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Steel Import Licenses Must Include Country of “Melt and Pour”

steel

Steel Import Licenses Must Include Country of “Melt and Pour”

The U.S. Department of Commerce’s (Commerce) Steel Import Monitoring and Analysis System (SIMA) will be modified effective October 13, 2020, to require that the country where the steel was “melted and poured” to be identified in the license application. Other changes in the final rule published on September 11, 2020, include adding coverage for eight additional HTS numbers in order to synchronize the system with the coverage of Section 232 for basic steel mill products; increasing the low-value license to $5,000, and allowing multiple uses; and extending the SIMA program indefinitely.

The new rule defines “melted and poured” as “the original location where the raw steel is: (A) First produced in a steel-making furnace in a liquid state; and then (B) Poured into its first solid shape…The first solid state can take the form of either a semi-finished product (slab, billets or ingots) or a finished steel mill product.”

The reporting requirement does not apply to raw materials used in steel manufacturing. The new required information on the country of “melt and pour” may also be useful in investigating circumvention of duties.

The SIMA website will shut down from October 9 until October 13, 2020 when the new website is updated and goes live. Commerce has created a page with the latest updates regarding SIMA. In the interim, Commerce stressed that there will be limited availability for manual license processing.

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Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. She practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

electric

The Global Electric Generator Market to Seek New Balance Between the Pandemic, Cheaper Oil, And the Demand for Alternative Energy

IndexBox has just published a new report: ‘World – Electric Generating Sets And Rotary Converters – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The Increased Demand for Autonomous Electricity Supply for Business, Industrial Facilities, and IT Infrastructure Buoys Electric Generator Market

In 2019, the global market for electric generating sets and rotary converters was finally on the rise to reach $58.4B after two years of decline. Electric generating sets and rotary converters are equipment that is used for primary power generation and also serves as backup power supplies for infrastructure and residential buildings.

The key factors in the demand for generators are the growing demand for electricity, insufficient electrical infrastructure, especially in areas far from large cities, the need to provide a guaranteed power supply with a stable voltage, as well as backup power to important infrastructure facilities (hospitals, government agencies, business centers, airports, train stations, etc.) and technical equipment (communication towers, data centers, industrial enterprises, etc.).

In value terms, the largest electric generating set and rotary converter markets worldwide were the UK ($3.1B), China ($2.8B), and Russia ($2B), together comprising 14% of the global market (IndexBox estimates). Brazil, the U.S., India, Indonesia, Turkey, Japan, Nigeria, South Korea, and Angola lagged somewhat behind, together comprising a further 15%. The leadership of the UK in value terms is largely attributed to the high demand for wind generators in the country – such units are large, rather expensive, and their quantity is much less than, for example, portable gasoline generators.

In 2019, the highest levels of per capita consumption of electric generating sets and rotary converters were registered in Angola (30 units per 1000 persons), followed by South Korea (8.23 units per 1000 persons), Japan (7.40 units per 1000 persons), and Russia (6.79 units per 1000 persons), while the world average per capita consumption of electric generating set and rotary converter was estimated at 2.92 units per 1000 persons.

Since industrial and other high capacity generators constitute expensive equipment, their installation and use correspond with capital investments against the background of the general growth of industry and trade. The dynamics of construction also directly affects the generator market: business centers, retail outlets, infrastructure, and social facilities are increasingly being equipped with backup generator sets, while residential construction is driving the demand for portable generators for private homes, which are usually purchased in case of power outages.

Another fundamental factor of market growth is the growth of the IT sector, as well as the telecommunications sector: the coverage of the countries of the world with wireless networks and mobile Internet is increasing, the infrastructure for which requires a stable power supply.

The development of electric transport (especially electric vehicles) will require the creation of a large-scale network of charging stations, which may increase the demand for generators (local generators can become auxiliary or even the main sources of energy for charging stations in hard-to-reach areas).

The Pandemic Hampers Business Investment But Promotes the Equipment of Medical Facilities and the Demand for Portable Generators

In view of the above, the dynamics of the electric generating sets and rotary converters market as a whole reflects the overall GDP growth. In early 2020, the global economy entered a period of the crisis caused by the outbreak of the COVID-19 pandemic. In order to battle the spread of the virus, most countries in the world implemented quarantine measures that put on halt production and transport activity.

The combination of those factors disrupts economic growth heavily throughout the world. According to World Bank forecasts, despite the gradual relaxing of restrictive measures and unprecedented government support in countries that faced the pandemic in early 2020, the annual decline of global GDP could amount to -5.2%, which is the deepest global recession being seen over the past eight decades.

