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TOURISM IS THE QUIET HERO OF TRADE

TOURISM IS THE QUIET HERO OF TRADE

International travelers drop big bucks in the United States

International travelers check in to their accommodations, they ride local transportation, they sightsee, they eat, and they shop. All that wonderful cross-border spending counts as an export in international trade.

Although the United States doesn’t hold the top spot in global tourism (France was most visited in 2018), its popularity still drives some 80 million visitors each year who spend more here than in any other country. In 2018, tourism brought in $256.1 billion in international travel receipts, driving 2.8 percent of U.S. GDP and supporting 7.8 million jobs in the United States.

The top five spenders on visits to the United States were China ($34.6 billion in U.S. travel spending), Canada ($27.2 billion), Mexico ($20.9 billion), followed by Japan and the United Kingdom.

Travel delivers 10% US exports

1.4 billion people are on the move

For the United States, tourism is a really important component of our trade portfolio, accounting for 31 percent of total services exports and 10 percent of all U.S. exports.

We are not alone. Globally, tourism is growing faster than global economic growth overall and is the third-largest sector in international trade. Some 1.4 billion people are on the move in the world as travel continues to grow year on year.

Is the U.S. losing global tourism market share?

Global travel exports were worth $1.7 trillion in 2018. The United States captured 15.7 percent of the total. But even as global travel is expanding, U.S. tourism growth is showing signs of slowing. France, the United Kingdom and Italy are traditional rivals, but the United Arab Emirates, Turkey, Egypt, Thailand and China are also garnering significant market share.

Aside from spending, another measure of competitiveness is the number of international visits annually. Total visits to the United States remained strong due to travel within North America, but the United States’ share of long-haul visits dropped from 13.7 percent in 2015 to 11.7 percent in 2018. Notably, visitors from Japan, South Korea, and China all fell in 2018.

While visits to the United States between 2015 and 2017 rose just 0.5 percent, the United Arab Emirates saw 20.1 percent growth, Canada experienced 19 percent growth, Australia 21.5 percent, India 24 percent, Thailand 14.1 percent and China 13.6 percent.

Travel is #2 export

Tourism and travel is so important to the economies of many countries that the OECD is working to develop a set of indicators to measure the competitiveness of destinations – how they optimize accessibility and attractiveness, deliver quality services, and gain market share while promoting efficient and sustainable use of tourism resources.

Road warriors are helping to grow trade

The tourism and travel sector isn’t strictly about the visitors who come to stroll through Istanbul’s bustling Grand Bazaar, New York’s Central Park or Beijing’s Forbidden City.

The World Travel & Tourism Council (WTTC) says business travel has a notable impact on wider trade flows. The road warriors who hop the long-haul flights to land a sale, keep existing customers, develop business partnerships, and enter into research and development deals generate travel revenue but also generate incremental trade over subsequent years through their business dealings, which in turn spur more business travel.

WTTC cites analysis by Oxford Economics estimating that business travel supported around a quarter of the growth in international trade within the Asia-Pacific region in the heady decade between 2003 and 2013.

travel global exports

Trade in global goodwill

Brand USA will not grow out of style anytime soon. The United States will remain a top destination for tourists and business travelers alike. The National Trade and Tourism Office projects annual international visits to the United States for personal and business reasons will grow to 95.5 million by 2023.

For the United States and the global economy, tourism and travel are the unsung heroes of the international trade story and not only for the billions in goods and services travelers buy directly and support indirectly. When we think about all the many forms of voluntary exchange, tourism and travel are at the top of the list for those that promote trade in international understanding and global goodwill.

 

 

Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

trade war

How Has the Trade War Affected China?

In the last two weeks the stakes in the ongoing trade conflict between the United States and China have increased significantly. After negotiations stalled in July, President Trump expanded his tariff targets to cover nearly all imports from China. But the weapons in this conflict have become increasingly more sophisticated. Beijing retaliated by suspending purchases of U.S. agricultural products and by lowering the value of its currency to make Chinese goods less expensive abroad. In response, the U.S. Treasury named China a currency manipulator and vowed to take actions to eliminate the alleged unfair competitive advantage. In addition, President Trump announced that the United States is not going to do any business with China’s tech giant Huawei. 

