Four mayors and a global trade authority endorse legislation to suspend aerospace incentives and avoid harsh tariffs.

The head of the Washington Council on International Trade, Lori Otto Punke explains why the Legislature should pass legislation to suspend the aerospace tax incentives in an effort to resolve a potentially costly dispute with the World Trade Organization. In an op-ed in the Spokesman-Review, Punke writes,

The legislation intends to resolve issues with the World Trade Organization over claims of U.S. government subsidization of aerospace companies, and it deserves the strong support of state policymakers.

Without this legislation, the European Union will have the legal right under WTO rules to impose tariffs on Washington state exports to the European Union, threatening our competitiveness and putting Washington state interests in the crossfire of yet another trade dispute.

As she points out, Washington has one of the nation’s most trade-driven state economies, with much at risk if the EU retaliates as expected.

Without this legislation, the European Union would be authorized by the WTO to impose tariffs on U.S. imports into the EU. These tariffs would be a significant hit locally, and a new front in the trade war would be tough to absorb.

It is in Washington state’s interest to pass this legislation expeditiously. It shows respect for the trade rules on which we all depend, and it ensures that our citizens won’t be caught up in yet another trade dispute.

In The Seattle Times, the mayors of Auburn, Everett, Kent and Renton also endorse the legislation.

The World Trade Organization has recently ruled that one of the tax provisions that the Washington state Legislature offered the aerospace industry 16 years ago is out of compliance with WTO rules. Boeing has proposed, with the support of its industry partners, legislation to end that tax preference. The legislation also provides that, if an agreement is ever reached that specifically allows the current lower Business & Occupation (B&O) tax rate to return, it would return, but only to the extent allowed by the agreement…

They observe that some special interests want to use this legislation as an opportunity to change the rules governing the incentive. To that, they say, no.

Unfortunately, some voices in Olympia are beginning to suggest that we should not include the provision allowing possible reinstatement of the current tax rate if an agreement is ever reached specifically allowing its return. They believe that, despite the challenges this industry is navigating, now is an opportune time to extract higher taxes and additional requirements on Boeing and its suppliers.

We fundamentally disagree. Now is the time to ensure our laws are compliant with WTO rules. But now is absolutely not the time to extract additional and unnecessary costs from this industry upon which so many of our citizens rely.

It is too important to the future of our cities, our region, our state and our people to play politics with this industry at this difficult time.

Right. See also this.