In Asian countries, especially China, which faced the pandemic earlier than others, the epidemic situation improved earlier, with the quarantine measures largely relaxed, and the economy is gradually recovering from the forced outage. Thus, in China, by the end of 2020, an increase of 1% is expected (while a year earlier it was 6.1%), and in general in Southeast Asia in 2020, an increase of 0.5% is expected. In the medium term, it is assumed that the economy will gradually recover over several years as the restrictions are finally lifted. The U.S., meanwhile, is struggling with a drastic short-term recession, with the expected contraction of GDP of approx. -6.1% in 2020, as the hit of the pandemic was harder than expected, and unemployment soared due to the shutdown and social isolation.

The industrial sector has proven vulnerable to the pandemic as due to quarantine measures, industrial facilities may be stopped, and the drop in incomes of the population makes the growth of end markets unfeasible, thereby hampering any expansion of the industrial manufacturing. Thus, the above economic prerequisites will have a negative impact on the establishment of new industrial facilities and put a drag on market recovery.

On the other hand, measures to mobilize the medical system and equip temporary COVID hospitals required the use of a large number of generators. At the same time, in the second half of 2020, the effect of this factor may fade out against the background of the gradual weakening of the pandemic and the removal of social isolation.

In the wind energy segment, which comprises the global exports of $6.1B in 2019, an additional factor is also favorable government policy worldwide. Increased attention to environmental issues and the political goal of reducing the “carbon load” will increase the demand for generators on alternative energy sources, in particular, for wind turbines.

As for portable generators, the additional demand could be found in those countries with a lack of stale centralized electricity supply e.g., in many African countries. Furthermore, lower oil prices as a result of reduced demand and oversupply amid the pandemic are making oil and gas more affordable. Consequently, the cost of electricity that is generated by the fossil-fuel-based equipment is reduced, which contributes to the growth of the use for electric generating sets and rotary converters. The increasing social anxiety, as well as the continuing threat of isolation due to the virus, could lead to the purchase of portable generators for future use in case of power outages in emergency situations.

Taking into account the above, it is expected that in 2020 and the next few years, global consumption of electric generating sets and rotary converters should decline somewhat against 2019. In the medium term, as the global economy recovers from the effects of the pandemic, the market is expected to grow gradually. Overall, market performance is forecast to pursue a slightly upward trend over the next decade, expanding with an anticipated CAGR of +0.9% for the period from 2019 to 2030, which is projected to bring the market volume to 25M units (IndexBox estimates) by the end of 2030.

Source: IndexBox AI Platform

free trade

WANT PEACE? PROMOTE FREE TRADE.

Frédéric Bastiat famously claimed that “if goods don’t cross borders, soldiers will.”

Bastiat argued that free trade between countries could reduce international conflict because trade forges connections between nations and gives each country an incentive to avoid war with its trading partners. If every nation were an economic island, the lack of positive interaction created by trade could leave more room for conflict. Two hundred years after Bastiat, libertarians take this idea as gospel. Unfortunately, not everyone does. But as recent research shows, the historical evidence confirms Bastiat’s famous claim.

To Trade or to Raid

In “Peace through Trade or Free Trade?” professor Patrick J. McDonald, from the University of Texas at Austin, empirically tested whether greater levels of protectionism in a country (tariffs, quotas, etc.) would increase the probability of international conflict in that nation. He used a tool called dyads to analyze every country’s international relations from 1960 until 2000. A dyad is the interaction between one country and another country: German and French relations would be one dyad, German and Russian relations would be a second, French and Australian relations would be a third. He further broke this down into dyad-years; the relations between Germany and France in 1965 would be one dyad-year, the relations between France and Australia in 1973 would be a second, and so on.

Using these dyad-years, McDonald analyzed the behavior of every country in the world for the past 40 years. His analysis showed a negative correlation between free trade and conflict: The more freely a country trades, the fewer wars it engages in. Countries that engage in free trade are less likely to invade and less likely to be invaded.

Trading partners

The Causal Arrow

Of course, this finding might be a matter of confusing correlation for causation. Maybe countries engaging in free trade fight less often for some other reason, like the fact that they tend also to be more democratic. Democratic countries make war less often than empires do. But McDonald controls for these variables. Controlling for a state’s political structure is important, because democracies and republics tend to fight less than authoritarian regimes.

McDonald also controlled for a country’s economic growth, because countries in a recession are more likely to go to war than those in a boom, often in order to distract their people from their economic woes. McDonald even controlled for factors like geographic proximity: It’s easier for Germany and France to fight each other than it is for the United States and China, because troops in the former group only have to cross a shared border.

The takeaway from McDonald’s analysis is that protectionism can actually lead to conflict. McDonald found that a country in the bottom 10 percent for protectionism (meaning it is less protectionist than 90 percent of other countries) is 70 percent less likely to engage in a new conflict (either as invader or as target) than one in the top 10 percent for protectionism.

Trade and Conflict

Protectionism and War

Why does protectionism lead to conflict, and why does free trade help to prevent it? The answers, though well-known to classical liberals, are worth mentioning.

