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Trump Steps in to Assist Suffering Farmers

Archives, Global Trade Daily, International Trade

Trump Steps in to Assist Suffering Farmers

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Just in time for the season of giving and hope, President Donald Trump approves another round of mitigation payments this week to assist farmers feeling the impacts of foreign trade retaliations, according to a release this week from the USDA.

The release confirms this is the second and final round of mitigation payments. Moving forward, certain producers that fall within the required categories will have the opportunity to leverage the Market Facilitation Program for the second half of 2018 production.

U.S. Secretary of Agriculture Sonny Perdue commented:

“The President reaffirmed his support for American farmers and ranchers and made good on his promise, authorizing the second round of payments to be made in short order. While there have been positive movements on the trade front, American farmers are continuing to experience losses due to unjustified trade retaliation by foreign nations. This assistance will help with short-term cash flow issues as we move into the new year.”

Producers interested in the MFP opportunity will have until January 15, 2019 to sign up for the program. The release specifically outlines the program was designed to help, “almond, cotton, corn, dairy, hog, sorghum, soybean, fresh sweet cherry, and wheat producers who have been significantly impacted by actions of foreign governments resulting in the loss of traditional exports,” (USDA).

Beyond the mitigation payments, Secretary Perdue followed through on Trump’s command to create other solutions for short-term relief, including:

-USDA’s Agricultural Marketing Service (AMS) which offers a food purchase and distribution program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation.

-USDA’s Farm Service Agency (FSA) has been administering MFP to provide the first payments to applicable producers.

– Agricultural Trade Promotion (ATP) program provides $200 million to be made available to develop foreign markets for U.S. agricultural products.

Producers interested in reading more about these solutions can visit: www.farmers.gov/mfp

Source: USDA

Archives, Global Trade Daily, International Trade

Joint Ventures and Global Trade

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When people hear the term “joint venture” a series of images and business operations come to mind, but in the trade industry, it’s a game changer. The most important questions to remember in a joint venture is the overall goal: what is being achieved as well as who’s bringing what to achieve the goals? Without these answered, there is almost no foundation to uphold supporting efforts.

Northern Ireland Business Info provides insight as to what it takes to implement a promising joint venture relationship, and you might be surprised at how managing these processes might be when several hands are in the basket. Everyone wants a piece of the pie, but in doing so, there must be a level of balance and mutual understanding.

Forming a joint venture can provide promising initiatives, and when done the right way, can produce fruitful benefits. Keep in mind, these are human beings you’re working with. Each person has their own set of strengths and weaknesses, and it takes a level of careful, balanced transparency to determine how to move forward.

Remember the common denominator within each of the recommendations boils down to one simple act: communication.

NIBusinessInfo states that building trust, planning, flexibility, monitoring and solutions to problems are key factors to maintain and implement for a successful joint venture. Each and every one of these tips requires transparency and communication – an honest assessment each step of the way identifying what is and what isn’t working, how things can improve, and what challenges to expect.

What’s not on the list is proactivity, digital solutions integration, and even more unexpected is the review of case studies. It’s alright to learn and implement new policies, but if a business can spare a costly lesson by learning from another businesses mistakes, why not?

Sage Journals provides an impressive library of case studies proving operational successes, failures, challenges and the solutions and reasoning behind each. Keep a constant finger on the pulse of your own business and the competition that is ever so present within all trade sectors around the world.

In an trade environment with tariff uncertainty, partners increasing, and technology solutions increasing, knowledge is the make or break factor of your business success. Know who you’re doing business with, keep your networks close and your communication clear and consistent.

Source: NIBusiness Info

Archives, Commentary, Global Trade Daily

House Democrats Won’t Accept USMCA In Its Present Form

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Looks like it’s back to the drawing board for NAFTA aka USMCA.

House Democrats, who will be in charge of the new Congress that convenes in January, have made it clear that they won’t accept the NAFTA revision that President Trump forced on Canada and Mexico in its present form. Among other things, they want stronger, more enforceable labor standards.

NAFTA labor standards are addressed in a side agreement and aren’t fully enforceable. In the revised NAFTA, which Trump renamed the U.S. Mexico Canada Agreement, labor standards, including new ones, are in the body of the agreement and are fully enforceable. But there’s a big difference between “enforceable” and “enforced.”

For example, the new deal requires that 40-45% of a car built in North America be built by workers earning at least $16 per hour. This is aimed at Mexico, because American and Canadian auto workers already earn more than that.

It’s hard to imagine how anyone could enforce a rule like that.

Also, U.S autoworkers earned between $19.31 and $29.73 per hour in September, according to the U.S. in Mexico and paying the 2.5% tariff to import them into the United States.

USMCA’s labor chapter also requires Mexico to enact laws or regulations mandating the “effective recognition of the right to collective bargaining,” and “the elimination of discrimination in respect of employment and occupation.”

However, a June 2018 report on employment discrimination against Mexican women, prepared for the Office of the UN High Commissioner for Human Rights, said, “Although employment discrimination can be legally punished through many different means in Mexico, according to available data, it is rarely actually punished. . . between 2013 and 2017, not one single employer in all the country was fined for employment discrimination or harassment.”

This is one of many problems with employment discrimination against women the report described.

The United States or Canada could file complaints against Mexico for employment discrimination under one of USMCA’s dispute resolution chapters. But the process for doing so would be long and complicated and winning would affect little if any change on the ground in Mexico.

Sex discrimination is rampant there, although it’s not as bad as it used to be. As recently as the mid-1990s, Mexican businesses placed want ads in newspapers specifying that applicants must be young, female and attractive. Women who didn’t fit that description had a hard time finding work. This led many of them to immigrate to the United States.

If the Trump administration put stronger labor standards in USMCA to get Democrats to support it, it didn’t work.

“Right now, it’s a work in progress,” said Rep. Nancy Pelosi, D-Calif., who will probably be the speaker of the House in the next Congress. “Without enforcement you don’t have anything.”

Rep. Richard Neal, D-Mass., who probably will be chairman of the House Ways and Means Committee, said in a statement, “ we will need to assess whether this agreement makes real improvements to the terms of the existing NAFTA . . . especially when it comes to the enforcement and enforceability of the agreement’s provisions, including the provisions that have always been critical to Democratic support – the ones that provide for worker rights and environmental protections.”