While these escalations have recently uneased investors and rattled the markets, they have yet to make an obvious impact on the U.S. economy, albeit U.S. farmers have begun to experience the negative effects of lost sales to China. But how have these actions resonated in China? There are some indicators that the trade war has had an impact on the Chinese economy, as well as public perception in that country. 

At the moment, the U.S. can claim a short term victory, although China appears to be playing the long game. Official reports indicate that Chinese economic growth has decelerated to its slowest pace since 1992, as businesses have held back on investment in light of the ongoing trade tensions with the United States. Also, Chinese exports to the U.S. declined by $5.6 billion in June, versus a $1.8 billion decrease in U.S. exports to China. 

The Trump administration has claimed that its trade policy seeks to remedy problems which have been neglected for too long, and to defend America’s economic interests against perceived abuses by its trade partners. The administration has introduced tariffs as a means to address alleged intellectual property violations by China and a growing trade deficit. Its trade policy takes into account that some pain will need to be absorbed by the United States. However, it is not evident that the U.S. consumer has suffered yet. U.S. importers have to pay the tariffs, and so far many have sough ways to absorb them in whole or in part to minimize any price increases for the consumer. They have also begun to shift sourcing to third countries, including bringing some production to the United States. 

Concurrently, Beijing has implemented a robust domestic stimulus by encouraging banks to relax controls on borrowing and by cutting 2 trillion yuan ($291 billion) in taxes. Furthermore, investment in infrastructure has increased in the first half of the year and Chinese factory output rose 6.3% in June from a year earlier, compared with 5.3% in May. Also, by letting the value of the yuan fall and making Chinese goods cheaper, China has in effect offset some of the impact of the U.S. tariffs – essentially giving the U.S. consumer a tax cut.

The efforts by the Chinese government to lower domestic taxes and support an easier fiscal policy appear to have been, at least temporarily, beneficial to economic growth. If these actions are to be expanded, they may continue to serve as a further stimulus in the second half of this year in areas such as consumption and investment. Although Chinese shipments to the United States have declined, they comprise only about a fifth of its overall exports. By allowing the yuan to fall, China can boost its sales to other countries to offset declines to the United States. 

The trade conflict also does not appear to have had a negative impact on the mindset of the Chinese population at large. Skilled workers and professionals have expressed an open mind to the ongoing trade negotiations, some even welcoming them with a sentiment that “Trump is good for Chinese people” because he has opened up the dialogue between the two countries on trade which in turn has fostered certain welcome reforms in China, as well as tax cuts. Indeed, if Beijing had already planned to institute such measures, then U.S. policy may have provided ample cover for them.

The trade war has also led China to reevaluate existing global alliances, such as those with Japan and Russia. Mending fences with Russia, for instance, is key to the continuation of China’s ambitious “Belt and Road Initiative” of investment and infrastructure projects to connect Asia with Africa and Europe via land and maritime networks. 

With further entrenchment by both sides, and a trade deal increasingly unlikely before next year’s U.S. presidential elections, China appears to be bracing itself for a protracted conflict and may have reason to believe it can “win” if President Trump faces increased political pressures entering the election. As the President recently announced, China may be counting on a Democrat to win the White House to strike a new trade deal. On the other hand, a continuing conflict between two of the world’s greatest economies which has evolved from measures to address intellectual property protection and trade imbalances to currency manipulation, may in the long run lead to recession and hurt growth globally. 