First, trade creates international goodwill. If Chinese and American businessmen trade on a regular basis, both sides benefit. And mutual benefit disposes people to look for the good in each other. Exchange of goods also promotes an exchange of cultures. For decades, Americans saw China as a mysterious country with strange, even hostile values. But in the 21st century, trade between our nations has increased markedly, and both countries know each other a little better now. iPod-wielding Chinese teenagers are like American teenagers, for example. They’re not terribly mysterious. Likewise, the Chinese understand democracy and American consumerism more than they once did. The countries may not find overlap in all of each other’s values, but trade has helped us to at least understand each other.

Trade helps to humanize the people that you trade with. And it’s tougher to want to go to war with your human trading partners than with a country you see only as lines on a map.

Second, trade gives nations an economic incentive to avoid war. If Nation X sells its best steel to Nation Y, and its businessmen reap plenty of profits in exchange, then businessmen on both sides are going to oppose war. This was actually the case with Germany and France right before World War I. Germany sold steel to France, and German businessmen were firmly opposed to war. They only grudgingly came to support it when German ministers told them that the war would only last a few short months. German steel had a strong incentive to oppose war, and if the situation had progressed a little differently—or if the German government had been a little more realistic about the timeline of the war—that incentive might have kept Germany out of World War I.

% reduction in conflict

Third, protectionism promotes hostility. This is why free trade, not just aggregate trade (which could be accompanied by high tariffs and quotas), leads to peace. If the United States imposes a tariff on Japanese automobiles, that tariff hurts Japanese businesses. It creates hostility in Japan toward the United States. Japan might even retaliate with a tariff on U.S. steel, hurting U.S. steel makers and angering our government, which would retaliate with another tariff. Both countries now have an excuse to leverage nationalist feelings to gain support at home; that makes outright war with the other country an easier sell, should it come to that.

In socioeconomic academic circles, this is called the Richardson process of reciprocal and increasing hostilities; the United States harms Japan, which retaliates, causing the United States to retaliate again. History shows that the Richardson process can easily be applied to protectionism. For instance, in the 1930s, industrialized nations raised tariffs and trade barriers; countries eschewed multilateralism and turned inward. These decisions led to rising hostilities, which helped set World War II in motion.

These factors help explain why free trade leads to peace, and protectionism leads to more conflict.

Free Trade and Peace

One final note: McDonald’s analysis shows that taking a country from the top 10 percent for protectionism to the bottom 10 percent will reduce the probability of future conflict by 70 percent. He performed the same analysis for the democracy of a country and showed that taking a country from the top 10 percent (very democratic) to the bottom 10 percent (not democratic) would only reduce conflict by 30 percent.

Democracy is a well-documented deterrent: The more democratic a country becomes, the less likely it is to resort to international conflict. But reducing protectionism, according to McDonald, is more than twice as effective at reducing conflict than becoming more democratic.

Here in the United States, we talk a lot about spreading democracy. We invaded Iraq partly to “spread democracy.” A New York Times op-ed by Professor Dov Ronen of Harvard University claimed that “the United States has been waging an ideological campaign to spread democracy around the world” since 1989. One of the justifications for our international crusade is to make the world a safer place.

Perhaps we should spend a little more time spreading free trade instead. That might really lead to a more peaceful world.

This article was originally published on FEE.org.

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Julian Adorney

Julian Adorney is a Young Voices contributor. He’s written for FEE, National Review, The Federalist, and blogs at The Empathetic Libertarian.

tariffs

WTO Rules that U.S. Section 301 Tariffs on Chinese Imports Violate International Trade Rules

The World Trade Organization (WTO) dispute settlement body ruled that the tariffs imposed by the U.S. on imports from China are inconsistent with the General Agreement on Tariffs and Trade (GATT), and recommended that the U.S. “bring its measures into conformity” with its obligations under the GATT. Beginning in 2018, at the direction of President Trump, the U.S. imposed tariffs on $400 billion worth of imports from China over 4 different lists or tranches. The U.S. and China negotiated a “phase one” trade deal earlier this year, however, most of the tariffs were still left in place.

The WTO panel concluded that the U.S. failed to demonstrate that the tariff measures are justified under Article XX(a) of the GATT 1994.  As a result, the panel found the U.S. tariff measures to be inconsistent with Articles I:1, II:1(a) and II:1(b) of GATT 1994. In other words, the WTO found that the U.S. tariffs on China were discriminatory and excessive, and the U.S. failed to present justification for an exemption that could have legally allowed for the tariffs.

Despite the WTO’s recommendation, its ruling is highly unlikely to sway the course of U.S. trade policy. This is not only because of the limited authority of the WTO, but also because the administration has argued that the tariffs are justified under U.S. law. Section 301 of the Trade Act of 1974 provides the U.S. government with the authority to impose trade sanctions on countries that violate trade agreements or engage in unfair trade practices, of which the U.S. has frequently accused China.