Trump has two choices.

If he wants to put USMCA into effect, he’s going to have to do the hard work of making it acceptable to House Democrats. That will mean, among other things, making sure the labor rights provisions aren’t just enforceable, but enforced. That, in turn, will mean more negotiations with Canada and Mexico, neither of which will be keen on going at it again with the Trump administration.

Or, he can walk away from the deal, leaving NAFTA in place. In that event, he might make good on his threats to withdraw from NAFTA, leaving the United States even more isolated than it already is. Commerce Secretary Wilbur Ross suggested that Trump would do that if Congress doesn’t ratify USMCA.

“The president can revoke the old NAFTA deal by simply giving six months’ notice,” he said in an October 1 interview with Fox Business News. “The old NAFTA deal is not going to be a realistic alternative.”

And, of course, Trump views NAFTA as “perhaps the worst trade deal ever made.” So, why wouldn’t he withdraw from it if he doesn’t get USMCA?

Taking the United States back to 1989, when it had no trade agreement with either Canada or Mexico, is not a realistic alternative, either.

I was speechwriter for U.S. Trade Representative Michael Froman and for Korean Ambasador Han Duk-soo during the Korean government’s quest for ratification of the Korea-US Free Trade Agreement.

Archives, Global Trade Daily, News

A Letter To The Presidents

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In a letter addressed to President Donald Trump and Chinese President Xi Jinping, tariffs remained the priority topic for Freedom Partners, American for Prosperity, and The Libre Initiative. The three joined efforts to speak out regarding the trade war.

The letter consisted of a plea from the trio asking that the two reach a compromise and utilize the G20 session as an opportunity to make a change in the current tariff situations and alleviate global tension.

The group noted that both parties seem “open to negotiations to drop tariffs” that will benefit everyone and the upcoming session provides a source of encouragement. The importance of employment opportunities and affordable goods and services were also key points mentioned to back up the plea.

“There is great urgency for the United States and China to come together and reach an agreement to eliminate tariffs and protectionist trade policies,” they wrote. “The continued escalation of tariffs has come at significant cost to the global economy. It has harmed businesses, farmers, consumers, workers, and families worldwide, inflicting higher costs, lost jobs, and uncertainty.”

As of today, there has not been a response reported from either of the presidents but some wonder if they will address this publicly as their global leadership position was called out and challenged. The letter was  summarized with demands to “End the trade war and come to an agreement on free trade to relieve businesses, consumers, workers, and families worldwide from any further collateral damage.”

Source: freedompartners.org

Archives, Global Trade Daily, News

California Wildfire Crisis

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What are now known to be the deadliest wildfires in California history (NY Times) have left many with massive damages to their homes and businesses. These fires also grant the opportunity for logistics companies to join forces and extend a helping hand to those that have been so devastatingly impacted.

“We hope this would be the last time this year that we have to send out an APB like this, because each one represents a major catastrophe that we wouldn’t wish on anyone,” said Executive Director Kathy Fulton. “However we’re thankful for the overwhelming response we’ve received from members of the logistics community.  Various companies have stepped up to help us fulfill requests for everything from forklifts and pallet jacks to logistics space and transportation services.  And that in turn has helped us make a considerable difference for disaster survivors.”

American Logistics Aid Network released a formal announcement this week stating that, “Effective immediately, the organization has expanded its disaster micro-site (www.alanaid.org/operations/) to include key details about the California fires and their related logistics needs.  And late yesterday the organization fulfilled its first request for logistics assistance – donated transportation of comfort items and clean-up supplies –  to fire-impacted areas.”

Executive Director Kathy Fulton explained that, “The need for our supply chain assistance to the people who are being impacted in California hasn’t been extensive yet, however the operative word is yet, which is why we hope members of the logistics community will stay in touch with us often in the days or weeks ahead – or consider making a pre-offer of any space, services and equipment they’d be willing to donate to relief efforts.  Like many disasters this one will continue to be an ongoing story for us for many weeks or months to come, so every donation or offer of assistance truly helps.”

The wildfires have destroyed over 7,100 structures with the majority of them being homes (NY Times). President Donald Trump has officially announced via Twitter his approval for an “expedited request for a Major Disaster Declaration for the state of California” yesterday and gave a candid speech honoring the mourning of the 42 lives lost so far.

American Logistics Aid Network encourages other logistics providers to consider their role during this time and extend assistance when the chance presents itself.

For more information on how your company can help these efforts, please contact Lori Lockman via email at: llockman@bellsouth.net

About ALAN:  Founded in 2005 in the wake of Hurricane Katrina, ALAN is a philanthropic, industry-wide organization that provides free logistics assistance to disaster relief organizations before, during and after catastrophic events.  It does this by bringing the expertise and resources of the logistics industry together with compassionate organizations so that help can arrive sooner, and each relief dollar can be maximized.  Over the years it has coordinated compassionate supply chain services for numerous natural disasters including hurricanes, wildfires, tornadoes and floods.  To learn more visit www.alanaid.org.

Source: alanaid.org

Archives, Features, Global Trade Daily

Our 2018 Picks for the Top 100 Cities for Global Trade

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Each year, Global Trade magazine takes the time to look at U.S. cities to guide our readers to the best places to do business.

We choose these cities based on many factors: what they’ve done, what’s planned, and how global trade has responded to them. As with any list like this, there is always room for interpretation, but we feel that each of these cities, from the country’s largest to some tiny cities, all deserve to a look from anyone interested in doing business in the United States.

THE NATIONAL ECONOMY AND TRENDS

The economy of the U.S. is stronger than it has been in decades. Record low unemployment, rising wages and high consumer and business confidence are all contributing to huge growth in the economy. The fundamentals of the economy are strong and don’t appear to be weakening soon.

Many businesses and industries that had abandoned the U.S. for cheaper shores are returning due to changes in tariffs and economic realities. Notable is the return of the steel industry, which was all but dead in the U.S. but now appears to be making a quiet resurgence.

On the horizon are areas for concern, depending on whom you ask.

