U.S. trade with Japan expected to decline as result of massive quake

The massive quake that hit Japan last month would also deal a blow to U.S. trade with Japan, the Los Angeles Economic Development Corporation (LAEDC) said on Monday.

The Port of Los Angeles and the Los Angeles International Airport (LAX) is expected to witness major declines in trade between the two countries later this month, the LAEDC told a pair of City Council committees.

Tourism from Japan and foreign investments will also be hit hard, the agency said, without giving specific figures.

"The city itself has a very large amount at stake in this trade, " LAEDC chief economist Nancy Sidhu told a special joint meeting of the trade, commerce and tourism and the jobs and business development committees.

Sidhu said the declines in imports from Japan would likely include automotive parts, computers, medical equipment and other hi-tech components.

Japan is the port's number two trading partner, second to China, and accounts for 15 percent of the port's total of 236 billion U.S. dollars in annual trade.

About 35.3 billion dollars in trade between Japan and the United States passed through the Port of Los Angeles in 2010, according to port officials.

Kathryn McDermott, the port's deputy executive director for business development, said trade with Japan accounts for about 800 jobs at the Ports of Los Angeles and Long Beach.

McDermott told the committees that the largest declines would not be felt until mid- to late-April, because American businesses are just now making adjustments to inventory that will affect imports from earthquake- and tsunami-ravaged Japan.

The LAEDC also predicts an unknown decline in the number of Japanese tourists to Los Angeles this year.

As a result, Mayor Antonio Villaraigosa will have to revise the city's hotel and sales tax revenue projections in his 2011-12 proposed budget to be presented later this month, according to the City Administrative Office (CAO).

About 305,000 Japanese tourists typically visit the city each year, providing a significant chunk of revenue for the city's general fund in the form of hotel and sales taxes, according to Rexford Olliff, a revenue projection analyst at the CAO's finance department.

"Even though we're in a rising economy and looking for the sales tax to grow next year, we're just going to get less growth," Olliff said. "There's just no way you can take that kind of travel out and say, 'Well we're big so it won't matter.'"

Meanwhile, foreign direct investment from Japan will decline as a result of the earthquake and tsunami, said the LAEDC.

Foreign direct investment from Japan is an important part of the local economy. Los Angeles area businesses owned and operated by Japanese companies account for about 2.6 billion dollars in income for nearly 50,000 workers, according to the LAEDC.

Source: English.news.cn