The WTO’s ruling is likely to increase the current U.S. administration’s distrust of the WTO. U.S. Trade Representative Robert Lighthizer criticized the ruling, saying “the United States must be allowed to defend itself against unfair trade practices…” and that “[the WTO’s] decision shows that the WTO provides no remedy for such misconduct” by China.

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Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. She practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

cheese

Global Cheese Market Hit Record Highs But Is to Lose Momentum Against the Pandemic

IndexBox has just published a new report: ‘World – Cheese – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

In 2019, the global cheese market increased by 2.3% to $114.1B, rising for the third year in a row after two years of decline. The market value increased at an average annual rate of +1.1% over the period from 2013 to 2019; the trend pattern remained consistent, with only minor fluctuations in certain years. The pace of growth was the most pronounced in 2017 when the market value increased by 7.1% year-to-year. Over the period under review, the global market reached its maximum level in 2019.

Taking into account the closure of the HoReCa sector worldwide due to the pandemic, a decrease in consumer incomes and possible disruptions in the work of international supply chains, global cheese consumption is expected to stagnate in 2020. Afterward, the start of gradual market growth is expected as the global economy recovers from the effects of the pandemic. The market is forecast to expand with an anticipated CAGR +0.6% for the period from 2019 to 2030, which is projected to bring the market volume to 27M tonnes by the end of 2030.

Consumption by Country

The U.S. (6.1M tonnes) remains the largest cheese consuming country worldwide, accounting for 24% of total volume. Moreover, cheese consumption in the U.S. exceeded the figures recorded by the second-largest consumer, Germany (3M tonnes), twofold. The third position in this ranking was occupied by France (1.6M tonnes), with a 6.4% share.

From 2013 to 2019, the average annual rate of growth in terms of volume in the U.S. totaled +2.5%. In the other countries, the average annual rates were as follows: Germany (+4.4% per year) and France (+1.3% per year).

In value terms, the U.S. ($25.9B) led the market, alone. The second position in the ranking was occupied by Germany ($11.2B). It was followed by Italy.

The countries with the highest levels of cheese per capita consumption in 2019 were the Czech Republic (64 kg per person), Germany (37 kg per person) and France (25 kg per person).

From 2013 to 2019, the most notable rate of growth in terms of cheese per capita consumption, amongst the main consuming countries, was attained by the Czech Republic, while cheese per capita consumption for the other global leaders experienced more modest paces of growth.

Market Forecast 2019-2025

Driven by increasing demand for cheese worldwide, the market is expected to continue an upward consumption trend over the next decade. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +1.8% for the period from 2019 to 2030, which is projected to bring the market volume to 31M tonnes by the end of 2030.

Production

In 2019, the amount of cheese produced worldwide rose slightly to 26M tonnes, picking up by 2.6% on the year before. The total output volume increased at an average annual rate of +2.6% from 2013 to 2019; the trend pattern remained consistent, with somewhat noticeable fluctuations in certain years.

Production by Country

The countries with the highest volumes of cheese production in 2019 were the U.S. (6.3M tonnes), Germany (3.5M tonnes) and France (1.9M tonnes), with a combined 46% share of global production. These countries were followed by Italy, Poland, the Netherlands, Argentina, Russia, the Czech Republic, Egypt, the UK and Canada, which together accounted for a further 26%.

From 2013 to 2019, the most notable rate of growth in terms of cheese production, amongst the key producing countries, was attained by the Czech Republic, while cheese production for the other global leaders experienced more modest paces of growth.

Imports

In 2019, approx. 7.1M tonnes of cheese were imported worldwide; rising by 3.5% against 2018. The total import volume increased at an average annual rate of +2.7% over the period from 2013 to 2019; the trend pattern remained consistent, with somewhat noticeable fluctuations throughout the analyzed period. The growth pace was the most rapid in 2018 with an increase of 4.2% against the previous year. Over the period under review, global imports attained the peak figure in 2019 and are expected to retain growth in the near future. In value terms, cheese imports rose to $32.3B (IndexBox estimates) in 2019.

Imports by Country

In 2019, Germany (778K tonnes), Italy (536K tonnes), the UK (495K tonnes), the Netherlands (390K tonnes), France (377K tonnes), Belgium (341K tonnes), Spain (310K tonnes), Japan (303K tonnes) and Russia (284K tonnes) represented the major importer of cheese in the world, mixing up 54% of total import. The U.S. (180K tonnes), Saudi Arabia (148K tonnes) and Greece (135K tonnes) took a relatively small share of total imports.

From 2013 to 2019, the most notable rate of growth in terms of purchases, amongst the main importing countries, was attained by the Netherlands, while imports for the other global leaders experienced more modest paces of growth.

In value terms, Germany ($4.2B) constitutes the largest market for imported cheese worldwide, comprising 13% of global imports. The second position in the ranking was occupied by the UK ($2.1B), with a 6.5% share of global imports. It was followed by Italy, with a 6.3% share.