The current administration succeeded with renegotiating some trade agreements, as evidenced by the creation of USMCA to replace NAFTA, but trade with China is still a huge question mark. China’s government doesn’t appear to respond to strong-arm tactics, and they have a large enough economy they may be willing to battle with the U.S. administration.

Some economists predict a mild recession in 2109, but most offer different reasons for this. Without a consensus, it’s hard to believe these predictions will come to fruition.

 

THE BEST CITIES FOR GLOBAL TRADE

Each category of this list allows business leaders to look at locations in which to open or relocate a business.

Multi-Category Winners

These cities deserve mention in several categories. Most times, these are America’s largest cities and are obvious candidates for many categories….

 

New York City(Export/Financial Hub)

New York City is an obvious choice for several categories. As the heart of the global financial community, with Wall Street and most of the world’s largest banks, New York is arguably the global financial center. The Port of New York and New Jersey is still the second busiest in the world. The Big Apple is the launching point for millions of global businesses.

 

Seattle(Export/Skilled Workforce/Financial Hub)

Seattle has been a global trade leader for over a generation. With its well-protected port, and as the home of such businesses as Amazon and Microsoft, skilled workers and financial services have flocked to the city. Few cities in the world offer the global trade access that Seattle does without massive populations.

 

Chicago(Export/Intermodal)

The Windy City has been the entry point to and exit point from the heart of the United States. It is still the ideal location to import and export goods. Its intermodal strengths include a massive highway system, river barges and rail that allow the movement of goods within the country with ease. The St. Lawrence Seaway provides access for ships of every size to go into and out of the Great Lakes.

 

Detroit(Export/Financial Hub/NAFTA/USMCA/Business Incentives)

Despite a legendary crash of the auto industry and bleak images of a downtown in shambles, the Motor City is still an economic powerhouse. With easy access to the Great Lakes and Canada, Detroit is an excellent place to do business with America’s second largest trade partner, Canada. The economy in Detroit has led to business incentives that rival or best anything being provided by the Southern states.

 

Miami , Florida(Export/Skilled Workforce)

More than pristine beaches, Miami and its high-tech port are an excellent location for import/export. There is also an abundance of skilled workers who have arrived in the city, many of them immigrants bringing an intimate knowledge of other nation’s economies and markets.

 

Dallas(Export/Intermodal)

The Big D is a place with a Texas-sized economy and the assets to keep it that way. The intermodal assets in the city make it an ideal location to bring goods in via air or the nearby Gulf ports and ship it to the booming South and into the Mountain states.

 

San Francisco(Financial Hub/Cities to Watch)

San Francisco has been a financial hub since the Gold Rush, and it continues to show its prowess by attracting financial business from Silicon Valley and the large, but hidden, economy of Northern California. The Golden Gate City makes our list of cities to watch as it is going through a growth spurt and, if the city leaders adapt well, will solidify San Francisco’s place among such cities as Hong Kong, Singapore and Los Angeles as a Ring of Fire powerhouse.

 

Charlotte, North Carolina(Financial Hub/Start-Relocate a Business)

There are few cities like Charlotte. Maintaining much of its old Southern Charm, this city has modernized overnight and is attracting some of the best businesses and minds in the country. The quality of life, the vibrant economy and the entrepreneurial spirit of the city make it an ideal place to start or relocate a business. The financial sector makes Charlotte a quiet giant, home to billion-dollar deals and a large investment community.

 

Minneapolis/St. Paul(Financial Hub/Skilled Workforce/Business Incentives)

The Twin Cities have been and are home to many of the nation’s largest financial institutions. It maintains its place as one of the best educated cities in the country with great colleges and universities and a quality of life that keeps people there. The region’s economic developers are committed with loans and grants to help businesses grow and thrive in the area.

 

Durham, North Carolina(Financial Hub/Start-Relocate a Business)

At one point of the Research Triangle, Durham, North Carolina, is on our list of places to start or relocate a business. With abundant workers, from unskilled to highly skilled, arriving to the region every day, it’s an ideal place to put most types of business. The financial sector in Durham is growing as the surrounding states are welcoming large global businesses with staffs that need local financial services.

 

Memphis, Tennessee(Intermodal/Business Incentives)

The Mississippi River flows past this city, known for its music life. The river along with a well-established intermodal system make Memphis a perfect spot from which to import and export. Bringing business to the city is made easier by incentives that often lead the nation in their boldness. Memphis sits at the heart of the South, centrally located to move goods and people up and down the entire country.

 

El Paso, Texas(Export/NAFTA/USMCA)

There might not be a better city to trade with Mexico and South and Central America than El Paso. Right on the Mexican border, with one of the best intermodal systems in the region, El Paso makes it easy to do business with America’s southern neighbors.

 

Austin, Texas(Start-Relocate a Business/Skilled Workforce/Quality of Life)

In a state famous for its rugged individualism, Austin is a place built on community growth and shared wisdom. This has attracted tens of thousands of skilled workers and created a capitol city that is friendly to residents and new businesses. Altogether, this makes Austin one of the coolest cities from which to launch one’s global empire.

 

Cheyenne, Wyoming(Start-Relocate a Business/Small Market)

With just 64,000 residents, Cheyenne is a small city that has a lot going for it. Wyoming is leading the nation in business climate, according to the Tax Foundation. This, combined with a commitment to small and medium-sized businesses, makes Cheyenne a great place to start or relocate a business. Still small enough to have that small-town feel, Cheyenne has a full-sized business climate.

 

Bismarck, North Dakota(Start-Relocate a Business/NAFTA/USMCA/Small Market)

Along the Canadian border there is a business boom that is quietly eclipsing the country. North Dakota’s oil rich economy is creating a perfect environment for starting or relocating a business, particularly if you’re looking to do business with Canada. North Dakota’s capitol city is small (72,500 souls) but is moving up the ranks of business-friendly cities.

 

Sioux Falls, South Dakota(Start-Relocate a Business/Business Incentives)

Sioux Falls, like Bismarck, is enjoying a statewide boom in energy. One of this small city’s biggest assets is the incentive efforts that are made to welcome and grow businesses. The leadership is very creative with assistance to bring jobs to town. Starting or relocating a business in the city is a powerful way to take advantage a great small city in a state that offers outstanding tax rates.