Mark Ludwikowski is the leader of the International Trade practice of Clark Hill, PLC and is resident in the firm’s Washington D.C. office. He can be reached at 202-640-6680 and mludwikowski@ClarkHill.com

What to Expect from Sub-Saharan Africa Economy in 2019

The IMF economic outlook presents a picture of what to expect from each economy or region annually. For Sub-Saharan Africa (SSA) in 2019, a GDP growth rate of 3.4 percent is projected at the aggregate level; a slight improvement over the 2.9 percent actual growth rate of 2018. Poor performance in the three big economies (Angola, Nigeria and South Africa) continues to weigh down the overall economic position of the region. Thus, when excluded, the growth projection for the rest of SSA rises above 5 percent since eighteen out of forty-five countries are anticipated to grow at five percent or higher in 2019. Over the last few years, countries like Cote d’Ivoire, Ethiopia, Rwanda, Ghana, and Tanzania have consistently exceeded the region’s average GDP growth rate.
Sub-Saharan Africa has continued to recover from the commodities market crash that brought its GDP growth rate down to 1.4 percent in 2016; its lowest level in decades. This growth pattern is influenced by a combination of factors which include improved global economy, increased public investment, strong agricultural production, relatively stable political environment across the continent and more. Improvements in policy frameworks and economic reforms also played an important role in the progress recorded. World Bank Doing Business 2019 reported that one out of three of all business regulatory improvements captured between June 2017 and May 2018 were in SSA. Sub-Saharan Africa has been the region with the highest number of reforms every year in the last seven years.
Although the Doing Business annual report is not the only measure of a country’s competitiveness since it is limited in scope and does not take into account other key market determinants such as market size, macroeconomic conditions, foreign investment, security and political stability. However, it provides valuable information to market players about government’s willingness and efforts to create a conducive marketplace for business.
The private sector, especially the service industry, is the largest beneficiary of the improved business environment contributing more than half of the region’s economic output. The service sector has played a more prominent role with an average growth rate of more than six percent over the last ten years. The region’s growth trend is expected to continue at least in the short and medium term. It is estimated that Africa will have over 160 million people in the middle class by 2030. Transition to middle class will be powered by a huge base of young and working age population which is growing at the rate of 1.7 million per month according to the IFC. Africa offers enormous business and investment opportunities in many sectors including transportation, information and communication technology (ICT), housing and education.
While the region has returned to a path of economic growth, certain conditions can threaten the realization of those projections on the long term – slow growth rate, high debt levels and upcoming elections. The current aggregate GDP growth rate is not strong enough to absorb any sudden economic shock or deliver rapid economic transformation across the continent. Escalating debt levels is very concerning as they pose serious risks to the region. Also, critical elections to watch include Nigeria, Senegal, Mozambique, South Africa, Botswana, Malawi and Namibia. Political situation in SSA has been relatively stable but fragile. Power shifts sometimes come with policy reversals; this can erode investors’ confidence in the market and adversely affect economic growth. Nevertheless, Africa remains a key destination for growth and market expansion.

Top African Economic Performers of 2018-2019

Table: Brookings Institute

Kemi Arosanyin is an International Trade Development Specialist and Director, Africa Trade Expansion Program at the World Trade Center Miami. She writes, speaks, and advises on trade and investment in sub-Saharan Africa.

Why Businesses Must Grasp Millennial Thinking Or Face Economic Calamity

When it comes to shopping and buying, the Millennial generation appears to play by its own rules.

And businesses that fail to understand the Millennial mindset are destined to fall behind their competition – and perhaps plummet into irrelevancy, says Gui Costin (www.guicostin.com), an entrepreneur, consultant and author of Millennials Are Not Aliens.

“Millennials are changing how we buy, how we sell, how we vacation, how we invest, and just about everything else,” Costin says. “If you’re running a business, you have to pay attention to how they think and act.”

Millennials are the generation born roughly from 1981 to 1995, meaning that the older millennials aren’t that far from 40. There are about 80 million Millennials, or nearly one-third of the adult population in the U.S. – and that’s a lot of buying power.

Millennials grew up under very different circumstances than Baby Boomers and Generation X, though, and the way in which they came of age greatly influenced them.