Import Prices by Country

The average cheese import price stood at $4,532 per tonne in 2019, falling by -1.6% against the previous year. Over the period under review, the import price showed a noticeable descent. The most prominent rate of growth was recorded in 2017 when the average import price increased by 11% year-to-year. Over the period under review, average import prices attained the peak figure at $5,303 per tonne in 2014; however, from 2015 to 2019, import prices failed to regain the momentum.

Prices varied noticeably by the country of destination; the country with the highest price was the U.S. ($7,560 per tonne), while Saudi Arabia ($3,362 per tonne) was amongst the lowest.

From 2013 to 2019, the most notable rate of growth in terms of prices was attained by Japan, while the other global leaders experienced a decline in the import price figures.

Source: IndexBox AI Platform

lemon juice

The Pandemic Hampers the Growth of the Global Concentrated Lemon Juice Market

IndexBox has just published a new report: ‘World – Concentrated Lemon And Other Citrus Fruit Juice – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Only a Slight Growth of the Global Concentrated Lemon Juice Market is Expected, As The Pandemic Hit Major Importing Countries

The value of the global concentrated lemon and other citrus fruit juice (excl. orange and grapefruit juice) market stood at approx. $647M in 2019, declining by -6.0% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

In physical terms, global concentrated lemon and other citrus fruit juice consumption also declined slightly the last year, amounting to 258K tonnes in 2019. From 2015-2018, the market increased steadily, but in 2019 the growth lost its momentum due to a slight decrease in the lemon harvest in Argentina, which remains the largest lemon juice producing country.

The countries with the highest volumes of consumption of concentrated lemon and other citrus fruit juice in 2019 were the U.S. (31K tonnes), Argentina (16K tonnes) and Japan (15K tonnes), with a combined 24% share of global consumption (IndexBox estimates). These countries were followed by Canada, Spain, Germany, China, India, Peru, France, Brazil and Mexico, which together accounted for a further 38%.

From 2007 to 2019, the most notable rate of growth in terms of consumption of concentrated lemon and other citrus fruit juice, amongst the key consuming countries, was attained by Spain, while consumption of concentrated lemon and other citrus fruit juice for the other global leaders experienced more modest paces of growth.

In value terms, the largest concentrated lemon and other citrus fruit juice markets worldwide were the U.S. ($79M), Japan ($56M) and Argentina ($47M), with a combined 28% share of the global market. These countries were followed by Germany, Spain, China, Canada, France, Brazil, India, Mexico and Peru, which together accounted for a further 37%.

The countries with the highest levels of concentrated lemon and other citrus fruit juice per capita consumption in 2019 were Canada (371 kg per 1000 persons), Argentina (354 kg per 1000 persons) and Peru (298 kg per 1000 persons).

Concentrated lemon juice is a well-known product in South America and in Southern Europe, as well as, being imported, in the U.S., Canada, and across Western Europe. By contrast, in Southern and South-Eastern Asia, the market is relatively underdeveloped; however, China emerges as the fastest-growing lemon juice importer – rapid urbanization and the rising popularity of the western-style cuisine drive the use of lemon juice here.

Apart from the other types of juices which are largely consumed as a beverage, concentrated lemon juice is used as an ingredient in various recipes in baking, grilling, and as an ingredient in marinades and salad dressings, in cocktails, hot tea, lemonade, and hot lemonade. It also may have some non-food applications like home deodorization and cleaning. Therefore, population growth remains a fundamental market driver, combined with increases in disposable income, which in turn will contribute to enhanced consumer spending.

The major downside risk for market growth comes from the possible contraction of incomes due to the COVID pandemic. In the context of falling incomes, consumers primarily tend to exclude non-staple goods from purchases, which include concentrated lemon and other citrus fruit juice.

Concentrated lemon and other citrus fruit juice is a widely traded commodity, with the share of exports in total global output increased from near 72% in 2007 to about 86% in 2019 (IndexBox estimates). This is conditioned by the rising demand for tropical and citrus fruit juices in those countries that don’t grow many lemons like the U.S., Europe, and Canada, on the one hand, and Argentina’s (together with some other countries) specialization in lemons, on the other hand.

The largest concentrated lemon and other citrus fruit juice importing markets worldwide were the U.S. ($102M), the Netherlands ($87M), and Japan ($63M), with a combined 40% share of global imports. Germany, France, Spain, Canada, Italy, the UK, China, Israel, and Belgium lagged somewhat behind, together accounting for a further 37%. The hit of the pandemic in the U.S. and Europe was severe, which leads to a dramatic drop in terms of GDP and consumer spending. This is to affect the consumption of concentrated lemon juice which is largely supplied by imports.

In Latin America, the impact of the crisis on domestic demand should be less significant because concentrated lemon and other citrus fruits and concentrated lemon and other citrus fruit juice are available locally. However, the concentrated lemon and other citrus fruit industry in large producing countries (Argentina, Brazil, Mexico) are largely export-oriented, therefore, the decrease in demand in Western countries can damage local producers and cause further disruption of supply chains.