 

Texarkana, Texas(Business Incentives/City to Watch)

By far the smallest city on our multi-category list, Texarkana has a unique history that makes it a city to watch. In the Panhandle, it is on the Arkansas border and very near the Louisiana and Oklahoma borders. Once home to the U.S. military’s largest weapons depot, this city has rail lines to spare and buildings that were literally built to withstand a bomb (or decades of business). The leadership offers amazing incentives and works with businesses to get them what they need. A tiny Texas giant, this is a city poised to lead the nation in growth.

 

Des Moines, Iowa(Quality of Life/City to Watch)

There are many nice cities, but Des Moines stands out. The moderate climate and Midwestern charm make it a great city to live in. The business climate continues to improve, making this gateway to the Plains a perfect place for any concern looking to bridge the distance between Chicago and the East and the energy of the Upper Plains states.

 

San Diego, California(NAFTA/USMCA/Skilled Workforce)

The largest city on the Mexico border, San Diego is the perfect place to do business with its southern neighbor and the nations farther south. Its climate and abundant activities attract more and more skilled workers every year. Easy access to the whole state of California, with 13 percent of the total U.S. population, makes San Diego a great place for business.

 

Bellevue, Washington(Quality of Life/Cities to Watch)

Green and lush like it’s big sister, Seattle, Bellevue is an ideal place to live. Sitting between two lakes, Lake Washington and Lake Sammamish, it’s a wonderful place for outdoor activities, still in the warm zone created by the Puget Sound. Microsoft, Amazon, Starbucks and all the other amazing businesses of Washington state are just a stone’s throw away. This is a city that is making room for the next wave of Washington innovation.

 

Buffalo, New York(NAFTA/USMCA/Skilled Workforce)

Buffalo sits on the very western edge of New York and at the leading edge of New England’s boom. Right on the Great Lakes and the heart of an East Coast Silicon Valley, Buffalo has more skilled workers per capita than most of the rest of the country. Many of these workers hail from New York state colleges and universities. The state’s incentive commitments are forging powerful partnerships with business.

 

LISTS BY CATEGORY

Rather than clog up the lists below with the repeat winners, we’ve pulled those cities out so we can highlight the great cities that win in their respective categories.

While each category has up to 10 winners, they are presented in no particular order as each offers its own assets, such as location, that make it unique for a business’ needs.

 

Top Export Cities

These are cities that make it easy to bring goods in and send goods out. Many have deep-water ports, or like El Paso have import/export assets that are outstanding.

-Houston, TX
-Los Angeles, CA
-New Orleans, LA

 

Top Financial Hubs

Banks, investment firms and stock brokers flock together to allow them to share information and often, because the city’s data capabilities are high enough to prevent a slowdown of information from around the world. Another significant reason to choose a city is its proximity to a growing industry that needs financial services.

-Richmond, Virginia
-Lincoln, Nebraska

 

Most Advanced Ports

The level of automation and quality of the dockside equipment in a port can hugely influence how quickly products are offloaded or put onto a ship. The ports on this list lead the nation in innovation, reliability and speed.

-Port of Long Beach, Port of Los Angeles
-Port of Savannah, Georgia
-Port of Virginia (Norfolk), VA
-Port Houston
-Port of Oakland Oakland, California
-Port of Charleston (South Carolina)

 

Intermodal Access

The ability to move from ship to train to truck to plane or any combination can mean the difference between shipments in days or weeks. The cities on this list provide the fastest and most intermodal access for shipments into or out of the United States. Some are located inland and allow for transport to the central part of the country. Others are coastal and act as the jump-off points to waters surrounding the country.

-Kansas City, Missouri
-Indianapolis, Indiana
-Columbus, Ohio
-Atlanta, GA
-Portsmouth, Virginia
-Elizabeth, New Jersey
-Little Rock, Arkansas

 

Start or Relocate a Business

This is the list of cities that are the best in the country for starting or relocating a business. Low start-up costs, an excellent business environment and plenty of qualified staff make these cities the ideal places to create a new global trade empire.

-Oklahoma City
-Missoula, Montana
-Billings, Montana
-Raleigh, North Carolina
-Grand Rapids, Michigan

 

NAFTA/USMCA Access

The latest update to NAFTA, the USMCA appears to be a modernization of the now 25-year-old agreement. The cities on this list provide a home base for any business seeking to work with the most important U.S. trading partners, Canada and Mexico. Most are near the borders, providing the ease of access to the U.S., while being ideally placed for shipments into and out of the northern and southern neighbors.

-Albuquerque, New Mexico
-Corpus Christi, Texas
-Fort Lauderdale, Florida
-Laredo, Texas
-Peoria, Illinois

 

Quality of Life

Business is important, but everyone needs to live some place that they love. This list represents the nicest places to live in the country. Where living is good, business is also excellent. Although not a strictly business category, the list compiles cities to consider if you need a great staff. Being someplace that people want to live makes it easier to attract great workers.

-Colorado Springs, Colorado
-Madison, Wisconsin
-Denver
-Huntsville, Alabama
-Portland, Oregon
-Las Cruces, New Mexico

 

Best Business Incentives

Incentives for businesses are thought of as being cash or tax credits, but many cities here offer many more diverse choices. Among them: free land or buildings, free education for staff, and many other attractive incentives.

-Omaha, Nebraska
-Salt Lake City
-Boca Raton, Florida
-Cleveland, IN

 

Skilled Workforce

Every business needs a great staff. In this era of near full employment, finding the right qualified staff can be a challenge. The cities on this list have a disproportionate number of educated laborers. For companies seeking a place to be that will give them the world’s greatest employees, these are places to be.

-Boston
-Washington, D.C.
-Milwaukee

 

Leading Southern Ports

The South is in the midst of a decade or more long boom. The area from Florida to Louisiana has some of the world’s greatest ports, providing a gateway to a powerful economic engine. These ports vary in size and volume, but all of them represent some of the best places in the world to move products into and out of the United States.

-Port Miami
-Port Everglades (Florida)
-Port Tampa (Florida)
-Port New Orleans
-Port Canaveral (Florida)
-Port South Louisiana
-Jacksonville Port Authority (Florida)

 

Small Markets (<100,000 population)

These small cities make a big imprint. Large cities are expensive and crowded, while these are small enough to be inexpensive, easy to move around in, and easy to be “a big fish in a small pond.” Look to these cities to be offered the respect you deserve.