One example is their relationship with technology.

“All of us, regardless of which generation we belong to, have been impacted by technology,” Costin says. “But the generation most affected by the digital, connected world are the Millennials. You could think of it this way: If technology were a geyser, Baby Boomers and Generation Xers have been sprayed by its impact, but Millennials got drenched.”

And their natural use of technology transformed the way they act as consumers, Costin says.

“Bargaining is a part of their process,” he says. “Because they are facile with technology, they rely heavily on their cell phones to price shop and hunt the best deals.”

Costin says there’s plenty that businesses need to understand about Millennials, but here are just a few other facts about their consumer habits worth paying attention to:

They let everyone know about their buying experiences. It is not uncommon for Millennials to candidly share details about their buying experiences, good or bad, on their public social media platforms. “This can translate to bad news for businesses that underperform or, conversely, great news for those that exceed expectations,” Costin says.

Big purchases can happen virtually. For many older people, it’s difficult to even conceive the idea of buying a car, for example, without ever physically seeing or touching it first. “Millennials do it all the time,” Costin says. “In fact, they are the very first of all the generations to make a large purchase without first performing an on-site inspection.”

Brand loyalty means something. No matter how fickle many people believe Millennials to be, they are extremely brand loyal, Costin says. In fact, 60 percent of Millennials say they almost always stick to brands they currently purchase.

Information is essential. Millennials scour the internet to learn about a brand or product before making a purchase. They check websites, blogs, or peer reviews that they trust.

Instant gratification is paramount. Because they have grown up in a digital age, Millennials are used to speed and immediate gratification. “They value prompt feedback and communication and do not like wasting time,” Costin says. “Think emails, text messages, and online messaging.”

“The environment you grow up in determines what you become accustomed to,” Costin says. “Gen Xers and Baby Boomers need to realize that how they grew up is affecting the way they are selling and marketing their organizations. But you cannot sell and market to Millennials the same way you were sold and marketed to.

“The good news is, many companies are listening. They are actively replacing dated, manual processes with more efficient, cutting-edge tools to promote the convenience and speed Millennials crave.”

About Gui Costin

Gui Costin (www.guicostin.com), author of Millennials Are Not Aliens, is an entrepreneur, and founder of Dakota, a company that sells and markets institutional investment strategies. Dakota is also the creator of two software products: Draft, a database that contains a highly curated group of qualified institutional investors; and Stage, a content platform built for institutional due diligence analysts where they can learn an in-depth amount about a variety of investment strategies without having to initially talk to someone. Dakota’s mission is to level the playing field for boutique investment managers so they can compete with bigger, more well-resourced investment firms. 

PORT TAMPA BAY GROWS BY LEVERAGING ITS REAL ESTATE AND CARGO DIVERSITY

Diversity among seaports is a concept not only understood but exemplified with Port Tampa Bay. Known as Florida’s largest seaport in both acreage and tonnage, with more than 34 million tons of cargo handled annually, Port Tampa Bay demonstrates industry breadth through its cargo diversification, cruise passengers and real estate strategies to keep pace with the central part of the Sunshine State’s blistering growth.

Through its purposeful investment and master planning approach, the management team has made great strides in recent years connecting transportation methods, logistics, warehousing and even manufacturing to support and grow the region’s largest economic engine. As its 2018 fiscal year saw an unprecedented number of major announcements related to growth, Port Tampa Bay is already seeing more growth in fiscal year 2019.

Cargo diversity, real estate and proximity to growth are the major differentiators that have enabled Port Tampa Bay to leverage itself and grow. 

“I found a tremendous convergence of opportunity when I arrived,” said Paul Anderson, Port Tampa Bay’s president and CEO. “I knew I wanted to maintain and expand a diverse portfolio, capitalizing on our land assets and building the infrastructure to serve more customers and Florida’s growth more efficiently.”