Accordingly, the market is expected to decrease somewhat in 2020 and then to start recovering gradually. Over the next decade, the market is expected to grow modestly, with an anticipated CAGR of +0.3% for the period from 2019 to 2030, which is projected to bring the market volume to 265K tonnes by the end of 2030.

Source: IndexBox AI Platform

foundational technologies

BIS Seeks Comments on Identifying “Foundational Technologies”

The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently published an Advanced Notice of Proposed Rulemaking (“ANPRM”) regarding the identification and review of controls for certain “foundational technologies.” This ANPRM represents another step toward implementation of the “emerging and foundational technology” provisions set forth in the Export Control Reform Act (“ECRA”) of 2018, which has been slow to get off the ground. Section 1758 of the ECRA requires that “foundational technologies” be identified and that BIS establish appropriate controls for that technology under the Export Administration Regulations (“EAR”).

The ANPRM solicits public comments concerning the definition of and criteria for identifying “foundational technologies” in order to apply controls to “emerging technologies” and “foundational technologies” which are essential to U.S. national security, pursuant to the ECRA. Specifically, BIS is asking interested parties to submit comments by October 26, 2020, responding to the following topics:

-How to further define foundational technology to assist in the identification of such items;

-sources to identify such items;

-criteria to determine whether controlled items identified in AT level Export Control Classification Numbers (ECCNs), in whole or in part, or covered by EAR99 categories, for which a license is not required to countries subject to a U.S. arms embargo, are essential to U.S. national security;

-the status of development of foundational technologies in the United States and other countries;

-the impact specific foundational technology controls may have on the development of such technologies in the U.S.;

-examples of implementing controls based on end-use and/or end-user rather than, or in addition to, technology-based controls;

-any enabling technologies, including tooling, testing, and certification equipment, that should be included within the scope of a foundational technology; and

-any other approaches to the issue of identifying foundational technologies important to U.S. national security, including the stage of development or maturity level of a foundational technology that would warrant consideration for export control.

BIS explained that it does not seek to expand jurisdiction over technologies that are not already subject to the EAR. BIS, through an interagency process, seeks to determine whether there are specific foundational technologies that warrant more restrictive controls.  Interested parties may submit comments through the federal rulemaking portal (regulations.gov) or via mail to BIS.

Husch Blackwell encourages clients and companies to review the recent ANPRM for applicability.

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Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.

Julia Banegas is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

barley

Saudi Arabia, Iran, and Jordan Import the Most Barley in the Middle East

IndexBox has just published a new report: ‘Middle East – Barley – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

In 2019, the Middle Eastern barley market increased by 8.4% to $5B, rising for the second consecutive year after four years of decline. Overall, consumption recorded a relatively flat trend pattern. The most prominent rate of growth was recorded in 2013 when the market value increased by 16% y-o-y. As a result, consumption reached a peak level of $7.6B. From 2014 to 2019, the growth of the market failed to regain momentum.

Consumption by Country

The countries with the highest volumes of barley consumption in 2019 were Turkey (7.5M tonnes), Iran (5.3M tonnes), and Saudi Arabia (4.2M tonnes), together comprising 82% of total consumption. These countries were followed by Jordan, Kuwait, Iraq, and the Syrian Arab Republic, which together accounted for a further 12%.

From 2007 to 2019, the biggest increases were in Kuwait, while barley consumption for the other leaders experienced more modest paces of growth.

In value terms, Turkey ($1.9B), Iran ($1.2B), and Saudi Arabia ($998M) were the countries with the highest levels of market value in 2019, together accounting for 82% of the total market. Jordan, Kuwait, Iraq, and the Syrian Arab Republic lagged somewhat behind, together accounting for a further 12%.

The countries with the highest levels of barley per capita consumption in 2019 were Kuwait (140 kg per person), Saudi Arabia (121 kg per person), and Turkey (91 kg per person).

Production in the Middle East

Barley production shrank modestly to 11M tonnes in 2019, approximately reflecting 2018. Over the period under review, production saw a relatively flat trend pattern.

Turkey (7M tonnes) remains the largest barley producing country in the Middle East, accounting for 65% of total volume. Moreover, barley production in Turkey exceeded the figures recorded by the second-largest producer, Iran (2.8M tonnes), threefold. Iraq (557K tonnes) ranked third in terms of total production with a 5.2% share.

In Turkey, barley production remained relatively stable over the period from 2007-2019. In other countries, the average annual rates were as follows: Iran (-0.9% per year) and Iraq (-2.4% per year).

Harvested Area and Yield in the Middle East

In 2019, approx. 6.1M ha of barley were harvested in the Middle East; waning by -1.6% against the previous year. In general, the harvested area recorded a mild contraction.

