA partners.* U.S. Trade Balance, 2008 144.3

Services

34.8

Agricultural Products Manufactured Goods: 15 FTA Partners

19.2

-380.5

Oil Products Manufactured Goods: Other Countries

-475.4 -500

-400

-300

-200 $ billions

-100

* State-specific data are not available for imports, so this chart cannot be prepared for Hawaii

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0

100

FOREIGN INVESTMENT IN HAWAII CREATES JOBS Foreign-owned companies invest significant amounts of capital to open or expand facilities in Hawaii every year. These companies employ 28,500 workers, almost 6 percent of all Hawaii employees in the private sector. •

Foreign-owned manufacturing accounts for 1,100 jobs, representing over 7 percent of all manufacturing jobs in Hawaii.

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U.S. subsidiaries of foreign companies pay an average compensation of $68,317 per year, 32 percent higher than U.S. companies.

Selected Multinational Corporations Employing Workers in Hawaii Company Air Liquide BAE Systems First Insurance Company of Hawaii Kotobuki Industries Koyo USA Kyo-Ya Company Star Cruises

Industry Country Industrial Gases France Defense/Aerospace United Kingdom Insurance/Financial Services Japan Machinery Japan Beverage Bottling Japan Travel and Tourism Japan Travel and Tourism Singapore

HAWAII COMPANIES AND WORKERS USE IMPORTS TO STAY COMPETITVE •

In 2008, 58.5 percent of the products we imported were used by U.S. workers to manufacture goods in the United States. Lower cost inputs keep U.S. manufacturing competitive in international markets.

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Imports frequently contain components (like cotton or semiconductors) and services (like design) sourced from U.S. companies and farmers, including companies and farmers in Hawaii.

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Services, especially transportation from Hawaii’s ports, finance and insurance, marketing and legal services, are needed to bring imported goods to American manufacturers and households. These importing-related services industries are vital to Hawaii’s growth, and account for 31.4 percent of state GDP, more than eighteen times as much as manufacturing.

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EXPORTS AND IMPORTS HELP HAWAII FAMILIES ENJOY A HIGHER STANDARD OF LIVING Exports and imports support family incomes. •

Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants.

Imports Keep Inflation Low (1999-2008) Price Change Toys -45% Clothing -10% Household Appliances -9% Footwear -3%

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Imports help keep prices for Hawaii families down while increasing their choices for goods and services. Prices for imported consumer goods tend to drop year after year.

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Trade and investment liberalization policies are worth over $10,000 per year to an average Hawaii family of four.

SOURCES JOBS Laura Baughman and Joseph Francois, Trade Partnership Worldwide, LLC (http://www.businessroundtable.org) U.S. Department of Labor (http://www.bls.gov/lau/home.htm) U.S. Department of Commerce (http://ita.doc.gov/td/industry/otea/jobs/index.html), (http://ita.doc.gov/td/industry/otea/edb/index.html), (http://www.bea.gov/regional/index.htm) EXPORTS U.S. Department of Agriculture (http://www.ers.usda.gov/StateFacts/) U.S. Department of Commerce (http://tse.export.gov), (http://www.usatradeonline.gov), (http://ita.doc.gov/td/industry/otea/edb/index.html), (http://www.bea.gov/bea/regional/gsp/) Andrew B. Bernard, J. Bradford Jensen, and Peter K. Schott (http://www.iie.com/publications/wp/wp05-10.pdf) PIERS Trade Intelligence database (http://www.piers.com/) Cruise Lines International Association, “2008 Cruise Industry Economic Study” (http://www2.cruising.org/Press/research/index.cfm) FOREIGN INVESTMENT Organization for International Investment (http://www.ofii.org) IMPORTS U.S. Department of Labor (http://www.bls.gov/mxp/home.htm) U.S. Department of Commerce (http://www.bea.gov/bea/regional/gsp/) STANDARD OF LIVING Council of Economic Advisers (http://www.gpoaccess.gov/eop/index.html) U.S. Department of Labor (http://www.bls.gov/cpi/home.htm) U.S. Department of Commerce (http://www.bea.gov/) TRADE LIBERALIZATION U.S. Department of Commerce (http://tse.export.gov)

Contact: David Thomas Director, Public Policy Business Roundtable 202.496.3262 [email protected]

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January 2010