As a result, officials understood that Port Tampa Bay’s most valuable position within the market could only be achieved through analyzing industry benchmarks, investing in infrastructure and capitalizing on opportunities by listening to the perspectives of carriers and beneficial cargo owners before implementing strategic initiatives. By gaining a thorough understanding of market conditions on a domestic and international level, Port Tampa Bay has successfully become the largest economic influencer in the Western Florida region, responsible for a more than $17 billion in economic impact while generating more than 85,000 jobs.

Port Tampa Bay’s cargo portfolio includes all major categories, from liquid bulk and dry bulk to containers, automobiles, break-bulk and more. Additionally, the port serves as one of the largest shipbuilding and repair handlers in the Southeast United States. It is also a top 10 cruise homeport, and last year the 1 million mark was surpassed for passengers sailing from Port Tampa Bay.

One of the world’s premier fertilizer export ports continues leading in both the liquid and dry-bulk arenas, thanks to the likes of global exporters Amalie Oil and Mosaic. Through these connections, Port Tampa Bay supports the reach of more than 100 countries and helps to feed the world.

On the break-bulk side, Tampa Tank/Florida Structural Steel helps to anchor several steel fabricators and related businesses, making the port a significant mover in this business segment. Furthermore, the port has developed about 290 acres of land to help continue its efforts handling steel, dry bulk and other commodities. 

Furthering its diversity and strategic master planning approach, the port developed a new on-dock cold storage facility and a dedicated automobile terminal fully equipped to process the anticipated expansion of vehicle production in Mexico and the Southeast.

Looking to the future, Port Tampa Bay has major plans in the works to expand overall capacity and infrastructure from docks and terminals to land tracts and parcels supportive of increased containers and break-bulk cargos. A total of $380 million is projected to support the port’s expansion efforts over the next five years. Through this budgeting and robust development planning, the port projects expanding its container terminal capacity to 160 acres–essentially quadrupling current capacity and attracting new services.

All of this vision, planning and investment has already paid off in a couple of very big ways. COSCO Shipping in December announced Port Tampa Bay’s first direct Asia weekly call service, followed by a second announcement in February by CMA CGM to expand its global container reach. Secondly, in April, Port Tampa Bay completed a major navigational improvement on its Big Bend channel, deepening and widening to accommodate larger ships.

More accomplished was how the project was pulled off: by first assembling a public-private partnership that included five stakeholders and maintaining its cohesiveness for several years. The improved channel can now service the approximately 290 acres of new terminal operations and capacity among port tenants.

Throughout all of Port Tampa Bay’s projects and new business expansion are the common themes of vision, strategic planning, investment and expertise. “That and listening to what our customers need to increase their efficiency and/or speed to market is what it is all about,” Anderson says.

These elements continue to provide Port Tampa Bay with ideas that increase economic impact, import/export efficiencies, and just as importantly, sustainable growth.

Report Reveals California as Tech Employment Hub

In 2018, the state of California increased its tech-related jobs by 51,567 according to the CompTIA Cyberstates 2019™ report, ultimately contributing to the state economy.

“Clearly the broad-based impact of the tech industry touches virtually every community, industry and market across California, especially when you consider the millions of knowledge workers who rely on technology to do their jobs,” said Todd Thibodeaux, president and CEO, CompTIA.

These numbers confirm that the state is increasingly becoming a tech-employment hub in the nation, with a reported increase of an estimated 360,000 jobs over the last two decades.

“When it comes to tech jobs, California is at the top in all categories from tech workforce total, tech jobs added and innovation score. More than 1.78 million Californians have a tech-related job, contributing more than $481.7 billion to the state’s economy and median annual wages of more than $96,000,” said Kelly Hitt, director of state government affairs for CompTIA in California.

“The findings attest to a tech labor market that will remain tight as employers balance short-term needs with an eye towards the future,” said Tim Herbert, senior vice president for research and market intelligence at CompTIA. “As digital-human models begin to unfold, employers and employees alike will face new challenges – and opportunities, in shaping the workforce of tomorrow.“