U.S. Tech Exports Slip
Last year, U.S. technology exports fell for the first time in five years amid lower demand from some of the biggest importers, according to the AeA, a tech industry trade group formerly called the American Electronics Assn.
Tech exports declined 3%, to $214 billion, according to an AeA ranking of the biggest tech exporting U.S. states. That was the first annual decline since 2002, when the tech sector was still reeling from the 2001 implosion of the tech bubble.
AeA researchers attributed the decline to slumping demand in Mexico, Japan, and South Korea, three of the largest importers of American high-tech goods. "We didn’t expect to see incredible growth, but we thought we would see a little bit of growth, " says Josh James, AeA’s director of research and industry analysis. The report was released Sept. 23.
Offshoring Hurts New York
Some states suffered declines as domestic semiconductor companies moved operations offshore or went entirely "fabless, " the term given to companies that outsource chip production. New York-based IBM (IBM), for example, announced layoffs in semiconductor operations last year that at least some union employees attribute to offshoring jobs and production. Semiconductor exports, the largest high-tech export category, declined 5%, to $50 billion in 2007. New York’s tech exports slumped 3%, to $8.9 billion. California, home to Intel (INTC), Google (GOOG), and Apple (AAPL), held its top ranking, though exports in the Golden State slipped 6.8%, to $48.2 billion. States including Michigan, Florida, and Virginia, experienced export gains.
Some states were affected by slowing demand from Japan and parts of Europe such as the Netherlands, Portugal, and the Czech Republic. High-tech exports to the Netherlands declined 38% and dropped 45% to Portugal. Exports to Japan slipped 6%, to $34 billion. In several cases, the declines resulted from foreign countries improving domestic production and increasing trade with other non-U.S. suppliers, the AeA says.
The AeA, which advocates free trade, blames U.S. "protectionist" trade policies for at least part of the decline. The association would like the U.S. to sign free-trade agreements with South Korea and other nations in order to make the U.S. a more favorable trading partner and boost demand for exports. "The mood on free trade and open trade has soured in this country, " James says. "But what they don’t look at is high-tech exports support hundreds of thousands of jobs." The AeA says U.S. tech exports support more than 894, 600 jobs.
Debate on Free Trade
Opponents say expanding free-trade agreements will widen the U.S. trade deficit and encourage outsourcing. In 2007, the deficit reached a high of $118 billion, more than three times the 2001 figure. The Washington Alliance of Technology Workers, a union for high-tech workers, argues that outsourcing encouraged by free-trade arrangements has depressed IT salaries and cost millions of jobs.
The AeA argues that protectionist trade policies will only make high-tech products more expensive for many Americans and spur retaliatory protectionist policies from other states—all the while failing to encourage companies to keep jobs at home.
For more, see BusinessWeek.com’s slide show of the biggest tech-exporting states.
Source: http://www.businessweek.com
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