In 2019, the average yield of barley in the Middle East totaled 1.8 tonnes per ha, stabilizing at the previous year’s figure. Over the period under review, the barley yield reached the peak level at 2 tonnes per ha in 2013; however, from 2014 to 2019, the yield remained at a lower figure.

Imports in the Middle East

After two years of growth, supplies from abroad of barley decreased by -2.8% to 10M tonnes in 2019. Overall, imports, however, showed a relatively flat trend pattern.Over the period under review, imports hit record highs at 13M tonnes in 2013; however, from 2014 to 2019, imports stood at a somewhat lower figure. In value terms, barley imports totaled $2.3B (IndexBox estimates) in 2019.

Imports by Country

Saudi Arabia was the main importing country with an import of about 4.2M tonnes, which amounted to 42% of total imports. It was distantly followed by Iran (2.6M tonnes), Jordan (0.9M tonnes), Kuwait (0.6M tonnes), and Turkey (0.6M tonnes), together committing a 46% share of total imports. The following importers – the United Arab Emirates (383K tonnes) and Israel (359K tonnes) – each comprised a 7.4% share of total imports.

From 2007 to 2019, the most notable rate of growth in terms of purchases, amongst the key importing countries, was attained by Iran, while imports for the other leaders experienced more modest paces of growth.

In value terms, Saudi Arabia ($966M), Iran ($546M), and Jordan ($213M) constituted the countries with the highest levels of imports in 2019, together accounting for 74% of total imports.

Import Prices by Country

In 2019, the barley import price in the Middle East amounted to $231 per tonne, increasing by 6.4% against the previous year. In general, the import price, however, showed a perceptible downturn. Over the period under review, import prices reached the maximum at $307 per tonne in 2013; however, from 2014 to 2019, import prices remained at a lower figure.

Average prices varied noticeably amongst the major importing countries. In 2019, major importing countries recorded the following prices: in Jordan ($248 per tonne) and Kuwait ($231 per tonne), while Israel ($209 per tonne) and Iran ($213 per tonne) were amongst the lowest.

From 2007 to 2019, the most notable rate of growth in terms of prices was attained by Iran, while the other leaders experienced a decline in the import price figures.

Source: IndexBox AI Platform

cross-docking

What Warehouses Should Keep in Mind When First Implementing Cross-Docking

Warehouses that want to improve labor and space utilization without expanding to a new location or breaking ground may consider cross-docking because of its potential efficiencies. Unfortunately, it can also come with many pitfalls for those trying it for the first time.

Cross-docking requires a detailed understanding of your team, space, partners, and technology. For new warehouses, that means implementing cross-docking should come with significant testing and preparation, especially in terms of your inventory management, scheduling, spatial allocation, and the training you give your team and partners.

Test inventory management tools

Cross-docking prepares companies for just-in-time (JIT) shipping and distribution, making immediate use of inventory as it arrives. Companies that want to start utilizing cross-docking will need a robust inventory management system that can understand and differentiate these inbound shipments.

Your tools must be able to understand inventory utilization. If half of the goods on an inbound shipment are for JIT purposes, then the inventory platform must be able to split received goods and correctly update both inventory levels and the number of products you list for sale. If this action would require ongoing intervention from you or additional inventory counts, it could introduce higher labor costs that negate cross-dock benefits.

Ultimately, cross-docking can help with inventory management and often keep companies from needing to expand physical infrastructure for the products they hold. It might also help you expand operations to support backorders. This takes time, however, and requires tools that help you understand and manage inventory levels without adding burden.

Robust scheduling includes flexibility

Cross-docking is intense choreography. You’re going to need smart people and reliable technology to manage the planning of how people and trucks are moving in and around your site. Cross-docking and JIT operations demand having the people available to handle inbound shipments and process them while helping your team know what inventory is ready to use and what needs to be put away.

Dock availability and the time of truck arrivals and departures must be flexible so that your operations can run normally. Every cross-docking team plans on a smooth day where everything runs on schedule. However, that’s rarely a reality. Paperwork, traffic delays, accidents, or even someone needing to use the bathroom can cause a small delay. Something as simple as an employee driving through the parking lot can force a truck to wait.

If you schedule everything down to the minute and don’t give your team and partners flexibility, it’ll cause greater delays. In most cases, as you’re expanding and learning, arriving trucks will end up waiting because it’s hard to predict the time people need, but you also don’t want docks sitting empty for extended periods. So, ensure that you have people ready when trucks are there and test the time you give teams for inbound and outbound.

Dock door assignments should consider space and traffic

One other caveat that many warehouses don’t consider when they first start cross-docking is the physical space that people, trucks, and inventory required. Cross-docking effectively requires that dock door assignments be efficient and allow incoming and departing trucks enough space to maneuver safely and quickly. Adding extra points to a turn will slow the entire process down, for example.

If your warehouse wasn’t built with cross-docking in mind, test this thoroughly. Often, warehouses need significant reconfiguration of internal elements or will install new doors and adjust the building design to facilitate cross-docking. Multiple teams, doors, trucks, and the equipment everyone is using are going to take up extra space and need to be able to move freely and safely. Start by giving everything and everyone more leeway than you think they need.