-St. George, Utah
-Wilson, North Dakota
-Denton, Texas
-Bozeman, Montana
-Burlington, Vermont
-Ft. Myers, Florida
-Enid, Oklahoma
-Holland, Michigan

 

Cities to Watch

These are cities that deserve attention for their economic climate and the efforts that the leadership and the great citizens are putting in to make their cities great places in which to live and do business.

-Kenosha, Wisconsin
-Dumas, Texas
-Madison, Wisconsin
-Baltimore, Maryland
-Jersey City, New Jersey
-Fremont, California
-Odessa, Texas
-Birmingham, Alabama
-Reno, Nevada
-Irvine, California
-Marietta, Georgia
-Decatur, Illinois
-Little Rock, Arkansas
-Tulsa, Oklahoma
-Peoria, Arizona

Archives, Global Trade Daily, Imports/Exports

Budding Signs of Trade Diversification a Welcome Sign for Canada’s Trade

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There’s been much ado in Ottawa as of late regarding the promotion of free-trade ideals and the pursuit of a globalist agenda in economics.

The recent handshake agreement on a rebranded United States-Mexico-Canada Agreement (USMCA) has understandably been the preeminent focus of business and political observers. But setting aside momentarily that historic détente in Can-Am relations, there’s been a great deal of work taking place in Ottawa to establish the conditions that will enable and empower not just globalism but genuine trade diversification.

Most Canadian businesses – particularly those for which trade across the 49th parallel is integral to their livelihood – have been alarmed by how quickly trade relations between Canada and the U.S. have regressed over the past 18 months, and how closely the USMCA negotiations came to leaving Canada without a free trade agreement with the U.S.

And yet, it was with little fanfare that Canada’s Parliament recently gave royal ascent (the last step in the ratification process) to the Comprehensive & Progressive Agreement for Trans-Pacific Partnership or CPTPP. For the uninitiated, the CPTPP is a multilateral free trade agreement involving 11 Pacific Rim countries. Originally, the agreement (then dubbed the Trans-Pacific Partnership) was a 12-nation pact that included the United States. However, U.S. President Donald Trump withdrew from the agreement via executive order on his third day in office.

Fearing the proliferation of protectionism and looking to solidify strength in numbers in Asia against China’s rising hegemony, the remaining members of the TPP relaunched trade talks in a rather expeditious manner in 2017. One year later, not only have those talks concluded, but also the required six signatory countries formally ratified the agreement, allowing entry into force on December 30, 2018.

For Canada, participation in the CPTPP represents a further bet on multilateral trade and the pursuit of a free trade agenda that is meant not only to provide greater import/export options for Canadian businesses, but to reduce Canada’s dependence on trade with the United States. That agenda has reasonably been pursued with increased vigor given Washington’s hyper focus on Buy American trade policies, bi-lateral trade, and the elimination of trade deficits.

To be sure, Canada’s globalist trade agenda predates the era of Donald Trump and the rise of trade protectionism. It is evident in the 2016 signing of the Comprehensive Economic & Trade Agreement (CETA) with the European Union; an agreement that took seven years to negotiate under an air of cynicism and opposition on both sides of the Atlantic.

Some have argued that Canada-EU trade data under CETA is indicative of Canadian businesses’ vulnerability to compete in a multilateral environment. These detractors note that since CETA’s provisional application in September 2017, exports to the EU increased only a modest 3.3 per cent versus a 12.9 per cent increase in imports from the EU.

But a closer look reveals one-fifth of those new imports are made up of machinery, indicating  the buds of economic diversification, rather than a sign of global non-competitiveness. Machinery is most often imported to enhance production efficiency and make businesses more innovative and internationally competitive. The fact that this taking place in a less-than-favorable exchange rate environment for Canadian businesses is all the more encouraging.

Far from driving job loss, the imports are spurring employment growth. In the year following CETA’s implementation, Canada’s unemployment rate fell from 6.2% to 5.9%. Furthermore, employment in some of the sectors most affected by the top imports from the EU, such as, mining and health care has risen 4.13% and 0.75% respectively. Granted, employment in manufacturing did drop 1.37% during that period; however, that figure is likely made up of job losses due to automation as much as job losses due to lost business.

It is also reassuring that trade growth with the EU hasn’t been limited to the UK, traditionally Canada’s largest European trading partner. According to a CBC report in September, exports from Canada to European countries other than the UK, grew 6.9%. This is yet another sign that Canadian businesses are looking outside their traditional comfort zones for both sourcing and selling opportunities.

Precisely how widely used the CPTPP will be amongst Canadian businesses is anyone’s guess at this point. Like the CETA countries, the CPTPP group is made up of diverse economies. And, like the EU, trade with the CPTPP group will require a reliance on ocean freight, multi-lingual communication and packaging, as well as multi-cultural considerations for how products are marketed.

The path of least resistance for Canadian businesses would be to breathe a heavy sigh of relief that the North American bloc has been salvaged by USMCA and revert to tried and true trade relationships with existing supply chain partners. No one would blame them for doing so. And for many businesses – particularly smaller ones – keeping trade within North America might be the only realistic approach.

For many others, the CPTPP and CETA represent a historic opportunity for businesses to diversify their sourcing and selling markets, but also to plant seeds that will grow sales, encourage innovation and productivity, expand product portfolios and serve as insurance against current and future trade disputes. For those reasons alone, businesses should be setting their sights on leveraging Canada’s newly acquired free trade prospects.

Cora Di Pietro is vice president of Global Trade Consulting at trade-services firm Livingston International. She is a frequent speaker and lecturer at industry and academic events and is an active member of numerous industry groups and associations.

 

 

 

 

 

 

Archives, Global Trade Daily, International Trade

Update on Russia: Restrictions Expanded to New Actors, Industries

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Since the beginning of August 2018, the United States has taken multiple actions that will affect U.S. trade with Russia.  The actions cover exports to Russia, doing business with Russian partners, and potential Russian investment in the United States.  These actions have added to the already challenging landscape of conducting business in and with Russia.

 

Economic Sanctions in Place Since 2014 Are Expanded Again

The United States has maintained targeted economic sanctions on Russia since 2014.  Most of these sanctions are administered by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC).

