Maryland's economy likely to benefit as world trade accord boosts exports

December 15, 1993|By John E. Woodruff | John E. Woodruff,Bloomberg Business NewsStaff Writer

Hundreds of export doors will eventually open for some of the fastest-growing parts of Maryland's economy with the sweeping accord under the General Agreement on Tariffs and Trade.

No one is willing to risk concrete estimates of what the state stands to gain, not until the fine print of the trade accord is read. Nonetheless, virtually everyone agrees that the state has a big stake in both the generalities and the details of the GATT negotiations.

"Maryland has always ranked in the lower half of the states in the value of its exports, but in the past few years its exports have grown by more than 50 percent, to about $5 billion a year," said James L. Hughes, director of the World Trade Center Institute in Baltimore. That makes Maryland's export growth the third-fastest the country.

"Exports have become the fastest-growing segment of the Maryland economy, and that in turn means that the new opportunities opened by expanding the trade agreement will in many cases play directly into some of the state's newly developing strengths," he said.

"None of what is going to come from big, complex trade deals like GATT and the North American Free Trade Agreement will happen overnight," said Curt Matthews, a spokesman for the international division of the state Department of Economic and Employment Development.

But Maryland's attempts to develop world-class telecommunications and biotechnology industries should benefit substantially over time, as should the state's growing agricultural technology, education and training businesses, he said.

"Many of Maryland's fastest-growing companies essentially sell ideas, and a lot of them have been waiting to see how safe they will be in selling ideas in markets where piracy has been a problem," Mr. Matthews said. "If they end up feeling comfortable with the new agreement, there is a lot of business for them to do overseas."

Some of Maryland's strongest recent export growth has been in traditional manufacturing industries, especially in exports of 1b minivans from General Motors Corp.'s Broening Highway plant, first to Germany and, more recently, to Egypt, said Charles McMillion, president of MBG Information Services.

Economists say it will become possible to make fairly firm estimates of the export prospects that will open to automobile companies and other traditional manufacturers.

"But a lot of Maryland's growth is in highly thought-intensive fields like computer software and biotechnology, so the state has an extremely high stake in details that we will see in the next few days on issues like patents and copyrights," Mr. McMillion said.

Even after those details are known, it will not be easy to estimate how much GATT will mean in export revenue for volatile businesses like biotechnology and computer software.

Assessing how those companies may do in domestic markets is a risky guessing game that frequently embarrasses respected analysts. The export factor will add layers of uncertainty that will vary from country to country as well as from company to company.

"I don't think anyone could make a quantitative prediction at this point, but these days, Baltimore companies have Russian software engineers in Moscow working on jobs, and Washington suburban software firms have Indian engineers in Bangalore doing very sophisticated work, so the more protection you have for intellectual property rights, the easier it will be to work in this kind of highly internationalized atmosphere," Mr. McMillion said.

"Realistically, there can't be state-by-state projections until a few days after Thursday morning, when we will see the final details of the draft," said James Frierson, of the Brock Group, a trade advocacy organization headed by Bill Brock, the former senator from Tennessee and Republican national chairman who lives in Maryland.

"These estimates will begin to come along in a few more days, and then we'll see how much each state can hope to gain from freer world trade," he said.

"Especially on intellectual property rights, everything will depend the precise details of the final wording of the documents," Mr. McMillion said. "You can say that some Maryland companies stand to gain just from having a clearer picture of their rights, but you won't know who stands to gain what, or how much any area or region will gain or lose, until you know the details of the wording."

"A lot also will depend on how aggressive Maryland companies are in recognizing opportunities and taking advantage of them, and stimulating them to see and act upon the opportunities is something that our department will be working on," said Mr. Matthews, of DEED.

THE GATT ACCORD

The following is a description of the changes in the General Agreement on Tariffs and Trade expected to be approved at the conclusion today:

SERVICES

Service industries would be covered for the first time by GATT rules. They include banking, securities, insurance, transport, tourism, telecommunications, film and television.

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