Some new inventory and dock management platforms support cross-docking and can make suggestions based on timing, assignments, and other aspects of your operations based on historical and current data. When your tools offer this, try out their analysis and recommendations to see if you can maximize your efforts.

The entire supply chain requires competencies

Cross-docking is an advanced management and utilization technique for any warehouse or distribution center. You’re managing dock door assignments, transshipment, vehicle routing, product allocation, barcode scanning and putaway, new warehouse layouts, and the network and systems required to manage it all.

Your team needs competency in each of those areas and activities. Partners should have their own understanding plus the ability to support you. Inbound expertise is required, across the board, for JIT requirements and scheduling to be effective.

You’ll eventually want to build out appropriate penalties for time windows to keep things running smoothly, but that requires your team not to cause delays. In many instances, cross-docking is complicated mathematics disguised as people and trucks.

Take your time to test and implement it. Work with partners proactively to help understand what they need from you and explain what you need from them. Train your team specifically on the new processes and requirements. Simulate, test, and optimize procedures and layout continually.

Cross-docking can save warehouses significantly on a variety of costs and size requirements. You might reduce material handling and make labor more efficient. Customer satisfaction can be improved, too, as you’re relying less on backorders or older products. Achieving all of those wins is a lengthy process, and it’s important to walk into the situation with patience.

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Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.

truffle

Mushroom And Truffle Imports in the U.S. Overcame $300M, Comprising 15% of the Market

IndexBox has just published a new report: ‘U.S. – Mushrooms And Truffles – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

In 2019, the U.S. mushroom and truffle market increased by 3.6% to $2.2B (IndexBox estimates) for the first time since 2016, thus ending a two-year declining trend. The market value increased at an average annual rate of +2.3% over the period from 2013 to 2019; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2016 when the market value increased by 13% against the previous year. As a result, consumption reached a peak level of $2.4B. From 2017 to 2019, the growth of the market remained at a lower figure.

Production in the U.S.

In 2019, the production of mushrooms and truffles was finally on the rise to reach 422K tonnes after two years of decline. Mushroom and truffle output in the U.S. indicated a relatively flat trend pattern, which was largely conditioned by a relatively flat trend pattern of the harvested area and a relatively flat trend pattern in yield figures.

In value terms, mushroom and truffle production amounted to $1.9B in 2019. The total output value increased at an average annual rate of +1.1% over the period from 2013 to 2019; the trend pattern remained consistent, with only minor fluctuations throughout the analyzed period.

Imports into the U.S.

For the seventh year in a row, the U.S. recorded growth in purchases abroad of mushrooms and truffles, which increased by 12% to 76K tonnes in 2019. In general, total imports indicated a buoyant increase from 2013 to 2019: its volume increased at an average annual rate of +9.3% over the last six years. Based on 2019 figures, imports increased by +70.8% against 2013 indices.  Over the period under review, imports attained the maximum in 2019 and are likely to see gradual growth in the near future. In value terms, mushroom and truffle imports totaled $319M (IndexBox estimates) in 2019.

The share of imports in terms of the total consumption increased robustly from 2015-2019 both in physical and value terms. Thus, it increased from 10% in 2015 (in physical terms) to 16% in 2019. This indicated the rising attractiveness of the American mushroom market for suppliers from abroad.

Imports by Country

In 2019, Canada (52K tonnes) constituted the largest mushroom and truffle supplier to the U.S., accounting for a 68% share of total imports. Moreover, mushroom and truffle imports from Canada exceeded the figures recorded by the second-largest supplier, Mexico (12K tonnes), fourfold. South Korea (7.2K tonnes) ranked third in terms of total imports with a 9.4% share.

From 2013 to 2019, the average annual rate of growth in terms of volume from Canada stood at +8.6%. The remaining supplying countries recorded the following average annual rates of imports growth: Mexico (+27.4% per year) and South Korea (+14.6% per year).

In value terms, Canada ($230M) constituted the largest supplier of mushroom and truffle to the U.S., comprising 72% of total imports. The second position in the ranking was occupied by Mexico ($39M), with a 12% share of total imports. It was followed by South Korea, with a 5.2% share.

Import Prices by Country

The average mushroom and truffle import price stood at $4,166 per tonne in 2019, increasing by 2.7% against the previous year. Over the period from 2013 to 2019, it increased at an average annual rate of +3.7%.

There were significant differences in the average prices amongst the major supplying countries. In 2019, the country with the highest price was Canada ($4,427 per tonne), while the price for mushrooms from China ($1,785 per tonne) was amongst the lowest.

From 2013 to 2019, the most notable rate of growth in terms of prices was attained by South Korea, while the prices for the other major suppliers experienced more modest paces of growth.

Source: IndexBox AI Platform