These sanctions ensnare many prominent Russian individuals and entities.  They have also ensnared prominent U.S. companies: see our July 2017 blog post on penalties imposed against Exxon for Russia sanctions violations.  For an example of how sanctions have been periodically and consistently extended, see our September 2016 blog post.

There are also more recent examples.

First, in Executive Order 13,848, issued on September 12, 2018, President Trump established a process to investigate and impose sanctions against foreign parties and their agents that interfere in U.S. elections.  Under the Order, no later than 45 days after an election is concluded, if there is an indication of actions taken to interfere with the outcome of the election, an assessment must be conducted.

When the assessment is concluded, the outcome must be reported to the President, the Attorney General, and the Secretaries of Defense, Homeland Security, State, and Treasury.  Within 45 days of receiving that assessment, the Attorney General and Secretary of Homeland Security must report on whether there was foreign interference in the election.  Any party deemed to have been involved in that interference can be designated as a Specially Designated National (SDN).  As a general matter, U.S. persons cannot conduct any business with an SDN.

In addition, the Order authorizes the imposition of sanctions against the largest business entities licensed or domiciled in a country whose government authorized, directed, sponsored, or supported election interference, including at least one entity from each of the following sectors: financial services, defense, energy, technology, and transportation (or, if inapplicable to that country’s largest business entities, sectors of comparable strategic significance to that foreign government).

While the Executive Order does not say so specifically, it is safe to conclude that the Order is directed at least in substantial part toward Russia.

Second, sanctions were imposed pursuant to the Countering America’s Adversaries Through Sanctions Act (CAATSA).  (More information about CAATSA is available in our August 2017 blog post.)  Under CAATSA, among other things, the U.S. government designates parties that are affiliated with the Russian government’s defense or intelligence sectors, and can impose sanctions against persons that transact with those designated parties.

On September 20, 2018, the U.S. State Department designated 33 such parties and added them to the list of 39 parties designated previously.  Those 72 parties are listed on the CAATSA section 231 List of Specified Persons (the LSP).

There is no outright prohibition on conducting business with these 72 parties.  However, any person – regardless of nationality – that engages in a “significant transaction” with a party on the LSP is subject to sanctions, including designation by OFAC as an SDN.

What constitutes a “significant transaction” is not well-established in OFAC regulations or guidance.  But some insight was offered on September 20.  On that day, acting in concert with the State Department, OFAC designated one Chinese individual and one Chinese entity as SDNs for involvement in a significant transaction with parties on the LSP.

The designations, and additional trade restrictions imposed on these two Chinese parties by the State Department, were made because the Chinese parties were involved in a transfer to China from Russia of combat aircraft and surface-to-air missile system-related equipment. The State Department characterized this as a significant transaction which triggered designation under CAATSA, though State did not specify whether the size of the transaction, the nature of the equipment transferred to Russia, and/or other factors rendered this a significant transaction.

 

New Export Restrictions Announced Under Chemical and Biological Weapons Law

On August 6, the State Department announced its determination that the government of Russia used chemical weapons in England in an effort to assassinate Sergei Skripal, a former Russian spy, and his daughter.  The determination was made pursuant to the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the CBW Act).

On August 27, acting in accordance with the CBW Act, the State Department announced the following restrictions on Russia:

-Termination of sales to Russia of defense articles and defense services, including termination of existing licenses for exports of such articles and services, except for exports in support of government and commercial space activities; and

-The prohibition on exports to Russia of commercial products and technology (e., items controlled for export under the Export Administration Regulations) subject to national security controls, with exceptions for certain exports specifically authorized under new licenses and specific license exceptions.

The State Department also imposed limits on certain financial assistance and aid for Russia.

The restrictions, which will remain in place for at least one year, augment existing restrictions on exports to Russia of certain oil and gas exploration equipment and exports to military end-users and for military end-uses.

 

Russian Investment in United States Likely to Be Subject to Greater Scrutiny

In August 2018, President Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA) into law. FIRRMA expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to review more types of transactions for potential national security concerns.

Much attention has understandably been paid to the impact that FIRRMA will have on investment from China. The impact on investment from Russia is likely to be significant, too.

For one, FIRRMA specifically contemplates scrutiny of investments originating in countries of “special concern.” In addition, the new law anticipates careful review of transactions that could create or expose U.S. cybersecurity vulnerabilities, including if the acquisition could facilitate election interference.

Russia is one of the countries that will be most impacted by these new provisions. Moreover, Russian investment in the United States will likely trigger CFIUS interest simply given how aggressively the Trump Administration has used national security as a basis for implementing trade restrictions. (In one particularly obscure example, OFAC recently emphasized how North Korea is using a large number of North Korean laborers in Russia to evade U.S. sanctions.)

 

Conclusion

We do not foresee the U.S. government easing trade restrictions on Russia anytime soon. To the contrary, we believe the U.S. government will continue to expand restrictions on Russia using mechanisms such as those described in this article.

It is therefore essential for companies to fully understand the scope of their Russia business. Screen transaction parties against the U.S. government restricted and prohibited parties lists, including – now – the LSP. Recognize that many U.S. exports to Russia are restricted based on the recipient or end-use of the product. Beware that Russian investment in the United States may face extra scrutiny.

Unfortunately, due diligence on Russian counterparts presents unique challenges. The ownership and organizational structures of such entities can be convoluted and obscure.  Accordingly, if a company has any reason to think a Russian business partner is affiliated in any way with a sanctioned entity, it is essential to enlist expert assistance to fully tease out ownership and control before proceeding.

Thad McBride is a partner in Bass, Berry & Sims PLC’s Washington, D.C. office in the firm’s International Trade Practice Group. They focus on counseling clients on compliance with economic sanctions and embargoes, US export regulations (ITAR and EAR), and the Foreign Corrupt Practices Act (FCPA). He may be reached at tmcbride@bassberry.com.

 

 

3pls, Archives, Global Trade Daily

AFTER NAFTA

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There was some uncertainty over the future of the North American Free Trade Agreement (NAFTA) ever since President Donald Trump took office. The president repeatedly threatened to pull the U.S. out of the agreement, and then claimed he would pursue a pact with Mexico and leave Canada out.

Those fears were allayed in early October when the three NAFTA partners announced the United States-Mexico-Canada Agreement (USMCA). The deal still must be signed by the parties and ratified by their legislatures, but all indications point to a continuing North American trade agreement going forward.

That’s important for companies that benefited from the integrated North American supply chains that NAFTA galvanized. The automobile manufacturing industry is a prime example of how NAFTA contributed to the development of truly North American products.

Trucks carry 63 percent of U.S.-NAFTA freight and are the most heavily utilized mode for moving goods to and from both U.S.-NAFTA partners. Rail is the second largest mode by value, moving 15.5 percent of all U.S.-NAFTA freight, followed by vessel, 6.4 percent; pipeline, 5.7 percent; and air, 3.7 percent.

Trade among the U.S., Canada, and Mexico would no doubt have continued without a new trade agreement or any trade agreement, but the advent of USMCA means that supply chains will be able to operate much as they did before. With that established, manufacturers want to know, “Which transportation and logistics providers are best to get products and components crossborder?” Here is a selection assembled by Global Trade.

 

BNSF Logistics

BNSF Logistics, a wholly owned subsidiary of Burlington Northern Santa Fe LLC, has been beefing up its North American capabilities in recent years, on both sides of the border. The multi-modal 3PL recently announced the formation of a new subsidiary in Mexico, BNSF Railway Servicios de Logistica, a move which further strengthens BNSF Logistics’ service offering across North America. The creation of Logistica, based in Monterrey, Mexico’s third largest city, will provide BNSF Logistics with additional local resources to support Mexico-based customers.

“The Monterrey region is strategically important to our growth plans in Mexico,” says Ray Greer, president of BNSF Logistics, “and having a local presence is key to developing vendor and client relationships.”

BNSF Logistics in recent years has acquired Albacor Shipping., Inc., a Toronto-based company, and the Texas-based EP Team, an air cargo specialist, providing the company with project cargo expertise.

“Industrial and project cargo is playing an important and growing role internationally,” notes Greer.

Much of BNSF Logistics’ industrial products business has been in moving equipment for the oil and gas and wind energy industries.

Landstar

Landstar System, Inc., a worldwide, asset-light provider of integrated transportation management solutions, has provided Mexico crossborder services out of Laredo since 1999, and has moved its operations to a new expanded logistics center. The 31,000-square-foot facility, located on a 50-acre site, accommodates 450 trailers and provides room for future expansion.

The Landstar U.S./Mexico Logistics Service Center features a highly secured C-TPAT certified site, including a 30-bay cross-dock and transload facility, along with a dedicated platform and heavy/specialized freight area with a custom 120-ton, stand-alone bridge crane. The logistics center is one of the largest facilities of its kind in Laredo.

The new yard has a custom-designed 120-ton stand-alone bridge crane to accommodate the ability to transload many of the largest super loads.

“The crane is used to transfer oversize, heavy and specialized loads between various types of platform equipment coming to and from Mexico,” explains Steve Wisnieski, vice president of Mexico Operations at Landstar Transportation Logistics.

Schneider National

Schneider was one of the first U.S. asset-based carriers to expand to both Mexico and Canada, boasting substantial presences in both countries since the early 1990s. Last year, the company announced it obtained the OK for streamlined customs clearance moving to Kansas City Southern Railway’s intermodal terminal near Mexico City. Schneider has also introduced intermodal service between the Southeast and Montreal on a route that bypasses the Great Lakes states.

Intermodal’s traditional selling point has been the trade-off between slower transit times and lower costs, but that analysis doesn’t always hold water when it comes to North American crossborder trade.

“In some cases, the costs of intermodal are the same as over-the-road if you are going to or from a location with constrained capacity,” says Jim Filter, Schneider National’s senior vice president and general manager for Intermodal.

The trade imbalance between Mexico and the U.S. means there is cost to relocating capacity to Mexico for northbound shipments. That’s why Filter has found that intermodal shipping rates northbound from Mexico to the U.S. are comparable to trucks. The same analysis doesn’t  apply to the U.S.-Canada intermodal lane, according to Filter, because of the greater relative balance in trade between those two countries.

Werner

Werner Global Logistics is an asset-based logistics services provider and a division of the well-known trucking company. The company recently added Werner Final Mile services that accommodates deliveries for eCommerce customers throughout North America. Werner provides trucking services from the U.S. to Mexico with its own assets, from loading to crossing border to delivery into the interior of Mexico.

“Technology is a huge part of the services we provide our customers,” says Craig Stoffel, a company vice president. “We are able to provide visibility right down to the individual item level. Today we can execute much of the supply chain hands-free.”

CSX Transportation

The railway’s Valleyfield terminal, 40 miles outside of Montreal, provides shippers additional capacity when shipping freight between the U.S. and Eastern Canada. Opened in late 2014, Valleyfield delivers intermodal access to Canadian distribution and consumption markets. Valleyfield provides on-site border clearance capabilities, facilitated by a 10,000-square-foot, secure container processing facility and access to the Canadian government’s VACIS truck scanning system. This machine is brought on site as required and is capable of more than 25 scans per hour of an entire vehicle to clear freight into Canada.

“The Valleyfield intermodal terminal provides shippers an alternative capacity solution when shipping freight between the U.S. and Eastern Canada,” says a CSX Transportation official. “Shippers converting freight from the highway to intermodal rail are able to secure additional capacity and lower transportation costs thanks to the expansive market reach of the CSXT Intermodal network.”

CSXT Intermodal service between the eastern United States and Mexico is available via a service called Streamline Passport, a door-to-door solution for shippers to more than 100 Mexican locations. Passport rates include all border fees, fuel surcharge and container per diem charges in Mexico. CSXT Intermodal ensures that all customs requirements are met when shipping cross-border freight.

Kansas City Southern 

KCS is the primary rail carrier handling rail shipments to and from the U.S. and Mexico, and its investments in recent years have gone a long way to make U.S.-Mexico cross-border rail quite seamless. Shippers on the KCS enjoy customs pre-clearance—which means that shipments are delivered directly to their destinations without a stop at the border—for faster service than trucks can offer.

The railway’s Mexican arm, Kansas City Southern de Mexico (KCSM), in partnership with Canadian National Railway, provides trans-border services that allow intermodal shipments to cross into Mexico prior to being inspected. The new inspection points are located in Mexico City at KCSM’s Puerta Mexico Intermodal Terminal and Terminal Ferroviaria de Valle de Mexico’s (TFVM) Pantaco Intermodal Terminal.

Last year, Kansas City Southern CEO Patrick Ottensmeyer joined U.S. and Mexican customs officials in the dedication of a new Unified Cargo Processing facility at the Laredo, Texas, railroad border crossing. In addition to sharing security technology and processes between U.S. and Mexico officials, the new facility streamlines the documentation review of northbound trains and conducts Mexico export processing at the U.S. railhead.

“Demand for rail shipments across this busiest international rail gateway in both directions will continue to increase in the future, particularly with growth in U.S. agricultural and future energy exports to Mexico,” Ottensmeyer points out. “New and innovative ways to keep this trade moving securely and efficiently over the border will be needed in the future to expand trade between the U.S. and Mexico and make North America even more competitive.”

 

Archives, Global Trade Daily

Don’t Feel Entirely Helpless in Trade Volatility

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The great American humorist and author, Mark Twain, once quipped, “Be careful about reading health books. You may die of a misprint.” In today’s politically charged environment, we all could use a dose of comicalness. Or perhaps, Twain’s premise is an important guide for how to approach the overly published and greatly analyzed reports and commentary about the looming “Trade War.”

Pointedly, as a manufacturer, the Trump Administration’s trade policy cannot be evaluated through one report, a singular set of analytical data, or a forecaster’s prognostication about the future of the aluminum or steel markets. It is far more complex, and any manufacturer who has not already done so should be preparing for long-term volatility in the international trade market.

There is no debate that the United States is in an unprecedented and unchartered posture relative to its largest trade partners. One needs to look no further than the Trump Administration’s latest September announcement of a third round of 10 percent Chinese tariffs – bringing the total amount of impacted goods to approximately $250 billion or half of all imported Chinese goods.

With the Trump Administration placing a deadline of January 1, 2019, before the latest round of Chinese tariffs is raised to 25 percent, there is mounting fear of international, political and business consequences on the horizon. Additionally, the Administration is threatening another $267 billion that would essentially subject all imported Chinese goods to increased tariffs.

That said many observers believe that the Trump Administration is simply creating an environment conducive to a favorable new trade relationship with its trade partners. So, as a U.S. manufacturer who sources materials and products internationally, what are you supposed to do in the short- and long-term?

The simple answer is to focus on what you can control and to not sit idle. To that end, all U.S. manufacturers – big or small – should consider three explicit and proactive steps to protect their interest.

For one, companies should take advantage of the available exclusion processes. If granted, the exclusions apply retroactively to the date that tariff went into effect. The Commerce Department is tasked with reviewing exclusion requests for the Section 232 Steel and Aluminum tariffs. A product exclusion will be granted if the article is not produced in the United States 1) in a sufficient and reasonably available amount; 2) satisfactory quality; or 3) there is a specific national security consideration warranting an exclusion. There is no deadline for submitting, but the Commerce Department has received over 30,000 requests, so companies should evaluate their potential for the exclusion if they have not done so already.

Similarly, the United States Trade Representative (USTR) has provided a mechanism to request exclusions for the Section 301 (China) tariffs. But unlike the Section 232 requests, these are time sensitive. There is an October 9, 2018 deadline for the first round of tariffs, and a December 18, 2018 deadline for the second round of tariffs. Key considerations are whether 1) the product is available only from China or whether a comparable product is available from other sources; 2) the imposition of the tariff will cause “severe economic harm to the requestor,”; and 3) the product is strategically important to the “Made in China 2025” program or other Chinese industrial programs. The USTR has not released an exclusion process for the latest round of 10 percent tariffs, but industry groups are petitioning the USTR for a similar process.

Second, as good corporate hygiene, it is prudent for a manufacturer to regularly evaluate its existing contracts, including supply contracts. Now, it is even more critical, as existing supply contracts may provide relief resulting from tariff increase, price increase, force majeure or potentially even causes for termination of the agreement that can be invoked. Of course, to cancel or amend an existing supply contract is only functional if you can replace the imported good with another source for those materials. And, if you are entering into an amended, extended or new supply contract, it is important to incorporate key protection clauses to avoid major spikes in prices that would be damaging to your business model.

Third, if you haven’t already, as a manufacturer who is importing goods and materials, it is important to evaluate the classifications of the imported products. The classification of each product is the determinative factor as to whether it may fall in or out of the tariff order. Whether there is an accidental misclassification, an intentional misclassification by the overseas seller or a product that is within a gray area, an audit of the classifications of your imported goods will avoid unnecessary surprise, potential liabilities and could result in an avoidance of higher tariffs. If there is uncertainty, the manufacturer can request guidance from Customs.

There are some camps who will point to the incredible and sustained bull stock market as prima facia evidence that the Trump trade policy is not impacting the economy. There are others, such as the National Association of Home Builders, who has implored the administration to back off the aggressive trade policy as it is experiencing increasing cost and estimates the tariffs will translate into a $2.5 billion tax on the U.S. housing market. The only certainty we can count on regarding the Trump trade policy, whether short- or long-term in duration, is that now is the time to act and to do what is in your control to protect your interest.

 

Christopher Kane is a Partner and Global Trade, Transportation and Logistics Team Leader at Adams and Reese (New Orleans). He maintains a multi-faceted practice, counseling clients on economic development matters, transportation law, construction law, business litigation cases, governmental relations and professional athlete injury claims. In some ways, these areas overlap, and as a result, the regional, national and international clients he advises benefit. He may be reached at christopher.kane@arlaw.com.

Cole Callihan is an associate at Adams and Reese (New Orleans), whose practice encompasses maritime/transportation, trade and customs matters. He advises companies on their compliance with maritime and transportation laws and regulations before the US Coast Guard (USCG), the US Customs and Border Protection (CBP), the Maritime Administration (MARAD), the Federal Maritime Commission (FMC) and the Federal Motor Carrier Safety Administration (FMCSA). He can be reached at cole.callihan@arlaw.com.